<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 16, 2000
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
------------------------
FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
------------------------
GREENFIELD ONLINE, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 8732 91-061440369
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (IRS EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
</TABLE>
------------------------
15 RIVER ROAD, SUITE 310
WILTON, CT 06897
(203) 834-8585
(ADDRESS, INCLUDING ZIP CODE AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICE)
------------------------
RUDY NADILO
CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER
GREENFIELD ONLINE, INC.
15 RIVER ROAD, SUITE 310
WILTON, CT 06897
(203) 834-8585
(NAME, ADDRESS, INCLUDING ZIP CODE AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
AGENT FOR SERVICE)
------------------------
Copies of all communications to:
<TABLE>
<S> <C> <C>
G. SCOTT GREENBURG JONATHAN A. FLATOW MARC M. ROSSELL
JAMIE D. PEDERSEN VICE PRESIDENT AND GENERAL COUNSEL SHEARMAN & STERLING
MAJA D. CHAFFE GREENFIELD ONLINE, INC. 599 LEXINGTON AVENUE
PRESTON GATES & ELLIS LLP 15 RIVER ROAD, SUITE 310 NEW YORK, NY 10022
701 FIFTH AVENUE, SUITE 5000 WILTON, CT 06897 (212) 848-4000
SEATTLE, WA 98104 (203) 834-8585
(206) 623-7580
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement as the
underwriters shall determine.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box: / /
If any of the Securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act,
check the following box: / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering: / /
If this Form is a post-effective amendment filed pursuant to
Rule 462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering: / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: / /
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED PROPOSED
TITLE OF SECURITIES AMOUNT TO BE MAXIMUM OFFERING MAXIMUM AGGREGATE AMOUNT OF
TO BE REGISTERED REGISTERED PRICE PER UNIT(1) OFFERING PRICE(1) REGISTRATION FEE
<S> <C> <C> <C> <C>
Common stock, $0.001
par value per share.......................... $ $86,250,000 $22,770
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(o) under the Securities Act of 1933.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED MARCH 16, 2000
Shares
[LOGO]
Common Stock
------------------
Prior to this offering, there has been no public market for our common
stock. The initial public offering price of the common stock is expected to be
between $ and $ per share. We have applied to list our common stock on
The Nasdaq Stock Market's National Market under the symbol "GFOL."
The underwriters have an option to purchase a maximum of
additional shares to cover over-allotments of shares.
INVESTING IN OUR COMMON STOCK INVOLVES RISKS. SEE "RISK FACTORS" ON
PAGE 6.
<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS GREENFIELD ONLINE
----------------- ----------------- -----------------
<S> <C> <C> <C>
Per share............................................... $ $ $
Total................................................... $ $ $
</TABLE>
Delivery of the shares of common stock will be made on or about
, 2000.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
CREDIT SUISSE FIRST BOSTON
BEAR, STEARNS & CO. INC.
DONALDSON, LUFKIN & JENRETTE
The date of this prospectus is , 2000.
<PAGE>
------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
PROSPECTUS SUMMARY............................ 1
RISK FACTORS.................................. 6
CAUTIONARY NOTE REGARDING FORWARD-
LOOKING STATEMENTS.......................... 17
USE OF PROCEEDS............................... 18
DIVIDEND POLICY............................... 18
CAPITALIZATION................................ 19
DILUTION...................................... 21
SELECTED FINANCIAL DATA....................... 22
MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS................... 24
BUSINESS...................................... 34
MANAGEMENT.................................... 48
<CAPTION>
PAGE
-----
<S> <C>
CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS................................ 57
PRINCIPAL SHAREHOLDERS........................ 59
DESCRIPTION OF CAPITAL STOCK.................. 61
CERTAIN U.S. FEDERAL TAX CONSEQUENCES
FOR NON-U.S. INVESTORS...................... 63
SHARES ELIGIBLE FOR FUTURE SALE............... 66
UNDERWRITING.................................. 68
NOTICE TO CANADIAN RESIDENTS.................. 70
LEGAL MATTERS................................. 71
EXPERTS....................................... 71
WHERE YOU CAN FIND MORE
INFORMATION................................. 71
INDEX TO FINANCIAL STATEMENTS................. F-1
</TABLE>
------------------
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT OR TO
WHICH WE HAVE REFERRED YOU. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH
INFORMATION THAT IS DIFFERENT. THIS DOCUMENT MAY ONLY BE USED WHERE IT IS LEGAL
TO SELL THESE SECURITIES. THE INFORMATION IN THIS DOCUMENT MAY ONLY BE ACCURATE
ON THE DATE OF THIS DOCUMENT.
DEALER PROSPECTUS DELIVERY OBLIGATION
UNTIL , 2000, 25 DAYS AFTER THE COMMENCEMENT OF THE OFFERING, ALL
DEALERS THAT EFFECT TRANSACTIONS IN THESE SECURITIES, WHETHER OR NOT
PARTICIPATING IN THIS OFFERING, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS
IN ADDITION TO THE DEALER'S OBLIGATION TO DELIVER A PROSPECTUS WHEN ACTING AS AN
UNDERWRITER AND WITH RESPECT TO UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
i
<PAGE>
PROSPECTUS SUMMARY
This summary highlights information contained elsewhere in this prospectus.
This summary is not complete and does not contain all of the information that
you should consider before investing in our common stock. You should read the
entire prospectus carefully, including our financial statements and the risks of
investing in our common stock discussed under "Risk Factors" before making an
investment decision.
GREENFIELD ONLINE, INC.
OUR BUSINESS
We are a pioneer and leading provider of marketing research using the
Internet. Businesses use marketing research to decide which products and
services to offer, as well as how to advertise, promote and distribute them.
Marketing researchers gather feedback from consumers using survey methods and
compile and interpret the data to deliver marketing information to clients. We
believe we produce faster, better and richer research than available using
offline survey methods through a combination of our 100% Internet-enabled
proprietary technology, high-quality online respondent panels and experienced
marketing research professionals. We believe the Internet is becoming the
dominant means for performing marketing research and that we are well positioned
to lead the transition to the Internet.
OUR OPPORTUNITY
According to the European Society of Opinion and Marketing Research, an
independent trade association, approximately $13.4 billion was spent on
marketing research worldwide in 1998, the majority of which was offline
research. Although offline marketing research companies have attempted to
automate some research processes, offline methods remain, for the most part,
inefficient and expensive.
We believe the Internet is fundamentally changing the marketing research
industry and that online marketing research will account for an increasing
percentage of overall marketing research spending. By using Internet-focused
technologies, marketing researchers can more rapidly access, collect and process
larger amounts of data than possible using offline methods. As more people use
the Internet, marketing researchers are increasingly able to survey a very
broad, diverse population. International Data Corporation, an information
technology data and analysis company, estimates that the number of worldwide
Internet users is expected to grow from 196 million in 1999 to 502 million by
the end of 2003. By effectively surveying this large pool of Internet users, we
believe that online marketing research can provide faster, better and richer
research for our clients.
OUR ADVANTAGE
Internet-focused technology. We are a 100% Internet-enabled company. We
developed our proprietary Web Research Engine to harness the power of the
Internet to provide marketing research to our clients. Our Web Research Engine
consists of integrated technologies that seamlessly interface with our clients,
our experienced researchers and our online panels. Our Web Research Engine
allows large numbers of surveys to be created, gathered and processed
efficiently. The key components of our Web Research Engine are:
o Survey Wizard: Our Survey Wizard software allows us to create and execute
complex, Web-enabled surveys that can incorporate sophisticated
multimedia. This technology automates the coding of questions and
generates Web-ready surveys from common desktop software.
o NetTap: Our NetTap technology is comprised of a proprietary set of
database tools that interface with our Survey Wizard software allowing us
to select targeted respondents from our online panels, launch surveys and
capture data.
o QuickTake: Our proprietary QuickTake software allows users to design,
create and launch short surveys over the Internet. Through QuickTake.com,
our clients can conduct their own surveys among
1
<PAGE>
online audiences from the Web or from their own lists or databases.
Clients can view and tabulate results in real time.
High-quality online panels. Since 1995, we have used our proprietary
NetReach Internet recruiting techniques to recruit and register over 500,000
respondents, residing in households containing approximately 1.6 million
individuals and about whom we have collected as many as 70 fields of demographic
and lifestyle information. Using our Web Research Engine, we can use this
information to target very specific segments of our online panels to meet our
clients' marketing research needs.
Experienced researchers. Our products and services are designed, sold and
delivered by experienced marketing research professionals. We believe our
researchers deliver quality data to our clients by effectively using their
knowledge of marketing research principles, our Web-based technology and our
online panels.
OUR PRODUCTS AND SERVICES
Using our Internet-based technology and high-quality online panels, we
offer marketing research designed to meet our clients' diverse needs. Our
products and services range from highly customized research projects that
require a significant investment of resources to quickly accessible
off-the-shelf and self-directed research. We offer:
o Custom research--full-service quantitative and qualitative research
tailored to our clients' specific research needs;
o Syndicated research--research and data compiled and packaged for
off-the-shelf or subscription sales to multiple clients; and
o Self-directed research--easy-to-use short online surveys that our clients
can create on their own using our proprietary software.
Since 1995, we have completed marketing research projects for over 350
clients. Our diverse client base includes traditional marketing-intensive
companies in industries such as consumer packaged goods, consumer services,
healthcare/pharmaceuticals, advertising and research and consulting, as well as
new Internet-related and technology companies.
OUR STRATEGY
We have developed a strategy to be the largest and most recognized supplier
of marketing research worldwide, as measured by market share, product quality,
geographic coverage and strength of brand name. We intend to:
o expand the online research market by converting present users of offline
marketing research, increasing sales to current clients and attracting
new clients with new products and services;
o build and maintain our high-quality online research panels;
o develop and enhance our scalable, proprietary Internet technology;
o attract and retain experienced marketing research professionals; and
o increase our brand awareness.
WHERE TO FIND US
Our principal executive offices are located at 15 River Road, Suite 310,
Wilton, CT 06897. Our telephone number at that address is (203) 834-8585. Our
principal website address is www.greenfield.com. The information contained on
our websites does not constitute part of this prospectus.
2
<PAGE>
OTHER INFORMATION
We were founded in 1994 as a business unit of Greenfield Consulting Group,
Inc. We were incorporated in Connecticut in 1995 under the name Greenfield
Online Research Center, Inc. We changed our name to Greenfield Online, Inc. in
1997 and moved our state of incorporation to Delaware in February 2000.
References in this prospectus to "Greenfield Online," "we," "our company" and
"us" refer to Greenfield Online, Inc.
The names Greenfield(R) and Greenfield Online(TM) are owned by Greenfield
Consulting Group, LLC, an affiliated company that holds a minority interest in
us. Greenfield Consulting Group holds a United States trademark registration for
the mark Greenfield and has filed for trademark registration of the mark
Greenfield Online. We have a right to use the Greenfield Online trademark and
the continuing right to use the name Greenfield in connection with our use of
the name Greenfield in our domain name www.greenfield.com. This prospectus also
includes other trademarks, trade names and service marks of Greenfield Online
and of other parties. All other trademarks, trade names or service marks used in
this prospectus are the property of their respective owners. We currently hold
United States trademark registrations for the marks Research Revolution(R),
NetReach(R) and FieldSource(R) and have filed in the United States for
registration of the marks NetTap(TM), Survey Wizard(TM), QuickTake(TM),
QuickTake.com(TM), FocusChat(TM), MindStorm(TM) and Digital Consumer(TM).
3
<PAGE>
THE OFFERING
<TABLE>
<S> <C>
Common stock offered.................................... shares
Common stock to be outstanding after
this offering......................................... shares, excluding 2,857,850 shares issuable
upon exercise of outstanding options at a weighted average
exercise price of $1.02 per share and 2,045,200 shares
available for future issuance under our 1999 Stock
Option Plan, 150,000 shares available for future
issuance under our 2000 Directors Stock Option Plan and
200,000 shares available for future issuance under our
2000 Employee Stock Purchase Plan.
Use of proceeds......................................... To repay outstanding corporate debt and for general
corporate purposes and working capital.
Proposed Nasdaq National Market symbol.................. GFOL
</TABLE>
Unless otherwise indicated, all information contained in this prospectus
gives effect to a 2-for-1 stock split, which took place in March 2000, and
assumes:
o no exercise of outstanding options or warrants, except for the assumed
exercise of warrants to purchase 307,668 shares of our common stock that
are currently exercisable;
o the conversion of all authorized and outstanding class A common stock and
class B common stock into a single class of common stock on a 1-for-1
basis to be effective upon the completion of this offering;
o the filing of our restated certificate of incorporation; and
o no exercise of the underwriters' over-allotment option.
4
<PAGE>
SUMMARY FINANCIAL DATA
You should read the following summary financial data together with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and our financial statements and the related notes included
elsewhere in this prospectus. The following table summarizes our statement of
operations data for each of the years ended December 31,1997 and 1998 and for
the periods from January 1, 1999 through May 16, 1999 and from May 17, 1999
through December 31, 1999, our unaudited pro forma statement of operations data
for the full year ended December 31, 1999 and our balance sheet data as of
December 31, 1997, 1998 and 1999.
As a result of a management buyout effected on May 17, 1999, a change in
control of our company occurred and a new reporting entity was organized. For
purposes of presentation and disclosure, we refer to ourselves as the
predecessor as of and for all periods up to the point of the management buyout
and as the successor as of and for all periods thereafter. Because the financial
statements of the successor are not directly comparable to those of the
predecessor, a dark bar has been inserted in the accompanying table to clearly
separate the financial position and the results of operation before and after
the change of control.
As a result of the management buyout, the statement of operations data
below includes two periods for 1999. The summarized financial data below also
include unaudited pro forma statement of operations data for the full year ended
December 31, 1999. The unaudited pro forma statement of operations data for the
year ended December 31, 1999 gives effect to the management buyout as if it had
occurred on January 1, 1999. The historical results below are not necessarily
indicative of future results. Amounts included below are in thousands, except
per share data.
<TABLE>
<CAPTION>
PREDECESSOR
----------------------------------
SUCCESSOR
YEAR ENDED --------------------------------------
DECEMBER 31, JANUARY 1 MAY 17 PRO FORMA
------------------ THROUGH THROUGH YEAR ENDED
1997 1998 MAY 16, 1999 DECEMBER 31, 1999 DECEMBER 31, 1999
------- ------- ------------ ----------------- -----------------
STATEMENT OF OPERATIONS DATA:
<S> <C> <C> <C> <C> <C>
Revenues.............................. $ 1,203 $ 2,791 $ 1,734 $ 5,558 $ 7,291
Cost of revenues...................... 521 1,251 702 2,517 3,219
------- ------- -------- --------- ---------
Gross profit.......................... 682 1,540 1,032 3,041 4,072
Total operating expenses.............. 1,582 3,870 5,613 16,753 28,295
------- ------- -------- --------- ---------
Operating loss........................ (900) (2,330) (4,581) (13,712) (24,223)
Net loss.............................. $ (916) $(2,445) $ (4,631) $ (13,789) $ (24,819)
------- ------- -------- --------- ---------
------- ------- -------- --------- ---------
Basic and diluted net loss per share.. $ (0.02) $ (0.05) $ (0.10) $ (0.56) $ (1.01)
------- ------- -------- --------- ---------
------- ------- -------- --------- ---------
Weighted average shares
outstanding--basic and diluted...... 45,000 45,000 45,000 24,707 24,563
------- ------- -------- --------- ---------
------- ------- -------- --------- ---------
</TABLE>
<TABLE>
<CAPTION>
PREDECESSOR
------------------
YEAR ENDED SUCCESSOR
DECEMBER 31, ------------
------------------ DECEMBER 31,
1997 1998 1999
------- ------- ------------
BALANCE SHEET DATA:
<S> <C> <C> <C>
Cash and cash equivalents................................................ $ 148 $ 114 $ 1,709
Working capital (deficiency)............................................. (1,650) (4,452) (1,200)
Total assets............................................................. 809 1,692 23,353
Long-term liabilities.................................................... -- 90 17,360
Total stockholders' equity (deficit)..................................... $(1,298) $(3,743) $ 323
</TABLE>
5
<PAGE>
RISK FACTORS
An investment in our common stock involves a high degree of risk. You
should carefully consider the risks described below before making a decision to
buy our common stock. If any of the following risks occurs, our business may be
harmed. In that case, the trading price of our common stock could decline and
you may lose all or part of your investment. You should also carefully consider
the other information in this prospectus, including our financial statements and
the related notes, before deciding to purchase shares of our common stock.
RISKS RELATED TO OUR BUSINESS
WE HAVE INCURRED SIGNIFICANT NET LOSSES SINCE OUR INCEPTION AND EXPECT TO
CONTINUE TO INCUR NET LOSSES FOR THE FORESEEABLE FUTURE.
We incurred net losses of $18.4 million in the year ended December 31,
1999. As of December 31, 1999, our stockholders' equity was $322,715. Given the
level of our planned operating expenditures, including costs associated with the
maintenance of our technology infrastructure, we expect to continue to incur
significant losses for the foreseeable future.
If our revenues grow at a slower rate than we anticipate, or if our
spending levels exceed our expectations or cannot be adjusted to reflect slower
revenue growth, we may not be able to achieve profitability. Even if we achieve
profitability in the future, we may be unable to sustain or increase
profitability on a quarterly or annual basis.
IF WE ARE UNABLE TO MAINTAIN THE SIZE OR DEMOGRAPHIC COMPOSITION OF OUR INTERNET
PANELS, OUR BUSINESS MAY SUFFER.
The commercial viability of our marketing research data, and our overall
business, depends on our ability to attract active online panelists and to
ensure that panel composition is maintained to accommodate a broad variety of
marketing research requests. There is currently no historical benchmark by which
to predict the optimal size of our online research panels so as to ensure high
response rates and maximum revenue generation per panelist. If we are unable to
accurately determine that optimal size and build appropriately sized panels, our
current panelists may become overused. As a result, our panelists may become
unresponsive to our requests to participate in research projects. If we fail to
regenerate our online panels with new and active panelists on a regular basis,
our business may suffer.
Our online panelists are not obligated to participate in our surveys, and
there can be no assurance that they will do so. Our ability to retain or
increase the number of online panelists or increase revenues may be harmed if:
o our panelists respond less frequently to our surveys or stop responding
altogether due to excessive requests for participation from us and other
researchers; or
o our panelists become dissatisfied with the forms of participation
incentives we provide.
If the number of panelists in any of our online panels decreases
significantly or the demographic composition of any of our online panels
narrows, our ability to provide our clients with accurate and statistically
valid information could suffer. This risk is likely to increase as our business
expands and as more demographically diverse surveys are requested by our
clients.
Additionally, in the past, the responsiveness of our online panels has been
variable and a function of the length of the surveys to be completed and the
incentives offered to participants. The incentives we offer panelists to join
our online panels and participate in surveys generally consist of cash
incentives or the opportunity to enter into a drawing for prizes. If we are
required to increase incentives or undertake more costly campaigns to recruit
additional panelists or retain our current panelists, our operating expenses may
increase and our business could be harmed.
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<PAGE>
FLUCTUATIONS IN OUR OPERATING RESULTS MAY CAUSE OUR STOCK PRICE TO DECLINE.
In the past, our operating results fluctuated significantly from quarter to
quarter and are expected to continue to do so in the future. Factors outside of
our control that have caused our operating results to fluctuate in the past and
that may affect us in the future, include:
o fluctuations in general economic conditions;
o fluctuations in the marketing research budgets of our clients;
o development of products and services by our competitors;
o technical difficulties or system downtime affecting the Internet
generally;
o demand for marketing research products and services generally; and
o seasonal fluctuations resulting from decreases in requests for marketing
research services during the summer and year-end vacation and holiday
periods.
Factors within our control that have caused our operating results to
fluctuate in the past and that may affect us in the future, include:
o our ability to increase the size and diversity of our online panels for
use in developing new products and services;
o our ability to develop products and services;
o technical difficulties or downtime of individual components of our
computer systems; and
o our ability to deliver projects to our clients in a timely fashion.
The factors listed above may affect both our quarter-to-quarter operating
results as well as our long-term success. Given the fluctuations in our
operating results, you should not rely on quarter-to-quarter comparisons of our
results of operations as an indication of our future performance or to determine
any trend in our performance.
IF THE MARKETPLACE DOES NOT ACCEPT INTERNET-BASED MARKETING RESEARCH, OUR GROWTH
WILL BE ADVERSELY AFFECTED.
The success of our business depends on our ability to develop and market
Internet-based products and services that achieve broad market acceptance by our
potential clients and on continued acceptance of our products and services by
our current clients. These clients must accept the Internet as a medium for
conducting marketing research and have confidence in the results derived from
Internet-based marketing research.
Because online marketing research is based on the electronic exchange of
information and opinions, it can only be conducted among people who own or have
access to computers and the Internet. As a result, Internet-based marketing
research methodologies presently cannot draw a statistically relevant sample of
the general population. When we first began conducting our marketing research in
1995, many potential clients were hesitant to use our services because of
concerns that any marketing research results obtained over the Internet were
inherently biased toward the views, experiences and attitudes of an
unrepresentative group of persons. If our potential clients do not accept our
Internet-based methodologies as reliable and unbiased, or our current clients do
not continue to have confidence in the reliability of these methodologies, our
revenues may not meet expectations or may decline and our business could be
harmed.
IF WE EXPERIENCE PROBLEMS TRANSFERRING TO OUR NEW ACCOUNTING SYSTEM, OUR
EXISTING ACCOUNTING SYSTEM MAY NOT BE ABLE TO MEET OUR PROJECTED GROWTH
REQUIREMENTS.
We are currently in the process of implementing a new accounting system
that includes an integrated suite of general ledger, accounts receivable,
accounts payable, fixed assets and project management software and related
hardware. We expect to transition our present bookkeeping functions to the new
system in the second half of fiscal 2000. If we are unable to implement this new
accounting system or if we experience
7
<PAGE>
material delays in doing so, our accounting management and personnel could be
distracted and our expenses could increase to cover the added cost of personnel
to manage the existing system.
WE MAY NOT BE ABLE TO COMPETE SUCCESSFULLY WITH OTHER INTERNET AND
NON-INTERNET-BASED MARKETING RESEARCH FIRMS.
The markets for our products and services are highly competitive. We
compete with marketing research firms offering Internet-based services, such as
Harris Interactive Inc., InsightExpress L.L.C. and The NPD Group Online
Division, as well as offline services, such as Market Facts, Inc., NFO
Worldwide, Inc. and The NPD Group, Inc. We expect to face competition in the
future from other marketing research firms that develop Internet-based products
and services or other companies with access to large databases of individuals
with whom they can communicate on the Internet. These companies may, either
alone or in alliances with other firms, penetrate the Internet-based marketing
research market.
Many of our current and potential competitors have longer operating
histories, greater name recognition and significantly greater financial and
marketing resources than we do. These competitors may be able to undertake more
extensive marketing campaigns, adopt more aggressive pricing policies and make
more attractive offers to potential employees, strategic partners and customers.
In addition, our competitors and potential competitors may develop technologies
that are superior to ours or that achieve greater market acceptance than our
own. If we do not successfully compete with these companies, we could experience
a loss of market share or reduced levels of revenue and profitability for our
business.
OUR SUCCESS DEPENDS ON OUR ABILITY TO RETAIN THE CURRENT MEMBERS OF OUR SENIOR
MANAGEMENT TEAM AND OTHER KEY PERSONNEL.
Our success depends on the continued services of our core senior management
team, especially Rudy Nadilo, our Chairman, President and Chief Executive
Officer. If one or more of these persons were unable or unwilling to continue in
their present position, our business would be disrupted. In March 2000, we
amended and restated our four-year employment agreement with Mr. Nadilo to make
his employment terminable only for cause. We also have entered into employment
agreements with each of our other senior managers. In each of these other
agreements, the employee is employed at will and may be terminated or may leave
at any time. Except for a key-person life insurance policy for Mr. Nadilo in the
amount of $4 million, we do not maintain key-person life insurance for any of
our other management personnel or employees.
WE MUST ATTRACT AND RETAIN MARKETING RESEARCH PROFESSIONALS AND OTHER HIGHLY
SKILLED PERSONNEL OR WE WILL BE UNABLE TO EXECUTE OUR BUSINESS STRATEGY
SUCCESSFULLY.
Our business model is based, and our success depends, upon our ability to
attract, retain and motivate highly skilled marketing research professionals and
technical, managerial, marketing, sales and client support personnel. Because
competition to attract trained technical and marketing research personnel is
intense in our industry, we may experience difficulty attracting, integrating or
retaining the number of qualified personnel our business plan requires for
successful implementation. For example, we recently reorganized our technology
staffing structure and moved our former Chief Technology Officer to a full-time
research and development position. We have employed an interim Chief Technology
Officer, and we intend to fill this position permanently in the near future.
However, because of the scarcity of candidates with sufficient technical skills,
we may have trouble recruiting a candidate for this position. If we are delayed
in recruiting a Chief Technology Officer, or other key employees, we may be
forced to incur significant additional recruitment, compensation and relocation
expenses. If we are unable to hire and retain skilled employees in the future,
our business may suffer.
IF WE ARE UNABLE TO MANAGE AND SUPPORT OUR GROWTH EFFECTIVELY, WE MAY NOT BE
ABLE TO EXECUTE OUR BUSINESS STRATEGY SUCCESSFULLY.
We are rapidly expanding and integrating new personnel to support our
growth, which makes it difficult to maintain our standards, controls and
procedures. Members of our senior management team will be required to devote
considerable amounts of their time to this expansion, which may reduce the time
they will have to provide management and other necessary services to us and to
research and negotiate investments in, and alliances with, companies
complementary to ours. To continue to develop our business, we must hire a
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substantial number of new employees. Our employee base has grown from 2 in 1994
to 115 as of March 13, 2000. We may need to hire a significant number of
additional employees in the future. The recruiting, hiring, training and
integration of a large number of employees will place a significant strain on
our management and operational resources. To manage our growth effectively, we
must successfully develop, implement, maintain and enhance our financial and
accounting systems and controls, integrate new personnel and manage expanded
operations. If we are unable to do so, our business may suffer.
IF WE DO NOT KEEP PACE WITH RAPID TECHNOLOGICAL CHANGE AND THE INTENSE
COMPETITION OF THE MARKETING RESEARCH INDUSTRY, WE MAY BE UNABLE TO IMPLEMENT
OUR BUSINESS PLAN SUCCESSFULLY.
The marketing research industry, particularly the online marketing research
industry, is characterized by intense competition, new product and service
developments and evolving technologies and research methodologies. The number of
Internet users is rapidly growing, and this growth intensifies these market
characteristics. To succeed, we will need to effectively develop and integrate
the various technologies and methodologies required to enhance and improve our
marketing research products and services. Any enhancements of new products or
services must meet the needs of our current and potential clients and achieve
significant market acceptance. Our success also depends on our ability to adapt
to rapidly changing Internet technologies, especially Internet infrastructure
technologies, by continually improving the performance features and reliability
of our products and services. We may experience difficulties that could delay or
prevent the successful development, introduction or marketing of new products
and services. We could also incur substantial costs if we need to modify our
services or infrastructure to adapt to these changes.
OUR NETWORK INFRASTRUCTURE MAY BE COMPROMISED OR DAMAGED, WHICH COULD HARM OUR
BUSINESS AND FINANCIAL CONDITION.
We depend on UUNET Technologies, Inc., an off-site facility located in
Fairfax, Virginia, to cohost our primary Web-survey and panel-management
systems. We also have a secondary hosting facility at our headquarters in
Wilton, Connecticut. While we are in the process of mirroring the hosting
functions that UUNET performs for us at our headquarters, we cannot assure you
that our systems will seamlessly or adequately replicate UUNET's services in
case of technical difficulties, if at all. The successful delivery of our
services is substantially dependent on our ability and the ability of UUNET to
protect our server and network infrastructure against damage from:
o fire;
o earthquake;
o hurricane;
o power loss;
o telecommunications failure;
o online or physical sabotage; and
o intentional acts of vandalism.
Despite precautions taken by UUNET and us, the occurrence of natural
disasters or other unanticipated problems at our respective facilities could
result in interruptions in the delivery of our products and services or cause
significant damage to our server and network structure. If any of these events
occur, our business, as well as our reputation and brand name, may be harmed.
ANY FAILURE IN THE PERFORMANCE OF OUR INTERNET-BASED TECHNOLOGY INFRASTRUCTURE
OR THE INTERNET AS A WHOLE COULD HARM OUR BUSINESS AND OUR REPUTATION.
In the past, we have experienced technical difficulties with, and downtime
of individual components of, our computer systems primarily as a result of
testing and implementing new and undeveloped software. Technical difficulties
and downtime may continue to occur from time to time in the future.
Historically, technical difficulties and downtime have had a minimal impact on
our operations and have usually been rectified within 48 hours. The impact of
technical difficulties on our systems or operations may, however, be
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more severe in the future. In addition, we are wholly dependent on the Internet
for the performance of marketing research and the delivery of our services. Any
extended disruption in Internet service could disrupt our business severely. We
currently have an internal formal disaster recovery plan in effect, including
business interruption insurance. Our business interruption insurance, however,
may not adequately compensate us for any losses that may occur due to any
failures in our systems or the systems of third parties and any resulting
interruptions in our communications with our Internet panels or in our data
collection efforts. In addition, our servers and software must be able to
accommodate a high volume of traffic. Any increase in demands on our servers
beyond that which we currently anticipate will require us to expand and adapt
our network infrastructure. If we are unable to add additional software and
hardware to accommodate increased demand, unanticipated system disruptions and
slower data collection may result. If any of these events occur and our
infrastructure fails, our business and our reputation may be harmed.
LOSS OF TECHNICAL SUPPORT FROM THIRD PARTIES COULD DISRUPT OUR BUSINESS.
We rely on third-party technology support for our infrastructure systems.
While our internal technicians design the majority of our technological
infrastructure, we often engage third-party vendors to build the architecture we
design. Technical support from third parties in the future may not continue to
be available to us on commercially reasonable terms, if at all. If this support
were to become unavailable, our business would be disrupted. The inability to
engage third parties to support the building and maintenance of the technology
important to our business would require us to obtain substitute technology that
might be of lower quality or performance standards, or might be of comparable
quality yet obtainable only at a greater cost. Our inability to outsource select
technical projects on a commercially reasonable basis could delay us from
providing our products and services to our clients, which may have a material
adverse impact on our business.
OUR INABILITY TO PROTECT OUR INTELLECTUAL PROPERTY COULD ADVERSELY AFFECT OUR
BUSINESS.
Our ability to compete and implement our business strategy successfully
depends on our use of our proprietary technologies, trademarks and other
intellectual property, which are protected through a combination of patent,
copyright, trade secret and trademark laws. The names Greenfield and Greenfield
Online are owned by, and U.S. trademark registration for the name Greenfield is
held by, Greenfield Consulting Group, LLC, an affiliated company. Greenfield
Consulting Group also has a pending trademark application for the name
Greenfield Online. We have a fully paid right to use the Greenfield Online
trademark and the continuing right to use the name Greenfield in connection with
our use of the name in our domain name www.greenfield.com. We currently have
trademark registrations for the trademarks Research Revolution, NetReach and
FieldSource.
We currently have patent applications pending covering our FocusChat and
MindStorm online marketing research processes and pending trademark applications
for numerous other products and services connected with our business. We also
expect to apply for additional trademarks or patents in the future. Our
trademark or patent applications may not be approved or, if approved, our
trademarks or patents could be successfully challenged by others or invalidated.
Our trademark applications may not be approved because third parties own these
trademarks. Use of these trademarks may also be restricted unless we enter into
arrangements with the third-party owners. If we do not gain approval for any of
these pending patent or trademark applications, our brand recognition and
business may suffer.
Despite our efforts to protect our proprietary rights from unauthorized use
or disclosure, through confidentiality agreements or otherwise, parties may
attempt to disclose, obtain or use our technologies. The steps we have taken may
not prevent misappropriation of our technologies, particularly in foreign
countries where laws or law enforcement practices may not protect our
proprietary rights as fully as in the U.S.
There can be no assurance that the steps we have taken to protect our
proprietary rights will be adequate or that third parties will not infringe or
misappropriate our copyrights, trademarks, trade secrets and similar proprietary
rights. In addition, there can be no assurance that other parties will not
assert claims of infringement of intellectual property against us. For example,
in August 1999, we were sued by Harris Interactive Inc. seeking, among other
things, to cancel our registration of the trademark, Research Revolution. If
this claim is successful, or if we are otherwise prevented from using any of our
trademarks, our brand
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recognition and business may suffer. As a result, we would have to make
substantial expenditures to promote and rebuild our brand identity and loyalty
with our clients and members of our Internet panels. Although we believe that
our products and services do not infringe upon the intellectual property rights
of others and that we have all rights necessary to utilize the intellectual
property employed in our business, we may receive claims alleging infringement
of third-party intellectual property rights. Any of these claims could require
us to spend significant sums on litigation, pay damages, delay product
installments, develop non-infringing intellectual property or acquire licenses
to intellectual property that is the subject of any such infringement. Any claim
of infringement of a third party's intellectual property right could have a
material adverse effect on our business, results of operations or financial
condition.
WE MAY BE AT A COMPETITIVE DISADVANTAGE IF WE ARE UNABLE TO PROTECT OUR
PROPRIETARY RIGHTS OR IF WE INFRINGE ON THE PROPRIETARY RIGHTS OF OTHERS. ANY
RELATED LITIGATION COULD BE TIME-CONSUMING AND COSTLY.
Proprietary rights, particularly trade secrets, copyrights and patents,
will be critical to our success and competitive position because we operate our
business through websites and rely heavily on hardware, software and Internet
technologies. The actions we take to protect our proprietary rights may be
inadequate. In addition, effective copyright and trademark protection may be
unenforceable or limited in certain countries and, due to the global nature of
the Internet, we may be unable to control the dissemination of our content and
products and the use of our services. In addition, third parties may claim that
we have violated their intellectual property rights. For example, companies have
recently brought claims against other companies regarding alleged infringement
of patent rights relating to methods of doing business over the Internet. In the
future, we may also license content from third parties, and we could receive
infringement actions based on this licensed content. To the extent that we
violate a patent or other intellectual property right of a third party, we may
be prevented from operating our business as planned and we may be required to
pay damages, to obtain a license, if available, for the use of the patent or to
use a non-infringing method to accomplish our objectives.
Our ability to execute our business strategy will suffer if a successful
claim of infringement is brought against us and we are unable to introduce new
trademarks, develop non-infringing technology or license the infringed or
similar technology on a timely basis. Moreover, our general liability insurance
may not cover, or may not be adequate to cover, all costs incurred in the
defense of potential patent and trademark infringement claims or to indemnify us
for all liability that may be imposed.
WE DERIVED APPROXIMATELY 11% OF OUR TOTAL REVENUES FROM TWO CLIENTS IN FISCAL
1999. IF WE WERE TO LOSE, OR IF THERE WERE A MATERIAL REDUCTION IN BUSINESS
FROM, EITHER ONE OF THESE CLIENTS, OUR BUSINESS MAY SUFFER.
In fiscal 1999, we derived approximately 7% of our total revenues from
Forrester Research, Inc. and approximately 4% of our total revenues from
Microsoft Corporation. We have a contract dated May 13, 1999, with Forrester
Research for a term of 18 months, which automatically renews unless terminated
by either party within 90 days prior to termination. We sell our marketing
research products to Microsoft under a standard purchase order. Either client
may terminate or reduce its use of our products or services at any time. The
reduction or loss in business from either one of these clients may have a
material adverse effect on our business, results of operations or financial
condition.
WE MIGHT HAVE DIFFICULTY OBTAINING ADDITIONAL CAPITAL, WHICH COULD PREVENT US
FROM ACHIEVING OUR BUSINESS OBJECTIVES.
We may need to raise additional capital in the future to fund the expansion
of our Internet panels and the marketing of our products and services, or to
acquire or invest in complementary businesses, technologies or services.
Additional financing may be unavailable on terms favorable to us, if at all. If
we raise additional funds by issuing additional shares of our common stock, you
will experience significant dilution to your ownership interest in us. If we
raise funds by issuing shares of a different class of stock other than our
common stock, the holders of the different classes of stock may have rights
senior to the rights of the holders of our common stock.
We currently anticipate that our available cash and cash equivalents and
our line of credit, combined with the net proceeds from this offering, will be
sufficient to fulfill our growth plan over the next 12 months.
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If additional financing is not available on acceptable terms, we may be unable
to fund the development and expansion of our business, attract qualified
personnel, promote our brand name successfully, take advantage of business
opportunities or respond to competitive pressures. Any of these may have a
material adverse effect on our business, results of operations and financial
condition.
POTENTIAL ACQUISITIONS OR INVESTMENTS IN OTHER COMPANIES MAY HAVE A NEGATIVE
IMPACT ON OUR BUSINESS OR MAY BE UNAVAILABLE.
As part of our strategy to expand our Internet panels, technology
infrastructure and products and services, if appropriate opportunities arise, we
may acquire or make investments in complementary businesses, products, services
or technologies. The risks we may face when acquiring or investing in
complementary businesses include:
o difficulties with the integration and assimilation of the acquired
business;
o diversion of our management team's attention from other business
concerns;
o availability of favorable acquisition or investment financing; and
o loss of key employees of any acquired business.
Acquisitions or investments may require us to expend significant amounts of
cash, which would result in our inability to use those funds for other business
purposes. Additionally, if we fund acquisitions through further issuances of our
common stock, our shareholders' holdings in us may be diluted, which may
adversely affect the market price of our stock. Amortization of goodwill and
other intangible assets related to potential acquisitions may reduce our overall
earnings, which in turn could negatively affect the price of our common stock.
These difficulties may adversely affect our business plan and may have a
material adverse impact on our business.
RISKS RELATED TO OUR INDUSTRY
WE DEPEND ON THE WIDESPREAD ACCEPTANCE AND GROWTH OF THE INTERNET. IF THE
INTERNET DOES NOT GROW AS PROJECTED, WE WILL BE UNABLE TO ATTRACT CLIENTS FOR
OUR INTERNET-BASED MARKETING RESEARCH.
We rely on the Internet for the critical aspects of our business, including
the recruitment of our online panelists. If Internet usage declines or grows at
a significantly slower rate than currently projected, we may be unable to
attract additional online panelists or clients for our Internet-based marketing
research products and services. This may have a material adverse impact on our
business.
FUTURE GOVERNMENT REGULATION COULD LIMIT OUR INTERNET ACTIVITIES OR RESULT IN
ADDITIONAL COSTS OF DOING BUSINESS AND CONDUCTING MARKETING RESEARCH ON THE
INTERNET.
There are currently few laws or regulations that specifically regulate
communications over the Internet. However, we expect more stringent laws and
regulations to be enacted both domestically and internationally in the near
future due to the increasing popularity and use of the Internet. Any new
legislation or regulations or the application of existing laws and regulations
to the Internet could limit our effectiveness in conducting Internet-based
marketing research and increase our operating expenses. In addition, the
application of existing laws to the Internet could expose us to substantial
liability for which we might not be indemnified by content providers or other
third parties. Existing laws and regulations currently address, and new laws and
regulations and industry self-regulatory initiatives are likely to address, a
variety of issues that could have a direct impact on our business, including:
o user privacy and expression;
o the rights and safety of children;
o intellectual property;
o information security;
o anticompetitive practices;
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o the convergence of offline channels with Internet commerce;
o taxation and pricing; and
o the characteristics and quality of products and services.
Those current laws that explicitly apply to the Internet have not yet been
interpreted by the U.S. courts, and their applicability and scope are not yet
defined. Any new laws or regulations relating to the Internet could have an
impact on the growth of the Internet and, as a result, may adversely affect our
business.
The Internet Tax Freedom Act prohibits states or political subdivisions
from imposing taxes on Internet access, unless imposed and enforced prior to
October 1, 1998 and multiple or discriminatory taxes on electronic commerce
during the period beginning October 1, 1998 and ending October 21, 2001. If the
current moratorium on the application of these taxes is not extended beyond
October 21, 2001, states may impose discriminatory, multiple or special taxes on
users of the Internet. If the moratorium ends, federal taxes may also be imposed
on electronic commerce. Any new taxes on Internet access and electronic commerce
may adversely affect our business.
WE ARE SUSCEPTIBLE TO BREACHES OF DATABASE SECURITY AND DENIAL OF SERVICE
ATTACKS.
Despite measures taken by us to increase security, our infrastructure is
potentially vulnerable to physical or electronic break-ins. A party who is able
to circumvent our security measures could misappropriate the personal
information of our online panelists or interrupt our operations. As a result, we
may be required to expend capital and other resources to protect against the
threat of security breaches or to alleviate problems caused by these breaches.
These increased expenditures could have a material adverse effect on our
business, results of operations and financial condition. In addition, security
breaches that result in access to the confidential information of our online
panelists or clients could damage our reputation and expose us to risk of loss
or liability.
Our computer systems are susceptible to planned overloads, commonly
referred to as denial of service attacks. By designing software applications
that trigger simultaneous overload traffic directed at a single website,
intruders have recently been able to temporarily impair the websites of
companies with more mature infrastructure systems than our own. If we become the
target of similar attacks, our websites could be temporarily disabled and our
business may suffer.
SECURITY CONCERNS COULD HINDER INTERNET COMMUNICATIONS AND OUR ABILITY TO OBTAIN
SUFFICIENT AND RELIABLE RESPONSES FROM OUR ONLINE PANELISTS.
The need to transmit confidential information securely has been a
significant barrier to communications over the Internet in the past. Security
concerns could cause some of our online panelists to reduce their participation
levels, provide inaccurate responses or terminate their membership in our online
panels. Breaches in confidentiality, or perceived breaches in confidentiality,
could adversely affect the commercial viability of our research and harm our
credibility with our current clients and online panelists. If our clients become
dissatisfied with our services, they may stop using our products and services,
and our reputation could be damaged. A loss of online panelists or a loss of
clients could hurt our efforts to generate revenues.
LIABILITY FOR THE UNAUTHORIZED USE OF THE PERSONAL INFORMATION OF OUR ONLINE
PANELISTS COULD BE COSTLY.
Liability claims could be initiated against us by our online panelists for
misuse of the personal information they provide to us. While we attempt to keep
the identity of, and information regarding, our online panelists strictly
confidential, we cannot assure you that intruders will not gain access to this
information. If a person circumvents the security measures imposed by us, that
person could misappropriate proprietary information and use it for unauthorized
purposes. Any claims resulting from the unauthorized use of information
concerning our online panelists could expose us to a risk of loss or result in
costly litigation. In addition, the Federal Trade Commission and state agencies
have recently been investigating various Internet companies regarding their use
of personal information. We could incur additional costs and expenses if new
regulations regarding the use of personal information are introduced or if our
privacy practices are investigated.
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IF WE ARE UNABLE TO ACHIEVE INTERNATIONAL GROWTH OF OUR ONLINE PANELS, OR IF WE
ARE UNABLE TO OVERCOME OTHER RISKS OF INTERNATIONAL OPERATIONS, WE WILL BE
UNABLE TO CONDUCT BUSINESS ON AN INTERNATIONAL LEVEL.
Our growth plans may include operations outside of the U.S. If we are
required to expand our business and panels to operate on an international level,
we could face the following risks:
o More restrictive privacy laws;
o Unexpected changes in regulatory requirements;
o Export controls relating to encryption technology;
o Lower penetration of Internet use internationally;
o Currency exchange fluctuations;
o Problems in collecting accounts receivable and longer collection periods;
o Potential adverse tax consequences;
o Political instability; and
o Internet access restrictions.
In addition, if we attempt to expand our international operations, we may
encounter more restrictive regulations and laws in Europe and elsewhere,
particularly laws related to privacy rights. These laws could inhibit our
ability to expand our online panels in a particular country or region. If we
expand internationally, we will experience some or all of these risks, which may
have a material adverse effect on our business, results of operations and
financial condition.
RISKS RELATED TO THIS OFFERING
THE PRICE OF OUR COMMON STOCK IS LIKELY TO BE VOLATILE AND SUBJECT TO WIDE
FLUCTUATIONS.
The trading prices of many Internet companies have been highly volatile.
The market price of our common stock may also be subject to wide fluctuations.
If our revenues do not grow, or grow more slowly than we anticipate, or if
operating or capital expenditures exceed our expectations and cannot be adjusted
accordingly, the market price of our common stock may decline.
In addition, if the market for Internet-related stocks or the stock market
in general experiences a loss in investor confidence or otherwise falls, the
market price of our common stock may fall for reasons unrelated to our business,
results of operations or financial condition. As a result, investors might be
unable to resell their shares of our common stock at or above the offering
price. In the past, some companies that have experienced volatility in the
market price of their stock have been the subject of securities class action
litigation. If we were to become the subject of a class action litigation, we
could incur substantial costs and our management team's attention and resources
could be diverted from our business.
OUR STOCK PRICE MAY DECLINE IF A LARGE NUMBER OF SHARES ARE SOLD AFTER THE
OFFERING OR THERE IS A PERCEPTION THAT THESE SALES MAY OCCUR.
Following this offering, we will have a large number of shares of common
stock outstanding and available for resale beginning at various points in time.
The market price of our common stock could decline as a result of sales of a
large number of shares of our common stock in the open market following this
offering, or the perception that these sales could occur. After the effective
date of the offering:
o no shares of common stock will be eligible for sale immediately, in
addition to the shares of common stock to be sold in this
offering;
o 111,000 shares of common stock purchased pursuant to options issued under
our stock option plans, not subject to lock-up restrictions, will be
eligible for sale beginning 90 days after the effective date of this
offering;
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o shares of common stock, constituting more than times the
number of shares to be issued in this offering, will be eligible for sale
beginning 181 days after the effective date of the offering; and
o shares of common stock to be issued upon exercise of currently
outstanding options and warrants.
The sale of these shares, or the perception that these shares may be sold
in the relatively near future, might make it difficult for us to sell equity
securities in the future. See "Shares Eligible for Future Sale."
YOU WILL INCUR IMMEDIATE AND SUBSTANTIAL DILUTION IN THE PRO FORMA AS ADJUSTED
NET TANGIBLE BOOK VALUE OF THE STOCK YOU PURCHASE.
We estimate that the initial public offering price of our common stock will
be $ per share. This amount is substantially higher than the pro forma as
adjusted net tangible book value, assuming exercise of the over-allotment in
full by the underwriters of $ per share that our outstanding common stock
will have immediately after this offering. Accordingly, if you purchase shares
of our common stock at its assumed initial public offering price, you will incur
immediate and substantial dilution of $ per share. If the holders of
outstanding options or warrants exercise those options or warrants, you will
suffer further dilution.
In addition, the issuance or exercise of additional options or warrants to
purchase our common stock could be dilutive to purchasers of shares in this
offering. The table below shows the number of outstanding options and warrants,
including reserved but unissued options, as of March 13, 2000. For more
information on the options, see "Description of Capital Stock--General" and, for
more information on the warrants, see "Description of Capital Stock--Warrants
and Other Rights."
<TABLE>
<CAPTION>
NUMBER OF SHARES UNDERLYING OUTSTANDING OPTIONS
AND/OR WARRANTS PLUS NUMBER OF
PLAN OR GROUP RESERVED BUT UNISSUED OPTIONS AND/OR SHARES
- ------------------------------------------------------------------ -----------------------------------------------
<S> <C>
1999 Stock Option Plan............................................ 4,903,050
2000 Directors Stock Option Plan.................................. 150,000
2000 Employee Stock Purchase Plan................................. 200,000
Warrants.......................................................... 307,668
</TABLE>
ANTITAKEOVER PROVISIONS IN OUR CHARTER DOCUMENTS AND DELAWARE LAW MIGHT DELAY OR
PREVENT TENDER OFFERS OR TAKEOVER ATTEMPTS, WHICH COULD ADVERSELY AFFECT OUR
STOCK PRICE.
Our restated certificate of incorporation provides for the division of our
board of directors into three classes and provides our board of directors with
the power to issue shares of preferred stock without stockholder approval. The
holders of this preferred stock could have voting rights, including voting
rights that could be superior to those holders of our common stock. Our board of
directors has the power to determine these voting rights. In addition, as a
Delaware corporation, we will be required to comply with Section 203 of the
Delaware General Corporation Law. In general, this law prevents a person who
becomes the owner of 15% or more of our outstanding voting stock from engaging
in specified business combinations for those years in which specified conditions
are satisfied. The effect of these provisions in our restated certificate of
incorporation and of Delaware law could discourage or prevent third parties from
seeking to obtain control of us, including transactions in which the holders of
common stock might receive a premium for their shares over prevailing market
prices.
OUR DIRECTORS, EXECUTIVE OFFICERS, KEY PERSONNEL, MEMBERS OF THEIR FAMILIES AND
ENTITIES AFFILIATED WITH THEM HAVE SIGNIFICANT CONTROL OVER OUR MANAGEMENT AND
AFFAIRS.
Our directors, executive officers, members of their families and entities
affiliated with them will, in the aggregate, beneficially own approximately
% of our common stock following the completion of this offering, or
approximately % of our common stock in the event that the underwriters'
over-allotment option is exercised in full. As a result, these stockholders will
be able to exercise control over all matters requiring approval by our
stockholders, including the election of directors and approval of mergers,
consolidations, sales of assets, recapitalizations and amendments to our
restated certificate of incorporation. These shareholders may take actions with
which you do not agree, including actions that delay, defer or
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prevent a change of control and could adversely affect the price investors might
be willing to pay in the future for our common stock.
BECAUSE AN ACTIVE TRADING MARKET FOR OUR COMMON STOCK MAY NOT DEVELOP AFTER THIS
OFFERING, IT MAY BE DIFFICULT FOR YOU TO SELL YOUR SHARES.
There was no public market for our common stock before this offering. We do
not know the extent to which investor interest will lead to the development of a
trading market or how liquid that market might be. If an active and liquid
trading market does not develop for our common stock, you may have difficulty
selling your shares.
WE HAVE DISCRETION AS TO THE USE OF PROCEEDS FROM THIS OFFERING AND MAY NOT USE
THESE IN A MANNER STOCKHOLDERS WOULD PREFER.
Other than the repayment of some of our corporate debt, we have not
identified specific uses for all of the proceeds from this offering, and our
management will have broad discretion in how we use them. In addition, we are
unable to determine how much of the proceeds will be used for any identified
purpose because circumstances regarding our planned use of the proceeds may
change. You will not have the opportunity to evaluate the economic, financial or
other information on which we base our decisions on how to use the proceeds. The
failure of our management to apply these funds effectively may have a material
adverse effect on our business and financial performance.
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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements based on our current
expectations, assumptions, estimates and projections about our business and our
industry that address, among other things:
o our ability to attract and retain experienced research professionals;
o the acceptance of Internet-based marketing research by existing and
potential clients;
o our ability to expand our Internet panels both domestically and
internationally;
o our ability to market our products and services;
o our ability to establish strategic relationships;
o our ability to continue to develop and improve our technology
infrastructure; and
o significant increases in competitive pressures in the marketing research
industry.
These forward-looking statements may be found in the sections of this
prospectus entitled "Prospectus Summary," "Risk Factors," "Use of Proceeds,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Business" and in this prospectus generally. When used in this
prospectus, the words "expects," "anticipates," "intends," "plans," "believes,"
"seeks" and "estimates" and similar expressions are generally intended to
identify forward-looking statements. These forward-looking statements involve
risks and uncertainties. Our actual results could differ materially from those
anticipated in these forward-looking statements as a result of many factors, as
more fully described in the "Risk Factors" section and elsewhere in this
prospectus.
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USE OF PROCEEDS
Our net proceeds, after deducting the estimated underwriting discounts and
commissions and offering expenses, from the sale of the shares of
common stock at the assumed public offering price of $ per share are
estimated to be $ million, or $ million if the underwriters' over-
allotment option is exercised in full. We intend to use the net proceeds of this
offering to repay outstanding loans and for general corporate purposes and
working capital. As of the date of this prospectus, we have no specific plans to
use the net proceeds from this offering other than as set forth below.
We intend to use the proceeds from this offering to repay:
o a $14.1 million loan to us from Greenfield Holdings, with an initial
interest rate of 7.5% from May 17, 1999 through May 17, 2001. This loan
has an original maturity date of May 17, 2009;
o a $6.0 million credit facility provided to us by Greyrock Capital, a
division of Banc of America Commercial Finance Corporation, with an
interest rate of the highest LIBOR rate in effect during each month plus
5.0%, provided that the interest rate in effect in each month shall not
be less than 8.0% per year. This facility has an original maturity date
of March 31, 2001, but can be renewed;
o a $2.5 million promissory note payable to us from Greenfield Holdings,
with an interest rate of 10.0%. This note has an original maturity date
of June 30, 2001.
The remaining $ million of the net proceeds will be used for
general corporate and working capital purposes to fund our expansion plans.
Pending our use of the net proceeds of this offering, we intend to invest
the net proceeds in short-term, interest-bearing, investment-grade securities.
DIVIDEND POLICY
We have never declared or paid any cash dividends on our capital stock or
other securities. We anticipate that we will retain all of our future earnings
for use in the expansion and operation of our business and do not anticipate
paying cash dividends in the foreseeable future. Any future determination as to
the payment of dividends will be at our board of directors' discretion and will
depend on our financial condition, operating results, current and anticipated
cash needs, plans for expansion and other factors that our board of directors
considers to be relevant.
18
<PAGE>
CAPITALIZATION
The following table sets forth our capitalization as of December 31, 1999.
Our capitalization is presented on an actual basis, unaudited pro forma basis
and unaudited pro forma as adjusted basis.
The unaudited pro forma information reflects the following as though the
transactions occurred as of December 31, 1999:
o Issuance of a promissory note payable to Greenfield Holdings dated
March 3, 2000, for cash consideration of $2.5 million;
o Issuance of 645,338 shares of our class A common stock to private
investors in March 2000 for cash consideration of $5.4 million; and
o Advance of $2.0 million under the revolving credit facility with Greyrock
Capital dated December 3, 1999.
The unaudited pro forma as adjusted information adjusts the unaudited pro
forma information to reflect the following transactions as though they occurred
as of December 31, 1999:
o Reclassification of our class A and class B common stock into a single
class of common stock and an increase in the common shares authorized to
100,000,000 shares;
o Exercise of warrants to purchase 307,668 shares of common stock at an
exercise price of $3.575 per share; and
o The sale of shares of common stock at an initial public offering price
of $ per share in this offering, after deducting underwriting
discounts and commissions and estimated offering expenses, and the
application of the estimated net proceeds. See "Use of Proceeds."
You should read this information together with the sections of this
prospectus entitled "Selected Financial Data" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the financial
statements and related notes appearing elsewhere in this prospectus.
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1999
--------------------------------------------
PRO FORMA
ACTUAL PRO FORMA AS ADJUSTED
----------- ------------ -------------
(IN THOUSANDS)
<S> <C> <C> <C>
Cash and cash equivalents.......................................... $ 1,708,738 $ 11,610,217
----------- ------------
----------- ------------
Term loan, net..................................................... $ 3,119,325 $ 5,119,325
Notes payable to stockholder, net.................................. 13,879,794 16,379,794
----------- ------------
16,999,119 21,499,119
----------- ------------
Stockholders' equity:
Common stock--Class A, $.01 par value--45,000,000 shares authorized
and issued and 3,801,500 shares outstanding, actual; 45,000,000
shares authorized and issued and 4,446,838 shares outstanding,
pro forma........................................................ 450,000 450,000
Common stock--Class B, $.01 par value--45,000,000 shares authorized
and 21,855,150 shares issued and outstanding, actual; 45,000,000
shares authorized and 21,855,150 shares issued and outstanding,
pro forma........................................................ 218,552 218,552
Additional paid-in-capital......................................... 37,880,231 43,019,990
Class A treasury stock, at cost--41,198,500 shares, actual;
40,553,162 shares, pro forma..................................... (16,708,292) (16,446,572)
Notes receivable from stockholders................................. (500,088) (500,088)
Unearned stock-based compensation.................................. (7,229,767) (7,229,767)
Accumulated deficit................................................ (13,787,921) (13,787,921)
----------- ------------
Total stockholders' equity......................................... 322,715 5,724,194
----------- ------------
Total capitalization, including borrowings....................... $17,321,834 $ 27,223,313
----------- ------------
----------- ------------
</TABLE>
19
<PAGE>
- ------------------
The outstanding share information in the table above excludes:
o an aggregate of 2,857,850 shares issuable upon exercise of outstanding
stock options under our 1999 Stock Option Plan at a weighted average
exercise price of $1.02 per share, of which 2,468,550 shares were
issuable upon the exercise of options issued as of December 31, 1999, at
a weighted average exercise price per share of $0.40 and 402,300 shares
were issuable upon the exercise of options issued subsequent to
December 31, 1999, at a weighted average exercise price per share of
$4.77;
o 2,045,200 shares of common stock available for future grants under our
1999 Stock Option Plan, of which 2,434,500 shares were available for
future grants as of December 31, 1999;
o 150,000 shares of common stock available for future grants under our 2000
Directors Stock Option Plan, of which no shares were available for future
grants as of December 31, 1999; and
o 200,000 shares of common stock available for future issuance under our
2000 Employee Stock Purchase Plan, of which no shares were available for
future grants as of December 31, 1999.
20
<PAGE>
DILUTION
As of December 31, 1999, our historical net tangible book value was
approximately $ million or $ per share of common stock. Net tangible
book value represents total tangible assets less total liabilities divided by
the number of all shares of common stock outstanding at that date. After giving
effect to our receipt of the net proceeds of $ million from the sale
of the shares of common stock in this offering at the assumed public
offering price of $ per share and application of estimated net proceeds of
$ million from this sale after deducting the underwriters' discounts and
commissions and estimated offering expenses, the net tangible book value at
December 31, 1999, would have been approximately $ million or $ per
share. This represents an immediate increase in net tangible book value of
$ per share to existing shareholders and an immediate dilution of $
per share to new investors purchasing shares of common stock in this offering.
The following table illustrates this per share dilution:
<TABLE>
<S> <C>
Assumed initial public offering price per share......................................... $
Pro forma net tangible book value per share as of December 31, 1999.....................
Increase per share attributable to new investors........................................
Pro forma as adjusted net tangible book value per share after giving effect to this
offering..............................................................................
------------
Dilution in pro forma net tangible book value per share to new investors................ $
------------
------------
</TABLE>
If the underwriters' over-allotment option is exercised in full, our pro
forma as adjusted net tangible book value at December 31, 1999, would have been
approximately $ per share, representing an immediate increase in net tangible
book value of $ to existing shareholders and an immediate dilution in net
tangible book value of $ per share to new investors.
The following table summarizes, on a pro forma basis, as of December 31,
1999, the differences between the number and percentage of shares of common
stock issued to our existing shareholders and new investors purchasing shares of
common stock in this offering, as well as the aggregate consideration and the
average price per share paid by them:
<TABLE>
<CAPTION>
TOTAL
SHARES PURCHASED CONSIDERATION AVERAGE
------------------ ------------------ PRICE PER
NUMBER PERCENT AMOUNT PERCENT SHARE
------- ------- ------- ------- ---------
<S> <C> <C> <C> <C> <C>
Existing shareholders............................... % $ % $
New investors.......................................
------- --- ------- ---
Total............................................... 100% $ 100%
------- --- ------- ---
------- --- ------- ---
</TABLE>
If the underwriters' over-allotment option is exercised in full, the
following will occur:
o The percentage of the total number of shares of common stock held by
existing shareholders will decrease to % after the offering;
and
o The number of shares held by new investors will increase to
or approximately % of the total number of shares of our
common stock outstanding after the offering.
The outstanding share information in the table above excludes:
o an aggregate of 2,857,850 shares issuable upon exercise of
outstanding stock options under our 1999 Stock Option Plan at a
weighted average exercise price of $1.02 per share;
o 2,045,200 shares of common stock available for future grants under
our 1999 Stock Option Plan;
o 150,000 shares of common stock available for future grants under our
2000 Directors Stock Option Plan; and
o 200,000 shares of common stock available for future issuance under
our 2000 Employee Stock Purchase Plan.
21
<PAGE>
SELECTED FINANCIAL DATA
The following selected financial data should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the financial statements and related notes, which are included
elsewhere in this prospectus. The selected statement of operations data for each
of years ended December 31, 1997 and 1998 and for the periods from January 1,
1999 through May 16, 1999 and from May 17, 1999 through December 31, 1999 and
the selected balance sheet data as of December 31, 1998 and 1999 are derived
from our audited financial statements, which are included elsewhere in this
prospectus. The selected balance sheet data as of December 31, 1997 is derived
from audited financial statements not included in this prospectus. The statement
of operations data for the years ended December 31, 1995 and 1996 and the
balance sheet data as of December 31, 1995 and 1996 are derived from unaudited
financial statements prepared by management and includes, in the opinion of
management, all adjustments necessary for the fair presentation of our financial
position and results of operations.
The selected financial data below include unaudited pro forma statement of
operations data for the full year ended December 31, 1999. The unaudited pro
forma statement of operations data for the year ended December 31, 1999 were
derived from unaudited financial statements prepared by management and give
effect to the management buyout of our company as if it had occurred on
January 1, 1999. The selected financial data for the years ended December 31,
1995, 1996, 1997 and 1998 and the period from January 1, 1999 through May 16,
1999 reflect the result of operations and balance sheet data of the predecessor.
The selected financial data for the period from May 17, 1999 through
December 31, 1999 reflect the results of operations and balance sheet data of
the successor. Because the selected financial data of the successor are not
directly comparable to those of the predecessor, a dark bar has been inserted in
the accompanying table to clearly separate the financial position and results of
operations before and after the change in control. The historical results below
are not necessarily indicative of future results. Amounts included below are in
thousands, except per share data.
<TABLE>
<CAPTION>
PREDECESSOR SUCCESSOR
-------------------------------------------------------- ---------------------------
PRO FORMA
YEAR ENDED DECEMBER 31, JANUARY 1 MAY 17 YEAR
-------------------------------------------- THROUGH THROUGH ENDED
MAY 16, DECEMBER 31, DECEMBER 31,
1995 1996 1997 1998 1999 1999 1999
----------- ----------- ------- ------- --------- ------------ ------------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
STATEMENT OF OPERATIONS DATA:
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues:............................... $ -- $ 645 $ 1,203 $ 2,791 $ 1,734 $ 5,558 $ 7,291
Cost of revenues...................... -- 177 521 1,251 702 2,517 3,219
------- ------- ------- ------- ------- -------- --------
Gross profit.......................... -- 468 682 1,540 1,032 3,041 4,072
Operating expenses:
Selling, general and administrative
expenses............................ 1 451 1,293 3,262 5,244 6,822 12,066
Depreciation and amortization......... -- 4 85 322 156 3,844 7,344
Research and development.............. -- 68 143 223 186 792 979
Panel acquisition expenses............ -- 67 61 63 27 112 139
Stock-based compensation expense(1)... -- -- -- -- -- 5,183 7,767
------- ------- ------- ------- ------- -------- --------
Total operating expenses............ 1 590 1,582 3,870 5,613 16,753 28,295
------- ------- ------- ------- ------- -------- --------
Operating loss...................... (1) (122) (900) (2,330) (4,581) (13,712) (24,223)
Interest expense, net................... -- (4) (16) (115) (50) (1,017) (1,536)
------- ------- ------- ------- ------- -------- --------
Loss before income taxes............ (1) (126) (916) (2,445) (4,631) (14,729) (25,759)
Income tax benefit...................... -- -- -- -- -- 940 940
------- ------- ------- ------- ------- -------- --------
Net loss................................ $ (1) $ (126) $ (916) $(2,445) $(4,631) $(13,789) $(24,819)
------- ------- ------- ------- ------- -------- --------
------- ------- ------- ------- ------- -------- --------
Basic and diluted net loss per share.... $ -- $ -- $ (0.02) $ (0.05) $ (0.10) $ (0.56) $ (1.01)
------- ------- ------- ------- ------- -------- --------
------- ------- ------- ------- ------- -------- --------
Weighted average shares outstanding--
basic and diluted..................... 45,000 45,000 45,000 45,000 45,000 24,707 24,563
------- ------- ------- ------- ------- -------- --------
------- ------- ------- ------- ------- -------- --------
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
PREDECESSOR
-----------------------------------
SUCCESSOR
AS OF DECEMBER 31, ------------------
----------------------------------- AS OF DECEMBER 31,
1995 1996 1997 1998 1999
---- ----- ------- ------- ------------------
BALANCE SHEET DATA:
<S> <C> <C> <C> <C> <C>
Cash and cash equivalents.................................... $1 $ 30 $ 148 $ 114 $ 1,709
Working capital (deficiency)................................. -- (397) (1,650) (4,452) (1,200)
Total assets................................................. 1 210 809 1,692 23,353
Long-term liabilities........................................ -- -- -- 90 17,360
Total stockholders' equity (deficit)......................... $1 $(381) $(1,298) $(3,743) $ 323
</TABLE>
- ------------------
(1) Stock-based compensation expense of $5,183,000 for the period from May 17,
1999 through December 31, 1999 has been combined into one line item in the
statement of operations. Had the stock-based compensation expense been
allocated to the other line items of the statement of operations, it would
have increased the cost of revenues by $20,000, increased the selling,
general and administrative expenses by $4,514,000 and increased the research
and development expenses by $649,000.
23
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion of our financial condition and results of
operations should be read in conjunction with our financial statements and
related notes starting on page F-1 of this prospectus. This discussion contains
forward-looking statements that involve risks and uncertainties. Our actual
results could differ materially from those anticipated in these forward-looking
statements as a result of the factors discussed in "Risk Factors" starting on
page 6 of this prospectus.
OVERVIEW
We are a leading provider of Internet-enabled marketing research using our
proprietary technologies. Businesses use marketing research to decide what
products and services to offer and the best ways to advertise, promote and
distribute those products and services. Marketing researchers gather information
from consumers using survey methods and compile and interpret the information to
deliver research results to clients. We have developed proprietary automated
methodologies using the Internet by which surveys are created and distributed to
our voluntary community of online survey panelists and by which survey results
are captured and compiled. Our marketing research professionals work closely
with our clients to create surveys customized to meet each client's information
needs. In addition, we have developed products and services that provide
self-directed research capabilities, allowing clients to create and distribute
their own online surveys. Further, we offer online focus groups and online
brainstorming, as well as syndicated, multi-client products sold on a
subscription or per-study basis.
We were founded in 1994 as a business unit of Greenfield Consulting Group,
Inc., specifically to develop technologies and methodologies that use the
Internet to perform marketing research. We were incorporated in 1995 and
reorganized on May 17, 1999, as a result of a management buyout. Our principal
service is custom marketing research. We derived a majority of our revenues
during the year ended December 31, 1999 from custom marketing research. We also
provide syndicated marketing research and launched our self-directed Internet
survey service, QuickTake.com, in February 2000. While we expect custom
marketing research to continue to provide the majority of our revenues in
ensuing years, we expect our syndicated and self-directed research to become an
increasing portion of our revenue mix.
MANAGEMENT BUYOUT
On May 17, 1999, our management team and a group of new investors executed
a management buyout in which approximately 97% of our outstanding common stock
was acquired by Greenfield Holdings, LLC, a company formed specifically to
effect the buyout, and certain other investors.
As a result of the management buyout, a change in control occurred, and a
new reporting entity was established. For purposes of presentation and
disclosure, we refer to ourselves as the predecessor as of and for all periods
up to the point of the management buyout and as the successor as of and for all
periods thereafter.
SOURCES OF REVENUES AND REVENUE RECOGNITION POLICY
We generate revenues from the performance and delivery of custom and
proprietary marketing research products and services, from syndicated marketing
research and from sales of self-directed surveys.
We recognize revenues from custom marketing research in the period in which
the product is delivered. Our custom research results are compiled as reports or
studies and are delivered within a short period, generally ranging from a few
days to eight weeks. Our syndicated marketing research is sold on a subscription
basis for periods of up to one year or on a per-study basis. We recognize
revenues from syndicated marketing research ratably over the term of the related
subscription as services are provided. Invoices billed prior to performance of
services, as well as customer advances, are recorded as deferred project
revenues.
Prior to 1999, our revenues were derived from a small client base.
Expansion of our client base has reduced this concentration. For the year ended
December 31, 1997, 18% and 15% of our revenues were from
24
<PAGE>
two customers, respectively, and, for the year ended December 31, 1998, 13% of
our revenues was from one customer. For the periods from January 1, 1999 through
May 16, 1999 and from May 17, 1999 through December 31, 1999, no single customer
represented greater than 10% of our revenues. Provisions for estimated contract
losses, if any, are also included as a variable project cost and are recognized
in the period such losses are determined.
COST OF REVENUES
Our cost of revenues represents project costs and associated direct labor.
Direct labor costs consist primarily of salaries, wages, incentives and benefits
for personnel directly related to the projects. Project costs also include
incentives paid to participating survey respondents and fees associated with the
preparation of survey results.
OPERATING EXPENSES
Our operating expenses consist of selling, general and administrative
expenses, depreciation and amortization, research and development, panel
acquisition costs and stock-based compensation.
Our selling, general and administrative expenses consist primarily of
salaries and benefits paid to sales and marketing personnel and program
expenses, public relations, advertising and promotion costs, commissions and
other marketing expenses as well as payroll taxes, costs of information
technology administration, general corporate functions and occupancy costs.
Our depreciation and amortization consists of depreciation of fixed assets
and internal-use software and amortization of goodwill and intangible assets
recorded in connection with the management buyout.
Our research and development expenses are all associated with new product
development, training and maintenance. In addition, we expense the costs
associated with maintenance and upgrades of our current technologies as these
costs are incurred.
Our panel acquisition costs are incurred in conjunction with recruiting and
retaining Web-based panel participants through our proprietary recruiting
process and are expensed as incurred.
Stock-based compensation expense represents noncash charges related to the
issuance of stock options and notes receivable to stockholders collateralized by
our stock. At December 31, 1999, we had unearned stock compensation charges of
$7,229,767 included in our balance sheet. These deferred charges represent
compensation expenses that will be recognized over the remaining vesting period
of the related options.
INTEREST EXPENSE, NET
Interest expense, net consists of interest expense on borrowings, net of
interest income.
INCOME TAX PROVISION (BENEFIT)
Our income tax provision (benefit) consists of a deferred tax benefit
arising from the net operating loss carryforwards of the company that eliminated
a net deferred tax liability established at the date of the management buyout.
Prior to the management buyout, we were an S corporation for tax purposes and
had no tax provision or benefit at the corporate level.
25
<PAGE>
RESULTS OF OPERATIONS
The following table sets forth a statement of operations data for the
periods indicated as a percentage of revenues:
<TABLE>
<CAPTION>
SUCCESSOR
----------------------------
PREDECESSOR PRO
-------------------------------------------- FORMA
YEAR YEAR JANUARY 1 MAY 17 YEAR
ENDED ENDED THROUGH THROUGH ENDED
DECEMBER 31, DECEMBER 31, MAY 16, DECEMBER 31, DECEMBER 31,
1997 1998 1999 1999 1999
------------ ------------ ---------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Revenues............................. 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of revenues..................... 43.3 44.8 40.5 45.3 44.1
------ ------ ------ -------- ------
Gross margin......................... 56.7 55.2 59.5 54.7 55.9
Selling, general and administrative
expenses........................... 107.5 116.9 302.5 122.8 165.5
Depreciation and amortization........ 7.1 11.5 9.0 69.2 100.7
Research and development............. 11.9 8.0 10.7 14.3 13.4
Panel acquisition expenses........... 5.1 2.2 1.6 2.0 1.9
Stock-based compensation expenses.... -- -- -- 93.3 106.5
------ ------ ------ -------- ------
Total operating expenses............. 131.5 138.6 328.8 301.4 388.1
------ ------ ------ -------- ------
Operating loss....................... (74.9) (83.5) (264.3) (246.7) (332.2)
Interest expense, net................ (1.3) (4.1) (2.9) (18.3) (21.1)
Income tax benefit................... -- -- -- 16.9 12.9
------ ------ ------ -------- ------
Net loss............................. (76.2)% (87.6)% (267.1)% (248.1)% (340.4)%
------ ------ ------ -------- ------
------ ------ ------ -------- ------
</TABLE>
SUPPLEMENTAL COMPARISON OF PRO FORMA YEAR ENDED DECEMBER 31, 1999 UNAUDITED, AND
1998
REVENUES
Revenues for the pro forma year ended December 31, 1999 increased
$4,499,821, or 161.2%, to $7,291,185 from $2,791,364 for the year ended
December 31, 1998. This was primarily a result of the growth in the number and
size of custom research projects. This rapid growth reflects our relatively
early stage of development, the growing acceptance of Internet-based marketing
research and an increase in our number of sales and marketing personnel in the
later half of 1999. We expect to grow at a somewhat lower rate through 2000 as
acceptance of Internet-based marketing research continues, as we continue to add
sales and marketing personnel and as we increase advertising and marketing
activities.
COST OF REVENUES
Cost of revenues increased $1,968,050, or 157.3%, to $3,218,947 for the pro
forma year ended December 31, 1999, exclusive of stock-based compensation,
representing 44.1% of revenues. Cost of revenues for the year ended
December 31, 1998, was $1,250,897, representing 44.8% of revenues. The overall
increase in the cost of revenues was primarily due to the increased number of
custom research projects and the related project costs. The decline in the cost
of revenues as a percentage of revenues reflects a trend to larger projects with
higher pricing and the efficiencies of our proprietary technologies in
supporting these larger projects. We expect improvements in our cost of revenues
as a percentage of revenues through 2000.
26
<PAGE>
OPERATING EXPENSES
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased $8,803,111, or
269.8%, to $12,065,510 for the pro forma year ended December 31, 1999, exclusive
of stock-based compensation, representing 165.5% of revenues. For the year ended
December 31, 1998, selling, general and administrative expenses were $3,262,399,
representing 116.9% of revenues. The increase was primarily due to the payment
of management bonuses of approximately $3,260,000 in conjunction with the
management buyout effected in May 1999, which were recorded as selling, general
and administrative expenses. Other increases were due to the addition of
personnel, increased commissions and other expenses associated with our expanded
advertising, marketing and public relations campaign. Excluding the management
bonuses, selling, general and administrative expenses as a percentage of
revenues would have been comparable between 1999 and 1998.
Depreciation and Amortization
Depreciation and amortization increased $7,022,579 to $7,344,455 for the
pro forma year ended December 31, 1999, representing 100.7% of revenues. For the
year ended December 31, 1998, depreciation and amortization expenses was
$321,876, representing 11.5% of revenues. The increase was primarily due to
amortization of goodwill and intangible assets associated with the management
buyout, which accounted for 95.0% of depreciation and amortization expenses in
1999 and will continue through 2003. The increase was also a result of
depreciation related to further investments in property, equipment and
internal-use software.
Research and Development
Research and development expenses increased $755,317, or 338.4%, to
$978,550 for the pro forma year ended December 31, 1999, exclusive of
stock-based compensation, representing 13.4% of revenues. For the year ended
December 31, 1998, research and development expenses were $223,233, or 8.0% of
revenues. The overall increase in research and development expenses were
primarily attributable to increased spending on new product development,
maintenance, upgrades of current products and technology and research and
development conducted by outside consulting firms. We expect substantial
additional increases in research and development expenses both in absolute terms
and as a percentage of revenues through 2000 as we upgrade our software and
technology, develop new products and develop new technology directed toward
improving productivity.
Panel Acquisition Expenses
Panel acquisition expenses for the pro forma year ended December 31, 1999,
were $139,800, representing 1.9% of revenues. For the year ended December 31,
1998, panel acquisition expenses were $62,682, or 2.2% of revenues. The overall
increase in panel acquisition expenses was primarily due to our continued
investment in panel acquisition to support a higher number of survey requests,
due to the increase in custom research projects. The decrease in panel
acquisition expenses as a percentage of revenues is not expected to continue.
Panel acquisition as a percentage of sales will increase as we recruit larger
panels that support greater survey capacity.
Stock-Based Compensation
We recognized $7,766,576 of stock-based compensation for the pro forma year
ended December 31, 1999, representing 106.5% of revenues. For the year ended
December 31, 1998, there were no charges associated with stock-based
compensation expenses. The increase is attributable to the issuance of stock
options to employees and directors during the period from May 17, 1999 through
December 31, 1999, for which compensation expense was recorded, and the issuance
of two notes receivable from stockholders. These notes receivable are
nonrecourse notes collateralized by our common stock and are accounted for using
variable plan accounting.
27
<PAGE>
INTEREST EXPENSE, NET
Interest expense, net increased $1,421,549 to $1,536,329 for the pro forma
year ended December 31, 1999, representing 21.1% of revenues. Interest expense,
net was approximately $114,780 for the year ended December 31, 1998,
representing 4.1% of revenues. Interest expense, net increased primarily as a
result of the issuance of a note payable to our majority shareholder in the
principal amount of $14,136,452 in May 1999 and the increase in borrowings
associated with our new credit facility entered into in December 1999.
INCOME TAX PROVISION (BENEFIT)
Our income tax benefit of $940,452 for the pro forma year ended December
31, 1999, consists of a deferred tax benefit arising from our operating loss
carryforwards during the pro forma year. These net operating losses eliminated a
net deferred tax liability that was established in pushdown accounting at the
date of the management buyout. Prior to the management buyout, we were an
S corporation for tax purposes and had no tax provision or benefit at the
corporate level.
COMPARISON OF THE PERIOD FROM MAY 17, 1999 THROUGH DECEMBER 31, 1999 AND THE
YEAR ENDED DECEMBER 31, 1998
As a result of the management buyout, we include the following comparison
of the period from May 17, 1999 through December 31, 1999, which is
approximately 7 1/2 months, to the year ended December 31, 1998. Changes in
revenues and expenses shown in this comparison are partially attributable to the
periods containing different numbers of months.
REVENUES
Revenues for the period from May 17, 1999 through December 31, 1999
increased $2,766,101, or 99.1%, to $5,557,465 from $2,791,364 for the year ended
December 31, 1998. This increase was primarily a result of the growth in the
number and size of custom research projects. This growth reflects our relatively
early stage of development, the growing acceptance of Internet-based marketing
research during 1999 and an increase in our number of sales and marketing
personnel in the later half of 1999. We expect to grow at a somewhat lower rate
through 2000 as acceptance of Internet-based marketing research continues, as we
continue to add sales and marketing personnel and as we increase advertising and
marketing activities.
COST OF REVENUES
Cost of revenues increased $1,265,861, or 101.2%, to $2,516,758 for the
period from May 17, 1999 through December 31, 1999, exclusive of stock-based
compensation, representing 45.3% of total revenues. Cost of revenues for the
year ended December 31, 1998, was $1,250,897, representing 44.8% of total
revenues. The overall increase in the cost of revenues was primarily due to an
increased number of custom research projects and the related project costs. The
decline in the cost of revenues as a percentage of revenues reflects a trend to
larger projects with higher pricing and the efficiencies of our proprietary
technologies in supporting these larger projects. We expect continued
improvements in our cost of revenues as a percentage of revenues through 2000.
OPERATING EXPENSES
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased $3,559,300, or
109.1%, to $6,821,699 for the period from May 17, 1999 through December 31,
1999, exclusive of stock-based compensation, representing 122.8% of total
revenues for the year. For the year ended December 31, 1998, selling, general
and administrative expenses were $3,262,399, representing 116.9% of revenues.
The large increase was primarily due to payment of management bonuses of
approximately $3,260,000 in conjunction with the management buyout, which were
recorded as selling, general and administrative expenses. Other increases were
due to the addition of personnel, increased commissions and other expenses
associated with our expanded advertising,
28
<PAGE>
marketing and public relations campaign. Excluding the management bonuses,
selling, general and administrative expenses as a percentage of revenues would
have been comparable between 1999 and 1998.
Depreciation and Amortization
Depreciation and amortization increased $3,521,752 to $3,843,628 for the
period from May 17, 1999 through December 31, 1999, representing 69.2% of
revenues. For the year ended December 31, 1998, depreciation and amortization
expenses were $321,876, representing 11.5% of revenues. The increase was
primarily due to amortization of goodwill and intangible assets associated with
the management buyout, which accounted for 87.0% of depreciation and
amortization expense in 1999 and will continue through 2003. The increase was
also a result of depreciation related to further investments in property,
equipment and internal-use software.
Research and Development
Research and development increased $569,035, or 254.9%, to $792,268 for the
period from May 17, 1999 through December 31, 1999, exclusive of stock-based
compensation, representing 14.3% of revenues. For the year ended December 31,
1998, research and development was $223,233, or 8.0% of revenues. The overall
increase in research and development expenses were primarily attributable to
increased spending on new product development, maintenance upgrades of current
products and technology and research and development conducted by outside
consulting firms. We expect additional increases in research and development
expenses as a percentage of revenues through 2000 as we upgrade our software and
technology, develop new products and develop new technology directed toward
improving productivity.
Panel Acquisition Expenses
Panel acquisition expenses increased $49,849, or 79.5%, to $112,531 for the
period from May 17, 1999 through December 31, 1999, representing 2.0% of
revenues. For the year ended December 31, 1998, panel acquisition expenses were
$62,682, or 2.2% of revenues. The overall increase in panel acquisition expenses
was primarily due to our continued investment in panel acquisition to support a
higher number of survey requests, due to the increase in custom research
projects. The decrease in panel acquisition expenses as a percentage of revenues
is not expected to continue. Panel acquisition as a percentage of revenues will
increase as we recruit larger panels that support greater survey capacity.
Stock-Based Compensation
We recognized $5,182,715 of stock-based compensation for the period from
May 17, 1999 through December 31, 1999, representing 93.3% of revenues. For the
year ended December 31, 1998, there were no charges associated with stock-based
compensation expenses. The increase is attributable to the issuance of stock
options to employees and directors during the period from May 17, 1999 through
December 31, 1999, with exercise prices below estimated fair value and the
issuance of two notes receivable from stockholders. These notes receivable are
collateralized by our common stock and are accounted for using variable plan
accounting.
INTEREST EXPENSE, NET
Interest expense, net increased $901,459 to $1,016,239 for the period from
May 17, 1999 through December 31, 1999, representing 18.3% of revenues. Interest
expense, net approximately $114,780 for the year ended December 31, 1998,
representing 4.1% of revenues. Interest expense, net increased primarily as a
result of the issuance of a note payable to our majority shareholder in the
amount of $14,136,452 in May 1999 and the increase in borrowings associated with
our credit facility entered into in December 1999.
INCOME TAX PROVISION (BENEFIT)
Our income tax benefit of $940,452 for the period from May 17, 1999 through
December 31, 1999, consists of a deferred tax benefit arising from the net
operating loss carryforwards of the company during the year. These net operating
losses eliminated a net deferred tax liability that was established in pushdown
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accounting at the date of the management buyout. Prior to the management buyout,
we were an S corporation for tax purposes and had no tax provision or benefit at
the corporate level.
COMPARISON OF THE YEARS ENDED DECEMBER 31, 1998 AND 1997
REVENUES
Revenues for the year ended December 31, 1998, increased $1,588,312, or
132.0%, to $2,791,364 from $1,203,052 for the year ended December 31, 1997. This
was primarily a result of the growth in the number and size of our custom
research projects.
COST OF REVENUES
Cost of revenues increased $729,639, or 140.0%, to $1,250,897 for the year
ended December 31, 1998, representing 44.8% of revenues. Cost of revenues for
the year ended December 31, 1997, were $521,258, representing 43.3% of revenues.
The overall increase in the cost of revenues was primarily due to an increased
number of custom research projects and the related project expenses.
OPERATING EXPENSES
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased $1,969,603, or
152.4%, to $3,262,399 for the year ended December 31, 1998, representing 116.9%
of revenues. For the year ended December 31, 1997, selling, general and
administrative expenses were $1,292,796, representing 107.5% of revenues. The
spending increases were due to the addition of personnel, increased commissions
and other expenses associated with our expanding advertising, marketing and
public relations campaigns.
Depreciation and Amortization
Depreciation and amortization increased $236,912 to $321,876 for the year
ended December 31, 1998, representing 11.5% of revenues. For the year ended
December 31, 1997, depreciation and amortization expense was $84,964,
representing 7.1% of revenues. The increase was primarily due to the
depreciation related to further investments in property, equipment and
internal-use software.
Research and Development
Research and development expenses increased $79,754, or 55.6%, to $223,233
for the year ended December 31, 1998, representing 8.0% of total revenues. For
the year ended December 31, 1997, research and development expenses were
$143,479, or 11.9% of revenues. The overall increase in research and development
expenses was primarily attributable to increased spending on new product
development, maintenance upgrades of current products and technology and
research and development conducted by outside consulting firms.
Panel Acquisition Expenses
Panel acquisition expenses for the year ended December 31, 1998, were
$62,682, representing 2.2% of total revenues. For the year ended December 31,
1997, panel acquisition expenses were $61,135, or 5.1% of total revenues. The
decrease in panel acquisition expenses as a percentage of revenue was due to
costs incurred in 1997 to support higher volumes of surveys expected in future
periods.
INTEREST EXPENSE, NET
Interest expense, net increased $98,835, or 619.9%, to $114,780 for the
year ended December 31, 1998, representing 4.1% of revenues. Interest expense,
net was $15,945 for the year ended December 31, 1997, representing 1.3% of
revenues. Interest expense, net increased primarily as a result of the increased
borrowings from one of our affiliates in 1998.
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LIQUIDITY AND CAPITAL RESOURCES
Liquidity
At December 31, 1999, we had cash and cash equivalents of approximately
$1.7 million. We regularly invest excess funds in short-term money market funds,
government securities and commercial paper. On March 13, 2000, we had cash and
cash equivalents of $7.5 million and additional borrowing capacity of
approximately $3.0 million.
We had negative cash flow from operations of approximately $6.7 million
during the period from May 17, 1999 through December 31, 1999. We used cash in
investing activities of $1 million during the period from May 17, 1999 through
December 31, 1999, primarily due to cash used for capital expenditures. We
generated cash from financing activities of approximately $9.2 million during
the period from May 17, 1999 through December 31, 1999, primarily reflecting
proceeds from the management buyout and additional debt financing, less the cost
of reacquiring treasury stock from the former sole stockholder of the company.
We have consistently sustained net losses and negative cash flows from
operations and have a working capital deficiency. Our ability to meet our
obligations in the ordinary course of business is dependent upon our ability to
attract capital from new and existing investors. To date, we have been able to
attract sufficient capital to support our operating needs and meet our
obligations as they come due. During 1999, we received approximately $27.0
million of debt and equity financing from various sources, including investors
participating in the management buyout, as well as from a financial institution.
In March 2000, we closed an additional debt and equity financing in the amount
of $10.4 million. These funds are being used to expand operations, including
hiring additional employees and continuing to invest in proprietary survey
products and technologies. Management believes that these funds, together with
available cash and the proceeds of this offering are sufficient to support our
operations.
Capital Resources
We have a substantial amount of debt. We intend to repay all of our debt
outstanding to our lenders with a portion of the proceeds from this offering.
The substantial amount of debt that is payable to Greenfield Holdings and
Greyrock Capital has created a highly leveraged balance sheet, and our debt
service levels would require us to achieve profitability early in 2001 in order
to sustain operations under the current capital structure. In the event that we
are unable to complete an initial public offering of our stock in which a
portion of the proceeds would be used to pay off all outstanding debt with
Greenfield Holdings, and the financial institution, it would be our intent to
refinance the Greenfield Holdings debt to an equity form of capital, such as
convertible preferred stock. We believe that our unique relationship with
Greenfield Holdings, afford us the ability to refinance the debt, if necessary.
This back-up refinancing plan, in conjunction with $5.0 million of equity
capital we raised in March 2000 with an institutional investor, would
appropriately balance our capital structure and minimize our debt service levels
going forward.
To further expand our operations, we may need to raise additional funds in
the future to fund more rapid expansion, to develop new products and to respond
to competitive pressures or to acquire complementary businesses or technologies.
If additional funds are raised through the issuance of additional equity
securities, the percentage equity ownership of our stockholders will be reduced,
stockholders may experience dilution and these equity securities may have
rights, preferences or privileges senior to those of our common stockholders. We
cannot assure you that additional financing will be available when needed on
terms favorable to us, or at all. If adequate funds are not available or are not
available on acceptable terms, we may be unable to develop or enhance products,
unable to take advantage of future opportunities or respond to competitive
pressures.
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YEAR 2000 DISCLOSURE
Many currently installed computer systems and software products are coded
to accept or recognize only two-digit entries in the date code filed. These
systems may recognize a date using "00" as the year 1900 rather than the year
2000. As a result, it has been necessary to update the computer systems and/or
software used by many companies and governmental agencies to comply with Year
2000 requirements so as not to risk system failure or miscalculations causing
disruptions of normal business activities. Most reports to date, however, are
that computer systems are functioning normally and the compliance and
remediation work accomplished leading up to the Year 2000 was effective to
prevent material problems. Computer experts have warned, however, that there may
still be residual consequences.
We are exposed to the risk that the systems on which we depend to conduct
our operations are not Year 2000 compliant and we cannot assure you that any
Year 2000 problems will not result in disruptions.
Based on initial reports, we believe that our information technology
systems, which include our hardware and software, and our non-information
technology systems, which include the telephone systems and other office
equipment we use internally, are Year 2000 compliant.
In addition, to date, we have not experienced any significant problems
relating to the Year 2000 compliance of our major vendors. However, we cannot
assure you that these vendors will not experience a Year 2000 problem in the
future. In the event that any of them experience a Year 2000 problem and we are
unable to locate an acceptable alternative, our business would be harmed.
Although our initial reports have not identified any material Year 2000
problems affecting our material third-party vendors, it is possible that certain
Year 2000 problems may have residual consequences or that our third-party
vendors were mistaken in certifying that their systems are Year 2000 compliant.
If we fail to fix our internal systems or to fix or replace material third-party
software, hardware or services on a timely basis, we may suffer lost revenues,
increased operating costs and other business interruptions, any of which could
have a material adverse effect on our business, results of operations and
financial condition.
Although initial reports are that computer systems are functioning
normally, we cannot assure you that governmental agencies, utility companies,
Internet access companies, third-party service providers and others outside our
control will not develop Year 2000 problems. If those entities fail to be Year
2000 compliant, there may be a systemic failure beyond our control, such as a
prolonged Internet, telecommunications or electrical failure, which could have a
material adverse effect on our business, results of operations and financial
condition.
Based on our assessment of our Year 2000 readiness, we do not anticipate
being required to implement any material aspects of a contingency plan to
address Year 2000 readiness of our critical operations.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
The following discusses our exposure to market risk related to changes in
interest rates and foreign currency exchange rates. This discussion contains
forward-looking statements that are subject to risks and uncertainties. Actual
results could vary materially as a result of a number of factors including those
set forth in the "Risk Factors" section of this prospectus.
Interest Rate Risk
Our exposure to market risk is for changes in interest rates for long-term
debt obligations. We use proceeds from these debt obligations to support general
corporate requirements, including capital expenditures and working capital
needs. We have interest rate exposure on our borrowings that bear variable
interest rates.
As disclosed in the notes to our financial statements, our debt obligations
as of December 31, 1999, included a long-term, unsecured promissory note and a
credit facility with a financial institution including a one-year renewable term
loan and a revolving credit line. Interest rates on the promissory note are
fixed for specified intervals and will increase with time until the note
matures. During the period in which the note is outstanding, changes in
prevailing market rates could have an effect on operations and cash flows.
Interest rates on the credit facility float with the market. A hypothetical
10.0% change in prevailing interest rates
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would have the effect of increasing or decreasing annual interest expense by
approximately $200,000 and would increase or decrease the fair value of
outstanding debt by approximately $900,000. Actual gains and losses in the
future may differ materially from that analysis, however, based on changes in
the timing and amount of actual interest rate movements.
We invest our cash and cash equivalents in investment-grade, highly liquid
investments, consisting of money market instruments and bank certificates of
deposit. We anticipate using a portion of our proceeds from this offering to
retire our debt obligations to affiliates and financial institutions and to
invest the remainder in similar investment-grade and highly liquid investments
pending their use as described in this prospectus.
Foreign Currency Exchange Rate Risk
We have no derivative financial instruments. We do not materially transact
in foreign currencies, and there is no impact of currency fluctuations on our
operations. As we consider expanding our operations outside the U.S., we could
be exposed to fluctuations in exchange rates.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, Accounting for Derivative Instruments
and Hedging Activities, "SFAS No. 133." The new standard establishes accounting
and reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts, and for hedging activities. SFAS No.
133 is effective for the company beginning in fiscal 2001. Management does not
expect SFAS No. 133 to have a material effect on our financial position or
results of operations.
In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 101, Revenue Recognition, "SAB 101," which provides
guidance on the recognition, presentation and disclosure of revenues in
financial statements filed with the Securities and Exchange Commission. SAB 101
outlines the basic criteria that must be met to recognize revenues and provides
guidance for disclosure related to revenue recognition policies. Management
believes that its revenue recognition policies and practices are in conformance
with SAB 101.
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BUSINESS
BUSINESS OVERVIEW
We are a pioneer in the use of the Internet to conduct marketing research.
We believe the Internet has become a viable medium for conducting marketing
research, and we are well positioned to lead the transition to the Internet.
Founded in 1994, we performed our first Internet-based research project in 1995
and continue to be a leading provider of Internet-based marketing research.
Societal changes and today's complex business environment have accelerated
businesses' need for marketing research. We have developed products and services
that include custom research, syndicated research and easy-to-use, self-directed
research to address our clients' diverse marketing research needs. We believe
that the combination of our proprietary Internet-based technology, our
high-quality online respondent panels and experienced research professionals
produces faster, better and richer results than those obtained using offline
marketing research methods. Our Internet-based technology provides a highly
automated platform to perform a large volume of marketing research. Our
proprietary online research panels contain over 500,000 registered respondents
who have provided us with information allowing us to reach highly targeted
groups of people quickly and efficiently. Our experienced marketing researchers
use their knowledge of marketing research, our Internet-based technology and our
online panels to deliver marketing research information to our clients.
INDUSTRY OVERVIEW
Growth and Acceptance of the Internet
International Data Corporation, an information technology data and analysis
company, estimates the number of worldwide Internet users will grow from
196 million at the end of 1999 to 502 million at the end of 2003. Jupiter
Communications, a provider of e-commerce research, estimates the percentage of
households in the U.S. that will be online will increase from 44% in 1999 to 63%
in 2003. We believe this growth and acceptance of the Internet is principally
driven by the widespread adoption of personal computers and Web-enabled devices
as they have become increasingly prevalent and affordable. In addition, the cost
of Internet access has declined as Internet Service Providers have moved to
flat-rate and low- or no-cost rate structures.
We believe the Internet has become an effective medium for conducting
marketing research because of its widespread growth and acceptance. Due to the
decreasing cost of personal computers and Web access, an increasingly diverse
group of people with demographics more reflective of the general population is
using the Internet. As a result, we believe marketing research conducted on the
Internet increasingly provides quality results that accurately reflect the
preferences of the general population and those segments of the population that
businesses want to understand better.
Offline Marketing Research Industry
Businesses rely on feedback from the marketplace to make decisions about
the products and services they offer. The more information businesses can gather
about their customers, their potential customers and their competition, the more
likely it is that they will be able to develop and sell products and services
that people will buy and use. Marketing research is a critical tool used to
gather the information that businesses need to make decisions regarding product
portfolios, advertising and promotion efforts and channels of distribution.
According to the European Society of Opinion and Marketing Research, an
independent trade association, approximately $13.4 billion was spent on
marketing research worldwide in 1998, a 10% increase from 1997.
Marketing research requires expertise in designing, gathering, processing
and analyzing information in order to provide accurate and reliable feedback.
Methods generally used by offline marketing researchers include in-person and
telephone interviews and direct mail surveys. These methods are costly because
they involve time-consuming and labor-intensive efforts to find and interview
people and to process and analyze information. Data acquisition costs are also
high due to declining cooperation rates among offline survey participants.
According to a survey conducted by the Council for Marketing and Opinion
Research, an independent trade organization, the percentage of Americans
agreeing to participate in offline surveys
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declined from 20% in 1995 to 14% in 1999. Marketing researchers have adopted
technology such as automated phone interviews and product scanner tracking in an
attempt to increase efficiencies in data collection and processing. However,
these methods still require a high degree of manual processing, remain
time-consuming and labor-intensive and do not address declining participation
rates.
Societal changes and the complexity of today's business environment have
greatly increased demand for high-quality marketing research. Increased
competition, globalization of products, technological innovation and rapidly
changing consumer preferences and lifestyles have accelerated the need for
marketing information. The risk to marketing research in this environment is
that businesses will forgo spending on marketing research because the time and
cost outweighs its value. Because of the expense, marketing research has
historically been primarily affordable to FORTUNE 1000 companies and
prohibitively expensive for small and mid-sized businesses. We believe that
before the Internet became available as a research tool, the marketing research
industry was unable to satisfy the increasing demand for fast, affordable and
quality research.
Online Marketing Research
We believe the Internet is fundamentally changing the marketing research
industry and allowing researchers to better meet the challenges posed by today's
business environment. Using the Internet, marketing researchers can rapidly
access, collect and process large amounts of data from diverse groups. Online
marketing research lowers data acquisition costs and provides opportunities to
expand the market to include companies that previously could not afford the high
cost of research. The Internet provides direct access to potential survey
participants and offers a convenient and unique environment for participants to
view and respond to surveys.
Internet-enabled survey methods speed up the information-gathering process
by preparing and delivering surveys and retrieving information electronically.
As surveys are completed, the results are captured and stored automatically.
These methods eliminate the need to print and distribute surveys and
substantially reduce the time required for entering and compiling data.
Further, we believe the Internet provides a superior, cost-efficient
platform for marketing research. The Internet eliminates the time-consuming,
labor-intensive and costly processes associated with offline research,
significantly reducing the cost of each completed survey. Lower per-survey costs
allow online marketing researchers to collect more data from larger audiences.
With lower cost access to large groups, online researchers are able to reach and
provide information from highly targeted demographic segments at speed and costs
unavailable through offline research methodologies.
It is our belief that the Internet also provides a unique and user-friendly
environment for conducting surveys. Internet-enabled surveys can accommodate a
variety of new media, including websites and streaming audio and video that
cannot be integrated into offline surveys. We believe that exposing participants
to these media allows researchers to capture feedback needed by marketers to
assess new product offerings and test new advertising messages more accurately.
Using the Internet, participants can complete surveys at their convenience and
are not subject to the bias that may be introduced by an interviewer. We believe
the convenience and anonymity offered by Internet surveys lead to richer, more
detailed responses.
Challenges of Moving Marketing Research Online From Offline Methods
Although the Internet presents a significant opportunity for marketing
researchers, transitioning from offline research to an online environment
presents substantial challenges. To use the Internet for marketing research,
companies must convert or abandon offline methodologies, develop Internet
expertise and invest in new infrastructure and technology. Marketing research
companies must also gain access to people who are online and willing to
participate in research. We believe that, to successfully compete in an online
environment, marketing research companies must develop online panels of survey
respondents and integrate their online panels with their online technologies.
We believe that many marketing research firms that have attempted to
migrate to online methodologies have been unsuccessful. This is because of the
high investment costs required to develop new technologies
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and expertise, a reluctance to abandon existing business models and a lack of
understanding about online panel building and the online environment. Most
offline marketing research companies rely on direct mail and telephone surveys
that are supported by dated technology systems, known as legacy systems. These
legacy systems cannot be modified to meet the particular demands of the Internet
and must be abandoned by companies attempting to conduct online marketing
research, often at high cost.
We believe that many offline marketing research companies have not
recognized that, to be effective, online marketing research should be conducted
using panels of respondents who have provided the researcher with detailed
demographic information and who have given their permission to be surveyed.
Creating and maintaining online panels requires knowledge and expertise that
these companies have not gained by building and using offline panels or other
survey methods. We believe online panel building and maintenance requires an
understanding of online communities and Internet users which can be gained only
through years of online experience.
THE GREENFIELD ONLINE ADVANTAGE
We are a pioneer in the use of the Internet as a foundation to build a
marketing research business. We were founded in 1994 and conducted our first
Internet-based marketing research project in 1995. Our early entry and
first-mover advantage have enabled us to develop a strong brand position for
Internet-based marketing research. We believe our five years of Internet
experience have provided us with a critical mass of knowledge and expertise,
which cannot be replicated without a similar investment of time and resources.
We believe that the combination of our Internet-focused technology, high-quality
online panels and experienced marketing research professionals provides us with
the ability to meet the challenges of the marketing research industry and
produce faster, better and richer results than can be obtained using offline
marketing research methods.
Internet-Focused Technology
We are a 100% Internet-enabled company. Since 1994, we have developed our
technology with the specific goal of harnessing the Internet to perform
marketing research. The technologies we have developed provide a highly
efficient platform to perform online marketing research and allow us to offer
research to a broad range of clients. Our core technology is our Web Research
Engine, comprised of three proprietary technologies: NetTap, Survey Wizard and
QuickTake. Our Web Research Engine allows us to reduce data acquisition costs by
expediting, and in some cases eliminating, many of the labor-intensive functions
of offline marketing research such as survey creation, identification of
potential respondents and data collection and input. Our technology also allows
us to deliver information faster than offline methods by automating
questionnaire design, reducing in-field survey time and facilitating data
collection and compiling. Using our technology, we believe we provide enhanced
services to our clients by conducting surveys that elicit detailed and accurate
information from the specific groups that match our clients' cost and timing
needs. Our technologies are also designed to be easy to use and eliminate the
need for highly skilled computer programmers to set up and process surveys.
High-Quality Online Panels
We have spent the last five years building, refining and investing in our
proprietary research panels. Our proprietary NetReach Internet recruiting
techniques enable us to build and replenish online panels comprised of
responsive and geographically and demographically diverse participants. We are
able to target very specific segments of our panels based on the marketing
research needs of our clients because each panelist has provided us with a
detailed personal profile comprised of up to 70 fields of information. We
believe that because each of our panelists has joined us voluntarily, we receive
timely and accurate responses to our surveys. The combination of our technology
and our online panels also significantly reduces the cost of conducting surveys
when compared with offline data collection methods. Response and participation
rates, sample gathering and survey delivery costs that impede offline research
have less impact on our marketing research because our online methodologies
permit us to identify, contact and survey additional respondents with minimal
cost and effort.
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Experienced Researchers
Marketing research requires special skills and training due to the
complexity of developing and producing surveys that deliver reliable, actionable
data. Therefore, we require the involvement of experienced researchers at every
stage of the process, from the consultative sale to report delivery. We believe
that the relevant industry experience and the combined knowledge and expertise
of our researchers provide us with a distinct competitive advantage. As a
result, our researchers drive the decisions, technology and product development
of our company.
OUR STRATEGY
Our goal is to expand our position as a leading Internet-based marketing
research company. We have developed a strategy to be the largest and most
recognized supplier of marketing research worldwide, measured by market share,
product quality, geographic coverage and strength of brand name. Our strategy is
to:
Expand the Market
Our strategy to expand the market for online marketing research is
threefold.
o Convert users of offline marketing research to online research. We
attract buyers of offline marketing research by demonstrating the
advantages of Web-enabled marketing research and the superiority of our
technology, panels and researchers. These advantages enable us to provide
clients with a faster, better and richer marketing research solution.
Since our inception, we have expanded our client base to include clients
who have traditionally relied upon offline marketing research.
o Grow sales to current clients. We intend to increase our sales to current
clients by offering a comprehensive suite of marketing research products
and services that will strengthen client loyalty and increase recurring
revenues. We also establish long-term relationships with our clients by
developing and marketing updated, subscription-based services as well as
customized systems and online panels. By offering our clients
comprehensive, continuing and customized services, we believe we will
cultivate high-value relationships that increase client loyalty.
o Expand addressable market. We also intend to expand our addressable
market by developing and offering products and services at various price
points to clients for whom marketing research has historically been
prohibitively expensive. We intend to provide quality research not only
to large FORTUNE 1000 corporations but also to small and mid-sized
businesses, which have been traditionally underserved by the marketing
research industry. To address the needs of this market, we will continue
to develop a range of self-directed, Web-based products that allow our
clients to quickly and cost effectively receive feedback on questions
they need answered prior to or instead of committing substantial
resources to larger research studies. We launched our first Web-based
self-directed service, QuickTake.com, in February 2000. Visitors to
QuickTake.com conduct surveys on their own and start obtaining results in
a matter of hours. We will continue to develop online products and
services that expand our market by providing more direct access to
information.
Build and Maintain Our High-Quality Online Research Panels
We believe the most critical element of successful online marketing
research is panels that provide reliable, high-quality responses that accurately
mirror the opinions and attitudes of targeted groups. By building a quality
general consumer panel and highly targeted vertical panels, we believe that we
can accurately research both the general population and specific
hard-to-research demographic groups.
We use our proprietary NetReach recruiting process to build and grow the
broadest and most representative panels. By providing access to highly targeted
panels and entering into strategic alliances with other companies to codevelop
or gain access to additional highly targeted panels, we intend to meet our
clients' need to target hard-to-research demographic groups. Through the
addition of demographic, lifestyle and other relevant panelist data, we
continuously improve our panels. We strive to preserve panelist participation
and longevity by building a sense of community and involvement among our panel
members.
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We maintain panel relations programs featuring newsletters, personalized emails
and selected research results.
Develop and Enhance Our Scalable, Proprietary Internet Technology
Our proprietary Web Research Engine enables us to efficiently perform
marketing research and deliver results online. We continuously develop and
enhance our technology to maintain and improve the speed and reliability of our
marketing research services. Our efforts are initially focused on automating all
functions of the marketing research process. In the longer term, we intend to
continue to develop technologies that will enable us to introduce new products
and services. We also intend to continue to enhance our Web Research Engine and
our websites to ensure speed, sophistication, flexibility, functionality and
security.
Attract and Retain High-Quality, Experienced Marketing Research Professionals
As we grow our client base and increase the number of products and services
we offer, we will need to increase the number of experienced researchers to
service our clients. We believe that marketing researchers with significant
experience most effectively sell to and service our clients. To meet the
expected growth in our business, we intend to increase the number of people with
relevant industry experience through an aggressive recruiting campaign and an
internal referral program. In addition, we have implemented appropriate
performance-based compensation strategies to attract and retain research
professionals.
Increase Brand Awareness
Since inception, we have worked to build strong brand awareness among the
purchasers of marketing research. We strive to be the recognized authority in
marketing research. We believe that brand awareness increases our credibility,
increases demand for our services and positions us as the quality provider of
marketing research. We intend to continue to build our brand awareness through a
concerted effort that includes public relations campaigns as well as online and
offline advertising.
OUR WEB RESEARCH PLATFORM
We believe the technologies and online panels we have developed provide a
highly efficient platform to perform online marketing research and allow us to
offer research to a broad range of clients.
Web Research Engine
Our core technology is our Web Research Engine. All of our products and
services rely on Internet technologies that we have developed or adapted to
collect, process, analyze and report marketing research information. These
integrated technologies, which seamlessly interface with each other and our
online panels, are what we call our Web Research Engine. Our Web Research Engine
is comprised of highly secure applications, an underlying database system and
QuickTake technology, which allow large numbers of surveys to be created,
gathered and processed efficiently. Our software was designed to be
user-friendly and compatible with a broad range of technologies. The key
components of our Web Research Engine are:
Survey Wizard. Our Survey Wizard software allows us to create and execute
complex Web-enabled surveys that can incorporate sophisticated multimedia.
Survey Wizard allows our researchers to create surveys easily and efficiently
with commonly available desktop software. This technology automates the coding
of questions, generates Web-ready surveys, and collects and stores data. This
automation eliminates the need to employ numerous skilled programmers to code
each survey and reduces the time required to create Web surveys. Our Survey
Wizard software has features that enhance the quality of our surveys by reducing
the number of incomplete responses as well as the time and cost of editing.
Survey Wizard can dynamically control how information from respondents is
captured, thereby reducing inaccuracy and inconsistency in the data. By
directing different questions to the respondent based upon their prior answers,
Survey Wizard allows for a more custom and detailed set of responses.
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NetTap. NetTap is a proprietary set of database tools that provides a
user-friendly interface for executing marketing research studies. NetTap
seamlessly interfaces with Survey Wizard and our online panels and allows us to:
o select a sample of respondents from our online panels;
o generate email invitations to the selected sample;
o publish surveys on the Web; and
o collect, store and retrieve data.
QuickTake. QuickTake is a 100% Web-based survey tool that allows us to
offer self-directed surveys for clients who need quick feedback. QuickTake
provides a Web-based interface and allows surveys to be conducted without the
use of a research staff. QuickTake is a powerful and user-friendly software tool
and features built-in functionality for easy navigation, flexible survey
formatting and real-time reporting of results. QuickTake can be used to perform
surveys among online audiences from the Web or from the user's own lists or
databases, such as employee groups, business partners, customers or website
visitors.
Each of our proprietary technologies that makes up our Web Research Engine
allows users, either our researchers or our clients, to launch and monitor
surveys and compile survey data from their personal computers, eliminating the
multistep, multiperson processes used by offline marketing research firms.
Greenfield Online Panels
All of our products and services rely on online panels of respondents that
we have recruited to participate in our marketing research studies. Using
NetReach, our continuous, dynamic proprietary technique for building and
maintaining online respondent panels, we attract potential panelists from the
entire spectrum of the Internet. We also obtain new members from our
www.quicktake.com website. Upon completing a survey launched from QuickTake.com,
respondents are invited to become members of our Greenfield Online panels. The
only way someone can become a panel member is by registering at our panelist
website, www.greenfieldonline.com, and completing a demographic and lifestyle
profile. This registration process is completely voluntary and automates the
capture of detailed demographic and lifestyle information that is needed to
target the various populations that our clients want to research. Our panel
relations program encourages a commitment to participate by upholding strict
security and privacy standards and maintaining regular contact with our panel
members. All of our marketing research studies report aggregate information
about groups, not individuals. Individually identifiable information is never
reviewed or published as part of a research survey. The combination of our
recruiting techniques, registration process and panel relations program allows
us to have highly diverse and comprehensively profiled online panels that can
support a wide range of marketing research products and services.
To date, we have recruited and registered over 500,000 respondents,
residing in households containing approximately 1.6 million people. We have
collected and maintain up to 70 fields of demographic and lifestyle information
from each of these respondents. We believe that the level of detail we have
compiled about these panelists and their households provides us with a strategic
advantage. Our NetReach recruiting program contrasts with the recruiting
strategies of many of our competitors who maintain larger databases but lack our
detailed profiles. Our online panels are comprised of:
General Consumer Panel. Our large, general consumer panel consists of a
cross section of people who access the Internet from the U.S. and more than 100
other countries. This online panel is built and maintained through our panelist
website, www.greenfieldonline.com, which provides access to our surveys,
information relevant to our panel members and a means for communicating
questions or comments to us.
Targeted Vertical Panels. Our vertical online panels target people
representing segments of the population that are important to the marketing
efforts of our clients, but who are difficult to reach through offline research
methods. These panels currently include college students, teens, mothers with
babies, gays and lesbians, pet owners and veterinarians, seniors, traveling
executives and future brides. We expect to continue to build additional targeted
vertical panels based on the research needs of our clients.
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PRODUCTS AND SERVICES
We offer a comprehensive suite of marketing research products and services
exclusively using Internet-based methodologies supported by our Web Research
Platform. We currently offer custom, syndicated and self-directed marketing
research.
<TABLE>
<CAPTION>
PRODUCTS AND SERVICES
CUSTOM RESEARCH SYNDICATED RESEARCH SELF-DIRECTED RESEARCH
- ---------------------------------- ---------------------------------- ----------------------------------
<S> <C> <C>
Full-service quantitative and Our research and data compiled and Easy-to-use online research
qualitative research designed to packaged for off-the-shelf or designed by individual users
meet each client's specific needs subscription sales to multiple
clients
BRANDED SERVICES DIGITAL CONSUMER STUDIES QUICKTAKE.COM
o FocusChat--online focus groups o Market intelligence on selected o A self-directed Internet-based
o MindStorm--online brainstorming research topics survey tool that rapidly
PRIVATE-LABEL SERVICES captures feedback from general
o FieldSource--data collection NETREACH VERTICAL MARKET STUDIES or targeted audiences
services for marketing o Studies conducted among our
researchers who have no or NetReach vertical panels
limited Internet research representing hard-to-research
capabilities groups
DIGITAL CONSUMER STORE
o Allows immediate online purchase
of our Digital Consumer branded
studies
WEB RESEARCH PLATFORM
GREENFIELD ONLINE PANELS
General consumer panel
Targeted vertical panels
WEB RESEARCH ENGINE
Survey Wizard--automated survey preparation
NetTap--survey distribution and collection; panel member selection
QuickTake--Web-based self-directed survey tool
</TABLE>
Custom Research
Custom marketing research services include studies designed to elicit
information on topics specifically identified by a client from populations they
wish to target. Our clients generally invest in custom research to minimize the
risk associated with making decisions involving large expenditures for their
businesses. We believe that our experience base allows us to design marketing
research that elicits the accurate and reliable information our clients need to
make more informed decisions about their marketing efforts. Our custom research
services are based on proven quantitative and qualitative marketing research
principles.
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In contrast to companies that focus on one area of marketing research, such
as customer satisfaction, we offer a full range of custom research to help
marketers make decisions. We offer services to guide our clients' marketing
efforts, including new product development, advertising and promotion, customer
acquisition and retention and e-commerce strategies.
For all of our custom research studies, we work closely with our clients to
understand their specific information needs. Based on our understanding of our
clients' needs and our experience in conducting online marketing research, we
design, execute and analyze research studies. The services we provide for a
typical custom research survey include questionnaire design, data collection and
processing, analysis and interpretation of results. Although we can use our
technology to collect and process data, we rely on our researchers to design and
analyze the research to provide high-quality information to our clients.
Questionnaires are designed by experienced research professionals who know how
to ask unbiased questions to elicit the specific information needed. Beyond
simply reporting the results, our researchers analyze and interpret the data to
help our clients understand what the results mean to their business.
Branded Services. We have developed custom research services that rely on
proprietary techniques and technologies. The branded custom services we
currently offer are FocusChat and MindStorm, which are analogous to focus groups
and brainstorming in offline research services. We developed these services to
provide unique and efficient methods to collect and deliver custom research
services. By conducting these custom research services online, we eliminate the
travel costs associated with gathering together a group of people and a
moderator in one location to conduct the research sessions. Through the use of
our Internet-based technologies, we also significantly reduce the time
associated with compiling the data after the research is completed.
o FocusChat. Group interviewing is a common research methodology used to
explore ideas or gain in-depth insights among small groups of people,
facilitated by a moderator. We conduct online group discussions for our
clients, using FocusChat, our proprietary software. By conducting these
group interviews online using FocusChat we can assemble and engage
respondents, clients and the group moderator from around the world in a
highly interactive discussion and provide the resulting transcripts for
immediate review and analysis.
o MindStorm. Brainstorming is a common research technique where
participants engage in an open discussion without the leadership of a
moderator. MindStorm is our proprietary software that acts as an online
think tank. This software permits participants from around the world to
brainstorm on a series of topics or questions that are posted on an
electronic bulletin board. This technique creates an environment for
unstructured discussion that provides our clients with realistic and
detailed feedback. Using MindStorm, we can monitor the progress of the
discussion, encourage and prompt participants to remain continuously
engaged throughout the session and electronically capture the information
and ideas formed by our participants for immediate review and analysis.
Private-Label Services. We offer data collection services through our
FieldSource service for other marketing research companies that have no or
limited Internet research capabilities.
o FieldSource. Through FieldSource, we expand the market for our services
by providing marketing research and consulting companies with access to
our online panels and our Web Research Engine. FieldSource enables these
companies to buy market data collection services from a recognized source
rather than building their own Internet-based marketing research
capabilities. Many FieldSource clients are well-established marketing
research companies that have developed long-standing customer
relationships by providing expertise for a particular industry or highly
specialized research. Through FieldSource, we can serve as a supplier to
these marketing researchers rather than competing with them by building
industry-specific expertise in-house at considerable cost.
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Syndicated Research
We conduct research and create syndicated reports that we sell to multiple
clients on an off-the-shelf basis. These reports are of general interest to our
clients and enable them to find information without the expense of a custom
research study. We offer two types of syndicated information products: Digital
Consumer studies and NetReach vertical market studies. Digital Consumer studies
can be purchased online through our Digital Consumer store.
Digital Consumer Studies. We have designed our Digital Consumer studies to
provide our clients with market intelligence about Internet commerce, consumer
use of the Internet and other topical issues. We select our research topics
based on market demand and our core competencies: in-depth knowledge of the
Internet and its impact upon consumers and the ability to access and research
hard-to-reach groups. This syndicated research is conducted among samples
derived from our panels. Once conducted and analyzed, the reports are made
generally available for purchase.
To date, we have produced the following studies:
<TABLE>
<CAPTION>
NAME TOPIC
- -------------------------- ---------------------------------------------------------------------------------
<S> <C>
Brides Decide Annual study of the purchasing decisions made by future brides
Dollars and $ense Study about how consumers are using the Internet to fulfill their financial needs
e-Merging Music Semiannual study of online music shoppers, with a supplement analyzing popular
music websites
Executives in Motion Semiannual study of the products and services executives are using while on
business trips
Eye on Apparel Semiannual study of online clothing shoppers, including an analysis of the top
clothing websites
Home for the Holidays Annual study of online shopping and purchasing intentions for the holiday season
Lowdown on the Countdown Study about Internet consumers' perspectives on the new millennium, including Y2K
fears and preparations
NetStyles Semiannual study of how Internet usage is changing family life, including
Internet usage in the U.S., Asia/Pacific, Australia, Canada, the United Kingdom
and other European countries
Ordering Groceries Online Semiannual study about consumer reactions to online shopping
Picture Perfect Study to understand the picture-taking habits of mothers and to examine the
growth and/or crossover to digital and Web-based photo activities
Shopping Index Quarterly study of what Americans are buying and doing on the Internet
Surfing Seniors Semiannual study of how the 55+ age group is using the Internet
Toy Purchasing Study Study that examines the toy shopping and purchasing behaviors of mothers with
small children using our Moms & Babies panel
Website Evaluation Study of opinions toward leading websites aimed at mothers
What Are the Odds? Study profiling online and offline gamblers
</TABLE>
- --------------------------------------------------------------------------------
NetReach Vertical Market Studies. NetReach vertical market studies include
surveys conducted among our NetReach vertical market panels of hard-to-research
groups. Each vertical market study is designed to provide trends and in-depth
information about purchasing, media usage, lifestyle, brand and/or product
preferences about a particular NetReach vertical market. For our current
vertical market studies, we have entered into strategic relationships where we
combine our expertise with the experience of firms that help us gain access to
hard-to-research groups, maximize our understanding of these groups, establish
credibility through the use of their brand name and help us market these
studies. The studies are conducted and reported
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on an ongoing basis. Clients can purchase our NetReach vertical market studies
individually or on a subscription basis. Our ongoing NetReach vertical market
studies currently include the Pulsefinder On-Campus Market Study and the Lesbian
& Gay Market Study.
Digital Consumer Store. As an added convenience to our clients, we offer
our Digital Consumer branded studies for immediate purchase at the Digital
Consumer store on our website. Our Digital Consumer store allows us to deliver
our products to a broader audience. We intend to increase the number of research
products available for sale online.
Self-Directed Research
We believe the Internet affords new opportunities for easy-to-use,
cost-effective online research. The time and cost involved in executing
marketing research offline historically has meant that many small to mid-sized
companies could not afford research. We have developed Internet survey tools
that reduce the time and cost of marketing research, making research more
accessible to anyone who needs to gather information. We offer products and
services at various price points to address a wide range of needs. Combining our
knowledge and marketing research expertise with our understanding of the
Internet environment and technologies, we believe we offer superior
self-directed online research tools. We intend to continue to develop and refine
our self-directed products and services.
QuickTake.com. In February 2000, we launched QuickTake.com, our 100%
Web-based self-directed research offering. At www.quicktake.com, users can
quickly and easily open an account, design a questionnaire of up to ten
questions and obtain access to broad or highly targeted audiences. QuickTake.com
allows users to rapidly design surveys or put together questions using templates
of commonly used research question formats. QuickTake.com offers options for
surveying between 50 and 500 people who meet specific demographic, geographic,
lifestyle or usage criteria in over 40 predefined categories. When a survey is
launched, real-time results are automatically compiled and can be viewed online
from a user's account. We believe QuickTake.com is especially useful for clients
who either cannot afford custom marketing research services, want only quick
feedback without the analysis our researchers provide or who require input
before making an investment in a larger custom marketing research project.
STRATEGIC BUSINESS RELATIONSHIPS
We establish business relationships, both formal and informal, with
companies that we believe complement our business objectives in the following
areas:
o Building and enhancing our online research panels;
o Developing new products and services;
o Strengthening and using our technological expertise; and
o Increasing our brand awareness.
Of the strategic business relationships that we have entered into, we
believe the following three relationships best meet the above criteria and
provide us with a competitive advantage.
Forrester Research. We are a preferred provider of online marketing
research services for Forrester, a leading information technology research firm.
Through this relationship, we have the right to use Forrester's
Technographics(R) scale to classify our panelists, which enables us to target
people based on their attitudes toward technology. We believe that our
relationship with Forrester has enhanced our panels and targeting capabilities
as well as our overall market exposure.
Flackett Stevens and Associates Ltd. Flackett Stevens and Associates Ltd.
is an international marketing research company that has developed a research
program for tracking the sale of baby products in Europe. We have an exclusive
agreement with Flackett Stevens to develop and market this program in the U.S.
We believe this relationship provides us with international exposure as well as
expands our existing syndicated services.
YouthStream Media Networks, Inc. Through our relationship with YouthStream,
a media company, we have built a panel of over 30,000 college students and have
jointly developed an ongoing tracking study of this market. The agreement with
YouthStream provides us with the exclusive right to access this panel and all
marketing research derived from this panel. This relationship has helped us to
gain access to a market demographic that has traditionally been difficult to
research and to develop new products and services.
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CLIENT DEVELOPMENT, MARKETING AND PUBLIC RELATIONS
Client Development
We have made a substantial investment in our client development
professionals to better serve our clients and service additional markets. Our
sales strategies are based on a consulting model in which we learn about our
clients' business needs so that we can help them purchase appropriate marketing
research. We believe this kind of selling is best accomplished by people with
professional training in marketing research methodologies and years of sales
experience. Trained professionals fully understand the client's business and how
specific marketing issues can be addressed by research. In addition, client
projects are often confidential and complex, requiring the establishment of a
relationship of trust with our clients. We recruit and maintain salespeople
experienced in marketing research. As of March 13, 2000, we employ 16 sales
professionals with an average of 17 years of marketing research experience. To
serve our clients locally, we have established an office in San Francisco,
California, and have client development representatives located in Redmond,
Washington; St. Louis, Missouri; and Chicago, Illinois.
Marketing
Our marketing activities are directed by an internal marketing department
and through the use of outside consultants. We employ an integrated marketing
approach to reinforce our brand and promote our products and services. This
marketing approach is comprised of:
o Websites. We use our websites to build brand awareness and communicate
with our clients, potential clients and panelists. Our advertising and
marketing efforts direct clients and potential clients to our corporate
website, www.greenfield.com. We use this website to introduce potential
clients to our company. Our panel recruiting and survey website,
www.greenfieldonline.com, helps us to build our various online panels,
conduct surveys and create an atmosphere of community for participants.
Our self-directed survey website, www.quicktake.com, markets, sells and
executes our QuickTake services.
o Advertising and Promotion. We build brand recognition and generate client
leads in separate advertising campaigns for Greenfield Online and for
QuickTake. We advertise in a variety of national print media, including
magazines and newspapers, as well as trade journals and other industry
publications. We also regularly mail promotional and survey materials to
our clients and potential clients. In addition, we present at a number of
trade shows and conferences. In September 1999, we hosted our Information
Edge conference in San Diego, California. Planned as an annual event, the
conference brings together senior marketing executives to network, share
ideas and interact with industry leaders.
Public Relations
Through our internal public relations department and the use of two public
relations agencies, we have a vigorous, ongoing campaign of press releases.
These releases provide free research information of general or industry-specific
interest. Our research results have been featured in The Wall Street Journal,
USA Today, The New York Times, Business Week, NBC Nightly News and other major
media outlets.
TECHNOLOGY AND INFRASTRUCTURE
Since 1994, we have spent and will continue to spend significant financial
and management resources to develop and build our robust, scalable user
interface and transaction processing system for conducting online marketing
research. Our system is based on internally developed proprietary software. Our
system has been designed around industry-standard architectures and has been
designed to reduce downtime in the event of outages or catastrophic occurrences.
Our technology infrastructure provides 24-hour-a-day, seven-day-a-week
availability. Our primary Web-survey and panel-management systems are hosted by
UUNET under a colocation service agreement which provides for redundant power
supply and communications systems. To maintain reliability and allow offline
survey development and analysis of panel and survey data, we are in the process
of replicating the functionality of the UUNET system at our Wilton, Connecticut
facility. Our Wilton facility is equipped with our own uninterruptible power
supply, heating, ventilation and fire suppression systems. Data is backed up on
a daily basis at both the UUNET and Wilton locations, and we routinely remove
backed-up data from our primary storage facilities.
Regular capacity planning allows us to quickly upgrade existing hardware
and integrate new hardware to react quickly to a rapidly expanding member base
and increased traffic to our websites. Our in-house
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technology group designs our system architecture and supervises its development
and deployment. We license commercially available technology when appropriate in
lieu of dedicating our own human or financial resources.
We employ several layers of security to protect data transmission and
prevent unauthorized access. Strict password management and physical security
measures are followed. Computer emergency response team alerts are read and,
where appropriate, recommended action is taken to address security risks and
vulnerabilities. From time to time, we use the services of third-party computer
security experts. We rely on encryption and authentication technology licensed
from third parties to provide the security and authentication technology to
effect secure transmission of confidential information, including customer
credit card numbers. Advances in computer capabilities, new discoveries in the
field of cryptography or other developments may result in a compromise of the
technology used by us to protect customer transaction data. Any such compromise
of our security could harm our reputation and, therefore, our business. In
addition, a party who is able to circumvent our security measures could
misappropriate proprietary information or cause interruptions in our operations.
OUR CLIENTS
Our client base has grown to a diversified group of over 350 clients from a
variety of industries. No one client accounted for 10% of our total revenues in
1999. Since January 1, 1998, at least 32 clients have purchased in excess of
$75,000 for online marketing research services from us, as listed below:
CONSUMER PACKAGED GOODS TECHNOLOGY/INTERNET ADVERTISING AGENCIES
- ----------------------- ------------------- --------------------
CONSUMER SERVICES HEALTHCARE/PHARMACEUTICALS RESEARCH AND CONSULTING
- ----------------- -------------------------- -----------------------
COMPETITION
The marketing research industry is highly competitive and, while the
industry has existed for many years, the Internet-based marketing research
industry is new and rapidly evolving. We currently compete against other
marketing research companies and technology companies that have developed tools
for conducting marketing research. The primary competitive factors in our
industry include the quality and timeliness of research, the prices of products
and services and position in the marketplace. We believe we distinguish
ourselves from our competitors through a combination of our technology, superior
online panels and experienced marketing researchers.
We expect competition to intensify as existing offline marketing research
firms recognize the significance of the Internet and as other companies already
engaged in Internet-based services recognize the potential revenue to be derived
from online marketing research. Our current competitors include:
<TABLE>
<CAPTION>
OFFLINE MARKETING ONLINE MARKETING ONLINE RESEARCH
RESEARCH RESEARCH TOOL PROVIDERS
- ------------------------------------ ------------------------------------------ ------------------------------
<S> <C> <C>
o Market Facts, Inc. o Decision Analysts o InsightExpress L.L.C.
o Millward Brown o Digital Marketing Services, Inc. o MarketTools, Inc.
o NFO Worldwide, Inc. o Harris Interactive Inc.
o The NPD Group, Inc. o Millward Brown Interactive
o NFO Interactive
o The NPD Group Online Division
</TABLE>
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OUR INTELLECTUAL PROPERTY
We regard our copyrights, service marks, trademarks, trade dress, trade
secrets, proprietary technology and similar intellectual property as critical to
our success and rely on patent, trademark and copyright law, trade secret
protection, confidentiality and assignment of invention agreements and/or
license agreements with employees, customers, independent contractors, partners
and others to protect our proprietary rights. We strategically pursue the
registration of our trademarks and service marks in the U.S. and have applied
for and obtained registrations in the U.S. for some of our trademarks and
service marks, including Research Revolution, NetReach and FieldSource.
Greenfield Consulting Group, owns the names Greenfield and Greenfield Online,
holds a U.S. registration for the Greenfield mark and has applied for
registration of the Greenfield Online mark. We maintain an exclusive,
royalty-free license to the name Greenfield Online for Internet-based marketing
research and a license to use the Greenfield name as part of one of our
corporate domain names, www.greenfield.com. Greenfield Consulting Group does not
have effective trademark registration of the name outside the U.S. Effective
trademark, service mark, copyright and trade secret protection may not be
available in every country in which our products and services are made available
online.
In August 1999, we were sued by Harris Interactive seeking, among other
things, to cancel our registration of the mark, Research Revolution. If this
claim were to be successful, or if we are otherwise prevented from using any of
our trademarks, our brand recognition and business may suffer. As a result, we
would have to make substantial expenditures to promote and rebuild our brand
identity and loyalty with our clients and members of our Internet panels.
EMPLOYEES
As of March 13, 2000, we employed a total of 123 people. None of our
employees is represented by a collective bargaining agreement. We have not
experienced any work stoppages and consider our relationship with our employees
to be good.
FACILITIES
The following table describes our facilities:
<TABLE>
<CAPTION>
APPROXIMATE
LOCATION SQUARE FOOTAGE USE TERM OF LEASE
- ---------------------------------------- -------------------- ----------------- -----------------------------
<S> <C> <C> <C>
15 River Road 20,085 square feet General office October 20, 1999-
Wilton, CT November 14, 2000
15 River Road 30,203 square feet General office November 15, 2000, as
Wilton, CT in a building yet to adjusted - nine years from
be constructed the commencement date
15 River Road 3,083 square feet Data center October 20, 1999-
Wilton, CT November 15, 2009, as
adjusted nine years from the
commencement date of the
30,500 square foot general
office lease
116 New Montgomery Street 3,583 square feet General office January 9, 1998-
San Francisco, CA December 1, 2004
</TABLE>
We lease approximately 23,168 square feet for our corporate headquarters
and data center in Wilton, Connecticut. We will occupy this space while our
future corporate headquarters and principal operational facilites are under
construction. The landlord of our future headquarters has projected that the
building improvements for the general office space will be delivered to us on or
before August 15, 2000. We intend to complete our tenant improvements and occupy
the new facility before November 15, 2000, when the nine-year lease is scheduled
to begin.
Effective December 1, 1999, we amended our lease for office space at 116
New Montgomery Street, San Francisco, California. The amendment increased our
space from 803 to 3,583 rentable square feet. The lease provides that the
landlord will make another 1,811 rentable square feet available to us so that we
may relocate to contiguous space on or before October 31, 2000. If the landlord
fails to make this space available, we have the option to terminate the lease.
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We lease all of our facilities and believe our current facilities are
adequate to meet our needs for the foreseeable future. We believe additional or
alternative facilities can be leased to meet our future needs on commercially
reasonable terms.
LEGAL PROCEEDINGS
From time to time, we may become involved in litigation relating to claims
arising from our ordinary course of business. Except as discussed below, we
believe that there are no claims or actions pending or threatened, the ultimate
disposition of which would have a material adverse effect on us.
On August 6, 1999, Harris Interactive Inc. filed a complaint against us in
the U.S. District Court for the Western District of New York. This complaint,
which was amended on September 23, 1999, seeks to have the registration of our
trademark Research Revolution cancelled and also seeks the following relief:
o A declaratory judgment that Harris Interactive is not infringing our
registered Research Revolution trademark (U.S. registration
no. 2,267,753);
o Unspecified monetary damages for alleged defamation and disparagment in
connection with remarks made by one of our senior officers and
third-party communications by our employees concerning Harris
Interactive's business practices;
o Unspecified monetary damages for our alleged intentional interference
with Harris Interactive's contractual relationships with its customers in
connection with third-party communications by our employees concerning
Harris Interactive's business practices; and
o Unspecified monetary damages for our alleged unfair competition by
stating on our website that we have the world's largest Internet-based
marketing research panel.
In November 1999, we delivered a draft answer to the amended complaint to
Harris Interactive, denying all claims asserted in the amended complaint. No
date has been set for trial. We believe these claims are without merit, and we
intend to vigorously defend this lawsuit.
Although resolution of these claims could cause us to expend significant
financial and managerial resources, which could adversely affect our business
operations, in our opinion, resolution of these matters will not have a material
effect on our financial position, results of operations or cash flows.
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MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The names, ages and positions of our executive officers and directors as of
March 13, 2000, are:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---------------------------------------------- --- ----------------------------------------------
<S> <C> <C>
Rudy Nadilo(1)................................ 46 Chairman of the Board, President and Chief
Executive Officer
Robert E. Bies................................ 41 Chief Financial Officer and Treasurer
Jonathan A. Flatow............................ 38 Vice President, Secretary and General Counsel
Stephen J. Cook............................... 53 Senior Vice President, Client Development
Susan Rosovsky................................ 37 Senior Vice President, Research Operations
Leigh-Brindeland Bell......................... 37 Senior Vice President, Business Development
Alastair Bruce................................ 37 Vice President, Client Development
Hugh Davis.................................... 27 Vice President, Cool Technology
Jon G. Rubin.................................. 42 Vice President, Marketing
Jeffrey Horing(2)............................. 35 Director
Peter Sobiloff(3)............................. 43 Director
Joel R. Mesznik(2)(3)......................... 54 Director
Burton J. Manning(2)(3)....................... 68 Director
</TABLE>
- ------------------
(1) Non-voting, ex-officio member of the Compensation Committee
(2) Member of the Audit Committee
(3) Member of the Compensation Committee
Rudy Nadilo has served as our Chairman since August 1999 and as President
and Chief Executive Officer since September 1997. Mr. Nadilo was with
Information Resources, Inc., a marketing research company, serving as Senior
Vice President of Information Resources' first marketing department between 1993
and 1997 and as Vice President of Product Management and Business Development
between 1991 and 1993. Mr. Nadilo holds a B.F.A. from Emerson College and an
M.A. from Northwestern University.
Robert E. Bies has served as our Chief Financial Officer since October 1999
and has been Treasurer since December 1999. Mr. Bies was with The Janis Group,
Inc., a solutions integration company, serving as Chief Financial Officer,
Secretary and Treasurer between 1997 and 1999 and as an independent Financial
Consultant from July 1996 to February 1997. He served in a variety of roles
while at Bionaire, Inc., an environmental air products company, between 1990 and
June 1996, including Senior Vice President and General Manager of U.S.
Operations. Mr. Bies holds a B.S. summa cum laude from Long Island University
and an M.B.A. with distinction from Hofstra University. Mr. Bies is a certified
public accountant licensed in New York.
Jonathan A. Flatow has served as our Secretary since July 1999 and as Vice
President and General Counsel since March 1, 2000. Mr. Flatow was a Partner in
the law firm of Wake, See, Dimes & Bryniczka, which he joined in 1986 as an
Associate. Mr. Flatow holds a B.A. from Franklin & Marshall College and J.D.
from Pace University School of Law.
Stephen J. Cook has served as our Senior Vice President, Client Development
since January 1998 and served as our Senior Vice President and Director,
Quantitative Research between 1996 and 1998. Between 1994 and 1996, Mr. Cook was
the principal of Prescription for Research, Inc., a private marketing research
company. Mr. Cook holds a B.S. from Long Island University.
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<PAGE>
Susan Rosovsky has served as our Senior Vice President, Research Operations
since January 2000 and served as our Vice President, Client Services between
1998 and 2000 and our Director, Client Services in 1998. Between 1997 and 1998,
Ms. Rosovsky was Vice President and Group Head for Custom Research at Macro
International, a marketing research company. Ms. Rosovsky was Director,
Analytical Services for The NPD Group, a marketing research company, between
1992 and 1997. Ms. Rosovsky holds an A.A.S. from The Fashion Institute of
Technology in New York City and a B.S. from St. John's University.
Leigh-Brindeland Bell has served as our Senior Vice President, Business
Development since January 2000 and served as our Vice President, Business
Development between 1997 and 2000. Between 1993 and 1997, Ms. Bell was employed
with Information Resources, Inc., serving first as Account Executive and then as
Director of Marketing. Ms. Bell holds an A.S. from the Art and Fashion Institute
and a B.S. from the University of San Francisco.
Alastair Bruce has served as our Vice President, Client Development since
1998. Between 1995 and 1998, he served as U.S. Marketing Director-International
of NFO Worldwide, a marketing research company. He also served as Marketing
Manager of NFO between 1989 and 1995. Mr. Bruce holds a B.A. with honors from
Brooks College, Oxford University, England.
Hugh Davis is a founder of Greenfield Online. He joined Greenfield
Consulting Group in September 1992. In October 1994, he became Director of
Online Research for Greenfield Online. In November 1998, he was promoted to Vice
President, Cool Technology, which is his current position. Mr. Davis holds a
B.S. from Fairfield University.
Jon G. Rubin has served as our Vice President, Marketing since January
2000. Between 1997 and 2000, Mr. Rubin served as the Senior Vice President of
Strategic Planning of News America Marketing, a division of News Corporation, an
international media company. He was employed by Actmedia, Inc., an in-store
retail advertising and promotion company, serving as Vice President of New
Ventures between 1996 and 1997 and Vice President of Marketing between 1992 and
1996. Mr. Rubin holds his B.S. from the University of Tulsa and an M.B.A. from
The Darden School, University of Virginia.
Jeffrey Horing has served as a member of our board of directors since May
1999. From its founding in 1995 to the present, Mr. Horing has served as a
Partner of InSight Capital Partners, a venture capital firm. From 1990 to 1994,
Mr. Horing served as a Technology Analyst at E.M. Warburg, Pincus, an investment
banking firm. Mr. Horing is also a director of Exchange Applications, Inc. He
holds a B.S.E. and B.S. from the University of Pennsylvania's Moore School of
Engineering and The Wharton School of Business and an M.B.A. from the M.I.T.
Sloan School of Management.
Peter Sobiloff has served as a member of our board of directors since May
1999. Mr. Sobiloff has been a General Partner of InSight Capital Partners, a
venture capital company, since 1998. Mr. Sobiloff served as Senior Executive at
i2 Technologies, a software company, from 1997 to 1998. From 1995 to 1997,
Mr. Sobiloff served as President of Think Systems, Inc., a software company that
was acquired by i2 Technologies He holds a B.A. from Baruch College.
Joel R. Mesznik has served as a member of our board of directors since May
1999. He has been President of Mesco Ltd., a consulting company, since 1990. He
is also a director of TRM Corporation and Resource Asset Investment Trust.
Mr. Mesznik holds a B.S. from the City University of New York and an M.B.A. from
Columbia University Graduate School of Business.
Burton J. Manning has served as a member of our board of directors since
May 1999. From March 1998 to the present, he has also served as President of
Brookbound, Inc., a consulting company. Mr. Manning was with J. Walter Thompson
Co. Worldwide, an advertising firm, serving as Chairman of the board of
directors from January 1997 to December 1997 and as Chairman and Chief Executive
Officer between 1987 and 1996. Mr. Manning also serves on the board of directors
of International Specialty Products, Inc.
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CLASSIFIED BOARD
Our restated certificate of incorporation provides for a classified board
of directors of six members consisting of three classes of directors, each
serving staggered three-year terms. As a result, a portion of our board of
directors will be elected each year. To implement the classified structure,
prior to the completion of this offering, two of the nominees to the board will
be elected to one-year terms, two will be elected to two-year terms and two will
be elected to three-year terms. After this offering, directors will be elected
for three-year terms. Peter Sobiloff and Burton J. Manning have been designated
Class I directors whose terms expire at the 2001 annual meeting of stockholders.
Joel R. Mesznik and have been designated Class II directors
whose terms expire at the 2002 annual meeting of stockholders. Rudy Nadilo and
Jeffrey Horing have been designated Class III directors whose terms expire at
the 2003 annual meeting of stockholders. See "Description of Capital
Stock--Delaware Antitakeover Law and Certain Charter and Bylaw Provisions."
Executive officers are appointed by the board of directors on an annual
basis and serve until their successors have been duly elected and qualified.
There are no family relationships among any of our directors.
BOARD COMMITTEES
Our board of directors has established an audit committee and a
compensation committee.
According to its formal charter, adopted in accordance with the rules of
the National Association of Securities Dealers, our audit committee reviews our
internal accounting procedures, engages our independent accountants and consults
and reviews the services provided by our independent accountants. The audit
committee currently consists of Messrs. Horing, Manning and Mesznik.
The compensation committee reviews and recommends to the board compensation
and benefits for all of our executive officers and establishes and reviews
general policies relating to compensation and benefits of our employees. The
compensation committee currently consists of Messrs. Mesznik, Sobiloff and
Manning, with Mr. Nadilo serving as a non-voting ex-officio member. Mr. Nadilo
participates in all decisions regarding salaries and incentive compensation for
all employees and consultants, except that he is excluded from discussions
regarding his own salary and incentive compensation.
None of Messrs. Horing, Manning or Sobiloff has been an officer or employee
of our company. Mr. Mesznik has been engaged as an independent consultant by us
to provide financial and managerial consulting services since May 1999.
BOARD COMPENSATION
Our employee directors receive no compensation for service on our board of
directors. Prior to February 2000, each nonemployee director, other than
Mr. Manning, was granted options to purchase 750 shares of our common stock, at
the option price established by our board at the time of issuance, for each
board meeting attended. The exercise price per share for these options equaled
the fair market value of the common stock on the date of grant as determined in
good faith by our board of directors. On May 17, 1999, Mr. Manning was granted
options to purchase 92,000 shares of our common stock at an exercise price of
$0.305 per share for his service on our board. In March 2000, we replaced our
prior nonemployee director stock option program by adopting our 2000 Directors
Stock Option Plan. This plan provides for a nondiscretionary initial grant of
20,000 stock options and a nondiscretionary grant of 4,000 stock options to each
member of our board at each annual board meeting if the member is a member of
the board on the date of the meeting and has served continuously as a member of
the board since the date of the member's initial grant. If the member was
ineligible to receive an initial grant, then the member must serve continuously
as a member of the board since the effective date of this offering. The stock
options granted as director compensation under the 2000 Directors Stock Option
Plan are granted at fair market value and vest 50% immediately upon issuance of
the grant and 25% on each anniversary of the grant if the director is still
serving on our board.
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Each nonemployee director is entitled to be reimbursed the reasonable costs
and expenses incurred in attending board meetings. We do not currently provide
additional cash compensation for committee participation or special assignments
of the board of directors.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of our compensation committee are Messrs. Mesznik, Sobiloff and
Manning. Prior to establishing the compensation committee, the board of
directors as a whole performed the functions delegated to the compensation
committee. No member of the board of directors or the compensation committee
serves as a member of the board of directors or compensation committee of any
entity that has one or more executive officers serving as a member of our board
of directors or compensation committee.
EXECUTIVE COMPENSATION
The following table sets forth the total compensation we paid to our Chief
Executive Officer and our next most highly compensated executive officers, whose
total compensation exceeded $100,000 for 1999.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM
--------------------------- COMPENSATION
BONUS AWARDS
AND OTHER SECURITIES
ANNUAL UNDERLYING
FISCAL COMPENSATION OPTIONS
NAME AND PRINCIPAL POSITION YEAR SALARY ($) (#)
- ---------------------------------------------------------- ------- -------- --------------- ------------
<S> <C> <C> <C> <C>
Rudy Nadilo
Chairman, President and Chief Executive Officer......... 1999 $248,882 $ 2,400,000(1) 887,150
Robert E. Bies
Chief Financial Officer and Treasurer................... 1999(2) 30,288 15,000 206,000
Stephen J. Cook
Senior Vice President, Client Development............... 1999 123,077 268,944(1) 194,950
Susan Rosovsky
Senior Vice President, Research Operations.............. 1999 90,712 74,650 204,950
Leigh-Brindeland Bell
Senior Vice President, Business Development............. 1999 102,154 78,000 204,950
Alastair Bruce
Vice President, Client Development...................... 1999 94,315 74,465 190,950
</TABLE>
- ------------------
(1) Amounts include $2.25 million and $125,000 received by Mr. Nadilo and
Mr. Cook, respectively, related to bonuses paid for successful consummation
of our management buyout on May 17, 1999.
(2) Mr. Bies began his employment with us in October 1999 at an annual salary of
$175,000.
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<PAGE>
OPTION GRANTS DURING FISCAL YEAR 1999
The following table sets forth information concerning grants of stock
options to each of the named executive officers above during 1999.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED ANNUAL
STOCK APPRECIATION RATE
NUMBER OF PERCENT FOR INDIVIDUAL GRANTS
SECURITIES OF TOTAL EXERCISE OPTION TERM($)
UNDERLYING OPTIONS PRICE PER EXPIRATION ------------------------
NAME OPTIONS(#) GRANTED(%) SHARE($) DATE 5% 10%
- ------------------------------------ ---------- ---------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Rudy Nadilo......................... 687,150 18.06% $0.31 08/06/09 $2,075,942 $3,431,767
200,000 5.26 0.87 12/06/09 3,253,194 5,283,234
Robert E. Bies...................... 206,000 5.42 0.51 11/06/09 1,884,765 3,063,404
Stephen J. Cook..................... 184,950 4.86 0.31 08/06/09 558,751 923,678
10,000 .26 0.87 12/06/09 162,660 264,162
Susan Rosovsky...................... 184,950 4.86 0.31 08/06/09 558,751 923,678
20,000 .53 0.87 12/06/09 325,319 528,323
Leigh-Brindeland Bell............... 184,950 4.86 0.31 08/06/09 558,751 923,678
20,000 .53 0.87 12/06/09 325,319 528,323
Alastair Bruce...................... 184,950 4.86 0.31 08/06/09 558,751 923,678
6,000 .16 0.87 12/06/09 97,596 158,497
</TABLE>
All options granted to these executive officers in the last fiscal year
were granted under the 1999 Stock Option Plan. Grants issued to these executive
officers prior to March 2000 were issued under the original form of
Non-Qualified Stock Option Agreement. Our board of directors approved an
amendment to our 1999 Stock Option Plan on March 3, 2000, which was approved by
a majority of our shareholders on March 6, 2000. Options issued subsequent to
this amendment were and will be issued under the revised option form. For
options issued to officers and employees, one-quarter of the shares vest and
becomes exercisable on the first anniversary of the date of grant, and an
additional one-eighth of the shares vest each six months after the first
anniversary. All individuals granted options under the 1999 Stock Option Plan
are required to agree to the terms of our shareholders' agreement originally
dated May 17, 1999. That agreement provides that if an employee or officer of
Greenfield Online is terminated, we may, but are not required to, repurchase his
or her shares. All options were granted at fair market value as determined in
good faith by our board of directors on date of grant. We have never granted
stock appreciation rights.
The potential realizable value shown in the table above represents
hypothetical gains that could be achieved for the options if exercised at the
end of the option term and assuming that the fair market value of the common
stock on the date of grant appreciates at 5% and 10% over the ten-year option
term and that the option is exercised and sold on the last day of its option
term for the appreciated stock price. The assumed 5% and 10% rates of stock
price appreciation are provided in accordance with rules of the Securities and
Exchange Commission and do not represent our estimate or projection of our
future common stock price. Actual gains, if any, on stock option exercises will
depend on the future performance of our common stock. As of March 13, 2000, we
granted options to acquire up to an aggregate of 4,207,350 shares of our common
stock to our employees and directors, all under the 1999 Stock Option Plan and
all at an exercise price equal to the fair market value of our common stock on
the date of the grant as determined in good faith by our board of directors.
AGGREGATE OPTION EXERCISES IN FISCAL 1999 AND FISCAL YEAR END OPTION VALUES
The following table sets forth the number of shares acquired and the value
realized upon the exercise of stock options during fiscal 1999 and the number of
shares of common stock subject to exercisable stock options held as of
December 31, 1999, by the named executive officers. There was no public trading
market for our common stock as of December 31, 1999. Accordingly, these values
of exercisable and unexercisable in-the-money options have been calculated on
the basis of the fair market value of the common stock at
52
<PAGE>
December 31, 1999, which was $ per share, as determined by management, less
the applicable exercise price per share, multiplied by the number of shares
underlying such options.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS AS OF IN-THE-MONEY OPTIONS AS OF
ACQUIRED ON DECEMBER 31, 1999 DECEMBER 31, 1999
EXERCISE VALUE ------------------------------------ ------------------------------------
NAME (#) REALIZED ($) EXERCISABLE (#) UNEXERCISABLE (#) EXERCISABLE ($) UNEXERCISABLE ($)
- ------------------- ----------- ------------ --------------- ----------------- --------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Rudy Nadilo........ -- -- -- 887,150 -- $
Robert E. Bies..... -- -- -- 206,000 --
Stephen J. Cook.... -- -- -- 194,950 --
Leigh-Brindeland
Bell............. -- -- -- 204,950 --
Susan Rosovsky..... -- -- -- 204,950 --
Alastair Bruce..... -- -- -- 190,950 --
</TABLE>
The table below sets forth what the value of exercisable and unexercisable
in-the-money options would have been for each named executive officer assuming
that the fair market value of our common stock was $ , which was the
initial public offering price of the shares offered hereby, on the date of the
exercise.
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
IN-THE-MONEY OPTIONS AT
DECEMBER 31, 1999
------------------------------------
NAME EXERCISABLE ($) UNEXERCISABLE ($)
- --------------------------------------------------------------------------------- --------------- -----------------
<S> <C> <C>
Rudy Nadilo...................................................................... -- $
Robert E. Bies................................................................... --
Stephen J. Cook.................................................................. --
Leigh-Brindeland Bell............................................................ --
Susan Rosovsky................................................................... --
Alastair Bruce................................................................... --
</TABLE>
STOCK PLANS
1999 Stock Option Plan
Our 1999 Stock Option Plan was adopted by our board of directors and
shareholders on May 12, 1999, and amended by our board of directors on March 3,
2000 and subsequently approved by our shareholders on March 6, 2000. The plan
allows our employee directors, officers, employees and consultants to acquire
our common stock. The options granted under the plan may be designated as either
"incentive stock options," intending them to be subject to the provisions of
Section 422 of the Internal Revenue Code of 1986, as amended, or "nonqualified
stock options," in the discretion of our board of directors. The number of
options available under the plan, as amended, shall not exceed 6,238,550 shares
of common stock.
Under the plan, as of March 13, 2000:
o options to purchase 4,193,350 shares of common stock have been issued,
net of forfeitures, all of which are nonqualified;
o options to purchase a total of 1,335,500 shares have been exercised;
o options to purchase a total of 2,857,850 shares at a weighted average
exercise price of $1.02 per share remain outstanding; and
o 2,045,200 shares remain available for future option grants.
Nonemployee directors are not eligible for option grants under this plan.
To the extent an optionee has the right in any calendar year to exercise for the
first time one or more incentive stock options for shares having an aggregate
fair market value in excess of $100,000, these excess options shall be treated
as nonstatutory stock options.
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<PAGE>
On March 3, 2000, our board of directors also approved the First Amendment
to Non-Qualified Stock Option Agreement between us and each of the following
senior managers: Messrs. Nadilo, Cook, Bies, Bruce, Rubin and Flatow and
Mesdames Rosovsky and Bell with respect to change in control provisions.
The plan is administered either by our board of directors or a committee
appointed by our board of directors. The administrator determines the terms of
options granted under the plan, including the number of shares subject to the
option, the exercise price, terms and exercisability. The exercise price of all
incentive stock options granted under our plan must be at least equal to the
fair market value of our common stock on the date of grant. The exercise price
of any stock option granted to an optionee who owns stock representing more than
10% of the voting power of our outstanding capital stock must equal at least
110% of the fair market value of the common stock on the date of grant. Payment
of the exercise price may be made in cash, delivery of shares of our common
stock or other consideration determined by the administrator. The administrator
determines the terms of options granted under the plan, which generally are
those contained in the standard form of option adopted by the board of
directors, but which may include additional terms such as reload rights. The
term of a stock option granted under our plan may not exceed ten years, but the
term of incentive stock options may not exceed five years for 10% stockholders.
No option may be transferred by the optionee other than by will or the laws of
descent or distribution. Each option may be exercised during the lifetime of the
optionee, but only by that optionee.
In the event of any change in control of our company, the plan requires
that each outstanding option be assumed or an equivalent option substituted by
the successor corporation. Further, under the First Amendment to Non-Qualified
Stock Option Agreement, our board granted the senior managers accelerated
vesting benefits in the event of a corporate transaction, as that term is
defined in the First Amendment. A corporate transaction generally includes the
sale, reorganization or merger of our company. All of the options held by a
senior manager will vest and be exercisable for 60 days if, within one year of a
corporate transaction, either of the following occur:
o the senior manager's employment is terminated by the successor
corporation without cause, or
o the senior manager resigns from the successor corporation for good
reason, as that term is defined in the First Amendment.
The administrator has the authority to amend or terminate the plan as long
as this action does not adversely affect any outstanding option. Majority
stockholder approval is required for an amendment to increase the number of
shares subject to the plan.
If not terminated earlier, the plan will terminate in 2009.
2000 Employee Stock Purchase Plan
Our 2000 Employee Stock Purchase Plan was adopted by our board of directors
and shareholders on March 3, 2000. A total of 200,000 shares of common stock has
been reserved for issuance under the plan. The plan, which is intended to
qualify under Section 423 of the Internal Revenue Code, generally will be
implemented in a series of offering periods of six-month duration with new
offering periods (other than the first offering period) commencing on each
subsequent January 1 and July 1, with the last day of each period being
designated as a purchase date. The first offering period will commence on the
date that is 90 days after the effective date of this offering and continuing
through December 31, 2000. The plan will be administered by our board of
directors or a committee appointed by our board of directors. Our employees
(including officers and employee directors) or employees of any subsidiary are
eligible to participate if they are employed by us or any subsidiary for at
least 20 hours per week and more than 5 months per year. The plan permits
eligible employees to purchase common stock through payroll deductions, which
may not exceed 10% of an employee's compensation, at a price equal to the lower
of 85% of the fair market value of our common stock at the beginning of the
offering period or the purchase date. Employees may end their participation in
the offering at any time prior to the last business day of the offering period,
and participation ends automatically on termination of employment with us. In
addition, participants may decrease their level of payroll deductions once
during an offering period.
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<PAGE>
Our board of directors may amend or terminate the plan as long as any
outstanding rights to purchase stock thereunder are not adversely affected. If
not terminated earlier, the plan will terminate on June 30, 2006.
2000 Directors Stock Option Plan
Our 2000 Directors Stock Option Plan was adopted by our board of directors
and shareholders in March 2000. A total of 150,000 shares of common stock has
been reserved for issuance under the plan, which provides for the grant of
nonstatutory stock options to our nonemployee directors. The plan is designed to
work automatically without administration. The plan becomes effective on the
effectiveness of the registration statement relating to this offering.
The plan provides that each person who is or becomes a nonemployee director
will be granted a nonstatutory stock option to purchase 20,000 shares of common
stock on the later of the date on which the optionee first becomes a nonemployee
director and the effective date of the plan (the trigger date). On the date of
each annual meeting of our stockholders after the nonemployee director begins to
serve on our board, he or she will be granted an option to purchase 4,000 shares
of common stock if, on that date, he or she has continuously served on our board
of directors since his or her trigger date.
The plan sets neither a maximum nor a minimum number of shares for which
options may be granted to a nonemployee director but does specify the number of
shares that may be included in any grant and the method of making a grant.
Optionees may not transfer options granted under the plan except by will or the
laws of descent or distribution or under a qualified domestic relations order.
Each option is exercisable, during the lifetime of the optionee, but only by
that optionee or his or her guardian or legal representative, unless otherwise
permitted. All options granted under this plan are exercisable 50% on the first
anniversary of the grant and 25% on each subsequent anniversary of the grant as
long as the nonemployee director continues to serve on our board of directors.
The exercise price of all stock options granted under the plan will be equal to
the fair market value of a share of our common stock on the date of the grant of
the option. Options granted under the plan have a term of ten years.
In the event of the dissolution or liquidation of our company, a sale of
all or substantially all of our assets, the merger of us with or into another
corporation in which we are not the surviving corporation or any other capital
reorganization in which more than 50% of our voting shares are exchanged, all
options granted under the plan accelerate and become fully exercisable. These
options must be exercised within seven months of the closing of the transaction.
Our board of directors may amend or terminate the plan as long as any
outstanding rights to purchase stock thereunder are not adversely affected,
absent optionee consent. If not terminated earlier, the plan will terminate in
2010.
EMPLOYMENT AGREEMENTS
We have entered into employment agreements with each of our named executive
officers. Our agreement with Mr. Nadilo, which we amended and restated in
March 2000, is for a term of four years from the effective date of May 17, 1999,
during which we may only terminate Mr. Nadilo's employment for cause. The
agreement provides for an annual base salary of $250,000 and provides that if we
terminate him without cause, he will receive his base salary, paid in monthly
installments, payable for one year or until he finds other employment during
this one-year period. The employment agreements with our other named executive
officers provide for no fixed term of employment, may be terminated at any time
and provide for base salaries as follows: Mr. Bies ($175,000); Mr. Cook
($125,000); Ms. Rosovsky ($110,000); Ms. Bell ($110,000); and Mr. Bruce
($90,000).
In addition, each of our agreements with our named executive officers:
o provides for participation in any performance-based bonus programs that
we make available to senior management;
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<PAGE>
o prohibits the named executive officer, during his or her employment with
us and for a period of five years thereafter, from disclosing
confidential information;
o requires the named executive officer to transfer to us any inventions he
or she develops during his or her employment;
o prohibits the named executive officer from competing with us, disparaging
us or hiring our employees for one year after termination; and
o provides for payment of 30 days of base salary if we terminate the named
executive officer without cause.
In addition, our agreement with each of Mr. Cook and Mr. Bies contains a
severance provision. If we terminate either Mr. Cook or Mr. Bies without cause,
we will pay their base salary for up to six months from the date of termination
or until they find other employment during this six-month period.
LIMITATION ON LIABILITY AND INDEMNIFICATION
Our restated certificate of incorporation limits the liability of our
directors to the maximum extent permitted by the Delaware General Corporation
Law. The Delaware General Corporation Law generally provides that the personal
liability of a director for monetary damages for breach of his or her fiduciary
duties as a director may be eliminated, except for:
o any breach of the director's duty of loyalty to a corporation or its
stockholders;
o acts or omissions not in good faith or that involve intentional
misconduct or a knowing violation of law;
o unlawful payments of dividends or unlawful stock repurchases, redemptions
or other distributions; or
o any transaction from which the director derived an improper personal
benefit.
Our restated bylaws provide that we may indemnify our directors and
officers and may indemnify our other employees and agents to the fullest extent
permitted by Delaware law. We believe that indemnification under our restated
bylaws covers at least negligence and gross negligence on the part of
indemnified parties.
We have obtained directors' and officers' insurance providing
indemnification for our directors, officers and some of our employees for
specified liabilities. We believe that this insurance is necessary to attract
and retain qualified directors and officers.
At present, there is no pending litigation or proceeding involving any of
our directors, officers, employees or agents where indemnification will be
required or permitted. We are not aware of any threatened litigation or
proceeding that might result in a claim for indemnification.
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<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
MANAGEMENT BUYOUT AND LEVERAGED RECAPITALIZATION TRANSACTION
On May 17, 1999, our management team and a group of new investors executed
a management buyout of our company in which approximately 97% of our outstanding
common stock was acquired by Greenfield Holdings, a company formed specifically
to execute the management buyout, and other investors. The transaction involved
a series of agreements:
o Stock Purchase, Sale and Redemption Agreement. Under this agreement,
Greenfield Holdings purchased securities for a purchase price of
$8,863,548, which, adjusted for stock splits and reflecting the
conversion to common, gave them 21,855,150 shares of our common stock.
o Promissory Note. Under this note, Greenfield Holdings loaned us
$14,136,452 that we used in part to redeem 94.5% of outstanding stock
then owned by one of our founders, Andrew Greenfield. This note must be
paid in full upon completion of this offering.
o Stock Purchase, Consent and Waiver Agreement. We used a portion of the
proceeds of the loan granted to us by Greenfield Holdings to loan
Mr. Nadilo, our Chairman, President and Chief Executive Officer, and
Mr. Davis, our Vice President, Cool Technology, $425,075 and $75,013,
respectively, to allow them to purchase Mr. Greenfield's remaining shares
of common stock. Adjusted for stock splits and reflecting the conversion
to common, the purchase gave them 1,048,050 and 184,950 shares,
respectively, of our common stock as of March 3, 2000. We have the right
to repurchase this stock for its original purchase price from either one
of Mr. Nadilo or Mr. Davis if his employment terminates for any reason.
The restrictions on the stock lapse and the stock becomes vested 25% one
year after the management buyout and 12.5% each six-month period
thereafter until four years have expired. For Mr. Nadilo, the expiration
of these restrictions will accelerate on 75% of his stock if we sell the
stock or all or substantially all of the assets of our company. For
Mr. Davis, the expiration of these restrictions will accelerate on 50% of
his stock if we sell the stock or all or substantially all of the assets
of our company. The stock purchased by Messrs. Nadilo and Davis is
pledged to us to secure the repayment of their loans.
AGREEMENTS WITH ANDREW GREENFIELD AND AFFILIATED ENTITIES
We are party to a number of agreements with Andrew Greenfield, a founder of
our company, and with Greenfield Consulting Group, Digital Idea, Inc. and
Strategic Focus, Inc., all entities controlled by Mr. Greenfield. The agreements
are:
o Forfeiture Agreement. Under this agreement, made as part of our Stock
Purchase, Sale and Redemption Agreement with Greenfield Holdings when we
redeemed 94.5% of Mr. Greenfield's stock, he agreed that if Greenfield
Consulting Group did not refer a minimum of $2,500,000 of online research
business to us by May 17, 2001, he would be subject to forfeiting up to
493,200 shares of common stock determined on a sliding scale based on the
actual business referred.
o Non-competition Agreement. Under this agreement, made as part of our
Stock Purchase, Sale and Redemption Agreement with Greenfield Holdings,
Mr. Greenfield agreed that, until March 17, 2002, he will not be employed
by, own an interest in, or finance any company that provides quantitative
or qualitative research over the Internet. Mr. Greenfield was granted the
individual right to conduct qualitative marketing research over the
Internet as long as he used our services exclusively, provided our
services were available on fair and reasonable terms as measured by
industry custom.
o Greenfield Consulting Group Agreement. In December 1999, we entered into
a two-year agreement in which Digital Idea agreed to purchase, at reduced
rates, qualitative and quantitative market research data from us. Under
this agreement, we agreed not to enter into any exclusive provider
arrangement with any other Internet-focused strategic consulting services
company in the marketing services category.
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<PAGE>
CERTAIN MANAGEMENT INTEREST IN GREENFIELD HOLDINGS
Two of the members of our management team have investments in Greenfield
Holdings. Mr. Nadilo owns 1.087% and Mr. Davis owns 0.652% of Greenfield
Holdings, which, as of March 14, 2000, held 83.1% of our common stock.
STOCK OPTION GRANT TO DIRECTOR
On September 17, 1999, as compensation for a speaking engagement, we
granted to Mr. Manning, one of our directors, an option to purchase 10,500
shares of our common stock at $0.51 per share. These options vested immediately
upon issuance.
NOTE AND WARRANT PURCHASE AGREEMENT WITH GREENFIELD HOLDINGS
On March 3, 2000, we entered into a Note and Warrant Purchase Agreement
with Greenfield Holdings, our largest shareholder. Greenfield Holdings agreed to
loan us up to $5 million for working capital purposes. Interest, which is
payable upon maturity, accrues at a rate of 10% per year. This loan matures on
the earlier of June 30, 2000 or the closing of this offering. As partial
consideration for this loan, we issued a warrant to purchase 139,860 shares of
common stock at an exercise price of $3.575 per share, exercisable for
five years. Effective March 10, 2000, we entered into an amendment to the Note
and Warrant Purchase Agreement, which extended the loan's maturity date to the
earlier of June 30, 2001 or the closing of this offering. As consideration for
the extension of the maturity date, we agreed to issue Greenfield Holdings
additional warrants to purchase our common stock. Should any portion of this
loan remain outstanding as of September 30, 2000, we have agreed to issue
warrants to purchase 34,965 shares of our common stock at an exercise price
equal to its fair market value on that day. If any portion of this loan remains
outstanding on December 31, 2000, March 31, 2000 or June 30, 2001, we have
agreed to issue the same amount of warrants on the same terms on each of these
dates.
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<PAGE>
PRINCIPAL SHAREHOLDERS
The following table sets forth information about the beneficial ownership
of our common stock as of March 14, 2000, and as adjusted for:
o each person who we know beneficially owns 5% or more of the common stock;
o each of our directors;
o each executive officer named in the summary compensation table; and
o all of our directors and executive officers as a group.
Except as otherwise indicated, we believe that the beneficial owners of the
common stock listed below have sole voting power and investment power with
respect to their shares. Beneficial ownership is determined in accordance with
the rules of the Securities and Exchange Commission. In computing the number of
shares beneficially owned by a person and the percentage ownership of that
person, shares of common stock subject to options or warrants held by that
person that are currently exercisable or will become exercisable within 60 days
after May 30, 2000, are deemed outstanding, while these shares are not deemed
outstanding for purposes of computing percent ownership of any other person.
Percent of beneficial ownership is based upon 26,301,988 shares of our common
stock outstanding prior to this offering and shares of common stock
outstanding after this offering. The shares outstanding prior to this offering
consist of 4,446,838 shares of class A common stock and 21,855,150 shares of
class B common stock. Upon the completion of this offering, both the class A and
class B common stock will be converted into a single class of common stock on a
1-for-1 basis. The address for those individuals for which an address is not
otherwise indicated is Greenfield Online, Inc., 15 River Road, Suite 310,
Wilton, CT 06897.
<TABLE>
<CAPTION>
NUMBER OF SHARES
BENEFICIALLY OWNED PRIOR
TO
AND AFTER OFFERING PERCENTAGE OWNED
------------------------ --------------------
NAME AND ADDRESS PRIOR TO AFTER PRIOR TO AFTER
OF BENEFICIAL OWNERS OFFERING OFFERING OFFERING OFFERING
- ----------------------------------------------------------------- ---------- ---------- -------- --------
<S> <C> <C> <C> <C>
Greenfield Holdings, LLC ........................................ 21,995,010 21,995,010 83.18% %
c/o InSight Capital Partners III, L.P.
527 Madison Avenue, 10th Floor
New York, NY 10022
InSight Capital Partners III, L.P. .............................. 7,900,606 7,900,606 29.98
527 Madison Avenue, 10th Floor
New York, NY 10022(1)
InSight Capital Partners (Cayman) III, LLC ...................... 2,401,854 2,401,854 9.13
c/o InSight Capital Partners III L.P.
527 Madison Avenue, 10th Floor
New York, NY 10022(2)
InSight Capital Partners III--Coinvestors, L.P. ................. 1,313,101 1,313,101 4.99
c/o InSight Venture Associates III, LLC
527 Madison Avenue, 10th Floor
New York, NY 10022(3)
DBV Investments, L.P. ........................................... 2,868,148 2,868,148 10.90
c/o MSD Capital, L.P.
780 Third Avenue, 43rd Floor
New York, NY 10017(4)
UBS Capital II LLC .............................................. 2,394,117 2,394,117 9.10
299 Park Avenue
New York, NY 10171(5)
Imprimis SB, L.P. ............................................... 2,394,117 2,394,117 9.10
c/o Wexford Management, LLC
411 West Putnam Avenue Suite 125
Greenwich, CT 06830(6)
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
NUMBER OF SHARES
BENEFICIALLY OWNED PRIOR
TO
AND AFTER OFFERING PERCENTAGE OWNED
------------------------ --------------------
NAME AND ADDRESS PRIOR TO AFTER PRIOR TO AFTER
OF BENEFICIAL OWNERS OFFERING OFFERING OFFERING OFFERING
- ----------------------------------------------------------------- ---------- ---------- -------- --------
<S> <C> <C> <C> <C>
Rudy Nadilo(7) .................................................. 1,287,134 1,287,134 4.89% %
Joel R. Mesznik(8) .............................................. 2,192,783 2,192,783 8.33
Burton J. Manning(9) ............................................ 198,178 198,178 *
Jeffrey Horing(10) .............................................. 11,618,561 11,618,561 44.05
Peter Sobiloff(11) .............................................. 11,618,561 11,618,561 44.05
All Directors and Officers as a Group (13 persons)(12)........... 15,628,014 15,628,014 59.23
</TABLE>
- ------------------
* Represents less than one percent.
(1) Represents InSight Capital Partners III, L.P.'s ownership of 35.92% of
Greenfield Holdings, LLC, membership units.
(2) Represents InSight Capital Partners (Cayman) III, LLC's ownership of 10.92%
of Greenfield Holdings, LLC membership units.
(3) Represents InSight Capital Partners III, Coinvestors, L.P.'s ownership of
5.97% of Greenfield Holdings, LLC membership units.
(4) Represents DBV Investments, L.P. c/o MSD Capital, L.P.'s ownership of
13.04% of Greenfield Holdings, LLC membership units.
(5) Represents UBS Capital II LLC's ownership of 10.87% of Greenfield Holdings,
LLC membership units.
(6) Represents Imprimis SB, L.P.'s ownership of 10.87% of Greenfield Holdings,
LLC membership units.
(7) Includes stock and warrants currently exercisable represented by
Mr. Nadilo's ownership of 1.087% of Greenfield Holdings, LLC. Includes
262,012 shares, with respect to which Mr. Nadilo disclaims beneficial
ownership, held by the Irrevocable Trust for Descendants of Rudy Nadilo u/a
dated January 26, 2000.
(8) Includes stock and warrants currently exercisable represented by
Mr. Mesznik's ownership of 4.348% of Greenfield Holdings, LLC membership
units held by GOL, L.L.C., an entity managed by Mr. Mesznik. Includes
118,000 shares, with respect to which Mr. Mesznik disclaims beneficial
ownership, held by the Joel R. Mesznik 1999 Descendants' Trust.
(9) Includes stock and warrants currently exercisable represented by
Mr. Manning's ownership of 0.435% of Greenfield Holdings, LLC.
(10) 11,615,561 of these shares represent ownership of stock and warrants
currently exercisable attributable to entities associated with InSight
Capital Partners III, L.P., InSight Capital Partners (Cayman) III, LLC and
InSight Capital Partners III, Coinvestors, L.P. through their respective
ownership of Greenfield Holdings LLC. Mr. Horing disclaims beneficial
ownership of the shares held by these entities, except to the extent of his
ownership arising from his principal interest in InSight Venture Associates
III, LLC, the general partner of each of InSight Capital Partners III,
L.P., InSight Capital Partners (Cayman) III, LLC, and InSight Capital
Partners III, Coinvestors, L.P. and his limited partnership interest in
InSight Capital Partners III, L.P.
(11) 11,615,561 of these shares represent ownership of stock and warrants
currently exercisable attributable to entities associated with InSight
Capital Partners III, L.P., InSight Capital Partners (Cayman) III, LLC and
InSight Capital Partners III, Coinvestors, L.P. through ownership of
Greenfield Holdings, LLC. Mr. Sobiloff disclaims beneficial ownership of
the shares held by these entities, except to the extent of his ownership
arising from his principal interest in InSight Venture Associates III, LLC,
the general partner of each of InSight Capital Partners III, L.P., InSight
Capital Partners (Cayman) III, LLC and InSight Capital Partners III,
Coinvestors, L.P. and his limited partnership interest in InSight Capital
Partners III, L.P.
(12) Includes the information contained in footnotes 1 through 10 above.
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<PAGE>
DESCRIPTION OF CAPITAL STOCK
GENERAL
After this offering, we will be authorized to issue 100,000,000 shares of
common stock, $0.001 par value, and 5,000,000 shares of undesignated preferred
stock, $0.001 par value. Immediately after this offering, we estimate that there
will be shares of common stock outstanding, 2,857,850 shares of
common stock will be issuable upon exercise of outstanding options and no shares
of preferred stock will be issued and outstanding based on shares and options
outstanding as of March 14, 2000. The figure for outstanding common shares upon
the completion of this offering reflects the issuance of 307,668 shares of
common stock in connection with the presumed exercise of warrants issued to our
lenders.
COMMON STOCK
The holders of our common stock are entitled to one vote per share on all
matters to be voted on by our shareholders. There are no cumulative voting
rights. Subject to preferences that may be applicable to any outstanding
preferred stock, the holders of our common stock are entitled to receive
dividends, if any, as may be declared by our board of directors out of funds
legally available for dividends. In the event of liquidation, dissolution or
winding up of our company, the holders of our common stock are entitled to share
ratably in all assets remaining after payment of liabilities, subject to prior
rights of preferred stock, if any, then outstanding. The common stock has no
preemptive or conversion rights or other subscription rights. There are no
redemption or sinking fund provisions applicable to the common stock. All
outstanding shares of our common stock are fully paid and nonasssessable.
PREFERRED STOCK
Pursuant to our restated certificate of incorporation, our board of
directors has the authority, without further action by our shareholders, to
issue up to 5,000,000 shares of preferred stock. The board of directors may
issue this stock in one of more series and may fix the rights, preferences,
privileges and restrictions of this preferred stock. Some of the rights and
preferences that our board of directors may designate include dividend rights,
conversion rights, voting rights, terms of redemption, liquidation preferences
and sinking fund terms. The board of directors may determine the number of
shares constituting any series or the designation of such series. Any or all of
the rights and preferences selected by our board of directors may be greater
than the rights of the common stock. The issuance of preferred stock could
adversely affect the voting power of holders of common stock and the likelihood
that stockholders will receive dividend payments and payments upon liquidation.
The issuance of preferred stock could also have the effect of delaying,
deferring or preventing a change in control of our company. We have no present
plan to issue shares of preferred stock.
REGISTRATION RIGHTS
On May 17, 1999, we entered into a Registration Rights Agreement with some
of our shareholders. Under this agreement, we granted these shareholders certain
rights to register the shares of common stock owned by them under the Securities
Act of 1933, as amended. Under this agreement, we granted to Greenfield
Holdings, or persons to whom Greenfield Holdings transfers a majority of its
shares, the right to demand that we effect a registration of the common stock,
or a designated portion of the common stock, held by them. There are no limits
on the number of times that these shareholders may demand registration. In
addition, all shareholders who have become parties to this agreement have
unlimited "piggyback" registration rights to have their shares registered under
the Securities Act. The agreement provides that whenever we propose to register
shares of our common stock under the Securities Act, then the shareholders, with
certain exceptions, will have the right to request that we register their shares
of common stock with this registration. The inclusion of Greenfield Holdings'
shares in any registration effected by us will be subject to the right of the
managing underwriters, if any, to reduce or exclude those shares. The agreement
requires us to pay for all costs and expenses incurred in connection with the
registration of securities under the agreement.
On December 3, 1999, we granted to Greyrock Capital piggyback registration
rights covering the shares received upon the exercise of warrants issued in
connection with their loan to us. The inclusion of Greyrock
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<PAGE>
Capital's shares in any registration effected by us will be subject to the right
of the managing underwriters, if any, to reduce or exclude those shares. The
agreement requires us to pay for all costs and expenses incurred with the
registration of securities under the rights granted under the agreement,
however, we shall not be required to pay underwriters' fees, discounts or
commissions relating to Greyrock Capital's registered shares. All expenses of
any registered offering not otherwise borne by us shall be borne pro rata among
the holders of the Greyrock Capital shares participating in the offering and us.
WARRANTS AND OTHER RIGHTS
We have issued the following warrants, all of which are fully exercisable
on the date of grant and have a five-year term:
o A warrant for 167,808 shares of common stock with an exercise price of
$3.575 per share issued to Greyrock Capital in connection with a
$6,000,000 loan to us on December 3, 1999; and
o A warrant for 139,860 shares of common stock with an exercise price of
$3.575 per share issued to Greenfield Holdings, in connection with the
issuance of a subordinated credit line of up to $5,000,000 on March 3,
2000.
DELAWARE ANTITAKEOVER LAW AND CERTAIN CHARTER AND BYLAW PROVISIONS
Section 203 of Delaware General Corporate Law
We are subject to the provisions of Section 203 of the General Corporation
Law of Delaware. In general, the statute prohibits a publicly held Delaware
corporation from engaging in a "business combination" with an "interested
stockholder" for a period of three years after the date of the transaction in
which the person became an interested stockholder, unless the business
combination is approved by our board of directors and/or our stockholders in a
prescribed manner. A "business combination" includes a merger, asset sale or
other transaction resulting in a financial benefit to the interested
stockholder. Subject to certain exceptions, an "interested stockholder" is a
person who, together with affiliates and associates, owns, or within three years
did own, 15% or more of the corporation's voting stock.
Classified Board of Directors
Our certificate of incorporation and bylaws provide for the division of our
board of directors into three classes as nearly equal in size as possible with
staggered three-year terms. Directors may only be removed for cause by the
holders of at least 60% of the voting power of our outstanding capital stock.
Any vacancy on our board of directors, including a vacancy resulting from an
enlargement of our board of directors, may only be filled by vote of a majority
of our directors then in office. The classification of our board of directors
and the limitation on filling vacancies could make it more difficult for a third
party to acquire, or discourage a third party from attempting to acquire,
control of us. In addition, our classified board of directors could delay
attempts by stockholders who do not approve of our policies or procedures to
elect a majority of our board of directors.
TRANSFER AGENT AND REGISTRAR
The Transfer Agent and Registrar for our common stock is ChaseMellon
Shareholder Services, LLC.
NASDAQ NATIONAL MARKET LISTING
We have applied to list our shares of common stock on The Nasdaq Stock
Market's National Market under the trading symbol "GFOL."
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<PAGE>
CERTAIN U.S. FEDERAL TAX CONSEQUENCES FOR NON-U.S. INVESTORS
INTRODUCTION
The following is a summary of certain U.S. federal income and estate tax
consequences to non-U.S. investors of owning and disposing of our common stock.
In this summary, a "non-U.S. investor" is a beneficial owner of our common stock
who is, for U.S. federal income tax purposes:
o a nonresident alien individual;
o a foreign corporation;
o a nonresident alien fiduciary of a foreign estate or trust; or
o a foreign partnership.
This summary does not address all of the U.S. federal income and estate tax
consequences that may be relevant to you in light of your particular
circumstances and also does not discuss any state, local or foreign tax
consequences to you of owning and disposing of our common stock. This summary is
based on current provisions of the Internal Revenue Code of 1986, as amended,
existing and proposed Treasury regulations thereunder and judicial and
administrative interpretations thereof, all as in effect on the date hereof and
all of which are subject to change, possibly with retroactive effect. If you are
considering buying our common stock, you should consult your tax advisor with
respect to the tax consequences of owning and disposing of our common stock.
DISTRIBUTIONS
For U.S. federal income tax purposes, dividends are distributions paid out
of our current or accumulated earnings and profits. Dividends paid to a non-U.S.
investor generally will be subject to withholding of U.S. federal income tax at
a 30% rate or such lower rate as may be specified by an applicable income tax
treaty. To receive a reduced treaty rate, you must furnish to us or our paying
agent a completed Form 1001 or W-8BEN (or substitute form) certifying that you
qualify for a reduced rate. Dividends that are effectively connected with the
conduct of a trade or business within the U.S. of a non-U.S. investor and, if a
treaty applies, attributable to a U.S. permanent establishment of a non-U.S.
investor within the U.S., will be exempt from withholding if you provide us with
a Form 4224 or Form W-8ECI (or substitute form). Dividends exempt from
withholding because they are effectively connected or attributable to a
permanent establishment of a non-U.S. investor will instead be taxed at ordinary
U.S. federal income tax rates on a net income basis. Further, if the non-U.S.
investor is a corporation, this effectively connected dividend income may also
be subject to an additional branch profits tax equal to 30% of effectively
connected earnings and profits for the taxable year, as adjusted for certain
items, unless an applicable treaty provides otherwise. Under current Treasury
regulations, dividends paid before January 1, 2001, to an address outside the
U.S. are presumed to be paid to a resident of the country of address for
purposes of the withholding discussed above and for purposes of determining the
applicability of a tax treaty rate.
For dividends paid after December 31, 2000, a non-U.S. investor generally
will be subject to U.S. backup withholding tax at a 31% rate under the backup
withholding rules described below, rather than at a 30% rate or a reduced rate
under an income tax treaty, as described above, unless the non-U.S. investor
complies with certain Internal Revenue Service certification procedures or, in
the case of payments made outside the U.S. with respect to an offshore account,
certain IRS documentary evidence procedures. Further, to claim the benefit of a
reduced rate of withholding under an income tax treaty for dividends paid after
December 31, 2000, a non-U.S. investor must comply with certain modified IRS
certification requirements. Special rules also apply to dividend payments made
after December 31, 2000, to foreign intermediaries, U.S. or foreign wholly owned
entities that are disregarded for federal tax purposes and entities that are
treated as fiscally transparent in the U.S., the applicable income tax treaty
jurisdiction, or both. You should consult your own tax advisor concerning the
effect, if any, of the rules affecting post-December 31, 2000, dividends on your
possible investment in our common stock.
If a distribution is made that is not a dividend for U.S. federal income
tax purposes, it will first constitute a return of capital that is applied
against the non-U.S. investor's basis in the common stock and
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any remaining amount will be treated as gain from the sale or exchange of stock.
Currently, withholding of U.S. federal income tax is generally imposed on the
gross amount of a distribution, regardless of whether we have sufficient current
and accumulated earnings and profits to cause the distribution to be a dividend
for U.S. federal income tax purposes. However, withholding on distributions made
after December 31, 2000, may be on less than the gross amount of the
distribution if the distribution exceeds a reasonable estimate by us of our
accumulated and current earnings and profits.
SALE OR OTHER DISPOSITION OF COMMON STOCK
A non-U.S. investor generally will not be subject to U.S. federal income
tax on any gain recognized on the sale or other disposition of our common stock,
except in the following circumstances:
o The gain is effectively connected with a trade or business of the
non-U.S. investor within the U.S. and, if a treaty applies, is
attributable to a U.S. permanent establishment of the non-U.S. investor.
Unless an applicable treaty provides otherwise, the non-U.S. investor
will be taxed on its net effectively connected gains derived from the
sale under the regular graduated U.S. federal income tax rates. If the
non-U.S. investor is a foreign corporation, an additional branch profits
tax may be applicable equal to 30% of its effectively connected earnings
and profits for the taxable year, as adjusted for items, unless an
applicable treaty provides otherwise;
o The non-U.S. investor is an individual who holds the common stock as a
capital asset, is present in the U.S. for 183 days or more in the taxable
year of the sale or other disposition and other conditions are met. In
this case, the non-U.S. investor will need to pay a flat 30% tax on the
gain derived from the sale, which may be offset by any applicable U.S.
capital losses;
o U.S. federal income tax laws applicable to expatriates apply to the
non-U.S. investor; or
o We are or have been a "U.S. real property holding corporation" at any
time during the five-year period ending on the date of disposition (or,
if shorter, the non-U.S. investor's holding period), unless both (i) the
non-U.S. investor held, actually or constructively, no more than 5% of
our outstanding common stock and (ii) our stock is "regularly traded on
an established securities market," for purposes of these rules. We
believe that we will not constitute a U.S. real property holding
corporation immediately after the offering and do not expect to become a
U.S. real property holding corporation; however, we can give no assurance
in this regard.
BACKUP WITHHOLDING AND INFORMATION REPORTING
Dividends. U.S. backup withholding tax generally will not apply to
dividends paid before January 1, 2001, to a non-U.S. investor at an address
outside the U.S. or to dividends paid after December 31, 2000, if the non-U.S.
investor certifies that it is a non-U.S. investor on a Form W-8BEN or otherwise
establishes an exemption. We must report annually to the IRS and to each
non-U.S. investor the amount of dividends paid to such investor and the amount,
if any, of tax withheld with respect to such dividends. This information may
also be made available to the tax authorities in the non-U.S. investor's country
of residence.
Sale through a U.S. office of a broker. Upon the sale or other disposition
of our common stock by a non-U.S. investor to or through a U.S. office of a
broker, the broker must backup withhold at a rate of 31% and report the sale to
the IRS, unless the non-U.S. investor certifies its foreign status under
penalties of perjury or otherwise establishes an exemption from backup
withholding.
Sale through a foreign office of a broker. The proceeds of a sale or other
disposition of our common stock by a non-U.S. investor to or through a foreign
office of a U.S. or foreign broker will not be subject to backup withholding.
However, if the broker is a U.S. person or a foreign person with relationships
with the U.S. it must report the sale or other disposition to the IRS unless the
broker has documentary evidence in its files that the seller is a non-U.S.
investor and other applicable conditions are met, or the holder otherwise
establishes an exemption.
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Backup withholding is not an additional tax. Amount withheld under the
backup withholding rules are generally allowable as a refund or credit against
the non-U.S. investor's U.S. federal income tax liability, if any, provided that
the required information is furnished to the IRS in a timely manner.
FEDERAL ESTATE TAXES
Our common stock owned or treated as owned by an individual who is not a
citizen or resident of the U.S. as defined for U.S. federal estate tax purposes,
at the time of death, will be included in such individual's gross estate for
U.S. estate tax purposes, unless an applicable estate tax treaty provides
otherwise.
The foregoing discussion is a summary of some U.S. federal income and
estate tax consequences of the ownership, sale or other disposition of our
common stock by non-U.S. investors. You are urged to consult your own tax
advisor with respect to the particular tax consequences to you of the ownership
and disposition of our common stock, including the effect of any state, local,
foreign or other tax laws.
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SHARES ELIGIBLE FOR FUTURE SALE
Sales of substantial amounts of our common stock in the public market could
adversely affect prevailing market prices of our common stock. Furthermore,
since no shares will be available for sale shortly after this offering because
of contractual and legal restrictions on resale described below, sales of
substantial amounts of common stock in the public market after these
restrictions lapse could adversely affect the prevailing market price and our
ability to raise equity capital in the future.
Upon completion of this offering, we will have outstanding
shares of common stock, assuming no exercise of the underwriters' over-allotment
option and no exercise of outstanding options and warrants. Of the shares of
common stock sold in this offering, all shares will be freely tradable on the
date of this prospectus unless purchased by "affiliates" as that term is defined
in Rule 144 of the Securities Act. The following table illustrates the shares
eligible for sale in the public market:
<TABLE>
<CAPTION>
NUMBER OF SHARES DATE
- ------------------- ------------------------------------------------------------------------------
<S> <C>
0 After the date of this prospectus, freely tradable shares other than those
sold in this offering and shares salable under Rule 144(k) that are not
subject to the 180-day lock-up.
111,000 After 90 days from the date of this prospectus, shares salable under Rule 144
or Rule 701 that are not subject to the 180-day lock-up.
After 180 days from the date of this prospectus, the 180-day lock-up is
released and these shares are salable under Rule 144 (subject, in some cases,
to volume limitations), Rule 144(k) or Rule 701.
After 180 days from the date of this prospectus, restricted securities that
are held for less than one year are not yet salable under Rule 144.
</TABLE>
LOCK-UP AGREEMENTS
We, and each of our directors, executive officers and existing shareholders
have agreed not to offer, sell, contract to sell, pledge or otherwise dispose
of, directly or indirectly, any shares of our common stock or any securities
convertible into or exchangeable or exercisable for any shares of our common
stock, or enter into a transaction which would have the same effect, or enter
into any swap, hedge or other arrangement that transfers, in whole or in part,
any of the economic consequences of ownership of the shares of common stock, or
exercise any right to request or demand registration pursuant to the Securities
Act, or publicly disclose the intention to make any offer, sale, pledge or
disposition, or to enter into any transaction, swap, hedge or other arrangement,
without the prior written consent of Credit Suisse First Boston Corporation, for
a period of 180 days after the public offering date set forth on the cover of
this prospectus. The restrictions set forth in the previous sentence do not
apply to the exercise of employee stock options outstanding on the date of this
prospectus.
RULE 144
In general, under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated) who has beneficially owned restricted shares for at
least one year, including persons who may be deemed our "affiliates," would be
entitled to sell within any three-month period a number of shares that does not
exceed the greater of 1% of the number of shares of common stock then
outstanding or the average weekly trading volume of the common stock as reported
through The Nasdaq National Market during the four calendar weeks preceding the
filing of a Form 144 with respect to such sale. Sales under Rule 144 are also
subject to manner of sale provisions and notice requirements and to the
availability of current public information about us. In addition, a person who
is not deemed to have been our affiliate at any time during the 90 days
preceding a sale and who has beneficially owned for at least two years the
shares proposed to be sold, would be entitled to sell such shares under
Rule 144(k) without regard to the requirements described above.
66
<PAGE>
RULE 701
In general, Rule 701 permits resales of shares issued under compensatory
benefit plans and contracts commencing 90 days after the issuer becomes subject
to the reporting requirements of the Securities Exchange Act in reliance upon
Rule 144 but without compliance with certain restrictions, including the holding
period requirements contained in Rule 144. We will file registration statements
on Form S-8 under the Securities Act to register common stock issuable under our
stock option plans and stock purchase plan. Such registration will permit the
resale of shares so registered by nonaffiliates in the public market without
restriction under the Securities Act.
No prediction can be made as to the effect, if any, that market sales of
shares or the availability of shares for sale will have on the market price
prevailing from time to time. Nevertheless, sales of substantial amounts of our
common stock in the public market after the lapse of the restrictions described
below could adversely affect the prevailing market price and our ability to
raise equity capital in the future at a time and price that it deems
appropriate.
REGISTRATION RIGHTS
After this offering, the holders of shares of common stock and
shares of common stock issuable upon the exercise of outstanding warrants will
be entitled to rights in connection with the registration of those shares under
the Securities Act. For more information, see "Description of Capital Stock--
Registration Rights." After such registration, these shares of our common stock
become freely tradable without restriction under the Securities Act. These sales
could have a material adverse effect on the trading price of our common stock.
STOCK PLANS
We intend to file a registration statement under the Securities Act
covering 6,588,850 shares of common stock reserved for issuance under our 1999
Stock Option Plan, our 2000 Directors Stock Option Plan and our 2000 Employee
Stock Purchase Plan and the shares reserved for issuance upon exercise of
outstanding non-plan options. We expect this registration statement to be filed
and to become effective as soon as practicable after the effective date of this
offering.
As of March 13, 2000, options to purchase 2,857,850 shares of common stock
were issued and outstanding. All of these shares will be eligible for sale in
the public market from time to time, subject to vesting provisions, Rule 144
volume limitations applicable to our affiliates and, in the case of some
options, the expiration of lock-up agreements.
67
<PAGE>
UNDERWRITING
Under the terms and subject to the terms set forth in an underwriting
agreement dated , 2000, we have agreed to sell to the underwriters named
below, for whom Credit Suisse First Boston Corporation, Bear, Stearns & Co. Inc.
and Donaldson, Lufkin & Jenrette Securities Corporation are acting as
representatives, the following respective numbers of shares of common stock:
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITERS SHARES
---------
<S> <C>
Credit Suisse First Boston Corporation......................................................
Bear, Stearns & Co. Inc.....................................................................
Donaldson, Lufkin & Jenrette Securities Corporation.........................................
-------
Total.....................................................................................
-------
-------
</TABLE>
The underwriting agreement provides that the underwriters are obligated to
purchase all the shares of common stock in this offering, if any are purchased,
other than those shares covered by the over-allotment option described below.
The underwriting agreement also provides that, if any underwriter defaults, the
purchase commitments of nondefaulting underwriters may be increased or the
offering of common stock may be terminated.
We have granted the underwriters a 30-day option to purchase on a pro-rata
basis up to additional shares at the initial public offering price less the
underwriting discounts and commissions. The option may be exercised only to
cover any over-allotments of common stock.
The underwriters propose to offer the shares of common stock initially at
the public offering price on the cover page of this prospectus and to selling
group members at that price less a concession of $ per share. The
underwriters and selling group members may allow a discount of $ per share
on sales to other broker/dealers. After the initial public offering, the public
offering price and concession and discount to broker/dealers may be changed by
the representatives.
The following table summarizes the compensation and estimated expenses we
will pay.
<TABLE>
<CAPTION>
PER SHARE TOTAL
------------------------------ ------------------------------
WITHOUT OVER- WITH OVER- WITHOUT OVER- WITH OVER-
ALLOTMENT ALLOTMENT ALLOTMENT ALLOTMENT
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Underwriting Discounts and Commissions
Paid by Us....................................... $ $ $ $
Expenses Payable by Us............................. $ $ $ $
</TABLE>
The underwriters have informed us that they do not expect discretionary
sales to exceed 5% of the shares of common stock being offered.
We have agreed that we will not offer, sell, contract to sell, pledge or
otherwise dispose of, directly or indirectly, or file with the Securities and
Exchange Commission a registration statement under the Securities Act relating
to, any shares of our common stock or securities convertible into or
exchangeable or exercisable for any share of our common stock, or publicly
disclose the intention to make any such offer, sale, pledge, disposition or
filing, without the prior written consent of Credit Suisse First Boston
Corporation for a period of 180 days after the date of this prospectus.
Our directors, executive officers and stockholders have agreed that they
will not offer, sell, contract to sell, pledge or otherwise dispose of, directly
or indirectly, any shares of our common stock or securities convertible into or
exchangeable or exercisable for any shares of our common stock, enter into a
transaction which would have the same effect, or enter into any swap, hedge or
other arrangement that transfers, in whole or in part, any of the economic
consequences of ownership of our common stock, whether any such aforementioned
transaction is to be settled by delivery of our common stock or such other
securities, in cash or otherwise, or publicly disclose the intention to make any
such offer, sale, pledge or disposition, or to enter into any such transaction,
swap, hedge or other arrangement, without, in each case, the prior written
consent of Credit Suisse First Boston Corporation for period of 180 days after
the date of this prospectus.
68
<PAGE>
The underwriters have reserved for sale, at the initial public offering
price, up to shares of our common stock for employees, directors and
other persons associated with us who have expressed an interest in purchasing
common stock in the offering. The number of shares available for sale to the
general public in this offering will be reduced to the extent these persons
purchase the reserved shares. Any reserved shares not so purchased will be
offered by the underwriters to the general public on the same terms as the other
shares.
We have agreed to indemnify the underwriters against liabilities under the
Securities Act of 1933, as amended, or contribute to payments that the
underwriters may be required to make in that respect.
We have applied to list our shares of common stock on The Nasdaq Stock
Market's National Market under the symbol "GFOL."
Prior to this offering, there has been no public market for our common
stock. The initial public offering price will be determined by negotiation
between us and the representatives. The principal factors considered in
determining the public offering price will include:
o the information set forth in this prospectus and otherwise available to
the representatives;
o the history of and the prospects for us and the industry in which we
compete;
o the prospects for and the timing of our estimated future earnings;
o the present state of our development and our current financial condition;
o the general condition of the securities markets at the time of this
offering;
o the recent market prices of and the demand for publicly-traded common
stock of generally comparable companies; and
o market conditions for initial public offerings.
The representatives may engage in over-allotment, stabilizing transactions,
syndicate covering transactions and penalty bids in accordance with Regulation M
under the Securities Exchange Act of 1934.
o Over-allotment involves syndicate sales in excess of the offering size,
which creates a syndicate short position.
o Stabilizing transactions permit bids to purchase the underlying security
as long as the stabilizing bids do not exceed a specified maximum.
o Syndicate covering transactions involve purchases of shares of the common
stock in the open market after the distribution has been completed in
order to cover syndicate short positions.
o Penalty bids permit the representatives to reclaim a selling concession
from a syndicate member when the common stock originally sold by that
syndicate member is purchased in a stabilizing transaction or in a
syndicate covering transaction to cover syndicate short positions.
These stabilizing transactions, syndicate covering transactions and penalty bids
may cause the price of the common stock to be higher than it would otherwise be
in the absence of these transactions. These transactions may be effected on The
Nasdaq Stock Market or otherwise and, if commenced, may be discontinued at any
time.
A prospectus in electronic format may be made available on the websites
maintained by one or more of our underwriters participating in this offering.
The representatives may agree to allocate a number of shares to underwriters for
sale to their online brokerage account holders. Internet distributions will be
allocated to the underwriters that will make Internet distributions on the same
basis as other allocations.
Other than the prospectus in electronic format, the information contained
on any website maintained by our underwriters is not part of this prospectus or
the registration statement of which this prospectus forms a part, has not been
approved or endorsed by us or any underwriter in its capacity as an underwriter
and should not be relied upon by investors.
69
<PAGE>
NOTICE TO CANADIAN RESIDENTS
RESALE RESTRICTIONS
The distribution of our common stock in Canada is being made only on a
private placement basis exempt from the requirement that we prepare and file a
prospectus with the securities regulatory authorities in each province where
trades of common stock are effected. Accordingly, any resale of our common stock
in Canada must be made in accordance with applicable securities laws which will
vary depending on the relevant jurisdiction and which may require resales to be
made in accordance with available statutory exemptions or pursuant to a
discretionary exemption granted by the applicable Canadian securities regulatory
authority. Purchasers are advised to seek legal advice prior to any resale of
the common stock.
REPRESENTATIONS OF PURCHASERS
Each purchaser of our common stock in Canada who receives a purchase
confirmation will be deemed to represent to us and the dealer from whom such
purchase confirmation is received that (i) such purchaser is entitled under
applicable provincial securities laws to purchase our common stock without the
benefit of a prospectus qualified under such securities laws, (ii) where
required by law, that such purchaser is purchasing as principal and not as agent
and (iii) such purchaser has reviewed the text above under "Resale
Restrictions."
RIGHTS OF ACTION (ONTARIO PURCHASERS)
The securities being offered are those of a foreign issuer, and Ontario
purchasers will not receive the contractual right of action prescribed by
Ontario securities law. As a result, Ontario purchasers must rely on other
remedies that may be available, including common law rights of action for
damages or rescission or rights of action under the civil liability provisions
of the U.S. federal securities laws.
ENFORCEMENT OF LEGAL RIGHTS
All of our directors and officers, as well as the experts named herein, may
be located outside of Canada and, as a result, it may not be possible for
Canadian purchasers to effect service of process within Canada upon the issuer
or such persons. All or a substantial portion of the assets of the issuer and
such persons may be located outside of Canada and, as a result, it may not be
possible to satisfy a judgment against the issuer or such persons in Canada or
to enforce a judgment obtained in Canadian courts against such issuer or persons
outside of Canada.
NOTICE TO BRITISH COLUMBIA RESIDENTS
A purchaser of common stock to whom the Securities Act (British Columbia)
applies is advised that such purchaser is required to file with the British
Columbia Securities Commission a report within ten days of the sale of any
common stock acquired by such purchaser pursuant to this offering. Such report
must be in the form attached to British Columbia Securities Commission Blanket
Order BOR #95/17, a copy of which may be obtained from us. Only one such report
must be filed in respect of common stock acquired on the same date and under the
same prospectus exemption.
TAXATION AND ELIGIBILITY FOR INVESTMENT
Canadian purchasers of common stock should consult their own legal and tax
advisors with respect to the tax consequences of an investment in common stock
in their particular circumstances and with respect to the eligibility of the
common stock for investment by the purchaser under relevant Canadian
legislation.
70
<PAGE>
LEGAL MATTERS
The validity of the common stock offered hereby will be passed upon for us
by Preston Gates & Ellis LLP, Seattle, Washington. Shearman & Sterling, New
York, New York, will pass upon selected legal matters in connection with this
offering for the underwriters. Partners of Preston Gates & Ellis LLP hold an
aggregate of 47,790 shares of our common stock.
EXPERTS
The financial statements as of December 31, 1999 and 1998 and for the
periods from May 17, 1999 through December 31, 1999 and from January 1, 1999
through May 16, 1999, and for the years ended December 31, 1998 and 1997
included in this prospectus have been so included in reliance on the reports of
PricewaterhouseCoopers LLP, independent accountants, given on their authority as
experts in auditing and accounting.
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the Securities and Exchange Commission a registration
statement on Form S-1 under the Securities Act with respect to the common stock
offered in this offering. This prospectus does not contain all of the
information set forth in the registration statement. For further information
with respect to Greenfield Online and the common stock offered in this offering,
we refer you to the registration statement and to the attached exhibits and
schedules. Statements made in this prospectus concerning the contents of any
document referred to in this prospectus are not necessarily complete. With
respect to each such document filed as an exhibit to the registration statement,
we refer you to the exhibit for a more complete description of the matter
involved.
You may inspect our registration statement and the attached exhibits and
schedules without charge at the public reference facilities maintained by the
Securities and Exchange Commission at 450 Fifth Street, NW, Washington, DC 20549
and at the regional offices of the SEC located at Seven World Trade Center, 13th
Floor, New York, NY 10048 and the Citicorp Center, 500 West Madison Street,
Suite 1400, Chicago, IL 60661. You may obtain copies of all or any part of our
registration statement from the SEC upon payment of prescribed fees.
You may copy all or part of our SEC filings from these offices upon payment
of the fees charged by the SEC. You may obtain information on the operation of
the public reference room in Washington, D.C. by calling the Securities and
Exchange Commission at 1-800-SEC-0330.
Our SEC filings, including the registration statement and the exhibits
filed with the registration statement, are available from the SEC's website at
www.sec.gov, which contains reports, proxy and information statements and other
information regarding issuers that file electronically with the SEC.
71
<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Accountants--Successor............................................................... F-2
Report of Independent Accountants--Predecessor............................................................. F-3
Balance Sheets at December 31, 1998 and 1999............................................................... F-4
Statements of Operations for the years ended December 31, 1997 and 1998, and the periods from January 1,
1999 through May 16, 1999 and from May 17, 1999 through December 31, 1999................................ F-5
Statements of Stockholders' Equity (Deficit) for the years ended December 31, 1997 and 1998, and the
periods from January 1, 1999 through May 16, 1999 and from May 17, 1999 through
December 31, 1999........................................................................................ F-6
Statements of Cash Flows for the years ended December 31, 1997 and 1998, and the periods from January 1,
1999 through May 16, 1999 and from May 17, 1999 through December 31, 1999................................ F-7
Notes to Financial Statements.............................................................................. F-8
Unaudited Pro Forma Condensed Statement of Operations...................................................... F-24
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
(SUCCESSOR)
To the Board of Directors and Stockholders
of Greenfield Online, Inc.:
In our opinion, the accompanying balance sheet and the related statements of
operations, stockholders' equity (deficit) and cash flows present fairly in all
material respects, the financial position of Greenfield Online, Inc.,
"Successor", at December 31, 1999 and the results of its operations and its cash
flows for the period from May 17, 1999 through December 31, 1999 in conformity
with accounting principles generally accepted in the United States. These
financial statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audit. We conducted our audit of these statements in accordance with
auditing standards generally accepted in the United States, which require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for the opinion expressed above.
PRICEWATERHOUSECOOPERS LLP
Stamford, Connecticut
March 3, 2000
F-2
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
(PREDECESSOR)
To the Board of Directors and Stockholders
of Greenfield Online, Inc.:
In our opinion, the accompanying balance sheet and the related statements of
operations, stockholders' equity (deficit) and cash flows present fairly, in all
material respects, the financial position of Greenfield Online, Inc.,
"Predecessor", at December 31, 1998 and the results of its operations and its
cash flows for the years ended December 31, 1997 and 1998 and the period from
January 1, 1999 through May 16, 1999 in conformity with accounting principles
generally accepted in the United States. These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with auditing standards generally
accepted in the United States, which require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
PRICEWATERHOUSECOOPERS LLP
Stamford, Connecticut
March 3, 2000
F-3
<PAGE>
GREENFIELD ONLINE, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
PREDECESSOR SUCCESSOR
------------ ------------
DECEMBER 31, DECEMBER 31,
1998 1999
------------ ------------
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents........................................................ $ 114,325 $ 1,708,738
Accounts receivable, net (Note 2)................................................ 707,534 1,854,614
Deferred project costs........................................................... 63,537 159,327
Other current assets (Note 4).................................................... 7,951 747,728
------------ ------------
Total current assets.......................................................... 893,347 4,470,407
Property and equipment, net (Note 5)............................................... 464,456 1,277,630
Internal use software, net (Note 6)................................................ 334,344 976,154
Goodwill, net (Notes 2 and 3)...................................................... -- 14,852,535
Intangible assets, net (Notes 2 and 3)............................................. -- 1,776,262
------------ ------------
Total assets.................................................................. $ 1,692,147 $ 23,352,988
------------ ------------
------------ ------------
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable................................................................. $ 543,320 $ 1,471,689
Accrued expenses (Note 7)........................................................ 287,485 2,169,469
Other current liabilities........................................................ 83,791 361,703
Deferred project revenues........................................................ 537,438 1,665,347
Due to affiliates (Note 8)....................................................... 3,892,831 2,005
------------ ------------
Total current liabilities..................................................... 5,344,865 5,670,213
Term loan, net (Note 9)............................................................ -- 3,119,325
Note payable to stockholder (Notes 3 and 8)........................................ -- 13,879,794
Other long-term liabilities........................................................ 89,795 360,941
------------ ------------
Total liabilities............................................................. 5,434,660 23,030,273
------------ ------------
Commitments and contingencies (Note 10)............................................ -- --
Stockholders' equity (deficit) (Note 12):
Common stock--Class A--$.01 par value--45,000,000 shares authorized and issued... 450,000 450,000
Common stock--Class B--$.01 par value--45,000,000 shares authorized and
21,855,150 shares issued...................................................... -- 218,552
Additional paid-in capital....................................................... -- 37,880,231
Class A treasury stock, at cost--41,198,500 shares............................... -- (16,708,292)
Notes receivable from stockholders............................................... -- (500,088)
Unearned stock-based compensation................................................ -- (7,229,767)
Accumulated deficit.............................................................. (4,192,513) (13,787,921)
------------ ------------
Total stockholders' equity (deficit).......................................... (3,742,513) 322,715
------------ ------------
Total liabilties and stockholders' equity (deficit)......................... $ 1,692,147 $ 23,352,988
------------ ------------
------------ ------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
GREENFIELD ONLINE, INC.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
PREDECESSOR
------------------------------------------- SUCCESSOR
--------------
YEAR ENDED DECEMBER 31, JAN. 1 THROUGH MAY 17 THROUGH
------------------------- MAY 16, DECEMBER 31,
1997 1998 1999 1999
---------- ----------- -------------- --------------
<S> <C> <C> <C> <C>
Revenues........................................... $1,203,052 $ 2,791,364 $ 1,733,720 $ 5,557,465
Cost of revenues (excluding stock-based
compensation of $20,209)......................... 521,258 1,250,897 702,189 2,516,758
---------- ----------- ------------ ------------
Gross profit..................................... 681,794 1,540,467 1,031,531 3,040,707
Operating expenses:
Selling, general and administrative expenses
(excluding stock-based compensation of
$4,513,140)...................................... 1,292,796 3,262,399 5,243,811 6,821,699
Depreciation and amortization (Notes 3, 5
and 6)........................................... 84,964 321,876 155,683 3,843,628
Research and development (excluding stock-based
compensation of $649,366)........................ 143,479 223,233 186,282 792,268
Panel acquisition expenses (Note 2)................ 61,135 62,682 27,349 112,531
Stock-based compensation expense (Note 12)......... -- -- -- 5,182,715
---------- ----------- ------------ ------------
Operating expenses............................... 1,582,374 3,870,190 5,613,125 16,752,841
---------- ----------- ------------ ------------
Operating loss................................... (900,580) (2,329,723) (4,581,594) (13,712,134)
---------- ----------- ------------ ------------
Interest income (expense):
Interest income.................................. -- -- -- 42,120
Interest expense................................. -- (11,510) (7,001) (202,855)
Related party interest expense, net.............. (15,945) (103,270) (42,902) (855,504)
---------- ----------- ------------ ------------
Interest expense, net............................ (15,945) (114,780) (49,903) (1,016,239)
---------- ----------- ------------ ------------
Loss before income taxes...................... (916,525) (2,444,503) (4,631,497) (14,728,373)
Income tax benefit (Note 11)....................... -- -- -- 940,452
---------- ----------- ------------ ------------
Net loss........................................... $ (916,525) $(2,444,503) $ (4,631,497) $(13,787,921)
---------- ----------- ------------ ------------
---------- ----------- ------------ ------------
Basic and diluted net loss per share............... $ (0.02) $ (0.05) $ (0.10) $ (0.56)
---------- ----------- ------------ ------------
---------- ----------- ------------ ------------
Weighted average shares outstanding--basic and
diluted.......................................... 45,000,000 45,000,000 45,000,000 24,707,186
---------- ----------- ------------ ------------
---------- ----------- ------------ ------------
Pro forma basic and diluted net loss per share
(unaudited)...................................... $
------------
------------
Pro forma weighted average shares outstanding--
basic and diluted (unaudited)....................
------------
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE>
GREENFIELD ONLINE, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
CLASS A CLASS B
COMMON STOCK COMMON STOCK CLASS A
ISSUED ISSUED ADDITIONAL TREASURY STOCK
--------------------- --------------------- PAID-IN --------------------------
SHARES AMOUNT SHARES AMOUNT CAPITAL SHARES AMOUNT
---------- -------- ---------- -------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
BEGINNING BALANCE AT JANUARY 1, 1997..... 45,000,000 $450,000 -- $ -- $ -- -- $ --
Net loss............................... -- -- -- -- -- -- --
---------- -------- ---------- -------- ----------- ----------- ------------
BALANCE AT DECEMBER 31, 1997............. 45,000,000 450,000 -- -- -- -- --
Net loss............................... -- -- -- -- -- -- --
---------- -------- ---------- -------- ----------- ----------- ------------
BALANCE AT DECEMBER 31, 1998............. 45,000,000 450,000 -- -- -- -- --
Capital contribution................... -- -- -- -- 1,100,000 -- --
Forgiveness of debt from affiliates
(Note 8)............................. -- -- -- -- 4,576,581 -- --
Net loss............................... -- -- -- -- -- -- --
---------- -------- ---------- -------- ----------- ----------- ------------
BALANCE AT MAY 16, 1999.................. 45,000,000 450,000 -- -- 5,676,581 -- --
SUCCESSOR
Issuance of common stock (Note 3)...... -- -- 21,855,150 218,552 8,644,996 -- --
Common stock issuance costs
(Note 3)............................. -- -- -- -- (170,111) -- --
Treasury stock repurchases (Notes 3 and
12).................................. -- -- -- -- -- (42,534,000) (17,249,912)
Notes receivable from stockholders
(Notes 3 and 12)..................... -- -- -- -- -- -- --
Issuance of stock options (Note 3)..... -- -- -- -- 443,880 -- --
Push-down of parent company basis
(Note 3)............................. -- -- -- -- 10,413,247 -- --
---------- -------- ---------- -------- ----------- ----------- ------------
BALANCE AT MAY 17, 1999.................. 45,000,000 450,000 21,855,150 218,552 25,008,593 (42,534,000) (17,249,912)
Issuance of stock options (Note 12).... -- -- -- -- 8,106,047 -- --
Amortization of unearned stock-based
compensation (Note 12)............... -- -- -- -- -- -- --
Issuance of warrants (Note 12)......... -- -- -- -- 960,736 -- --
Exercise of stock options.............. -- -- -- -- (501,580) 1,335,500 541,620
Variable plan compensation charge
(Note 12)............................ -- -- -- -- 4,306,435 -- --
Net loss............................... -- -- -- -- -- -- --
---------- -------- ---------- -------- ----------- ----------- ------------
BALANCE AT DECEMBER 31, 1999............. 45,000,000 $450,000 21,855,150 $218,552 $37,880,231 (41,198,500) $(16,708,292)
---------- -------- ---------- -------- ----------- ----------- ------------
---------- -------- ---------- -------- ----------- ----------- ------------
<CAPTION>
NOTES UNEARNED TOTAL
RECEIVABLE STOCK- STOCKHOLDERS'
FROM BASED ACCUMULATED EQUITY
STOCKHOLDERS COMPENSATION DEFICIT (DEFICIT)
------------ ------------ ------------ -------------
<S> <C> <C> <C> <C>
BEGINNING BALANCE AT JANUARY 1, 1997..... $ -- $ -- $ (831,485) $ (381,485)
Net loss............................... -- -- (916,525) (916,525)
---------- ------------ ------------ -------------
BALANCE AT DECEMBER 31, 1997............. -- -- (1,748,010) (1,298,010)
Net loss............................... -- -- (2,444,503) (2,444,503)
---------- ------------ ------------ -------------
BALANCE AT DECEMBER 31, 1998............. -- -- (4,192,513) (3,742,513)
Capital contribution................... -- -- -- 1,100,000
Forgiveness of debt from affiliates
(Note 8)............................. -- -- -- 4,576,581
Net loss............................... -- -- (4,631,497) (4,631,497)
---------- ------------ ------------ -------------
BALANCE AT MAY 16, 1999.................. -- -- (8,824,010) (2,697,429)
SUCCESSOR
Issuance of common stock (Note 3)...... -- -- -- 8,863,548
Common stock issuance costs
(Note 3)............................. -- -- -- (170,111)
Treasury stock repurchases (Notes 3 and
12).................................. -- -- -- (17,249,912)
Notes receivable from stockholders
(Notes 3 and 12)..................... (500,088) -- -- (500,088)
Issuance of stock options (Note 3)..... -- -- -- 443,880
Push-down of parent company basis
(Note 3)............................. -- -- 8,824,010 19,237,257
---------- ------------ ------------ -------------
BALANCE AT MAY 17, 1999.................. (500,088) -- -- 7,927,145
Issuance of stock options (Note 12).... -- (7,665,421) -- 440,626
Amortization of unearned stock-based
compensation (Note 12)............... -- 435,654 -- 435,654
Issuance of warrants (Note 12)......... -- -- -- 960,736
Exercise of stock options.............. -- -- -- 40,040
Variable plan compensation charge
(Note 12)............................ -- -- -- 4,306,435
Net loss............................... -- -- (13,787,921) (13,787,921)
---------- ------------ ------------ -------------
BALANCE AT DECEMBER 31, 1999............. $ (500,088) $(7,229,767) $(13,787,921) $ 322,715
---------- ------------ ------------ -------------
---------- ------------ ------------ -------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE>
GREENFIELD ONLINE, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
PREDECESSOR
--------------------------------------- SUCCESSOR
------------
YEAR ENDED DECEMBER 31, JAN. 1 TO MAY 17 TO
------------------------ MAY 16, DECEMBER 31,
1997 1998 1999 1999
--------- ----------- ----------- ------------
Cash flows from operating activities:
<S> <C> <C> <C> <C>
Net loss............................................... $(916,525) $(2,444,503) $(4,631,497) $(13,787,921)
Adjustments to reconcile net loss to net cash provided
by (used in) operating activities:
Depreciation and amortization..................... 84,964 321,876 155,683 3,843,628
Stock-based compensation expense.................. -- -- -- 5,182,715
Amortization of debt discount..................... -- -- -- 97,172
Income tax benefit................................ -- -- -- (940,452)
(Increase) decrease in:
Accounts receivable............................. (107,566) (437,593) (83,495) (1,063,584)
Deferred project costs.......................... (36,534) (27,003) (57,364) (38,426)
Other current assets............................ (1,251) 5,439 (121,006) (618,771)
Increase (decrease) in:
Accounts payable................................ 208,750 291,746 260,944 667,425
Accrued expenses................................ 76,394 188,260 3,272,654 (1,390,720)
Other liabilities............................... -- 55,489 (12,663) (270)
Deferred project revenues....................... 284,540 252,898 (189,799) 1,317,708
Due to affiliates............................... 455,821 541,660 410,201 (11,287)
--------- ----------- ----------- ------------
Net cash provided by (used in) operating activities...... 48,593 (1,251,731) (996,342) (6,742,783)
--------- ----------- ----------- ------------
Cash flows from investing activities:
Capital expenditures................................... (420,908) (645,025) (228,992) (1,007,944)
--------- ----------- ----------- ------------
Net cash used in investing activities.................... (420,908) (645,025) (228,992) (1,007,944)
--------- ----------- ----------- ------------
Cash flows from financing activities:
Proceeds from term loan................................ -- -- -- 4,000,000
Advances from affiliate................................ 489,945 1,880,000 -- --
Principle payments under capital lease obligations..... -- (16,828) (15,877) (91,507)
Proceeds from issuance of note payable to
stockholder.......................................... -- -- -- 14,136,452
Treasury stock repurchase.............................. -- -- -- (17,249,912)
Loans to management to acquire capital stock........... -- -- -- (500,088)
Proceeds from the issuance of capital stock............ -- -- -- 8,863,548
Capital contribution from predecessor.................. -- -- 1,387,818 --
Proceeds of options exercised.......................... -- -- -- 40,040
--------- ----------- ----------- ------------
Net cash provided by financing activities................ 489,945 1,863,172 1,371,941 9,198,533
--------- ----------- ----------- ------------
Net increase (decrease) in cash and cash equivalents..... 117,630 (33,584) 146,607 1,447,806
Cash and cash equivalents at the beginning of the
period................................................. 30,279 147,909 114,325 260,932
--------- ----------- ----------- ------------
Cash and cash equivalents at the end of the period....... $ 147,909 $ 114,325 $ 260,932 $ 1,708,738
--------- ----------- ----------- ------------
--------- ----------- ----------- ------------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION*
Cash paid for interest................................. $ -- $ 114,779 $ 7,001 $ 122,793
--------- ----------- ----------- ------------
--------- ----------- ----------- ------------
</TABLE>
* See Note 14 for supplemental disclosure of noncash investing and financing
transactions.
The accompanying notes are an integral part of these financial statements.
F-7
<PAGE>
1. ORGANIZATION, BUSINESS AND BASIS OF PRESENTATION
ORGANIZATION AND BASIS OF PRESENTATION
Greenfield Online, Inc., the "Company," was incorporated in the State of
Connecticut on September 28, 1995. Until May 17, 1999, one person owned the
capital stock of the Company. On May 17, 1999, management and a group of new
investors executed a management buyout in which approximately 97% of the
outstanding common stock of the Company was acquired by a group of new investors
led by Greenfield Holdings, LLC., "Greenfield Holdings". Greenfield Holdings was
formed for the sole purpose of acquiring the Company in the management buyout.
As a result of the management buyout effective May 17, 1999, a change in
control occurred, and a new reporting entity exists. For purposes of
presentation and disclosure, we refer to the Company as the Predecessor as of
and for all periods up to the point of the management buyout and as the
Successor as of and for all periods thereafter. Because the financial statements
of the Successor are not directly comparable to those of the Predecessor, a dark
bar has been inserted in the accompanying financial statements to clearly
separate the financial position, results of operations and cash flows of the
Company before and after the change in control. These financial statements
present the operations of the Successor and the Predecessor. The financial
statements also reflect "push-down" accounting in accordance with SEC Staff
Accounting Bulletin No. 54, "SAB 54", with respect to the management buyout. See
Note 3. In February of 2000, the Company changed its state of incorporation from
Connecticut to Delaware.
BUSINESS
The Company conducts business-to-business marketing research services
through the use of the Internet. The Company has developed proprietary automated
methodologies in which surveys are created and delivered to the Company's
community of online survey respondents or "Panelists". The surveys are then
tabulated and are used as a basis for custom research projects conducted by the
Company. In addition, the Company has developed other products that provide
"do-it-yourself" capabilities for market researchers, in which surveys may be
created and delivered by the market researcher with minimal Company
intervention. Further, the Company has developed a service which provides the
client access to online focus groups and the Company has developed syndicated,
multi-client products which are sold on a subscription basis.
The Company has a limited operating history and its prospects are subject
to the risks, expenses and uncertainties frequently encountered by companies in
the new and rapidly evolving markets for Internet products and services. These
risks include the failure to further develop and extend the Company's online
research products, the rejection of Internet-based marketing research by
companies in favor of more traditional methods, the inability of the Company to
maintain and increase its online survey panel, failure to compete effectively
for new customers, as well as other risks and uncertainties. In the event the
Company does not successfully implement its business plan, certain assets may
not be recoverable.
The Company has consistently sustained net losses and negative cash flows
from operations and maintains a working capital deficiency. As a result of the
management buyout, the Company became highly-leveraged. The Company's ability to
meet its obligations in the ordinary course of business is dependent upon its
ability to attract capital from new and existing investors. To date, the Company
has been able to attract sufficient capital to support its operating needs and
meet its obligations as they come due. During 1999, the Company received
approximately $27 million of debt and equity financing from various sources,
including investors participating in the management buyout, as well as financial
institutions. In 2000, the Company closed on additional debt financing in the
amount of approximately $5 million, and an additional $5.4 million in equity.
See Note 15. These funds are being used to expand its operations, including
hiring additional employees and continuing to invest in proprietary Internet
survey products and technologies. Management believes that these funds, together
with available cash are sufficient to support the Company's operations at least
through March 2001.
In addition, to further expand its operations the Company plans to seek
additional capital, including sale of a portion of its common stock in an
initial public offering, or additional private debt and equity financing.
F-8
<PAGE>
1. ORGANIZATION, BUSINESS AND BASIS OF PRESENTATION--(CONTINUED)
However, there can be no assurance that the Company will successfully complete
an initial public offering or that it will be able to attract further capital to
support this expansion.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
USE OF ESTIMATES
The accompanying financial statements are prepared in conformity with
generally accepted accounting principles which require management to make
estimates and assumptions that affect the reported amount of assets and
liabilities and disclosures of contingent liabilities, if any, at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
REVENUE RECOGNITION
The Company recognizes revenue for customized (nonrecurring) research
services in the period in which the product is delivered. Custom research
products are delivered within a short period generally ranging from a few days
to eight weeks. An appropriate deferral is made for costs related to contracts
in process. Syndicated (recurring) research services are sold on a subscription
basis for periods of up to one year. Subscription revenues are recognized
ratably over the term of the related contract as services are provided. Billings
rendered in advance of performance of services, as well as customer deposits
received in advance, are recorded as deferred revenue. Provision for estimated
contract losses, if any, is made in the period such losses are determined.
PANEL ACQUISITION EXPENSES
Costs associated with establishing and maintaining panels of potential
survey respondents are expensed as incurred. The costs to acquire these
web-based panelists approximated $61,135, $62,682, $27,349 and $112,531 in the
years ended December 31, 1997 and 1998, and the periods from January 1, 1999
through May 16, 1999 and from May 17, 1999 through December 31, 1999,
respectively.
SOFTWARE COSTS
The Company has adopted Statement of Position 98-1, "Accounting for the
Costs of Computer Software Developed or Obtained for Internal Use", SOP 98-1.
SOP 98-1 requires companies to capitalize costs of computer software developed
or obtained for internal use, provided that such costs are not research and
development. The Company develops new proprietary products and technology
through its internal research and development group and through use of outside
technology developers.
All costs associated with development of code, and purchase or license of
software from external vendors which is used to run the Company's web operations
are capitalized and amortized over the estimated useful life, two years.
The Company expenses as incurred all costs associated with new product
development whether performed by employees or outside consultants, including
reengineering, process mapping, feasibility studies, data conversion, and
training and maintenance. In addition, the Company expenses as incurred the
costs associated with maintenance and upgrades of current technologies. Such
costs are included in research and development in the statement of operations.
F-9
<PAGE>
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
CASH AND CASH EQUIVALENTS
Cash equivalents consist of highly liquid investments with maturities of
three months or less at the date of purchase.
FAIR VALUE OF FINANCIAL INSTRUMENTS
Cash, accounts receivable, accounts payable and accrued expenses are valued
at their carrying amounts, which approximate their fair value. The face value of
the term loan and note payable to stockholder approximate their fair value. The
term loan and note payable to stockholder are included in the balance sheet at
their face amount net of an applicable discount. The fair value of such debt is
estimated based on quoted market prices for the same or similar issues offered
to the Company for debt with the same or similar remaining maturities and terms.
Discounts are based upon the estimated relative fair value of common stock
purchase warrants issued with the debt.
CONCENTRATION OF CREDIT RISK AND SIGNIFICANT CUSTOMERS
Financial instruments which potentially expose the Company to
concentrations of credit risk consist principally of accounts receivable. The
Company controls this risk through credit approvals and ongoing credit
evaluations of its customers' financial condition. The Company periodically
reviews accounts receivable for collectibility and provides for an allowance for
doubtful accounts to the extent that amounts are not expected to be collected.
The allowance for doubtful accounts was $0 and $67,058 at December 31, 1998 and
1999, respectively. Based upon the existing client portfolio and limited
historical write-offs, management believes that the reserve for doubtful
accounts is adequate.
For the year ended December 31, 1997, 18% and 15% of total revenue was from
two customers and 13% were from one customer for the year ended December 31,
1998. For the periods from January 1, 1999 through May 16, 1999 and from
May 17, 1999 through December 31, 1999 no single customer represented greater
than 10% of the Company's revenues.
For the year ended December 31, 1997, 16% and 13% of the Company's accounts
receivable balance were from two customers. The Company had no single customer
that represented greater than 10% of its accounts receivable balance at December
31, 1998 or 1999.
FIXED ASSETS
Fixed assets are stated at cost. Depreciation of fixed assets is calculated
on the straight-line basis over the estimated useful lives of the assets, which
are generally 2 to 7 years. Leasehold improvements are amortized on the
straight-line method over the estimated useful life of the assets, or lease
term, whichever is shorter. Maintenance and repairs for fixed assets are
expensed as incurred. Retirements or dispositions of fixed assets are included
in income on a net basis. Assets to be disposed of are reported at the lower of
the carrying value or fair value less estimated costs of disposal.
GOODWILL AND INTANGIBLE ASSETS
Goodwill and certain intangible assets were recorded through the
application of "push-down" accounting in accordance with SEC Staff Accounting
Bulletin No. 54 in connection with the management buyout transaction described
in Note 3. Goodwill and identifiable intangible assets are amortized on a
straight-line basis over the estimated period of benefit, which ranges from 2 to
4 years. For the period from May 17, 1999 through December 31, 1999,
amortization of goodwill and intangibles was $3,277,221.
The Company periodically evaluates the carrying value of its long-lived
assets. Impairment charges are recorded when indicators of impairment are
present and the undiscounted future cash flows estimated to be generated by the
underlying assets are less than the assets' carrying amounts. If such assets are
determined to be impaired, the impairment to be recognized is measured as the
amount by which the carrying amount of the assets exceeds the estimated fair
value of the assets. To date, no such impairment charges have been required.
F-10
<PAGE>
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
INCOME TAXES
For the years ended December 31, 1997 and 1998 and the period from January
1, 1999 through May 16, 1999, the Company elected to be taxed and operated as an
S-Corporation and, therefore, was exempt from taxation under the provisions of
the Internal Revenue Code, the "Code," and applicable state tax regulations.
Under the provisions of the Code, the stockholders include their pro rata share
of the Company's income or loss on their personal income tax returns. Subsequent
to May 16, 1999, the Company converted to a C-Corporation and became subject to
Federal and state corporate income taxes.
The Company uses the liability method of accounting for income taxes, as
set forth in Statement of Financial Accounting Standards No. 109, Accounting for
Income Taxes, SFAS No. 109. Under this method, deferred tax assets and
liabilities are recognized for the expected future tax consequences of temporary
differences between the carrying amounts and the tax basis of assets and
liabilities and net operating loss carryforwards, all calculated using presently
enacted tax rates. The income tax information included on the face of the
statements of operations and in Note 11 is presented in accordance with SFAS
No. 109.
STOCK-BASED COMPENSATION
The Company applies Accounting Principles Board Opinion No. 25, Accounting
for Stock Issued to Employees, "APB No. 25", and related interpretations in
accounting for its employee stock option plan and stock awards, and has adopted
the disclosure-only provisions of Statement of Financial Accounting Standards
No. 123, Accounting for Stock-Based Compensation, "SFAS No. 123" for such
awards. Under APB No. 25, compensation is determined to the extent that the fair
value of the underlying stock on the date of grant exceeds the exercise price of
the employee stock option or stock award. Compensation so determined is deferred
in stockholders' equity (deficit) and then recognized over the service period
for the stock option or award.
Stock based transactions with non-employees are accounted for under SFAS
123 based on the fair value of the consideration received or the fair value of
the equity instruments issued, which ever is more reliably measurable. The fair
value of such equity instruments is determined using the Black-Scholes pricing
model and accounted for in the same manner as if the Company had paid cash for
goods and services instead of paying with equity instruments.
EARNINGS (LOSS) PER SHARE
The Company computes net loss per share pursuant to Statement of Financial
Accounting Standards No. 128, Earnings Per Share, and SEC Staff Accounting
Bulletin No. 98. Basic net loss per share is computed by dividing net loss by
the weighted average number of shares of the Company's common stock outstanding
during the period.
For the years ended December 31, 1997 and 1998 and the period from January
1, 1999 through May 16, 1999 there were no outstanding equity instruments
convertible into common stock. For the period from May 17, 1999 to December 31,
1999 options to purchase 3,804,050 shares of common stock and warrants to
purchase 167,808 shares common stock were excluded from the calculation of
diluted earnings per share because including them would have been antidilutive.
Pro Forma (Unaudited): Pro forma net loss per share adjusts net loss per
share to reflect the assumed issuance of common shares to fund the
cash payment to stockholders of $14,136,452 at the initial public offering date
for the redemption of the note payable to stockholder.
COMPREHENSIVE INCOME
The Company adopted, in 1999, the accounting treatment prescribed by
Statement of Financial Accounting Standards No. 130, Reporting Comprehensive
Income. The adoption of this statement had no impact on the Company's financial
statements for the periods presented.
F-11
<PAGE>
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, Accounting for Derivative Instruments
and Hedging Activities, "SFAS No. 133". The new standard establishes accounting
and reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts, and for hedging activities. SFAS No.
133 is effective for the Company beginning in fiscal 2001. Management does not
expect SFAS No. 133 to have a material effect on the financial position, results
of operations or cash flows of the Company.
In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 101, Revenue Recognition, "SAB 101," which provides
guidance on the recognition, presentation and disclosure of revenue in financial
statements filed with the Securities and Exchange Commission. SAB 101 outlines
the basic criteria that must be met to recognize revenues and provides guidance
for disclosures related to revenue recognition policies. Management believes
that its revenue recognition policies and practices are in conformance with SAB
101.
3. MANAGEMENT BUYOUT AND LEVERAGED RECAPITALIZATION TRANSACTION
As disclosed in Note 1, a change in control occurred via a management
buyout effective May 17, 1999. The transaction was structured as a leveraged
recapitalization, and was executed in three broad steps. First, the existing
common stock of the Company was split into two classes, Class A and Class B,
with substantially the same rights. All shares outstanding at the time were
owned by the sole stockholder of the Predecessor, and were converted into Class
A stock, and Class B stock was reserved for the new investors. Second, new
investors, through Greenfield Holdings, purchased newly issued Class B shares in
exchange for cash. In addition, Greenfield Holdings loaned the Company a
substantial amount in exchange for an unsecured long-term note payable. Third,
using the proceeds from the equity infusion and the borrowings from Greenfield
Holdings, the Company in turn concurrently repurchased substantially all of the
Class A shares outstanding from the sole stockholder of the Predecessor in a
treasury stock transaction. Certain other agreements were executed in connection
with this transaction. The transaction and its effects are described in greater
detail below.
STOCK REPURCHASE AND REDEMPTION AGREEMENT
On May 17, 1999, pursuant to a Stock Repurchase and Redemption Agreement,
(the "Agreement"), the Successor sold to Greenfield Holdings 21,855,150 shares
of Class B common stock for an aggregate purchase price of $8,863,548. In
addition, pursuant to the Agreement, on May 17, 1999, the Successor redeemed
42,534,000 shares of Class A common stock from the sole stockholder of the
Predecessor for an aggregate purchase price of $17,249,912. The repurchase of
the Class A common stock was funded using the proceeds from the sale of Class B
common stock and the proceeds from the Promissory Note to Greenfield Holdings.
PROMISSORY NOTE
On May 17, 1999, the Successor received a loan in the form of a Promissory
Note to Greenfield Holdings, in the amount of $14,136,452. The note is unsecured
and bears interest at an escalating rate as follows: May 17, 1999 to May 16,
2001, 7.5% per annum; May 17, 2001 to May 16, 2003, 9.5% per annum; and,
May 17, 2003 to May 17, 2009, 10.5% per annum. The interest is payable annually
on May 17 in cash, or, at the election of the Company, 70% of the interest due
may be paid-in-kind by increasing the amount then outstanding on the note by 70%
of the interest then due. Interest expense is calculated using the effective
interest method over the term of the note, at an effective rate of 9.64%.
The note has a stated maturity of May 17, 2009. However, it is subject to
mandatory prepayment upon the occurrence of any one of the following events: i)
liquidation of the Company; (ii) merger or consolidation with an aggregate
consideration of greater than $20 million; (iii) disposal of all or
substantially all of the Company's assets, or acquisition of all or
substantially all of the assets of any other entity; (iv) an initial
F-12
<PAGE>
3. MANAGEMENT BUYOUT AND LEVERAGED RECAPITALIZATION TRANSACTION--(CONTINUED)
public offering; (v) a change of control wherein Greenfield Holdings ceases to
own at least 40% of the outstanding capital stock of the Company.
As a result of the management buyout and leveraged recapitalization,
Greenfield Holdings and certain other investors became owners of approximately
97% of all of the outstanding common stock of the Company. The change in
ownership of outstanding common stock was as follows:
<TABLE>
<CAPTION>
OWNERSHIP OF OWNERSHIP OF
PREDECESSOR SUCCESSOR
------------ ------------
<S> <C> <C>
Sole Stockholder of Predecessor.................................. 100.0% 3.3%
Greenfield Holdings and investor group........................... 0.0% 96.7%
------ ------
Total....................................................... 100.0% 100.0%
------ ------
------ ------
</TABLE>
As part of the management buyout, the sole stockholder of the Predecessor
had an additional 1.7% contingent ownership interest based upon a revenue
referral agreement. The Greenfield Holdings investor group includes two officers
of the Company that have restricted shares of 4.3% and 0.8%, respectively, that
are earned over a period of four years from the date of the management buyout.
None of these contingent interests were treated as outstanding for purposes of
determining whether substantially all of the Predecessor interest was acquired.
Management was represented by an advisor who received stock options as
remuneration for the management buyout. As consideration for his assistance, the
advisor, who became a member of the Board of Directors of the Company after the
management buyout, received stock options to purchase 1,233,000 shares of common
stock at an exercise price of $0.005 per share. These options are treated as
issuance costs. The options were immediately vested and were exercisable through
their expiration date of May 17, 2009. The advisor exercised these options in
October 1999. The fair value of these options at issuance was determined using a
Black-Scholes pricing model assuming a volatility rate of 61%, an expected life
of 10 years, no expected dividends and a risk free rate of 5.3%. The fair value
of these options of $443,880 was allocated to the debt and equity proceeds
received in the management buyout on a pro rata basis based upon the relative
value of the debt and equity proceeds. The allocation to the promissory note,
$273,769, is treated as a discount on the note and is being amortized to the
statement of operations as related party interest expense over the term of the
note in accordance with the effective interest method. The unamortized balance
of the debt discount was $256,658 at December 31, 1999, and is included in note
payable to stockholder on the balance sheet. The allocation to the equity
proceeds, $170,111, is included in additional paid-in capital.
The values assigned by Greenfield Holdings to the Company's net assets are
based upon a valuation study conducted by management with the assistance of an
outside valuation firm. Greenfield Holdings' basis in the net assets of the
Company was then "pushed down" to the Company in accordance with SAB 54.
F-13
<PAGE>
3. MANAGEMENT BUYOUT AND LEVERAGED RECAPITALIZATION TRANSACTION--(CONTINUED)
The following table compares Predecessor and Successor balance sheets as of
the date of the management buyout. The changes reflect the revaluations and
changes in stockholders' equity (deficit) described above.
<TABLE>
<CAPTION>
HISTORICAL ADJUSTED BASIS
PREDECESSOR MANAGEMENT PUSH DOWN SUCCESSOR
MAY 17, 1999 BUYOUT* ADJUSTMENTS MAY 17, 1999
------------ ----------- ------------ --------------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents......................... $ 260,932 $ 5,250,000 $ -- $ 5,510,932
Accounts receivable, net.......................... 791,029 -- -- 791,029
Deferred project costs............................ 120,901 -- -- 120,901
Other current assets.............................. 128,957 -- -- 128,957
------------ ----------- ------------ ------------
Total current assets........................... 1,301,819 5,250,000 -- 6,551,819
Property and equipment, net......................... 508,529 -- -- 508,529
Internal use software, net.......................... 362,782 -- 271,691 634,473
Goodwill............................................ -- -- 17,823,042 17,823,042
Intangible assets................................... -- -- 2,082,976 2,082,976
------------ ----------- ------------ ------------
Total assets................................... $ 2,173,130 $ 5,250,000 $ 20,177,709 $ 27,600,839
------------ ----------- ------------ ------------
------------ ----------- ------------ ------------
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable.................................. $ 804,265 $ -- $ -- $ 804,265
Accrued expenses.................................. 3,560,139 -- -- 3,560,139
Other current liabilities......................... 75,208 -- -- 75,208
Deferred project revenues......................... 347,639 -- -- 347,639
Due to affiliates................................. 13,469 -- -- 13,469
Deferred tax liability............................ -- -- 940,452 940,452
------------ ----------- ------------ ------------
Total current liabilities...................... 4,800,720 -- 940,452 5,741,172
Note payable to stockholder, net.................... -- 13,862,683 -- 13,862,683
Other long-term liabilities......................... 69,839 -- -- 69,839
------------ ----------- ------------ ------------
Total liabilities................................... 4,870,559 13,862,683 940,452 19,673,694
------------ ----------- ------------ ------------
Stockholders' equity (deficit):
Common stock--Class A, 0.01 par value 450,000 -- -- 450,000
Common stock--Class B, 0.01 par value -- 218,552 -- 218,552
Additional paid-in capital........................ 5,676,581 8,918,765 10,413,247 25,008,593
Class A treasury stock--at cost................... -- (17,249,912) -- (17,249,912)
Notes receivable from stockholders................ -- (500,088) -- (500,088)
Accumulated deficit............................... (8,824,010) -- 8,824,010 --
------------ ----------- ------------ ------------
Total stockholders' equity (deficit)................ (2,697,429) (8,612,683) 19,237,257 7,927,145
------------ ----------- ------------ ------------
Total liabilities and stockholders'
equity (deficit).................................. $ 2,173,130 $ 5,250,000 $ 20,177,709 $ 27,600,839
------------ ----------- ------------ ------------
------------ ----------- ------------ ------------
</TABLE>
- ------------------
* Entries reflect the infusion of equity and debt of $8,863,548 and $14,136,452,
respectively, the issuance of options to the deal advisor, the purchase of
treasury stock and the issuance of the notes receivable from stockholders, as
described in Note 12.
F-14
<PAGE>
3. MANAGEMENT BUYOUT AND LEVERAGED RECAPITALIZATION TRANSACTION--(CONTINUED)
Goodwill and identifiable intangibles recognized in connection with the
push-down accounting were as follows at December 31, 1999:
<TABLE>
<CAPTION>
ESTIMATED SUCCESSOR
USEFUL DECEMBER 31,
LIVES 1999
--------- ------------
<S> <C> <C>
Goodwill............................................................................... 3.0 $ 17,823,042
Less-accumulated amortization.......................................................... (2,970,507)
------------
$ 14,852,535
------------
------------
Intangible assets:
Panel members........................................................................ 4.0 $ 711,752
Customer base........................................................................ 2.5 382,475
Workforce............................................................................ 3.5 988,749
------------
2,082,976
Less-accumulated amortization.......................................................... (306,714)
------------
$ 1,776,262
------------
------------
</TABLE>
4. OTHER CURRENT ASSETS
Other current assets consisted of the following:
<TABLE>
<CAPTION>
PREDECESSOR SUCCESSOR
------------ ------------
DECEMBER 31, DECEMBER 31,
1998 1999
------------ ------------
<S> <C> <C>
Prepaid advertising.................................... $ -- $317,960
Security deposits...................................... 7,951 226,720
Other.................................................. -- 203,048
------ --------
$7,951 $747,728
------ --------
------ --------
</TABLE>
5. PROPERTY AND EQUIPMENT, NET
Property and equipment, net consists of the following:
<TABLE>
<CAPTION>
PREDECESSOR SUCCESSOR
ESTIMATED ------------ ------------
USEFUL DECEMBER 31, DECEMBER 31,
LIVES - YEARS 1998 1999
------------- ------------ ------------
<S> <C> <C> <C>
Furniture and fixtures.................. 7 $ 91,832 $ 112,488
Leasehold improvements.................. 2* 88,404 113,824
Office equipment........................ 3 - 5 419,107 1,515,445
Telephone system........................ 5 8,573 46,989
----- ---------- ----------
607,916 1,788,746
Less--accumulated depreciation and
amortization.......................... (143,460) (511,116)
---------- ----------
$ 464,456 $1,277,630
---------- ----------
---------- ----------
</TABLE>
- ------------------
* Life of underlying lease.
Depreciation and amortization expense for these items amounted to $25,314,
$113,682, $74,433, and $305,223 in the years ended December 31, 1997 and 1998
and the periods from January 1, 1999 through May 16, 1999 and from May 17, 1999
through December 31, 1999, respectively.
F-15
<PAGE>
6. INTERNAL USE SOFTWARE, NET
Internal-use software, net consists of the following:
<TABLE>
<CAPTION>
PREDECESSOR SUCCESSOR
ESTIMATED ------------ ------------
USEFUL DECEMBER 31, DECEMBER 31,
LIFE 1998 1999
--------- ------------ ------------
<S> <C> <C> <C>
Internal use software...................... 2 $ 601,714 $1,585,957
Less--accumulated depreciation............. (267,370) (609,803)
---------- ----------
$ 334,344 $ 976,154
---------- ----------
---------- ----------
</TABLE>
Depreciation related to internal use software amounted to $59,650,
$208,194, $81,250 and $261,183 in the years ended December 31, 1997 and 1998 and
the periods from January 1, 1999 through May 16, 1999 and from May 17, 1999
through December 31, 1999, respectively.
Software costs expensed as incurred and charged to research and development
expense amounted to $59,650, $88,893, $98,568 and $522,945 in the years ended
December 31, 1997 and 1998 and the periods from January 1, 1999 through May 16,
1999 and from May 17, 1999 through December 31, 1999, respectively.
7. ACCRUED EXPENSES
Accrued expenses consisted of the following:
<TABLE>
<CAPTION>
PREDECESSOR SUCCESSOR
------------ ------------
DECEMBER 31, DECEMBER 31,
1998 1999
------------ ------------
<S> <C> <C>
Employee bonuses....................................... $ 61,425 $ 833,822
Accrued interest related party......................... -- 855,109
Other.................................................. 226,060 480,538
-------- ----------
$287,485 $2,169,469
-------- ----------
-------- ----------
</TABLE>
8. RELATED PARTY TRANSACTIONS
GREENFIELD HOLDINGS
The Company, as part of the management buyout and leveraged
recapitalization, received a promissory note from Greenfield Holdings. See
Note 3. The carrying amount of this note at December 31, 1999 of $13,879,794 is
included on the balance sheet as Note Payable to Stockholder, and the interest
expense related to this note is included in the statement of operations as
related party interest expense. Interest expense is calculated using the
effective interest method over the term of the note.
Two management team members purchased equity shares in Greenfield Holdings
as a part of the leveraged recapitalization transaction. These investments
represent a 1.087% and 0.652% equity share in Greenfield Holdings.
I-GAIN
In 1999, the Company entered into a relationship with I-Gain, an incentive
and loyalty reward company, in which I-Gain pays cash awards to panelists on a
random drawing basis on behalf of the Company. I-Gain receives a fee of $0.50
per transaction. A member of the Company's management team holds a 10% ownership
interest in I-Gain. The total costs incurred for this arrangement with I-Gain in
the periods from January 1, 1999 through May 16, 1999 and from May 17, 1999
through December 31, 1999 were $258,310 and $590,610, respectively. These fees
are included in cost of revenues.
F-16
<PAGE>
8. RELATED PARTY TRANSACTIONS--(CONTINUED)
GREENFIELD CONSULTING GROUP, INC.
In December 1999, the Company entered into a two-year agreement with
Greenfield Consulting Group, Inc., "Greenfield Consulting." Greenfield
Consulting is wholly owned by the sole stockholder of the Predecessor. Under the
two-year agreement, Digital Idea, Inc., a subsidiary of Greenfield Consulting
would exclusively purchase qualitative and quantitative market research data
from the Company at reduced rates. In turn, the Company agreed to not enter into
any exclusive provider arrangement with any other internet-focused strategic
consulting services company in the marketing services category. During the
period from May 17, 1999 through December 31, 1999, the Company earned revenues
of $26,200 from Digital Idea, Inc. related to these services.
On May 14, 1999, the Company entered into a three-year agreement with
Greenfield Consulting in which Strategic Focus, Inc., a subsidiary of Greenfield
Consulting, would provide certain support services for the Company's Focus Chat
business, which provides the Company's clients access to online focus groups.
The agreement required the Company to rely exclusively on Strategic Focus, Inc.
for these support services. In January 2000, Strategic Focus, Inc. was dissolved
and the contract became null and void. During the period from May 17, 1999
through December 31, 1999, the Company incurred expenses of $21,563 related to
this agreement.
On May 17, 1999, the Company entered into a Transition Services Agreement
with Greenfield Consulting in which the Company would share services related to
accounting, human resources and office administration through December 31, 1999.
The agreement could be terminated at any time given mutual agreement between the
Company and Greenfield Consulting. This agreement was terminated effective
November 30, 1999. During the period from May 17, 1999 through December 31,
1999, the Company paid fees for shared services of $49,482 to Greenfield
Consulting.
On May 17, 1999, the Company entered into a sublease agreement with
Greenfield Consulting wherein it sublet an aggregate of 9,411 square feet from
Greenfield Consulting in their Westport, Connecticut office. The agreement was
effective through August 31, 1999; however, it could be extended on a
month-to-month basis through December 31, 1999. The sublease was extended
through November 30, 1999. During the period from May 17, 1999 through
December 31, 1999, the Company incurred expenses of $129,687 related to this
agreement.
MESCO, LTD.
In 1999, the Company paid a total of $32,500 in consulting fees to Mesco,
Ltd., a consulting firm in which one of the Company's directors, who is also a
stockholder, is a principal. These consulting fees were paid at a fixed rate of
$5,000 per month. Under the agreement with Mesco, Ltd., Mesco provides business
and financial consulting services to the Company. This agreement can be
terminated at any time by either party.
FORGIVENESS OF PAYABLE TO AFFILIATE
During the period from January 1, 1999 through May 16, 1999, the sole
stockholder of the Predecessor forgave a loan due to him from the Predecessor in
the amount of $2,788,665. Additionally, Greenfield Consulting, wholly owned by
the sole stockholder of the Predecessor, forgave $1,787,916 of intercompany
advances to the Predecessor. The forgiveness of the $4,576,581 of payables
during the period from January 1, 1999 through May 16, 1999 has been accounted
for as an additional contribution of capital to the Predecessor company.
9. TERM LOAN AND REVOLVING CREDIT FACILITY
On December 3, 1999, the Company entered into a Loan and Security Credit
Agreement that provides a credit line of $6.0 million, "the credit facility".
The credit facility is comprised of a one-year term loan in the amount of $4.0
million and a revolving credit line of up to $2.0 million. The revolving credit
line is based upon an 85% advance rate on eligible accounts receivable. The
credit facility bears interest monthly at
F-17
<PAGE>
9. TERM LOAN AND REVOLVING CREDIT FACILITY--(CONTINUED)
a rate equal to the highest LIBOR rate in effect during the month plus 5% per
annum, provided that the interest rate in effect in each month shall not be less
than 8% per annum. The credit facility was originally to mature on November 30,
2000 at which time it automatically would renew, subject to the terms and
conditions as set forth in the credit facility. The credit facility is
collateralized by the general assets of the Company, including security in the
Company's patents, trademarks and copyrighted works. The credit facility carries
a mandatory repayment if the Company completes an initial public offering of its
equity securities.
As of December 31, 1999, the outstanding borrowings on the term loan were
$4.0 million. The Company had not used the revolving credit line and, as such,
had no outstanding balance at December 31, 1999. The interest rate at
December 31, 1999 was 11.5%.
In conjunction with the credit facility, the Company issued a warrant to
purchase 167,808 shares of its Class A common stock to the debt holder. See Note
12. The warrant has an exercise price of $3.58 per share, and is fully
exercisable through its expiration date of December 3, 2003. The fair value of
the warrant was determined using the Black-Scholes pricing model assuming a
volatility rate of 61%, an expected life of 4 years, no expected dividends and a
risk free rate of return of 5.9%. The gross proceeds of the debt financing were
then allocated between the debt and the warrants based on the estimated fair
values of both instruments. The relative fair value assigned to the warrants of
$960,736 was recorded as a discount to the term loan. This discount is being
amortized as interest expense over the term of the loan using the effective
interest method. Amortization of the discount was $80,061 in the period from May
17, 1999 to December 31, 1999. See Note 12 for warrants. The borrowings under
this agreement are reported in the balance sheet as term loan, net and are net
of unamortized discount of $880,675.
10. COMMITMENTS AND CONTINGENCIES
LEASE COMMITMENTS AND OBLIGATIONS
Assets under capital leases are summarized below:
<TABLE>
<CAPTION>
PREDECESSOR SUCCESSOR
------------ ------------
DECEMBER 31, DECEMBER 31,
1998 1999
------------ ------------
<S> <C> <C>
Equipment.............................................. $148,354 $803,358
Less--accumulated depreciation......................... (24,317) (182,118)
-------- --------
Assets under capital leases, net....................... $124,037 $621,240
-------- --------
-------- --------
</TABLE>
Future minimum lease payments under capital leases and noncancelable
operating leases as of December 31, 1999 are as follows:
<TABLE>
<CAPTION>
CAPITAL OPERATING
--------- ----------
<S> <C> <C>
Years Ending December 31:
2000..................................................... $ 419,290 $ 758,710
2001..................................................... 266,814 583,123
2002..................................................... 138,856 544,357
2003..................................................... 670 515,219
2004 and beyond.......................................... -- 2,310,005
--------- ----------
Total minimum lease payments........................ 825,630 $4,711,414
----------
----------
Amount representing interest........................ (128,918)
---------
Present value of minimum lease payments............. 696,712
Less current portion................................ (335,771)
---------
Noncurrent portion.................................. $ 360,941
---------
---------
</TABLE>
The current portion of capital lease obligations is included in the balance
sheet in other current liabilities and the noncurrent portion is included in
other long-term liabilities.
F-18
<PAGE>
10. COMMITMENTS AND CONTINGENCIES--(CONTINUED)
Total rental expense for operating leases was $61,447, $262,650, $126,359
and $267,133, in the years ended December 31, 1997 and 1998 and the periods from
January 1, 1999 through May 16, 1999 and from May 17, 1999 through December 31,
1999.
COMMITMENTS
The Company entered into agreements during 1999 committing to pay
$2,271,000 during the year ended December 31, 2000. Of this amount, $1,971,000
pertains to panel acquisition expenses and $300,000 pertains to security
deposits on leased office space.
EMPLOYMENT AGREEMENTS
The Company maintains employment agreements with the key officers of the
Company. The employment agreements contain provisions for minimum compensation
levels. In addition, three of the agreements contain severance provisions and
one contains a provision for key man life insurance.
LITIGATION
The Company, in the ordinary course of business, is subject to various
legal proceedings. While it is impossible to determine the ultimate outcome of
these matters, it is management's opinion that the resolution of these matters
will not have a material adverse effect on the financial position, results of
operations and cash flows of the Company.
11. INCOME TAXES
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and amounts used for income tax purposes. The net deferred tax assets
recorded in 1999 are primarily related to federal and state net operating loss
carryforwards and other temporary differences generated for the period from May
17, 1999 through December 31, 1999.
Income tax benefit for the period from May 17, 1999 through December 31,
1999 included the following:
<TABLE>
<CAPTION>
CURRENT DEFERRED TOTAL
--------- --------- ---------
<S> <C> <C> <C>
Federal................................................ $ -- $(800,589) $(800,589)
State.................................................. -- (139,863) (139,863)
--------- --------- ---------
$ -- $(940,452) $(940,452)
--------- --------- ---------
--------- --------- ---------
</TABLE>
The components of deferred income taxes at December 31, 1999 are presented
below:
<TABLE>
<S> <C>
Deferred tax assets:
Net operating loss carryforwards.............................................. $1,392,250
Deferred revenues............................................................. 526,293
Unearned stock-based compensation............................................. 350,274
Related party interest expense, net........................................... 341,688
Other deferred tax assets..................................................... 339,513
----------
Gross deferred tax asset........................................................ 2,950,018
Deferred tax liabilities:
Purchase accounting temporary differences....................................... (828,622)
Net deferred tax asset.......................................................... 2,121,396
Less--valuation allowance....................................................... (2,121,396)
----------
Net deferred tax asset.......................................................... $ --
----------
----------
</TABLE>
A full valuation allowance was recorded against net deferred tax asset
because their realizability is subject to future events, including generating
sufficient taxable income, the likelihood of which cannot be
F-19
<PAGE>
11. INCOME TAXES--(CONTINUED)
determined at this time. The Company continually reviews the adequacy of the
valuation allowance and will recognize these benefits only as and when
reassessment indicates that it is more likely than not that the benefits will be
realized.
The Connecticut state and federal net operating loss carryforwards (NOLs)
of approximately $3,486,000 each expire at various times through 2004 for
Connecticut and 2019 for Federal purposes.
The differences between the income tax benefit at the U.S. statutory rate
and the effective rate are summarized as follows:
<TABLE>
<S> <C>
Federal statutory rate.............................................................. 34.00%
State statutory rate................................................................ 5.94%
Unearned stock-based compensation................................................... (11.95%)
Goodwill amortization............................................................... (7.20%)
Valuation allowance................................................................. (14.40%)
-------
Effective tax rate............................................................. 6.39%
-------
-------
</TABLE>
12. STOCKHOLDERS' EQUITY
COMMON STOCK
Effective with the management buyout (see Note 3), the Company has two
classes of common stock, Class A and Class B. The Class B common stock has a
preference over the Class A in liquidation. In liquidation the Class B common
stock receives a 7% cumulative return on its original price per share.
STOCK REPURCHASE AND REDEMPTION
On May 17, 1999, pursuant to the Stock Purchase and Redemption Agreement,
the Company sold to Greenfield Holdings 21,855,150 shares of Class B common
stock for an aggregate purchase price of $8,863,548. In addition, pursuant to
the Agreement, on May 17, 1999, the Company redeemed 42,534,000 shares of
Class A common stock from the sole stockholder of the Predecessor for an
aggregate purchase price of $17,249,912. See Note 3.
NOTES RECEIVABLE FROM STOCKHOLDERS
In conjunction with the management buyout on May 17, 1999 (see Note 3), the
Company paid $500,088 to the former sole stockholder of the Predecessor on
behalf of two officers of the Company. In exchange, these employees issued to
the Company two nonrecourse promissory notes in the amounts of $425,075 and
$75,013, respectively. The cash paid to the employees was used to purchase
1,048,050 and 184,950 shares, respectively, of Class A common stock from the
sole stockholder of the Predecessor. The promissory notes are collateralized
with the shares of the Company's Class A common stock and bear interest at a
rate of 5.3% per year. The Company's sole recourse against the employees is
limited to the Class A common stock. Principal and interest may be prepaid in
whole or in part at any time without penalty.
The stock purchased by the employees with the proceeds of these notes is
restricted since the Company has the right to repurchase the stock for its
original purchase price from either one of the officers if their employment
terminates for any reason. The restrictions on the stock lapse and the stock
becomes vested 25% one year after the management buyout and 12.5% each six-month
period thereafter until four years have expired.
Under Emerging Issues Task Force Abstract 95-16, Accounting for Stock
Compensation Arrangements with Employer Loan Features, "EITF 95-16," these
nonrecourse notes receivable, collateralized by stock, are treated as a stock
option award with variable plan accounting treatment. Accordingly, the Company
has recognized a stock based compensation charge, and related increase in
additional paid-in capital, of $4,306,435 for the period from May 17, 1999
through December 31, 1999, related to these notes receivable. This charge is
calculated as the excess of the estimated fair value of the common stock at
December 31,
F-20
<PAGE>
12. STOCKHOLDERS' EQUITY--(CONTINUED)
1999, over the value of the common stock at issuance, multiplied by the number
of shares held by the employees and an applicable vesting percentage.
UNEARNED STOCK-BASED COMPENSATION
In connection with certain stock option and warrant grants from May 17,
1999 through December 31, 1999, the Company recorded unearned stock-based
compensation totaling $7,665,421, which is being amortized to operations over
the related service periods, generally four years. The Company has amortized
$435,654 of stock-based compensation expense in the statement of operations in
the period from May 17, 1999 through December 31, 1999 related to these option
grants. Stock-based compensation expense for the period from May 17, 1999
through December 31, 1999 totaled $5,182,715, including compensation expense of
$440,626 for certain options with immediate vesting and $4,306,435 related to
the notes receivable from key employees.
TREASURY STOCK
The Company accounts for treasury stock under the cost method. On May 17,
1999, the Company repurchased 42,534,000 shares of its Class A common stock for
$17,249,912 as part of the management buyout and leveraged recapitalization
transaction as described in Note 3.
WARRANTS
On December 3, 1999, in conjunction with the establishment of the credit
facility, see Note 8, the Company issued a warrant to purchase 167,808 shares of
Class A common stock at an exercise price of $3.58 per share to a debt holder.
The warrant is exercisable immediately and expires on December 3, 2003. This
warrant was outstanding at December 31, 1999. See Note 9.
STOCK OPTIONS
In the period ending December 31, 1999, the Board of Directors of the
Company authorized and reserved 4,238,550 shares of Class A common stock for
issuance under its stock option plan. There were 434,500 shares available for
future grant at December 31, 1999.
13. 1999 STOCK OPTION PLAN
On May 12, 1999, the Company adopted a non-qualified stock option plan that
enables key employees, directors and consultants of the Company to purchase
shares of common stock of the Company. The Company grants options to purchase
its common stock, generally at fair value at the date of grant based upon
valuations determined by management and the Board of Directors. Options
generally vest over a period up to 4 years and expire after 10 years from the
date of grant.
Stock option activity is as follows:
<TABLE>
<CAPTION>
WEIGHTED AVERAGE
NUMBER OF SHARES PRICE PER SHARE
---------------- ----------------
<S> <C> <C>
Outstanding at May 17, 1999.................................................. -- --
Granted.................................................................... 3,804,050 $ 0.27
Canceled................................................................... -- --
Exercised.................................................................. 1,335,500 $ 0.03
----------
Outstanding at December 31, 1999............................................. 2,468,550 $ 0.40
----------
----------
</TABLE>
Under the provisions of SFAS No. 123, Accounting for Stock-Based
Compensation, the Company has elected to continue to account for its stock
option plan in accordance with the provisions of APB No. 25. Had compensation
cost for the Company's employee stock option plan been determined consistent
with the
F-21
<PAGE>
13. 1999 STOCK OPTION PLAN--(CONTINUED)
provisions of SFAS No. 123, the Company's net loss and net loss per share would
have been the pro forma amounts indicated below:
<TABLE>
<CAPTION>
BASIC AND DILUTED
NET LOSS
NET LOSS PER SHARE
---------------------------- ---------------------
AS PRO AS PRO
REPORTED FORMA REPORTED FORMA
------------ ------------ -------- ---------
<S> <C> <C> <C> <C>
May 17, 1999 to December 31, 1999......................... $(13,787,921) $(13,810,863) $(0.56) $ (0.56)
</TABLE>
For the periods ended December 31, 1997 and 1998 and for the period from
January 1, 1999 through May 11, 1999, the Company did not have a stock option
plan in effect.
For purposes of this disclosure, the fair value of each option grant was
estimated on the date of grant using the Black-Scholes option pricing model with
the following weighted average assumptions used for grants outstanding in 1999.
<TABLE>
<CAPTION>
1999
----
<S> <C>
Risk-free interest rate............................................ 5.9%
Weighted average expected life (years)............................. 5
Volatility factor.................................................. 61%
Expected dividends................................................. 0
</TABLE>
The following represents additional information about stock options
outstanding at December 31, 1999:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING
- --------------------------------------------------------------- OPTIONS EXERCISEABLE
WEIGHTED --------------------------
WEIGHTED AVERAGE WEIGHTED
AVERAGE EXERCISE AVERAGE
RANGE OF REMAINING LIFE PRICE EXERCISE
EXERCISE PRICES NUMBER CONTRACTUAL PER NUMBER PRICE (PER
PER SHARE OUTSTANDING (YEARS) SHARE EXERCISABLE SHARE)
- ---------------- ----------- -------------- -------- ----------- ----------
<S> <C> <C> <C> <C> <C>
$0.31--$0.49 1,877,450 9.6 $ 0.31 4,500 $ 0.31
$0.50--$0.74 290,600 9.5 $ 0.51 4,500 $ 0.51
$0.75--$0.88 300,500 9.9 $ 0.87 4,500 $ 0.87
</TABLE>
14. SUPPLEMENTAL DISCLOSURE OF NONCASH TRANSACTIONS
JANUARY 1, 1999 THROUGH MAY 16, 1999
Prior to the management buyout transaction disclosed in Note 3, the former
sole shareholder and a related party forgave their respective loan balances in
the amounts of $2,788,665 and $1,787,916, respectively, through a capital
contribution.
MAY 17, 1999 THROUGH DECEMBER 31, 1999
The relative fair value of the warrants issued in conjunction with the term
loan was $960,736 and was recorded as a discount to the term loan. See Note 9.
The relative fair value of the stock options assigned to the note payable
to stockholder was $273,769 and was recorded as a discount to the note payable
to stockholder. See Note 3.
During the year ended December 31, 1998 and the period from May 17, 1999
through December 31, 1999, the Company entered into several capital lease
obligations to purchase fixed assets in the amounts of $148,354 and $655,004,
respectively.
15. SUBSEQUENT EVENTS
In February of 2000, the Company changed its state of incorporation from
Connecticut to Delaware.
F-22
<PAGE>
15. SUBSEQUENT EVENTS--(CONTINUED)
On March 3, 2000, the Board of Directors of the Company voted to amend its
articles of incorporation to increase the number of common shares authorized by
the Company to 100,000,000. In addition, the Company amended its articles of
incorporation and executed a 2-for-1 stock split. All references to common stock
amounts, shares and per share data included in the financial statements and
related footnotes have been adjusted to give retroactive effect to this stock
split.
On March 3, 2000, the Company entered into a subordinated credit facility,
the "Subordinated Credit Line," with the Greenfield Holdings. The Subordinated
Credit Line allows for the Company to borrow up to $5.0 million from Greenfield
Holdings at an interest rate of 10% per year. This Subordinated Credit Line
matures at June 30, 1999. The facility includes 139,860 warrants issued to
Greenfield Holdings at an exercise price of $3.58 per share which expire on
March 3, 2004. The subordinated credit facility has a mandatory prepayment if
the Company completes an initial public offering. On March 3, 2000, the Company
received $2.5 million of cash under this Subordinated Credit Line.
On March 3, 2000, the Company amended the nonrecourse notes receivable from
the two employees of the Company described in Note 12. Under the amendment, the
notes were made recourse notes. As such, variable plan accounting ceases.
UNAUDITED
Effective March 10, 2000, the Company entered into an agreement that
extended the maturity date of the Subordinated Credit Line to the earlier of
June 30, 2001 or the closing of an initial public offering. As consideration for
the extension of the maturity date, the Company agreed to issue Greenfield
Holdings additional warrants to purchase common stock. Should any portion of the
Subordinated Credit Line remain outstanding as of September 30, 2000, the
Company will issue warrants to purchase 34,965 shares of common stock at an
exercise price equal to the fair value on that day. If any portion of the
Subordinated Credit Line remains outstanding on December 31, 2000, March 31,
2000 or June 30, 2001, the Company will issue the same amount of warrants on the
same terms on each of these dates.
On March 13, 2000 and March 14, 2000, the Company issued an aggregate of
645,338 shares of Class A common stock to private investors for cash
consideration of $5.4 million or $8.37 per share.
On March 14, 2000, the Company extended the initial maturity date on its
credit facility, see Note 9, to March 31, 2001. Based upon this extension the
term loan balance has been included as a long-term liability in the
December 31, 1999 balance sheet.
F-23
<PAGE>
UNAUDITED PRO FORMA CONDENSED
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
The following unaudited pro forma condensed statement of operations for the
year ended December 31, 1999 gives effect to the management buyout completed on
May 17, 1999 as if it had occurred on January 1, 1999. The management buyout is
described in further detail in Note 3 to the Company's financial statements on
page F-12.
The unaudited pro forma statements of operations include certain
adjustments to reflect a full year's amortization consisting of capitalized
software, goodwill and intangible assets, as well as incremental related party
interest expense and vesting of stock-based compensation. The adjustments are
more fully explained in the notes to the pro forma financial statements. The
unaudited pro forma condensed statement of operations should be read in
conjunction with the respective audited financial statements of the Company
appearing elsewhere in this prospectus. The pro forma results are not
necessarily indicative of results that actually would have occurred if the
management buyout had taken place on January 1, 1999.
<TABLE>
<CAPTION>
PERIOD FROM PERIOD FROM PRO FORMA
JANUARY 1, 1999 MAY 17, 1999 YEAR ENDED
THROUGH THROUGH PRO FORMA DECEMBER 31,
MAY 16, 1999 DECEMBER 31, 1999 ADJUSTMENTS 1999
--------------- ----------------- ----------- ------------
<S> <C> <C> <C> <C>
Revenues..................................... $ 1,733,720 $ 5,557,465 $ -- $ 7,291,185
Cost of revenues............................. 702,189 2,516,758 -- 3,218,947
----------- ------------- ----------- ------------
Gross profit............................ 1,031,531 3,040,707 -- 4,072,238
----------- ------------- ----------- ------------
Operating expenses:
Selling, general and administrative
expenses................................ 5,243,811 6,821,699 -- 12,065,510
Depreciation and amortization.............. 155,683 3,843,628 3,345,144(1) 7,344,455
Research and development................... 186,282 792,268 -- 978,550
Panel acquisition expenses................. 27,349 112,531 -- 139,880
Stock-based compensation expense........... 5,182,715 2,583,861(3) 7,766,576
----------- ------------- ----------- ------------
Operating expenses...................... 5,613,125 16,752,841 5,929,005 28,294,971
----------- ------------- ----------- ------------
Operating loss.......................... (4,581,594) (13,712,134) (5,929,005) (24,222,733)
----------- ------------- ----------- ------------
Interest income (expense):
Interest income............................ -- 42,120 -- 42,120
Interest expense........................... (7,001) (202,855) -- (209,856)
Related party interest expense............. (42,902) (855,504) (470,187)(2) (1,368,593)
----------- ------------- ----------- ------------
Interest expense, net...................... (49,903) (1,016,239) (470,187) (1,536,329)
----------- ------------- ----------- ------------
Loss before income taxes................ (4,631,497) (14,728,373) (6,399,192) (25,759,062)
Income tax benefit........................... -- 940,452 -- 940,452
----------- ------------- ----------- ------------
Net loss................................ $(4,631,497) $ (13,787,921) $(6,399,192) $(24,818,610)
----------- ------------- ----------- ------------
----------- ------------- ----------- ------------
Basic and diluted net loss per share......... $ (0.10) $ (0.56) $ (1.01)
----------- ------------- ------------
----------- ------------- ------------
Weighted average shares outstanding--basic
and diluted................................ 45,000,000 24,707,186 24,563,348
----------- ------------- ------------
----------- ------------- ------------
</TABLE>
(1) Goodwill and certain intangible assets were recorded through the application
of "push-down" accounting in accordance with SEC Staff Accounting Bulletin
No. 54 in connection with the management buyout transaction described in Note 3
to the audited financial statements. Goodwill, capitalized software and
identifiable intangible assets are amortized on a straight-line basis over the
estimated period of benefit, which ranges from 2 to 4 years. The pro forma
adjustments for the year ended December 31, 1999 assume an additional four and
half months of amortization of capitalized software, goodwill and intangible
assets. This resulted in additional amortization of $3,345,144.
F-24
<PAGE>
(2) As a result of the management buyout, the Successor received a loan in the
form of a Promissory Note to Greenfield Holdings, in the amount of $14,136,452.
The note is unsecured and bears interest at an escalating rate as follows: May
17, 1999 to May 16, 2001, 7.5% per annum; May 17, 2001 to May 16, 2003, 9.5% per
annum; and, May 17, 2003 to May 17, 2009, 10.5% per annum. The pro forma
adjustment for the year ended December 31, 1999 assumes an additional four and
half months of interest expense relating to this Promissory Note, which amounted
to $523,567.
During the period from January 1, 1999 through May 16, 1999, the sole
stockholder of the Predecessor forgave a loan due to him from the Predecessor in
the amount of $2,788,665. The pro forma statement of operations for the year
ended December 31, 1999 gives effect to the forgiveness of such debt as if it
had occurred on January 1, 1999 and, as such, interest expense associated with
this loan of $42,902 was eliminated in the pro forma adjustments.
In conjunction with the management buyout on May 17, 1999, the Company paid
$500,088 to two officers of the Company. In exchange, these employees issued to
the Company two Nonrecourse Promissory Notes in the amounts of $425,075 and
$75,013, respectively. The cash paid to the employees was used to purchase
1,048,050 and 184,950 shares, respectively, of Class A common stock from the
sole Stockholder of the Predecessor. The promissory notes are secured with the
shares of the Company's Class A common stock and bear interest at a rate of 5.3%
per annum. The Company's sole recourse against the employees is limited to the
Class A common stock. Principal and interest may be prepaid in whole or in part
at any time without penalty. The pro forma adjustments for the year ended
December 31, 1999 assume an additional four and a half months of related party
interest income relating to these two Nonrecourse Promissory Notes, which
amounted to $10,478.
(3) The Class A common stock purchased by employees with the proceeds of their
Nonrecourse Promissory Notes is restricted as the Company has the right to
repurchase the stock for its original purchase price if their employment
terminates for any reason. The restrictions on the stock lapse and the stock
becomes vested 25% after one year from the management buyout and 12.5% each
six-month period thereafter until four years have expired. The stock purchased
by the employees is accounted for using variable plan accounting as required by
EITF 95-16. The Company recognizes stock-based compensation based on increases
in the fair value of the stock held by the employees, multiplied by the
applicable vesting period. The pro forma adjustments for the year ended
December 31, 1999 assume an additional four and a half months of vesting for
this stock, which amounted to $2,583,861.
F-25
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the costs and expenses, other than
underwriting discounts and commissions, payable by the Company in connection
with the sale of common stock being registered. All amounts are estimates except
the SEC registration fee and the NASD filing fee. The Registrant will pay all
these expenses.
<TABLE>
<CAPTION>
AMOUNT
TO BE PAID
----------
<S> <C>
SEC Registration Fee.................................................... $
NASD Filing Fee.........................................................
Nasdaq National Market Listing Fee......................................
Printing Fees and Expenses..............................................
Legal Fees and Expenses.................................................
Accounting Fees and Expenses............................................
Blue Sky Fees and Expenses..............................................
Transfer Agent and Registrar Fees.......................................
Miscellaneous...........................................................
--------
Total.............................................................. $
--------
--------
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law permits a corporation
to include in its charter documents and in agreements between the corporation
and its directors and officers, provisions expanding the scope of
indemnification beyond that specifically provided by the current law.
Our restated certificate of incorporation limits the liability of directors
to the maximum extent permitted by the Delaware General Corporation Law. The
Delaware General Corporation Law provides that the personal liability of a
director for monetary damages for breach of his or her fiduciary duties as a
director may be eliminated, except for:
o any breach of the director's duty of loyalty to a corporation or its
stockholders;
o acts or omissions not in good faith or that involve intentional
misconduct or a knowing violation of law;
o unlawful payments of dividends or unlawful stock repurchases, redemptions
or other distributions; and
o any transaction from which the director derived an improper personal
benefit.
Our restated bylaws provide that we may indemnify our directors and
officers and may indemnify our other employees and agents to the fullest extent
permitted by Delaware law. We believe that indemnification under our restated
bylaws covers at least negligence and gross negligence on the part of
indemnified parties.
We have obtained directors' and officers' insurance providing
indemnification for our directors, officers and some of our employees for
certain liabilities. We believe that this insurance is necessary to attract and
retain qualified directors and officers.
II-1
<PAGE>
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
(a)(1) On May 17, 1999, our management team and a group of new investors
executed a management buyout in which approximately 97% of our outstanding
common stock was acquired by Greenfield Holdings, LLC., a company formed
specifically to execute the buyout, and certain other investors. The transaction
involved a series of agreements:
o Stock Purchase, Sale and Redemption Agreement. Under this agreement,
Greenfield Holdings purchased securities for a purchase price of
$8,863,548, which, adjusted for stock splits and reflecting the
conversion to common, gave them 21,855,150 shares of our common stock.
o Promissory Note. Under this note, Greenfield Holdings loaned us
$14,136,452 that we used in part to redeem 94.5% of outstanding stock
then owned by one of our founders, Andrew Greenfield. The loan from
Greenfield Holdings to us must be paid in full upon completion of this
offering.
o Stock Purchase, Consent and Waiver Agreement. We used a portion of the
proceeds of the loan made under the Promissory Note to loan Mr. Nadilo
and Mr. Davis $425,075 and $75,013, respectively, to allow them to
purchase stock from Mr. Greenfield. Adjusted for stock splits and
reflecting the conversion to common, the purchase gave them 1,048,050 and
184,950 shares, respectively, of our common stock as of March 3, 2000. We
have the right to repurchase the stock for its original purchase price
from either one of them if his employment terminates for any reason. The
restrictions on the stock lapse and the stock becomes vested 25% one year
after the management buyout and 12.5% each six-month period thereafter
until four years have expired. For Mr. Nadilo, the expiration of these
restrictions will accelerate on 75% of his stock if we sell the stock or
assets of our company. For Mr. Davis, the expiration of these
restrictions will accelerate on 50% of his stock if we sell the stock or
assets of our company. The stock purchased by Messrs. Nadilo and Davis is
pledged to us to secure the repayment of their loans
(a)(2) On March 14, 2000, we completed a private placement of 645,338
shares of our Class A common stock at a price of $8.37 per share for an
aggregate offering price of $5.4 million. The purchasers, all of which were
accredited investors within the definition of Regulation D, were TechVantage
Partners, L.P., TechVantage Qualified Partners, L.P. and TechVantage Overseas
Fund, Inc. (all of whom are controlled by Westway Capital, LLC), 701 Venture
Investments, LLC and GDCP Investment Partners.
(b) There were no underwritten offerings employed in connection with any of
the transactions set forth in Item 15(a).
The issuances described in Items 15(a)(1) and (2) were deemed to be exempt
from registration under the Securities Act in reliance upon
Section 4(2) thereof as transactions by an issuer not involving any public
offering. The issuances described in Item 15(a)(2) were deemed to be exempt from
registration under the Securities Act in reliance upon Rule 506 of
Regulation D.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ --------------------------------------------------------------------------------------------------------
<S> <C>
1.1 -- Form of Underwriting Agreement*
3.1 -- Restated Certificate of Incorporation of the Registrant, to be effective upon completion of
the offering
3.2 -- Form of Restated Bylaws of the Registrant, to be effective upon completion of the offering
4.1 -- Form of the Registrant's Common Stock Certificate
5.1 -- Opinion of Preston Gates & Ellis LLP*
10.1 -- Stock Purchase & Redemption Agreement among the Registrant, Andrew Greenfield and Greenfield
Holdings, LLC, dated May 12, 1999
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ --------------------------------------------------------------------------------------------------------
<S> <C>
10.2 -- Escrow Agreement among the Registrant, Andrew Greenfield, Greenfield Holdings, LLC and
SunTrust Bank, Atlanta, dated May 17, 1999
10.3 -- License Agreement between the Registrant and Greenfield Consulting Group, Inc., dated
December 22, 1999
10.4 -- Supplement to License Agreement between the Registrant and Greenfield Consulting Group, Inc.,
dated January 27, 2000
10.5 -- Agreement between the Registrant and Greenfield Consulting Group, Inc., dated April 20, 1999
10.6 -- Agreement between the Registrant and Digital Idea, LLC, dated as of December 1, 1999
10.7 -- Shareholders' Agreement among the Registrant, Andrew Greenfield and Greenfield Holdings, LLC,
dated May 17, 1999, as amended
10.8 -- Registration Rights Agreement among the Registrant, Andrew Greenfield and Greenfield
Holdings, LLC, dated May 17, 1999
10.9 -- Promissory Note made by the Registrant in favor of Greenfield Holdings, LLC, dated May 17,
1999
10.10 -- Note and Warrant Purchase Agreement between the Registrant and Greenfield Holdings, LLC,
dated March 3, 2000
10.11 -- Promissory Note made by the Registrant in favor of Greenfield Holdings, LLC, dated March 3,
2000
10.12 -- Class A Common Stock Warrant issued by the Registrant to Greenfield Holdings, LLC, dated
March 3, 2000
10.13 -- Stock Purchase, Consent & Waiver Agreement among the Registrant, Rudy Nadilo, Hugh Davis, and
Andrew Greenfield, dated May 17, 1999
10.14 -- Retained Shareholder Joinder among the Registrant, Rudy Nadilo and Hugh Davis, dated May 17,
1999
10.15 -- Nonrecourse Promissory Note made by Rudy Nadilo in favor of the Registrant, dated May 17,
1999
10.16 -- Pledge Agreement between the Registrant and Rudy Nadilo, dated May 17, 1999
10.17 -- Amended and Restated Employment Agreement between the Registrant and Rudy Nadilo, dated
March 13, 2000
10.18 -- Non-recourse Promissory Note made by Hugh Davis in favor of the Registrant, dated May 17,
1999
10.19 -- Pledge Agreement between the Registrant and Hugh Davis, dated May 17, 1999
10.20 -- Loan and Security Agreement between the Registrant and Greyrock Capital, a division of Banc
of America Commercial Finance Corporation, dated December 3, 1999
10.21 -- Secured Promissory Note made by the Registrant in favor of Greyrock Capital, a division of
Banc of America Commercial Finance Corporation, dated December 3, 1999
10.22 -- Patent and Trademark Security Agreement between the Registrant and Greyrock Capital, a
division of Banc of America Commercial Finance Corporation, dated December 3, 1999
10.23 -- Security Agreement in Copyrighted Works between the Registrant and Greyrock Capital, a
division of Banc of America Commercial Finance Corporation, dated December 3, 1999
10.24 -- Registration Rights Agreement between the Registrant and Greyrock Capital, a division of Banc
of America Commercial Finance Corporation, dated December 3, 1999
10.25 -- Antidilution Agreement between the Registrant and Greyrock Capital, a division of Banc of
America Commercial Finance Corporation, dated December 3, 1999
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ --------------------------------------------------------------------------------------------------------
<S> <C>
10.26 -- Warrant to Purchase Stock issued by the Registrant to Greyrock Capital, a division of Banc of
America Commercial Finance Corporation, dated December 3, 1999
10.27 -- Agreement between the Registrant and CommonPlaces LLC, dated January 28, 2000
10.28 -- Lease between the Registrant and Wilton Executive Campus Associates, dated October 20, 1999
10.29 -- Lease between the Registrant and Wilton Campus Properties, LLC, dated October 20, 1999
10.30 -- Lease between the Registrant and Wilton Executive Campus Associates, dated October 20, 1999
(Data Center)
10.31 -- Lease between the Registrant and New Montgomery Associates, LLC, dated January 9, 1998, as
amended
10.32 -- Amended and Restated 1999 Stock Option Plan of the Registrant
10.33 -- Form of Stock Option Agreement of the Registrant
10.34 -- 2000 Directors Stock Option Plan of the Registrant, to be effective upon completion of the
offering
10.35 -- 2000 Employee Stock Purchase Plan of the Registrant, to be effective upon completion of the
offering
10.36 -- Employment Agreement between the Registrant and Susan Rosovsky, dated July 1, 1999
10.37 -- Employment Agreement between the Registrant and Leigh-Brindeland Bell, dated July 1, 1999
10.38 -- Employment Agreement between the Registrant and Stephen J. Cook, dated July 1, 1999
10.39 -- Amended and Restated Employment Agreement between the Registrant and Robert E. Bies, dated
March 3, 2000
10.40 -- Form of Non-Qualified Stock Option Agreement of the Registrant, as amended (used for
management options before amendment and restatement of 1999 Stock Option Plan)
10.41 -- Agreement between the Registrant and Forrester Research, Inc., dated May 13, 1999
10.42 -- Agreement between the Registrant and Flackett Stevens and Associates, dated June 11, 1999
10.43 -- Co-Location Services Agreement between the Registrant and UUNet Technologies, Inc., dated
May 29, 1998
10.44 -- Employment Agreement between the Registrant and Alastair Bruce dated July 1, 1999
10.45 -- Amended Promissory Note made by Hugh Davis in favor of the Registrant dated March 3, 2000
10.46 -- Amended Promissory Note made by Rudy Nadilo in favor of the Registrant dated March 3, 2000
10.47 -- Amendment No. 1 to Note and Warrant Purchase Agreement between the Registrant and Greenfield
Holdings, LLC, dated March 10, 2000
10.48 -- Form of First Amendment to Non-Qualified Stock Option Agreement of the Registrant
23.1 -- Consent of PricewaterhouseCoopers LLP, Independent Accountants
23.2 -- Consent of Counsel (included in Exhibit 5.1)*
27.1 -- Financial Data Schedule
</TABLE>
- ------------------
* To be filed by amendment
(b) Financial Statement Schedules
II-4
<PAGE>
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes to provide to the underwriters
at the closing specified in the Underwriting Agreement, certificates in such
denominations and registered in such names as required by the underwriters to
permit prompt delivery to each purchaser
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Act, the
information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in the
form of prospectus filed by the Registrant pursuant to Rule 424(b)(1),
or (4), or 497(h) under the Act shall be deemed to be a part of this
Registration Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Act, each
post-effective amendment that contains a form of prospectus shall be
deemed to be a new registration statement relating to the securities
offered therein and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-1 and has duly caused this its Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of New York, state of New York, on the 16 day of
March, 2000.
GREENFIELD ONLINE, INC.
By: /s/ Robert E. Bies
------------------------------------
Robert E. Bies
Chief Financial Officer and
Treasurer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Robert E. Bies, his attorney-in-fact, for him in
any and all capacities, to sign any amendments to this registration statement
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 said attorney-in-fact, or his substitute, may do or cause to
be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement on Form S-1 has been signed by the following persons
in the capacities indicated on March 16, 2000.
<TABLE>
<CAPTION>
DATE
--------------
<S> <C> <C>
/s/ Rudy Nadilo President and Chief Executive Officer, March 16, 2000
Rudy Nadilo Director (Principal Executive Officer)
/s/ Robert E. Bies Chief Financial Officer and Treasurer March 16, 2000
Robert E. Bies (Principal Financial and Accounting Officer)
/s/ Jeffrey Horing Director March 16, 2000
Jeffrey Horing
/s/ Peter Sobiloff Director March 16, 2000
Peter Sobiloff
/s/ Joel R. Mesznik Director March 16, 2000
Joel R. Mesznik
/s/ Burton J. Manning Director March 16, 2000
Burton J. Manning
</TABLE>
II-6
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIAL
NUMBER DESCRIPTION PAGE NO.
- ------ -------------------------------------------------------------------------------------------- -----------
<S> <C>
1.1 -- Form of Underwriting Agreement*
3.1 -- Restated Certificate of Incorporation of the Registrant, to be effective upon
completion of the offering
3.2 -- Form of Restated Bylaws of the Registrant, to be effective upon completion of the
offering
4.1 -- Form of the Registrant's Common Stock Certificate
5.1 -- Opinion of Preston Gates & Ellis LLP*
10.1 -- Stock Purchase & Redemption Agreement among the Registrant, Andrew Greenfield and
Greenfield Holdings, LLC, dated May 12, 1999
10.2 -- Escrow Agreement among the Registrant, Andrew Greenfield, Greenfield Holdings,
LLC and SunTrust Bank, Atlanta, dated May 17, 1999
10.3 -- License Agreement between the Registrant and Greenfield Consulting Group, Inc.,
dated December 22, 1999
10.4 -- Supplement to License Agreement between the Registrant and Greenfield Consulting
Group, Inc., dated January 27, 2000
10.5 -- Agreement between the Registrant and Greenfield Consulting Group, Inc., dated
April 20, 1999
10.6 -- Agreement between the Registrant and Digital Idea, LLC, dated as of December 1,
1999
10.7 -- Shareholders' Agreement among the Registrant, Andrew Greenfield and Greenfield
Holdings, LLC, dated May 17, 1999, as amended
10.8 -- Registration Rights Agreement among the Registrant, Andrew Greenfield and
Greenfield Holdings, LLC, dated May 17, 1999
10.9 -- Promissory Note made by the Registrant in favor of Greenfield Holdings, LLC,
dated May 17, 1999
10.10 -- Note and Warrant Purchase Agreement between the Registrant and Greenfield
Holdings, LLC, dated March 3, 2000
10.11 -- Promissory Note made by the Registrant in favor of Greenfield Holdings, LLC,
dated March 3, 2000
10.12 -- Class A Common Stock Warrant issued by the Registrant to Greenfield Holdings,
LLC, dated March 3, 2000
10.13 -- Stock Purchase, Consent & Waiver Agreement among the Registrant, Rudy Nadilo,
Hugh Davis, and Andrew Greenfield, dated May 17, 1999
10.14 -- Retained Shareholder Joinder among the Registrant, Rudy Nadilo and Hugh Davis,
dated May 17, 1999
10.15 -- Nonrecourse Promissory Note made by Rudy Nadilo in favor of the Registrant, dated
May 17, 1999
10.16 -- Pledge Agreement between the Registrant and Rudy Nadilo, dated May 17, 1999
10.17 -- Amended and Restated Employment Agreement between the Registrant and Rudy Nadilo,
dated March 13, 2000
10.18 -- Non-recourse Promissory Note made by Hugh Davis in favor of the Registrant, dated
May 17, 1999
10.19 -- Pledge Agreement between the Registrant and Hugh Davis, dated May 17, 1999
10.20 -- Loan and Security Agreement between the Registrant and Greyrock Capital, a
division of Banc of America Commercial Finance Corporation, dated December 3,
1999
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIAL
NUMBER DESCRIPTION PAGE NO.
- ------ -------------------------------------------------------------------------------------------- -----------
<S> <C>
10.21 -- Secured Promissory Note made by the Registrant in favor of Greyrock Capital, a
division of Banc of America Commercial Finance Corporation, dated December 3,
1999
10.22 -- Patent and Trademark Security Agreement between the Registrant and Greyrock
Capital, a division of Banc of America Commercial Finance Corporation, dated
December 3, 1999
10.23 -- Security Agreement in Copyrighted Works between the Registrant and Greyrock
Capital, a division of Banc of America Commercial Finance Corporation, dated
December 3, 1999
10.24 -- Registration Rights Agreement between the Registrant and Greyrock Capital, a
division of Banc of America Commercial Finance Corporation, dated December 3,
1999
10.25 -- Antidilution Agreement between the Registrant and Greyrock Capital, a division of
Banc of America Commercial Finance Corporation, dated December 3, 1999
10.26 -- Warrant to Purchase Stock issued by the Registrant to Greyrock Capital, a
division of Banc of America Commercial Finance Corporation, dated December 3,
1999
10.27 -- Agreement between the Registrant and CommonPlaces LLC, dated January 28, 2000
10.28 -- Lease between the Registrant and Wilton Executive Campus Associates, dated
October 20, 1999
10.29 -- Lease between the Registrant and Wilton Campus Properties, LLC, dated
October 20, 1999
10.30 -- Lease between the Registrant and Wilton Executive Campus Associates, dated
October 20, 1999 (Data Center)
10.31 -- Lease between the Registrant and New Montgomery Associates, LLC, dated
January 9, 1998, as amended
10.32 -- Amended and Restated 1999 Stock Option Plan of the Registrant
10.33 -- Form of Stock Option Agreement of the Registrant
10.34 -- 2000 Directors Stock Option Plan of the Registrant, to be effective upon
completion of the offering
10.35 -- 2000 Employee Stock Purchase Plan of the Registrant, to be effective upon
completion of the offering
10.36 -- Employment Agreement between the Registrant and Susan Rosovsky, dated July 1,
1999
10.37 -- Employment Agreement between the Registrant and Leigh-Brindeland Bell, dated
July 1, 1999
10.38 -- Employment Agreement between the Registrant and Stephen J. Cook, dated July 1,
1999
10.39 -- Amended and Restated Employment Agreement between the Registrant and Robert E.
Bies, dated March 3, 2000
10.40 -- Form of Non-Qualified Stock Option Agreement of the Registrant, as amended (used
for management options before amendment and restatement of 1999 Stock Option
Plan)
10.41 -- Agreement between the Registrant and Forrester Research, Inc., dated May 13, 1999
10.42 -- Agreement between the Registrant and Flackett Stevens and Associates, dated
June 11, 1999
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIAL
NUMBER DESCRIPTION PAGE NO.
- ------ -------------------------------------------------------------------------------------------- -----------
<S> <C>
10.43 -- Co-Location Services Agreement between the Registrant and UUNet Technologies,
Inc., dated May 29, 1998
10.44 -- Employment Agreement between the Registrant and Alastair Bruce dated July 1, 1999
10.45 -- Amended Promissory Note made by Hugh Davis in favor of the Registrant dated
March 3, 2000
10.46 -- Amended Promissory Note made by Rudy Nadilo in favor of the Registrant dated
March 3, 2000
10.47 -- Amendment No. 1 to Note and Warrant Purchase Agreement between the Registrant and
Greenfield Holdings, LLC, dated March 10, 2000
10.48 -- Form of First Amendment to Non-Qualified Stock Option Agreement of the Registrant
23.1 -- Consent of PricewaterhouseCoopers LLP, Independent Accountants
23.2 -- Consent of Counsel (included in Exhibit 5.1)*
27.1 -- Financial Data Schedule
</TABLE>
- ------------------
* To be filed by amendment
<PAGE>
RESTATED CERTIFICATE OF INCORPORATION
OF
GREENFIELD ONLINE, INC.
(Pursuant to Sections 242 and 245 of the
General Corporation Law of the State of Delaware)
Greenfield Online, Inc., a corporation organized and existing under the
General Corporation Law of the State of Delaware, does hereby certify:
1. This corporation was originally incorporated pursuant to the
General Corporation Law of the State of Delaware on February
24, 2000 under the name GFOL, Inc.
2. The following Restated Certificate of Incorporation was duly
proposed by the corporation's Board of Directors and adopted
by the corporation's stockholders in accordance with the
provisions of Section 242 of the General Corporation Law of
the State of Delaware.
3. In lieu of a meeting of the stockholders, the written consent
of the necessary majority of stockholders has been given for
the adoption of the following Restated Certificate of
Incorporation in accordance with the applicable provisions of
Section 228 and Section 242 of the General Corporation Law of
the State of Delaware.
4. The Certificate of Incorporation of this corporation is
amended and restated in its entirety as follows:
FIRST: The name of the corporation is Greenfield Online, Inc.
(hereinafter referred to as the "Corporation").
SECOND: The address of the registered office of the
Corporation in the State of Delaware is Corporation Trust Center, 1209 Orange
Street, in the City of Wilmington, County of New Castle. The name of the
registered agent of the Corporation at that address is The Corporation Trust
Company.
THIRD: The purpose of the Corporation is to engage in any
lawful act or activity for which a corporation may be organized under the
Delaware General Corporation Law.
1
<PAGE>
FOURTH: A. The total number of shares of all classes
of stock which the Corporation shall have authority to issue is One Hundred Five
Million (105,000,000), consisting of One Hundred Million (100,000,000) shares of
Common Stock, par value one tenth of one cent ($.001) per share (the "Common
Stock") and Five Million (5,000,000) shares of Preferred Stock, par value one
tenth of one cent ($.001) per share (the "Preferred Stock").
B. The board of directors is authorized,
subject to any limitations prescribed by law, to provide for the issuance of
shares of Preferred Stock in series, and by filing a certificate pursuant to the
applicable law of the State of Delaware (such certificate being hereinafter
referred to as a "Preferred Stock Designation"), to establish from time to time
the number of shares to be included in each such series, and to fix the
designation, powers, preferences, and rights of the shares of each such series
and any qualifications, limitations or restrictions thereof. The number of
authorized shares of Preferred Stock may be increased or decreased (but not
below the number of shares thereof then outstanding) by the affirmative vote of
the holders of a majority of the Common Stock, without a vote of the holders of
the Preferred Stock, or of any series thereof, unless a vote of any such holders
is required pursuant to the terms of any Preferred Stock Designation.
C. Each outstanding share of Common Stock shall
entitle the holder thereof to one vote on each matter properly submitted to the
stockholders of the Corporation for their vote; provided, however, that, except
as otherwise required by law, holders of Common Stock shall not be entitled to
vote on any amendment to this Restated Certificate of Incorporation (including
any Certificate of Designations relating to any series of Preferred Stock) that
relates solely to the terms of one or more outstanding series of Preferred Stock
if the holders of such affected series are entitled, either separately or
together as a class with the holders of one or more other such series, to vote
thereon by law or pursuant to this Restated Certificate of
2
<PAGE>
Incorporation (including any Certificate of Designations relating to any series
of Preferred Stock).
FIFTH: The following provisions are inserted for the
management of the business and the conduct of the affairs of the Corporation,
and for further definition, limitation and regulation of the powers of the
Corporation and of its directors and stockholders:
A. The business and affairs of the Corporation
shall be managed by or under the direction of the board of directors. In
addition to the powers and authority expressly conferred upon them by statute or
by this Restated Certificate of Incorporation or the Bylaws of the Corporation,
the directors are hereby empowered to exercise all such powers and do all such
acts and things as may be exercised or done by the Corporation.
B. The directors of the Corporation need not
be elected by written ballot unless the Bylaws so provide.
C. Any action required or permitted to be taken
by the stockholders of the Corporation must be effected at a duly called annual
or special meeting of stockholders of the Corporation and may not be effected by
any consent in writing by such stockholders.
D. Special meetings of stockholders of the
Corporation may be called only by the Chairman of the Board or the President or
by the board of directors acting pursuant to a resolution adopted by a majority
of the Whole Board. For purposes of this Restated Certificate of Incorporation,
the term "Whole Board" shall mean the total number of authorized directors
whether or not there exist any vacancies in previously authorized directorships.
SIXTH: A. Subject to the rights of the holders of any series
of Preferred Stock to elect additional directors under specified circumstances,
the number of directors shall be fixed from time to time exclusively by the
board of directors pursuant to a resolution adopted by a
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<PAGE>
majority of the Whole Board. The directors, other than those who may be elected
by the holders of any series of Preferred Stock under specified circumstances,
shall be divided into three classes, with the term of office of the first class
to expire at the Corporation's first annual meeting of stockholders, the term of
office of the second class to expire at the Corporation's second annual meeting
of stockholders and the term of office of the third class to expire at the
Corporation's third annual meeting of stockholders. At each annual meeting of
stockholders, directors elected to succeed those directors whose terms expire
shall be elected for a term of office to expire at the third succeeding annual
meeting of stockholders after their election.
B. Subject to the rights of the holders of any
series of Preferred Stock then outstanding, newly created directorships
resulting from any increase in the authorized number of directors or any
vacancies in the board of directors resulting from death, resignation,
retirement, disqualification, removal from office or other cause shall, unless
otherwise provided by law or by resolution of the board of directors, be filled
only by a majority vote of the directors then in office, though less than a
quorum, and directors so chosen shall hold office for a term expiring at the
annual meeting of stockholders at which the term of office of the class to which
they have been chosen expires. No decrease in the authorized number of directors
shall shorten the term of any incumbent director.
C. Advance notice of stockholder nominations
for the election of directors and of business to be brought by stockholders
before any meeting of the stockholders of the Corporation shall be given in the
manner provided in the Bylaws of the Corporation.
D. Subject to the rights of the holders of any
series of Preferred Stock then outstanding, any directors, or the entire board
of directors, may be removed from office at any time, but only for cause and
only by the affirmative vote of the holders of at least sixty
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percent (60%) of the voting power of all of the then-outstanding shares of
capital stock of the Corporation entitled to vote generally in the election of
directors, voting together as a single class.
SEVENTH: The board of directors is expressly empowered to
adopt, amend or repeal Bylaws of the Corporation. Any adoption, amendment or
repeal of the Bylaws of the Corporation by the board of directors shall require
the approval of a majority of the Whole Board. The stockholders shall also have
power to adopt, amend or repeal the Bylaws of the Corporation; provided,
however, that, in addition to any vote of the holders of any class or series of
stock of the Corporation required by law or by this Restated Certificate of
Incorporation, the affirmative vote of the holders of at least sixty percent
(60%) of the voting power of all of the then-outstanding shares of the capital
stock of the Corporation entitled to vote generally in the election of
directors, voting together as a single class, shall be required to adopt, amend
or repeal any provision of the Bylaws of the Corporation.
EIGHTH: A director of the Corporation shall not be personally
liable to the Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability (i) for any breach of the
director's duty of loyalty to the Corporation or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the Delaware General
Corporation Law, or (iv) for any transaction from which the director derived an
improper personal benefit. If the Delaware General Corporation Law is amended to
authorize corporate action further eliminating or limiting the personal
liability of directors, then the liability of a director of the Corporation
shall be eliminated or limited to the fullest extent permitted by the Delaware
General Corporation Law, as so amended.
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Any repeal or modification of the foregoing paragraph by the
stockholders of the Corporation shall not adversely affect any right or
protection of a director of the Corporation existing at the time of such repeal
or modification.
NINTH: The Corporation reserves the right to amend or repeal
any provision contained in this Restated Certificate of Incorporation in the
manner prescribed by the laws of the State of Delaware and all rights conferred
upon stockholders are granted subject to this reservation; provided, however,
that, notwithstanding any other provision of this Restated Certificate of
Incorporation or any provision of law that might otherwise permit a lesser vote
or no vote, but in addition to any vote of the holders of any class or series of
the stock of this corporation required by law or by this Restated Certificate of
Incorporation, the affirmative vote of the holders of at least sixty percent
(60%) of the voting power of all of the then-outstanding shares of the capital
stock of the Corporation entitled to vote generally in the election of
Directors, voting together as a single class, shall be required to amend or
repeal this Article NINTH, Sections C or D of Article FIFTH, Article SIXTH,
Article SEVENTH, or Article EIGHTH.
IN WITNESS WHEREOF, Greenfield Online, Inc. has caused this Restated
Certificate to be executed by its duly authorized officer this ____day of
_____________________, 2000.
GREENFIELD ONLINE, INC.
By
-------------------------------------
Rudy Nadilo
President and Chief Executive Officer
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GREENFIELD ONLINE, INC.
RESTATED BYLAWS
ARTICLE I - STOCKHOLDERS
Section 1. Annual Meeting.
(1) An annual meeting of the stockholders, for the election of
directors to succeed those whose terms expire and for the transaction of such
other business as may properly come before the meeting, shall be held at such
place, on such date, and at such time as the Board of Directors shall each year
fix, which date shall be within thirteen (13) months of the last annual meeting
of stockholders.
(2) Nominations of persons for election to the Board and the
proposal of business to be transacted by the stockholders may be made at an
annual meeting of stockholders (a) pursuant to the Corporation's notice with
respect to such meeting, (b) by or at the direction of the Board or (c) by any
stockholder of record of the Corporation who was a stockholder of record at the
time of the giving of the notice provided for in the following paragraph, who is
entitled to vote at the meeting and who has complied with the notice procedures
set forth in this section.
(3) For nominations or other business to be properly brought
before an annual meeting by a stockholder pursuant to clause (c) of the
foregoing paragraph, (1) the stockholder must have given timely notice thereof
in writing to the Secretary of the Corporation, (2) such business must be a
proper matter for stockholder action under the General Corporation Law of the
State of Delaware, (3) if the stockholder, or the beneficial owner on whose
behalf any such proposal or nomination is made, has provided the Corporation
with a Solicitation Notice, as that term is defined in subclause (c)(iii) of
this paragraph, such stockholder or beneficial owner must, in the case of a
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proposal, have delivered a proxy statement and form of proxy to holders of at
least the percentage of the Corporation's voting shares required under
applicable law to carry any such proposal, or, in the case of a nomination or
nominations, have delivered a proxy statement and form of proxy to holders of a
percentage of the Corporation's voting shares reasonably believed by such
stockholder or beneficial holder to be sufficient to elect the nominee or
nominees proposed to be nominated by such stockholder, and must, in either case,
have included in such materials the Solicitation Notice and (4) if no
Solicitation Notice relating thereto has been timely provided pursuant to this
section, the stockholder or beneficial owner proposing such business or
nomination must not have solicited a number of proxies sufficient to have
required the delivery of such a Solicitation Notice under this section. To be
timely, a stockholder's notice shall be delivered to the Secretary at the
principal executive offices of the Corporation not less than 45 or more than 75
days prior to the first anniversary (the "Anniversary") of the date on which the
Corporation first mailed its proxy materials for the preceding year's annual
meeting of stockholders; provided, however, that if the date of the annual
meeting is advanced more than 30 days prior to or delayed by more than 30 days
after the anniversary of the preceding year's annual meeting, notice by the
stockholder to be timely must be so delivered not later than the close of
business on the later of (i) the 90th day prior to such annual meeting or (ii)
the 10th day following the day on which public announcement of the date of such
meeting is first made. Such stockholder's notice shall set forth (a) as to each
person whom the stockholder proposes to nominate for election or reelection as a
director all information relating to such person as would be required to be
disclosed in solicitations of proxies for the election of such nominees as
directors pursuant to Regulation 14A under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), and such person's written consent to serve as a
director if elected; (b) as to any other business that the stockholder proposes
to bring before the meeting, a brief
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description of such business, the reasons for conducting such business at the
meeting and any material interest in such business of such stockholder and the
beneficial owner, if any, on whose behalf the proposal is made; (c) as to the
stockholder giving the notice and the beneficial owner, if any, on whose behalf
the nomination or proposal is made (i) the name and address of such stockholder,
as they appear on the Corporation's books, and of such beneficial owner, (ii)
the class and number of shares of the Corporation that are owned beneficially
and of record by such stockholder and such beneficial owner, and (iii) whether
either such stockholder or beneficial owner intends to deliver a proxy statement
and form of proxy to holders of, in the case of a proposal, at least the
percentage of the Corporation's voting shares required under applicable law to
carry the proposal or, in the case of a nomination or nominations, a sufficient
number of holders of the Corporation's voting shares to elect such nominee or
nominees (an affirmative statement of such intent, a "Solicitation Notice").
(4) Notwithstanding anything in the second sentence of the
third paragraph of this Section 1 to the contrary, in the event that the number
of directors to be elected to the Board is increased and there is no public
announcement naming all of the nominees for director or specifying the size of
the increased Board made by the Corporation at least 55 days prior to the
Anniversary, a stockholder's notice required by this Bylaw shall also be
considered timely, but only with respect to nominees for any new positions
created by such increase, if it shall be delivered to the Secretary at the
principal executive offices of the Corporation not later than the close of
business on the 10th day following the day on which such public announcement is
first made by the Corporation.
(5) Only persons nominated in accordance with the procedures
set forth in this Section 1 shall be eligible to serve as directors and only
such business shall be conducted at an annual meeting of stockholders as shall
have been brought before the meeting in accordance with
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the procedures set forth in this section. The chair of the meeting shall have
the power and the duty to determine whether a nomination or any business
proposed to be brought before the meeting has been made in accordance with the
procedures set forth in these Bylaws and, if any proposed nomination or business
is not in compliance with these Bylaws, to declare that such defective proposed
business or nomination shall not be presented for stockholder action at the
meeting and shall be disregarded.
(6) Only such business shall be conducted at a special meeting
of stockholders as shall have been brought before the meeting pursuant to the
Corporation's notice of meeting. Nominations of persons for election to the
Board may be made at a special meeting of stockholders at which directors are to
be elected pursuant to the Corporation's notice of meeting (a) by or at the
direction of the Board or (b) by any stockholder of record of the Corporation
who is a stockholder of record at the time of giving of notice provided for in
this paragraph, who shall be entitled to vote at the meeting and who complies
with the notice procedures set forth in this Section 1. Nominations by
stockholders of persons for election to the Board may be made at such a special
meeting of stockholders if the stockholder's notice required by the third
paragraph of this Section 1 shall be delivered to the Secretary at the principal
executive offices of the Corporation not later than the close of business on the
later of the 90th day prior to such special meeting or the 10th day following
the day on which public announcement is first made of the date of the special
meeting and of the nominees proposed by the Board to be elected at such meeting.
(7) For purposes of this section, "public announcement" shall
mean disclosure in a press release reported by the Dow Jones News Service,
Associated Press or a comparable national news service or in a document publicly
filed by the Corporation with the Securities and Exchange Commission pursuant to
Section 13, 14 or 15(d) of the Exchange Act.
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(8) Notwithstanding the foregoing provisions of this Section
1, a stockholder shall also comply with all applicable requirements of the
Exchange Act and the rules and regulations thereunder with respect to matters
set forth in this Section 1. Nothing in this Section 1 shall be deemed to affect
any rights of stockholders to request inclusion of proposals in the
Corporation's proxy statement pursuant to Rule 14a-8 under the Exchange Act.
Section 2. Special Meetings: Notice.
Special meetings of the stockholders, other than those
required by statute, may be called at any time by the Chairman of the Board or
the President or by the Board of Directors acting pursuant to a resolution
adopted by a majority of the Whole Board. For purposes of these Bylaws, the term
"Whole Board" shall mean the total number of authorized directors whether or not
there exist any vacancies in previously authorized directorships. Notice of
every special meeting, stating the time, place and purpose, shall be given by
mailing, postage prepaid, at least ten but not more than sixty days before each
such meeting, a copy of such notice addressed to each stockholder of the
Corporation at his post office address as recorded on the books of the
Corporation. The Board of Directors may postpone or reschedule any previously
scheduled special meeting.
Only such business shall be conducted at a special meeting of
stockholders as shall have been brought before the meeting pursuant to the
Corporation's notice of meeting.
Section 3. Notice of Meetings.
Written notice of the place, date, and time of all meetings of
the stockholders shall be given, not less than ten (10) nor more than sixty (60)
days before the date on which the meeting is to be held, to each stockholder
entitled to vote at such meeting, except as otherwise provided herein or
required by law (meaning, here and hereinafter, as required from time to time by
the Delaware General Corporation Law or the Certificate of Incorporation of the
Corporation).
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When a meeting is adjourned to another place, date or time,
written notice need not be given of the adjourned meeting if the place, date and
time thereof are announced at the meeting at which the adjournment is taken;
provided, however, that if the date of any adjourned meeting is more than thirty
(30) days after the date for which the meeting was originally noticed, or if a
new record date is fixed for the adjourned meeting, written notice of the place,
date, and time of the adjourned meeting shall be given in conformity herewith.
At any adjourned meeting, any business may be transacted which might have been
transacted at the original meeting.
Section 4. Quorum.
At any meeting of the stockholders, the holders of a majority
of all of the shares of the stock entitled to vote at the meeting, present in
person or by proxy, shall constitute a quorum for all purposes, unless or except
to the extent that the presence of a larger number may be required by law. Where
a separate vote by a class or classes is required, a majority of the shares of
such class or classes present in person or represented by proxy shall constitute
a quorum entitled to take action with respect to that vote on that matter.
If a quorum shall fail to attend any meeting, the chairman of
the meeting may adjourn the meeting to another place, date, or time.
Section 5. Organization.
Such person as the Board of Directors may have designated or,
in the absence of such a person, the Chairman of the Board or, in his or her
absence, the Chief Executive Officer of the Corporation or, in his or her
absence, such person as may be chosen by the holders of a majority of the shares
entitled to vote who are present, in person or by proxy, shall call to order any
meeting of the stockholders and act as chairman of the meeting. In the absence
of the Secretary of the Corporation, the secretary of the meeting shall be such
person as the chairman appoints.
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Section 6. Conduct of Business.
The chairman of any meeting of stockholders shall determine
the order of business and the procedure at the meeting, including such
regulation of the manner of voting and the conduct of discussion as seem to him
or her in order. The chairman shall have the power to adjourn the meeting to
another place, date and time. The date and time of the opening and closing of
the polls for each matter upon which the stockholders will vote at the meeting
shall be announced at the meeting.
Section 7. Proxies and Voting.
At any meeting of the stockholders, every stockholder entitled
to vote may vote in person or by proxy authorized by an instrument in writing or
by a transmission permitted by law filed in accordance with the procedure
established for the meeting. Any copy, facsimile telecommunication or other
reliable reproduction of the writing or transmission created pursuant to this
paragraph may be substituted or used in lieu of the original writing or
transmission for any and all purposes for which the original writing or
transmission could be used, provided that such copy, facsimile telecommunication
or other reproduction shall be a complete reproduction of the entire original
writing or transmission.
All voting, including on the election of directors but
excepting where otherwise required by law, may be by a voice vote; provided,
however, that upon demand therefore by a stockholder entitled to vote or by his
or her proxy, a stock vote shall be taken. Every stock vote shall be taken by
ballots, each of which shall state the name of the stockholder or proxy voting
and such other information as may be required under the procedure established
for the meeting.
The Corporation may, and to the extent required by law, shall,
in advance of any meeting of stockholders, appoint one or more inspectors to act
at the meeting and make a written
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report thereof. The Corporation may designate one or more persons as alternate
inspectors to replace any inspector who fails to act. If no inspector or
alternate is able to act at a meeting of stockholders, the person presiding at
the meeting may, and to the extent required by law, shall, appoint one or more
inspectors to act at the meeting. Each inspector, before entering upon the
discharge of his duties, shall take and sign an oath faithfully to execute the
duties of inspector with strict impartiality and according to the best of his
ability. Every vote taken by ballots shall be counted by a duly appointed
inspector or inspectors.
All elections shall be determined by a plurality of the votes
cast, and except as otherwise required by law, all other matters shall be
determined by a majority of the votes cast affirmatively or negatively.
Section 8. Stock List.
A complete list of stockholders entitled to vote at any
meeting of stockholders, arranged in alphabetical order for each class of stock
and showing the address of each such stockholder and the number of shares
registered in his or her name, shall be open to the examination of any such
stockholder, for any purpose germane to the meeting, during ordinary business
hours for a period of at least ten (10) days prior to the meeting, either at a
place within the city where the meeting is to be held, which place shall be
specified in the notice of the meeting, or if not so specified, at the place
where the meeting is to be held.
The stock list shall also be kept at the place of the meeting
during the whole time thereof and shall be open to the examination of any such
stockholder who is present. This list shall presumptively determine the identity
of the stockholders entitled to vote at the meeting and the number of shares
held by each of them.
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ARTICLE II - BOARD OF DIRECTORS
Section 1. Number, Election and Term of Directors.
Subject to the rights of the holders of any series of
preferred stock to elect directors under specified circumstances, the number of
directors shall be fixed from time to time exclusively by the Board of Directors
pursuant to a resolution adopted by a majority of the total number of directors
which the Corporation would have if there were no vacancies. The directors,
other than those who may be elected by the holders of any series of preferred
stock under specified circumstances, shall be divided, with respect to the time
for which they severally hold office, into three classes with the term of office
of the first class to expire at the Corporation's first annual meeting of
stockholders, the term of office of the second class to expire at the
Corporation's second annual meeting of stockholders and the term of office of
the third class to expire at the Corporation's third annual meeting of
stockholders, with each director to hold office until his or her successor shall
have been duly elected and qualified. At each annual meeting of stockholders,
commencing with the first annual meeting, (i) directors elected to succeed those
directors whose terms then expire shall be elected for a term of office to
expire at the third succeeding annual meeting of stockholders after their
election, with each director to hold office until his or her successor shall
have been duly elected and qualified, and (ii) if authorized by a resolution of
the Board of Directors, directors may be elected to fill any vacancy on the
Board of Directors, regardless of how such vacancy shall have been created.
Section 2. Newly Created Directorships and
Vacancies.
Subject to applicable law and to the rights of the holders of
any series of preferred stock with respect to such series of preferred stock,
and unless the Board of Directors otherwise determines, newly created
directorships resulting from any increase in the authorized number of
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directors or any vacancies on the Board of Directors resulting from death,
resignation, retirement, disqualification, removal from office or other cause
shall be filled only by a majority vote of the directors then in office, though
less than a quorum, and directors so chosen shall hold office for a term
expiring at the annual meeting of stockholders at which the term of office of
the class to which they have been elected expires and until such director's
successor shall have been duly elected and qualified. No decrease in the number
of authorized directors constituting the entire Board of Directors shall shorten
the term of any incumbent director.
Section 3. Regular Meetings.
Regular meetings of the Board of Directors shall be held at
such place or places, on such date or dates, and at such time or times as shall
have been established by the Board of Directors and publicized among all
directors. A notice of each regular meeting shall not be required.
Section 4. Special Meetings.
Special meetings of the Board of Directors may be called by
the President or by two or more directors then in office and shall be held at
such place, on such date, and at such time as they or he or she shall fix.
Notice of the place, date, and time of each such special meeting shall be given
each director by whom it is not waived by mailing written notice not less than
five (5) days before the meeting or by telephone or by telegraphing or telexing
or by facsimile transmission of the same not less than twenty-four (24) hours
before the meeting. Unless otherwise indicated in the notice thereof, any and
all business may be transacted at a special meeting.
Section 5. Quorum.
At any meeting of the Board of Directors, a majority of the
total number of the Whole Board shall constitute a quorum for all purposes. If a
quorum shall fail to attend any
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meeting, a majority of those present may adjourn the meeting to another place,
date, or time, without further notice or waiver thereof.
Section 6. Participation in Meetings By Conference
Telephone.
Members of the Board of Directors, or of any committee
thereof, may participate in a meeting of such Board or committee by means of
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other and such participation
shall constitute presence in person at such meeting.
Section 7. Conduct of Business.
At any meeting of the Board of Directors, business shall be
transacted in such order and manner as the Board may from time to time
determine, and all matters shall be determined by the vote of a majority of the
directors present, except as otherwise provided herein or required by law.
Action may be taken by the Board of Directors without a meeting if all members
thereof consent thereto in writing, and the writing or writings are filed with
the minutes of proceedings of the Board of Directors.
Section 8. Powers.
The Board of Directors may, except as otherwise required by
law, exercise all such powers and do all such acts and things as may be
exercised or done by the Corporation, including, without limiting the generality
of the foregoing, the unqualified power:
(1) To declare dividends from time to time in
accordance with law;
(2) To purchase or otherwise acquire any
property, rights or privileges on such terms as it shall determine;
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(3) To authorize the creation, making and
issuance, in such form as it may determine, of written obligations of
every kind, negotiable or non-negotiable, secured or unsecured, and to
do all things necessary in connection therewith;
(4) To remove any officer of the Corporation
with or without cause, and from time to time to devolve the powers and
duties of any officer upon any other person for the time being;
(5) To confer upon any officer of the
Corporation the power to appoint, remove and suspend subordinate
officers, employees and agents;
(6) To adopt from time to time such stock
option, stock purchase, bonus or other compensation plans for
directors, officers, employees and agents of the Corporation and its
subsidiaries as it may determine;
(7) To adopt from time to time such insurance,
retirement, and other benefit plans for directors, officers, employees
and agents of the Corporation and its subsidiaries as it may determine;
and,
(8) To adopt from time to time regulations, not
inconsistent with these Bylaws, for the management of the Corporation's
business and affairs.
Section 9. Compensation of Directors.
Unless otherwise restricted by the certificate of
incorporation, the Board of Directors shall have the authority to fix the
compensation of the directors. The directors may be paid their expenses, if any,
of attendance at each meeting of the Board of Directors and may be paid a fixed
sum for attendance at each meeting of the Board of Directors or paid a stated
salary or paid other compensation as director. No such payment shall preclude
any director from serving the
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Corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed like compensation for attending
committee meetings.
ARTICLE III - COMMITTEES
Section 1. Committees of the Board of Directors.
The Board of Directors, by a vote of a majority of the Whole
Board, may from time to time designate committees of the Board, with such
lawfully delegable powers and duties as it thereby confers, to serve at the
pleasure of the Board and shall, for those committees and any others provided
for herein, elect a director or directors to serve as the member or members,
designating, if it desires, other directors as alternate members who may replace
any absent or disqualified member at any meeting of the committee. In the
absence or disqualification of any member of any committee and any alternate
member in his or her place, the member or members of the committee present at
the meeting and not disqualified from voting, whether or not he or she or they
constitute a quorum, may by unanimous vote appoint another member of the Board
of Directors to act at the meeting in the place of the absent or disqualified
member.
Section 2. Conduct of Business.
Each committee may determine the procedural rules for meeting
and conducting its business and shall act in accordance therewith, except as
otherwise provided herein or required by law. Adequate provision shall be made
for notice to members of all meetings; one-third (1/3) of the members shall
constitute a quorum unless the committee shall consist of one (1) or two (2)
members, in which event one (1) member shall constitute a quorum; and all
matters shall be determined by a majority vote of the members present. Action
may be taken by any committee without a meeting if all members thereof consent
thereto in writing, and the writing or writings are filed with the minutes of
the proceedings of such committee.
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ARTICLE IV - OFFICERS
Section 1. Generally.
The officers of the Corporation shall consist of a President,
one or more Vice Presidents, a Secretary, a Treasurer and such other officers as
may from time to time be appointed by the Board of Directors. Officers shall be
elected by the Board of Directors, which shall consider that subject at its
first meeting after every annual meeting of stockholders. Each officer shall
hold office until his or her successor is elected and qualified or until his or
her earlier resignation or removal. Any number of offices may be held by the
same person. The salaries of officers elected by the Board of Directors shall be
fixed from time to time by the Board of Directors or by such officers as may be
designated by resolution of the Board.
Section 2. President.
The President shall be the Chief Executive Officer of the
Corporation. Subject to the provisions of these Bylaws and to the direction of
the Board of Directors, he or she shall have the responsibility for the general
management and control of the business and affairs of the Corporation and shall
perform all duties and have all powers which are commonly incident to the office
of chief executive or which are delegated to him or her by the Board of
Directors. He or she shall have power to sign all stock certificates, contracts
and other instruments of the Corporation which are authorized and shall have
general supervision and direction of all of the other officers, employees and
agents of the Corporation.
Section 3. Vice President.
Each Vice President shall have such powers and duties as may
be delegated to him or her by the Board of Directors. One (1) Vice President
shall be designated by the Board to perform the duties and exercise the powers
of the President in the event of the President's absence or disability.
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Section 4. Treasurer.
The Treasurer shall have the responsibility for maintaining
the financial records of the Corporation. He or she shall make such
disbursements of the funds of the Corporation as are authorized and shall render
from time to time an account of all such transactions and of the financial
condition of the Corporation. The Treasurer shall also perform such other duties
as the Board of Directors may from time to time prescribe.
Section 5. Secretary.
The Secretary shall issue all authorized notices for, and
shall keep minutes of, all meetings of the stockholders and the Board of
Directors. He or she shall have charge of the corporate books and shall perform
such other duties as the Board of Directors may from time to time prescribe.
Section 6. Delegation of Authority.
The Board of Directors may from time to time delegate the
powers or duties of any officer to any other officers or agents, notwithstanding
any provision hereof.
Section 7. Removal.
Any officer of the Corporation may be removed at any time,
with or without cause, by the Board of Directors.
Section 8. Action with Respect to Securities of
Other Corporations.
Unless otherwise directed by the Board of Directors, the
President or any officer of the Corporation authorized by the President shall
have power to vote and otherwise act on behalf of the Corporation, in person or
by proxy, at any meeting of stockholders of or with respect to any action of
stockholders of any other Corporation in which this Corporation may hold
securities and
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otherwise to exercise any and all rights and powers which this Corporation may
possess by reason of its ownership of securities in such other Corporation.
ARTICLE V - STOCK
Section 1. Certificates of Stock.
Each stockholder shall be entitled to a certificate signed by,
or in the name of the Corporation by, the President or a Vice President, and by
the Secretary or an Assistant Secretary, or the Treasurer or an Assistant
Treasurer, certifying the number of shares owned by him or her. Any or all of
the signatures on the certificate may be by facsimile.
Section 2. Transfers of Stock.
Transfers of stock shall be made only upon the transfer books
of the Corporation kept at an office of the Corporation or by transfer agents
designated to transfer shares of the stock of the Corporation. Except where a
certificate is issued in accordance with Section 4 of Article V of these Bylaws,
an outstanding certificate for the number of shares involved shall be
surrendered for cancellation before a new certificate is issued therefor.
Section 3. Record Date.
In order that the Corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders, or to receive
payment of any dividend or other distribution or allotment of any rights or to
exercise any rights in respect of any change, conversion or exchange of stock or
for the purpose of any other lawful action, the Board of Directors may, except
as otherwise required by law, fix a record date, which record date shall not
precede the date on which the resolution fixing the record date is adopted and
which record date shall not be more than sixty (60) nor less than ten (10) days
before the date of any meeting of stockholders, nor more than sixty (60) days
prior to the time for such other action as hereinbefore described; provided,
however, that
16
<PAGE>
if no record date is fixed by the Board of Directors, the record date for
determining stockholders entitled to notice of or to vote at a meeting of
stockholders shall be at the close of business on the day next preceding the day
on which notice is given or, if notice is waived, at the close of business on
the day next preceding the day on which the meeting is held, and, for
determining stockholders entitled to receive payment of any dividend or other
distribution or allotment of rights or to exercise any rights of change,
conversion or exchange of stock or for any other purpose, the record date shall
be at the close of business on the day on which the Board of Directors adopts a
resolution relating thereto.
A determination of stockholders of record entitled to notice
of or to vote at a meeting of stockholders shall apply to any adjournment of the
meeting; provided, however, that the Board of Directors may fix a new record
date for the adjourned meeting.
Section 4. Lost, Stolen or Destroyed Certificates.
In the event of the loss, theft or destruction of any
certificate of stock, another may be issued in its place pursuant to such
regulations as the Board of Directors may establish concerning proof of such
loss, theft or destruction and concerning the giving of a satisfactory bond or
bonds of indemnity.
Section 5. Regulations.
The issue, transfer, conversion and registration of
certificates of stock shall be governed by such other regulations as the Board
of Directors may establish.
ARTICLE VI - NOTICES
Section 1. Notices.
Except as otherwise specifically provided herein or required
by law, all notices required to be given to any stockholder, director, officer,
employee or agent shall be in writing and
17
<PAGE>
may in every instance be effectively given by hand delivery to the recipient
thereof, by depositing such notice in the mails, postage paid, recognized
overnight delivery service or by sending such notice by facsimile, receipt
acknowledged, or by prepaid telegram or mailgram. Any such notice shall be
addressed to such stockholder, director, officer, employee or agent at his or
her last known address as the same appears on the books of the Corporation. The
time when such notice is received, if hand delivered, or dispatched, if
delivered through the mails or by telegram or mailgram, shall be the time of the
giving of the notice.
Section 2. Waivers.
A written waiver of any notice, signed by a stockholder,
director, officer, employee or agent, whether before or after the time of the
event for which notice is to be given, shall be deemed equivalent to the notice
required to be given to such stockholder, director, officer, employee or agent.
Neither the business nor the purpose of any meeting need be specified in such a
waiver. Attendance at any meeting shall constitute waiver of notice except
attendance for the sole purpose of objecting to the timeliness of notice.
ARTICLE VII - MISCELLANEOUS
Section 1. Facsimile Signatures.
In addition to the provisions for use of facsimile signatures
elsewhere specifically authorized in these Bylaws, facsimile signatures of any
officer or officers of the Corporation may be used whenever and as authorized by
the Board of Directors or a committee thereof.
Section 2. Corporate Seal.
The Board of Directors may provide a suitable seal, containing
the name of the Corporation, which seal shall be in the charge of the Secretary.
If and when so directed by the
18
<PAGE>
Board of Directors or a committee thereof, duplicates of the seal may be kept
and used by the Treasurer or by an Assistant Secretary or Assistant Treasurer.
Section 3. Reliance upon Books, Reports and
Records.
Each director, each member of any committee designated by the
Board of Directors, and each officer of the Corporation shall, in the
performance of his or her duties, be fully protected in relying in good faith
upon the books of account or other records of the Corporation and upon such
information, opinions, reports or statements presented to the Corporation by any
of its officers or employees, or committees of the Board of Directors so
designated, or by any other person as to matters which such director or
committee member reasonably believes are within such other person's professional
or expert competence and who has been selected with reasonable care by or on
behalf of the Corporation.
Section 4. Fiscal Year.
The fiscal year of the Corporation shall be as fixed by the
Board of Directors.
Section 5. Time Periods.
In applying any provision of these Bylaws which requires that
an act be done or not be done a specified number of days prior to an event or
that an act be done during a period of a specified number of days prior to an
event, calendar days shall be used, the day of the doing of the act shall be
excluded, and the day of the event shall be included.
ARTICLE VIII - INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 1. Right to Indemnification.
Each person who was or is made a party or is threatened to be
made a party to or is otherwise involved in any action, suit or proceeding,
whether civil, criminal, administrative or investigative (hereinafter a
"proceeding"), by reason of the fact that he or she is or was a director or
19
<PAGE>
an officer of the Corporation or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another corporation or
of a partnership, joint venture, trust or other enterprise, including service
with respect to an employee benefit plan (hereinafter an "indemnitee"), whether
the basis of such proceeding is alleged action in an official capacity as a
director, officer, employee or agent or in any other capacity while serving as a
director, officer, employee or agent, shall be indemnified and held harmless by
the Corporation to the fullest extent authorized by the Delaware General
Corporation Law, as the same exists or may hereafter be amended (but, in the
case of any such amendment, only to the extent that such amendment permits the
Corporation to provide broader indemnification rights than such law permitted
the Corporation to provide prior to such amendment), against all expense,
liability and loss (including attorneys' fees, judgments, fines, ERISA excise
taxes or penalties and amounts paid in settlement) reasonably incurred or
suffered by such indemnitee in connection therewith; provided, however, that,
except as provided in Section 3 of this ARTICLE VIII with respect to proceedings
to enforce rights to indemnification, the Corporation shall indemnify any such
indemnitee in connection with a proceeding (or part thereof) initiated by such
indemnitee only if such proceeding (or part thereof) was authorized by the Board
of Directors of the Corporation.
Section 2. Right to Advancement of Expenses.
In addition to the right to indemnification conferred in
Section 1 of this ARTICLE VIII, an indemnitee shall also have the right to be
paid by the Corporation the expenses (including attorney's fees) incurred in
defending any such proceeding in advance of its final disposition (hereinafter
an "advancement of expenses"); provided, however, that, if the Delaware General
Corporation Law requires, an advancement of expenses incurred by an indemnitee
in his or her capacity as a director or officer (and not in any other capacity
in which service was or is rendered by such indemnitee, including, without
limitation, service to an employee benefit plan) shall be made
20
<PAGE>
only upon delivery to the Corporation of an undertaking (hereinafter an
"undertaking"), by or on behalf of such indemnitee, to repay all amounts so
advanced if it shall ultimately be determined by final judicial decision from
which there is no further right to appeal (hereinafter a "final adjudication")
that such indemnitee is not entitled to be indemnified for such expenses under
this Section 2 or otherwise. The rights to indemnification and to the
advancement of expenses conferred in Sections 1 and 2 of this ARTICLE VIII shall
be contract rights and such rights shall continue as to an indemnitee who has
ceased to be a director, officer, employee or agent and shall inure to the
benefit of the indemnitee's heirs, executors and administrators.
Section 3. Right of Indemnitee to Bring Suit.
If a claim under Section 1 or 2 of this ARTICLE VIII is not
paid in full by the Corporation within sixty (60) days after a written claim has
been received by the Corporation, except in the case of a claim for an
advancement of expenses, in which case the applicable period shall be twenty
(20) days, the indemnitee may at any time thereafter bring suit against the
Corporation to recover the unpaid amount of the claim. If successful in whole or
in part in any such suit, or in a suit brought by the Corporation to recover an
advancement of expenses pursuant to the terms of an undertaking, the indemnitee
shall be entitled to be paid also the expense of prosecuting or defending such
suit. In (i) any suit brought by the indemnitee to enforce a right to
indemnification hereunder (but not in a suit brought by the indemnitee to
enforce a right to an advancement of expenses) it shall be a defense that, and
(ii) in any suit brought by the Corporation to recover an advancement of
expenses pursuant to the terms of an undertaking, the Corporation shall be
entitled to recover such expenses upon a final adjudication that, the indemnitee
has not met any applicable standard for indemnification set forth in the
Delaware General Corporation Law. Neither the failure of the Corporation
(including its directors who are not parties to such action, a committee of such
directors, independent legal counsel, or its stockholders) to have made a
21
<PAGE>
determination prior to the commencement of such suit that indemnification of the
indemnitee is proper in the circumstances because the indemnitee has met the
applicable standard of conduct set forth in the Delaware General Corporation
Law, nor an actual determination by the Corporation (including its directors who
are not parties to such action, a committee of such directors, independent legal
counsel, or its stockholders) that the indemnitee has not met such applicable
standard of conduct, shall create a presumption that the indemnitee has not met
the applicable standard of conduct or, in the case of such a suit brought by the
indemnitee, be a defense to such suit. In any suit brought by the indemnitee to
enforce a right to indemnification or to an advancement of expenses hereunder,
or brought by the Corporation to recover an advancement of expenses pursuant to
the terms of an undertaking, the burden of proving that the indemnitee is not
entitled to be indemnified, or to such advancement of expenses, under this
ARTICLE VIII or otherwise shall be on the Corporation.
Section 4. Non-Exclusivity of Rights.
The rights to indemnification and to the advancement of
expenses conferred in this ARTICLE VIII shall not be exclusive of any other
right which any person may have or hereafter acquire under any statute, the
Corporation's Certificate of Incorporation, Bylaws, agreement, vote of
stockholders or directors or otherwise.
Section 5. Insurance.
The Corporation may maintain insurance, at its expense, to
protect itself and any director, officer, employee or agent of the Corporation
or another corporation, partnership, joint venture, trust or other enterprise
against any expense, liability or loss, whether or not the Corporation would
have the power to indemnify such person against such expense, liability or loss
under the Delaware General Corporation Law.
22
<PAGE>
Section 6. Indemnification of Employees and Agents
of the Corporation.
The Corporation may, to the extent authorized from time to
time by the Board of Directors, grant rights to indemnification and to the
advancement of expenses to any employee or agent of the Corporation to the
fullest extent of the provisions of this Article with respect to the
indemnification and advancement of expenses of directors and officers of the
Corporation.
ARTICLE IX - AMENDMENTS
In furtherance and not in limitation of the powers conferred
by law, the Board of Directors is expressly authorized to make, alter, amend and
repeal these Bylaws subject to the power of the holders of capital stock of the
Corporation to alter, amend or repeal the Bylaws; provided, however, that, with
respect to the powers of holders of capital stock to make, alter, amend and
repeal Bylaws of the Corporation, notwithstanding any other provision of these
Bylaws or any provision of law which might otherwise permit a lesser vote or no
vote, but in addition to any affirmative vote of the holders of any particular
class or series of the capital stock of the Corporation required by law, these
Bylaws or any preferred stock, the affirmative vote of the holders of at least
sixty percent (60%) of the voting power of all of the then-outstanding shares
entitled to vote generally in the election of directors, voting together as a
single class, shall be required to make, alter, amend or repeal any provision of
these Bylaws.
23
<PAGE>
CERTIFICATE OF ADOPTION
The undersigned Secretary of Greenfield Online, Inc. does hereby
certify that the above and foregoing Bylaws of said corporation were adopted by
the directors as the Bylaws of said corporation and that the same do now
constitute the Bylaws of this corporation.
DATED as of __________, 2000.
-----------------------------
Jonathan Flatow, Secretary
24
<PAGE>
COMMON STOCK COMMON STOCK
NUMBER Greenfield Online(TM)(Logo) SHARES
GO
GREENFIELD ONLINE, INC. CUSIP
INCORPORATED UNDER THE LAWS OF THE SEE REVERSE FOR
STATE OF DELAWARE CERTAIN DEFINITIONS
THIS CERTIFIES THAT:
IS THE OWNER OF
FULLY PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK PAR
VALUE $0.001 PER SHARE OF
GREENFIELD ONLINE, INC. (hereinafter called the Corporation), transferable on
the books of the Corporation by the holder hereof in person or by duly
authorized attorney, upon surrender of this Certificate properly endorsed. This
Certificate and the shares represented hereby are issued and shall be held
subject to all of the provisions of the Certificate of Incorporation and Bylaws
of the Corporation and of the amendments from time to time made thereto (copies
of which are on file with the Transfer Agent) and to legends, if any, appearing
on the reverse hereof or appended hereto, to all of which the holder, by
acceptance hereof, assents.
This Certificate is not valid until countersigned by the Transfer Agent
and registered by the Registrar.
Witness the facsimile seal of the Corporation and the facsimile signatures
of its duly authorized officers.
Dated:
SIGNATURE TO COME SIGNATURE TO COME
SEAL TO COME
CHIEF EXECUTIVE OFFICER SECRETARY
COUNTERSIGNED AND REGISTERED:
ChaseMellon Shareholder Services, L.L.C.
TRANSFER AGENT
AND REGISTRAR
BY
AUTHORIZED SIGNATURE
<PAGE>
GREENFIELD ONLINE, INC.
LEGEND:
THE CORPORATION WILL FURNISH WITHOUT CHARGE TO EACH STOCKHOLDER WHO SO
REQUESTS A STATEMENT OF THE POWERS, DESIGNATIONS, PREFERENCES, AND RELATIVE,
PARTICIPATING, OPTIONAL OR OTHER SPECIAL RIGHTS OF EACH CLASS OF STOCK OR SERIES
THEREOF OF THE CORPORATION AND THE QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS
OF SUCH PREFERENCES AND/OR RIGHTS. SUCH REQUEST MAY BE MADE TO THE SECRETARY OF
THE CORPORATION.
The following abbreviations, when used in the inscription on the face of
this Certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM -- as tenants in common UNIF GIFT MIN ACT--___ Custodian ___
TEN ENT -- as tenants by the entireties (Cust) (Minor)
JT TEN -- as joint tenants with right of Under Uniform Gifts to Minors
survivorship and not as Act__________________________
tenants in common (state)
Additional abbreviations may also be used though not in the above list.
For Value Received, hereby sell,
----------------------------------------
assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER
OF ASSIGNEE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)
- --------------------------------------------------------------------------------
- ------------------------------------------------------------------------- Shares
represented by the within Certificate, and do hereby irrevocably constitute
and appoint
- ----------------------------------------------------------------------- Attorney
to transfer the said shares on the books of the within-named Corporation with
full power of substitution in the premises.
Dated
-------------
--------------------------------------------
NOTICE: THE SIGNATURE(S) TO THE ASSIGNMENT MUST
CORRESPOND WITH THE NAME(S) AS WRITTEN UPON
THE FACE OF THE CERTIFICATE IN EVERY
PARTICULAR, WITHOUT ALTERATION OR
ENLARGEMENT OR ANY CHANGE WHATEVER.
SIGNATURE GUARANTEED:
- -------------------------------------------------------------
THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE
GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGS AND LOAN
ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED
SIGNATURE GUARANTEE, MEDALLION PROGRAM), PURSUANT TO S.E.C.
RULE 17Ad-15.
<PAGE>
================================================================================
STOCK PURCHASE AND REDEMPTION AGREEMENT
BY AND AMONG
GREENFIELD ONLINE, INC.,
ANDREW GREENFIELD,
AND
GREENFIELD HOLDINGS, LLC
May 12, 1999
================================================================================
<PAGE>
STOCK PURCHASE AND
REDEMPTION AGREEMENT (as amended,
modified or supplemented, this
"Agreement"), dated as of May 12,
1999, by and among GREENFIELD
ONLINE, INC., a Connecticut
corporation (the "Company"), ANDREW
GREENFIELD, an individual (the
"Shareholder"), and GREENFIELD
HOLDINGS, LLC, a Delaware limited
liability company (the "Investor").
RECITALS
WHEREAS, the Company is engaged in the business (the "Subject
Business") of providing customized and syndicated marketing research services
over the Internet;
WHEREAS, the Board of Directors of the Company has approved
this Agreement and, as of the Closing Date, will approve the Related Documents
to which the Company is a party and the transactions contemplated hereby and
thereby (including the Purchase, the Redemption and the Reclassification); and
WHEREAS, the parties hereto desire to make certain
representations, warranties, covenants and agreements in connection with the
transactions contemplated hereby (including the Purchase, the Redemption and the
Reclassification).
NOW, THEREFORE, in consideration of the mutual
representations, warranties, covenants and agreements set forth herein, the
parties hereto hereby agree as follows:
ARTICLE I
PURCHASE AND REDEMPTION
1.1 Purchase of Purchased Shares.
Immediately prior to the Closing, (i) the Shareholder shall file the
Amended Charter with the Secretary of State of the State of Connecticut and
shall convert all of the 200 authorized shares of Common Stock into 200,000 of
shares of capital stock of which 100,000 shall be designated as Class A Common
Stock of the Company, par value $0.01 per share (the "Class A Common"), and
100,000 of which shall be designated as Class B Common Stock of the Company, par
value $0.01 per share (the "Class B Common" or the "Purchased Shares") and (ii)
upon the effectiveness of the Amended Charter, the 100 issued and outstanding
shares of Common Stock of the Company shall be converted into 100,000 shares of
Class A Common (the transactions referred in clauses (i) and (ii) of this
Section 1.1 collectively, the "Reclassification"). Upon the terms and subject to
the conditions set forth herein, at the Closing the Company shall sell,
transfer, convey and assign to the Investor and the Investor shall purchase and
acquire from the Company (the "Purchase"), 48,567 shares of Class B Common
Stock, par value $0.01 per share (the "Class B Common" or the "Purchased
Shares"), of the Company.
2
<PAGE>
1.2 Purchase Price for Purchased Shares.
The aggregate purchase price to be paid for the Purchased Shares by the
Investor (the "Purchased Shares Consideration") shall be $8,863,548. Upon the
terms and subject to the conditions set forth herein, at the Closing, the
Company shall sell, transfer, convey and assign to the Investor and the Investor
shall purchase and acquire from the Company the Purchased Shares for the
Purchased Shares Consideration.
1.3 Redemption of Redeemed Shares.
Upon the terms and subject to the conditions set forth herein, at the
Closing the Shareholder shall sell, transfer, convey and assign to the Company,
and the Company shall redeem and purchase from the Shareholder (the
"Redemption"), 94,520 shares of Class A Common Stock (the "Redeemed Shares").
1.4 Purchase Price for Redeemed Shares.
The aggregate purchase price to be paid for the Redeemed Shares by the
Company (the "Redeemed Shares Consideration") shall be an amount equal to
$17,249,912; provided, however, that $1,600,000 of the Redeemed Shares
Consideration shall be held in the Escrow Account pursuant to Section 1.5(c). At
the Closing, the Shareholder shall sell, transfer, convey and assign to the
Company the Redeemed Shares and the Company shall redeem and purchase from the
Shareholder the Redeemed Shares for the Redeemed Shares Consideration.
1.5 Consideration.
(a) At the Closing, the Investor shall wire transfer the
Purchased Shares Consideration in immediately available funds to the account of
the Company (to be specified by the Company in writing at least two Business
Days prior to the Closing Date) for the benefit of the Company. At the Closing,
the Company shall wire transfer the Redeemed Shares Consideration in immediately
available funds to the account of the Shareholder (to be specified by the
Shareholder at least two Business Days prior to the Closing Date) for the
benefit of the Shareholder.
(b) The consideration to be paid by the Investor or the
Company pursuant to the Purchase or the Redemption, as the case may be, shall be
deemed to be consideration for the Purchased Shares, the Redeemed Shares and the
covenants contained herein and in the Related Documents.
(c) At the Closing, the sum of $1,600,000 (the "Escrow Fund")
shall be wire transferred by the Company to the Escrow Agent pursuant to the
terms of the Escrow Agreement. As provided in the Escrow Agreement, the Escrow
Fund shall be held in an account (the "Escrow Account") to provide
indemnification as provided in Article VIII hereof.
3
<PAGE>
1.6 Delivery of Purchased Shares.
At the Closing, in consideration of the Investor's delivery of the
Purchased Shares Consideration, the Company shall deliver to the Investor a
certificate or certificates representing the Purchased Shares free and clear of
all Encumbrances.
1.7 Delivery of Redeemed Shares.
At the Closing, in consideration of the Company's delivery of the
Redeemed Shares Consideration to be delivered at the Closing, the Shareholder
shall deliver to the Company a certificate or certificates representing the
Redeemed Shares, duly endorsed in blank for transfer or accompanied by stock
powers duly executed in blank, sufficient in form and substance to convey to the
Company good title to the Redeemed Shares free and clear of all Encumbrances.
1.8 Contingent Shares Component.
(a) Contingent Shares shall become Earned Shares in accordance
with this Section 1.8. The percentage of the Contingent Shares that shall become
Earned Shares on the Contingent Shares Component Determination Date shall
correspond to the amount of Referral Revenue as determined by reference to the
following table; provided, however, that all Contingent Shares shall become
Earned Shares on the date of the consummation of a Sale of the Company:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
Percentage of Contingent
Shares that become Earned
Aggregate Amount of Referral Revenue Shares
- ---------------------------------------------------------------------------------------------------
<S> <C>
less than $1,000,000 0
- ---------------------------------------------------------------------------------------------------
greater than or equal to $1,000,000 but less than $1,300,000 50%
- ---------------------------------------------------------------------------------------------------
greater than or equal to $1,300,000 but less than $1,600,000 60%
- ---------------------------------------------------------------------------------------------------
greater than or equal to $1,600,000 but less than $1,900,000 70%
- ---------------------------------------------------------------------------------------------------
greater than or equal to $1,900,000 but less than $2,200,000 80%
- ---------------------------------------------------------------------------------------------------
greater than or equal to $2,200,000 but less than $2,500,000 90%
- ---------------------------------------------------------------------------------------------------
greater than or equal to $2,500,000 100%
- ---------------------------------------------------------------------------------------------------
</TABLE>
Contingent Shares that do not become Earned Shares on the Contingent Shares
Component Determination Date shall automatically, without any action on the part
of any of the parties hereto or any other Person, be forfeited by the
Shareholder to the Company for no consideration and be deemed to be cancelled
and to cease to be outstanding for all purposes. The number of Contingent Shares
subject to forfeiture pursuant to this Section 1.8 shall be subject to
proportionate adjustment in the event of any stock dividends, stock splits,
stock combinations or other similar events affecting the Class A Common or the
Class B Common after the date hereof. Schedule 1.8 hereto sets forth the
referrals and the Referral Revenue as of the date hereof.
(b) Any amount or calculation to be made in connection with
this Section 1.8 shall be determined or made in accordance with and using the
same revenue, income and expense recognition policies and practices as have been
used by the Company prior to the
4
<PAGE>
Closing. All accounting entries will be made regardless of their amount and all
detected errors and omissions will be corrected regardless of their materiality.
(c) Within 15 days following the end of each calendar quarter
during the Referral Period, the Company shall deliver to the Shareholder a
certificate showing the Company's calculation of the Referral Revenue for such
quarterly period and for the period from April 20, 1999, through the end of such
quarterly period. In the event that the Shareholder disputes such calculation,
he shall promptly notify the Company in writing, together with his calculation
of the Referral Revenue during such calendar quarter. Thereafter, the parties
shall in good faith seek to resolve their differences in the calculation of
Referral Revenue. If such good faith efforts do not result in a written
agreement with respect thereto, the parties shall utilize the dispute resolution
procedures set forth in Section 1.8(e) on the dates set forth therein.
(d) The Company shall promptly, but no later than thirty (30)
days after receipt of the Company's unaudited financial statements for the
fiscal quarter ending after the Contingent Shares Component Determination Date,
provide the Shareholder with a certificate (the "Referral Revenue Certificate")
setting forth the Company's determination as to the Contingent Shares which have
become Earned Shares in accordance with this Section 1.8, if any.
(e) During the 30 days immediately following receipt of the
Referral Revenue Certificate by the Shareholder, the Shareholder and his
accountant shall be entitled to review the Referral Revenue Certificate and any
working papers, trial balances and similar materials relating to the Referral
Revenue Certificate prepared by the Company or its accountants. The
determination of the Earned Shares set forth in the Referral Revenue Certificate
shall become final and binding upon the parties on the thirty-first day
following delivery thereof unless the Shareholder gives written notice to the
Company of his disagreement with the Referral Revenue Certificate (a "Notice of
Disagreement") prior to such date. Any Notice of Disagreement shall specify in
reasonable detail the nature of any disagreement so asserted. If a timely Notice
of Disagreement is delivered by the Shareholder to the Company, then the
determination of the Earned Shares set forth in the Referral Revenue Certificate
(as revised (if at all) in accordance with clause (x) or (y) below) shall become
final and binding upon the parties on the earlier of (x) the date the Company
and the Shareholder resolve in writing any differences they have with respect to
any matter specified in a Notice of Disagreement or (y) the date any matters in
dispute are finally resolved in writing by the Accounting Firm. During the 30
days immediately following the delivery of any Notice of Disagreement, the
Company and the Shareholder shall seek in good faith to resolve in writing any
differences which they may have with respect to any matter specified in such
Notice of Disagreement. During such 30-day period, the Company and the
Shareholder shall each have access to the other party's working papers. At the
end of such 30-day period, the Company and the Shareholder shall submit to the
Accounting Firm for review and resolution any and all matters which remain in
dispute and which were included in any Notice of Disagreement, and the
Accounting Firm shall reach a final, binding resolution of all matters which
remain in dispute, which final resolution shall be (i) in writing, (ii)
furnished to the Company and the Shareholder as soon as practicable after the
items in dispute have been referred to the Accounting Firm, (iii) made in
accordance with this Agreement and (iv) conclusive and binding upon the parties
hereto and not subject to collateral attack for any reason. The determination of
the Earned Shares, as adjusted to reflect the Accounting Firm's resolution of
the matters in dispute, shall become final and binding on the parties hereto on
the date the
5
<PAGE>
Accounting Firm delivers its final resolution to the parties. The Accounting
Firm shall be PricewaterhouseCoopers, LLP, or if such firm is unable or
unwilling to act, such other independent "Big 5" public accounting firm as shall
be agreed upon by the Company and the Shareholder in writing or, if such parties
cannot so agree within the 30-calendar day period referred to above, by lot from
among the remaining independent "Big 5" public accounting firms willing to act
and that have not previously served as accountants to the Shareholder or the
Company. Each party shall pay its own costs and expenses incurred in connection
with such dispute resolution; provided that the fees and expenses of the
Accounting Firm shall be borne 50% by the Company on the one hand, and 50% by
the Shareholder on the other hand.
(f) Upon any forfeiture of Contingent Shares pursuant to this
Section 1.8, the Shareholder shall promptly deliver to the Company the
certificate or certificates representing such Contingent Shares so forfeited,
duly endorsed or accompanied by duly executed stock powers for transfer to the
Company (or, in the event the loss or theft of such certificate(s), an affidavit
of loss and indemnity acceptable to the Company), but sufficient in form and
substance to convey to the Company good title to the Contingent Shares so
forfeited, free and clear of any Encumbrances, but the Shareholder's failure to
do so shall not affect in any way such forfeiture. In addition to the
restrictions and limitations placed on the Contingent Shares pursuant to the
Shareholders' Agreement, the Shareholder may not Transfer (as defined in the
Shareholders' Agreement) any Contingent Shares without the prior written consent
of the Company in its sole discretion, and any such Transfer attempted without
the Company's consent shall be void ab initio. All certificates representing
Contingent Shares shall bear such legends and notices as may be reasonably
required by the Company to effectuate and evidence the provisions of this
Section 1.8.
1.9 Satisfaction of Bonus Obligations.
Prior to the Closing Date, the Company will satisfy its employee bonus
obligations payable to all of its employees upon a change of control or Sale of
the Company or similar event by paying to the employees set forth on Schedule
3.19 (other than Rudy Nadilo) the respective amounts set forth opposite each
employee's name, which payments shall not exceed $1,010,000 in the aggregate.
Immediately after the Closing, the Company shall pay Rudy Nadilo a bonus of
$2,250,000, subject to receipt of shareholder approval.
ARTICLE II
CLOSING
The closing of the Purchase, the Redemption and the Reclassification
(the "Closing") shall take place (a) at the offices of O'Sullivan Graev &
Karabell, LLP, 30 Rockefeller Plaza, New York, New York 10112, as promptly as
practicable after satisfaction or waiver of the conditions set forth in Article
VII in accordance with this Agreement, but in any event not later than May 19,
1999, or (b) at such other place, time and date as the Investor and the Company
may agree in writing. The date and time of such Closing are referred to herein
as the "Closing Date".
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Investor as follows:
3.1 Organization; Good Standing; Qualification and Power.
The Company is a corporation duly organized, validly existing and in
good standing under the Laws of the jurisdiction of its incorporation, has all
requisite corporate power and authority to own, lease and operate its properties
and to carry on its business as now being conducted and as presently proposed to
be conducted, to enter into this Agreement and the Related Documents to which it
is party, to perform its obligations hereunder and thereunder and to consummate
the transactions contemplated hereby and thereby, and is duly qualified and in
good standing to do business in each jurisdiction in which the nature of its
business or the ownership or leasing of its properties makes such qualification
necessary. The jurisdictions in which the Company is qualified as a foreign
corporation or licensed or registered to carry on business are set forth in
Schedule 3.1.
3.2 Subsidiaries; Investments.
The Company does not have, nor has it ever in the past had, any
Subsidiaries. Except as set forth in Schedule 3.2, the Company does not own or
hold, directly or indirectly, any equity interest in or debt obligation (other
than accounts receivable in the ordinary course of business) of any Person.
3.3 Capital Stock.
(a) As of the date hereof and immediately prior to the filing
of the Amended Charter pursuant to Section 1.1, the authorized capital stock of
the Company consists of 200 shares of Common Stock, of which, 100 shares are and
immediately prior to the filing of the Amended Charter pursuant to Section 1.1,
will be issued and outstanding, with such shares of Common Stock being owned of
record and beneficially by the Shareholder. All of such shares are validly
issued, fully paid and non-assessable and have been issued in compliance with
all applicable Laws, including, without limitation, applicable securities Laws.
Except as set forth in Schedule 3.3, there are no securities of the Company
presently outstanding, and on the Closing Date there will not be any outstanding
securities of the Company, which are convertible into, exchangeable for, or
carrying the right to acquire, equity securities of the Company, or
subscriptions, warrants, options, calls, puts, convertible securities,
registration or other rights, arrangements or commitments obligating the Company
to issue, sell, register, purchase or redeem any of its equity securities or any
ownership interest or rights therein. Except as set forth in Schedule 3.3, there
are no voting trusts or other agreements or understandings to which the Company
is bound with respect to the voting of the Company's capital stock. Except as
set forth on Schedule 3.3, there are no stock appreciation rights, phantom stock
rights or similar rights or arrangements of the Company outstanding.
(b) The authorization, issuance, sale and delivery of the
Class A Common and Class B Common and the filing of the Amended Charter, have
been duly authorized by all
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requisite board action, all stockholder and other corporate action on the part
of the Company. As of the Closing after giving effect to the transactions
contemplated by Section 1.1, 5,480 shares of Class A Common and 48,567 shares of
Class B Common, will be duly and validly issued and outstanding, fully paid and
nonassessable, with no personal liability attaching to the ownership thereof.
3.4 Approvals.
The Board of Directors of the Company has approved the Purchase, the
Redemption and the Reclassification, this Agreement and, as of the Closing Date,
the Related Documents to which the Company is a party, and determined the
Purchase and the Redemption to be fair to and in the best interests of the
Company and the Shareholder. No other approval is required in order to
consummate the transactions contemplated by this Agreement or any of the Related
Documents to which the Company is a party.
3.5 Authority; Noncontravention; Consents.
(a) The execution, delivery and performance of this Agreement
and the Related Documents and the consummation of the transactions contemplated
hereby and thereby have been duly and validly authorized by all necessary action
on the part of the Company; and this Agreement has been, and the Related
Documents, when executed and delivered by the Company will be, duly and validly
executed and delivered by the Company; and this Agreement is, and the Related
Documents, when executed and delivered by the Company will be, the valid and
binding obligations of the Company, enforceable against the Company in
accordance with their respective terms, except as enforceability thereof may be
limited by any applicable bankruptcy, reorganization, insolvency or other Laws
affecting creditors rights generally or by general principles of equity.
(b) Except as set forth in Schedule 3.5(b), neither the
execution, delivery and performance of this Agreement and the Related Documents,
nor the consummation by the Company of the transactions contemplated hereby or
thereby will (i) conflict with, or result in any violation of, or cause a
default (with or without notice or lapse of time, or both) under, or give rise
to a right of termination, amendment, cancellation or acceleration of any
obligation contained in or the loss of any benefit under, or result in the
creation of any Encumbrance upon any of the properties or assets of the Company
under any term, condition or provision of (x) the Company's Charter Documents or
(y) any Contract to which the Company is a party or by which its properties or
assets are bound, (ii) result in any investigatory, remedial or reporting
obligation under any Environmental and Safety Requirement or (iii) violate any
Laws applicable to the Company or any of its properties.
(c) The Shareholder is the lawful owner, of record and
beneficially, of each of the shares of Common Stock and the Class A Common being
sold, transferred, conveyed and assigned by him hereunder pursuant to the
Purchase, the Redemption and the Reclassification and has good title to such
shares, free and clear of any Encumbrances whatsoever and with no restrictions
on the voting rights and other incidents of record and beneficial ownership
pertaining thereto. Except for the Related Documents and as set forth on, there
are no agreements between
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the Shareholder and any other Person with respect to the voting of, or any
matters pertaining to, the capital stock of the Company.
(d) Except as set forth on Schedule 3.5(d), no consent,
approval, Order or authorization of, registration, declaration or filing with,
or notification to any Governmental Entity or any other third party is required
in connection with the execution, delivery and performance by the Company of
this Agreement or the Related Documents or the consummation of the transactions
contemplated hereby or thereby.
3.6 Financial Statements.
(a) Prior to the date hereof, the Company has delivered to the
Investor true, correct and complete copies of:
(i) the compiled balance sheets of the Company as of
December 31, 1997, and as of December 31, 1998 (the "Latest Compiled
Balance Sheet", and such date, the "Latest Compiled Balance Sheet
Date") and the related statements of income, and retained earnings and
cash flows for the fiscal years then ended, together with the report
thereon of Beers, Hamerman & Company, P.C.; and
(ii) the unaudited balance sheet of the Company as of
March 31, 1999 (the "Latest Balance Sheet", and such date being the
"Latest Balance Sheet Date"), and the related statements of income and
retained earnings and cash flows for the fiscal period then ended.
(b) The financial statements referenced in this Section 3.6
shall be collectively referred to in this Agreement as the "Financial
Statements". Except as set forth in Schedule 3.6(b), the Financial Statements
(i) are in accordance with the Books and Records of the Company which have been
maintained in a manner consistent with past practice, (ii) have been prepared in
accordance with the Statements on Standards for Accounting and Review Services
issued by the American Institute of Certified Public Accountants, and (iii) have
been prepared in accordance with GAAP and consistently applied throughout the
periods covered thereby except as described in the Accountant's Compilation
Report attached thereto.
3.7 Absence of Undisclosed Liabilities.
Except as set forth in Schedule 3.7, the Company has no Liabilities,
except for (i) Liabilities reflected in the Liabilities section of either the
Latest Balance Sheet or the Latest Compiled Balance Sheet, and (ii) Liabilities
that have arisen since the date of the Latest Balance Sheet or the Latest
Compiled Balance Sheet in the ordinary course of business (none of which arise
from any breach of Contract, breach of warranty, tort, infringement, violation
of Law, or any action, suit or Proceeding (including any Liability under any
Environmental and Safety Requirement)). There are no loss contingencies (as such
term is used in Statement of Financial Accounting Standards No. 5 issued by the
Financial Accounting Standards Board in March 1975) that are not adequately
provided for on the Latest Balance Sheet or the Latest Compiled Balance Sheet.
Except as set forth in Schedule 3.7, the Company has not, either expressly or by
operation of Law, assumed or undertaken any Liability of any other Person.
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3.8 Absence of Changes.
Since the Latest Compiled Balance Sheet Date, there has not been any
Material Adverse Change affecting the Company and no event has occurred or
circumstance exists which may result in such a Material Adverse Change. Without
limiting the generality of the foregoing, since the Latest Compiled Balance
Sheet Date, except as set forth in Schedule 3.8, the Company has been operated
in the ordinary course of business, consistent with past practice, and there has
not been:
(a) except in the ordinary course of business, any payment,
discharge or satisfaction of any Encumbrance or Liability by the Company or any
cancellation by the Company of any debts or claims or any amendment, termination
or waiver of any rights of value to the Company;
(b) any declaration, setting aside or payment of any dividend
or other distribution of any assets of any kind whatsoever with respect to any
shares of the capital stock of the Company, or any direct or indirect
redemption, purchase or other acquisition of any such shares of the capital
stock of the Company;
(c) any stock split, reverse stock split, combination,
reclassification or recapitalization of any capital stock of the Company, or any
issuance of any other security in respect of or in exchange for, any shares of
any capital stock of the Company;
(d) any issuance by the Company of any shares of its capital
stock or any debt security or securities, rights, options or warrants
convertible into or exercisable or exchangeable for any shares of such capital
stock or debt security;
(e) any license, sale, transfer, pledge, mortgage or other
disposition of any tangible or intangible asset of the Company with a fair
market value in excess of $25,000;
(f) any termination or, to the Company's best knowledge,
indication of an intention to terminate or not renew, any Contract between the
Company and any other Person with a fair market value in excess of $100,000
prior to the scheduled termination date of such Contract;
(g) any write-down or write-up of the value of any asset of
the Company, or any write-off of any accounts receivable or notes receivable of
the Company or any portion thereof;
(h) any increase in or modification of compensation payable or
to become payable to any officer, employee, consultant or agent of the Company,
other than any such increases in the ordinary course of business, consistent
with past practice, or the entering into of any employment contract with any
officer or employee;
(i) any increase in or modification or acceleration of any
benefits payable or to become payable under any bonus, pension, severance,
insurance or other benefit plan, payment or arrangement (including, but not
limited to, the granting of stock options, restricted stock awards or stock
appreciation rights) made to, for or with any officer, employee, consultant or
agent of the Company;
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(j) the making of any loan, advance or capital contribution to
or investment in any Person or the engagement in any transaction with any
employee, officer, director or shareholder of the Company, other than advances
to employees in the ordinary course of business for travel and similar business
expenses;
(k) any change in the accounting methods or practices followed
by the Company or any change in depreciation or amortization policies or rates
theretofore adopted;
(l) any deterioration in the aging of the Company's accounts
payable or acceleration in the aging of the Company's accounts receivable or
other change in the Company's working capital management practices, other than
in the ordinary course of business;
(m) any change in the manner in which the Company extends
discounts or credit to customers or otherwise deals with customers;
(n) any termination of employment of any officer or key
employee of the Company or, to the Company's best knowledge, any expression of
intention by any officer or key employee of the Company to terminate such office
or employment with such Person;
(o) any amendments or changes in the Company's Charter
Documents;
(p) any labor disputes or any union organizing campaigns;
(q) the commencement of any litigation or other action by or
against the Company; or
(r) any agreement, understanding, authorization or proposal,
whether in writing or otherwise, for the Company to take any of the actions
specified in items (a) through (q) above.
3.9 Employment Agreements.
Except as disclosed in Schedule 3.9, there exist no employment,
consulting, non-competition, severance, bonus or indemnification agreements or
understandings between the Company and any current or former director or officer
of the Company or any other employee or agent. Schedule 3.9 sets forth a true,
correct and complete list of all amounts payable or that will become payable to
each present or former director, officer, consultant or employee of the Company
pursuant to any agreement or understanding set forth in Schedule 3.9 as a result
of the execution and delivery of this Agreement and the Related Documents and/or
the consummation of the transactions contemplated hereby, which schedule shall
separately identify the Person to whom such amount is or will become payable.
3.10 Tax Matters.
(a) Except as set forth on Schedule 3.10: (i) the Company and
(ii) each other Person included in any consolidated or combined Tax Return and
part of an affiliated group, within the meaning of Section 1504 of the Internal
Revenue Code of 1986, as amended (the "Code"), of which the Company is or has
been a member ("Tax Affiliate"), for the years that it was a Tax Affiliate of
the Company:
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(i) has timely paid or caused to be paid all Taxes
required to be paid by it through the date hereof and as of the Closing
Date (including any Taxes shown due on any Tax Return);
(ii) has filed or caused to be filed in a timely and
proper manner (within any applicable extension periods) all Tax Returns
required to be filed by it with the appropriate Governmental Entities
in all jurisdictions in which such Tax Returns are required to be
filed; and all Tax Returns filed on behalf of the Company and each Tax
Affiliate were true, complete and correct; and
(iii) has not requested or caused to be requested any
extension of time within which to file any Tax Return, which Tax Return
has not since been filed.
(b) The Company has previously delivered to the Investor true,
correct and complete copies of all income Tax Returns filed by or on behalf of
the Company through the date hereof for all completed Tax years of the Company
that remain open for audit or reviewed by the relevant taxing authority.
(c) Except as set forth in Schedule 3.10:
(i) neither the Company nor any Tax Affiliate (for
the years that it was a Tax Affiliate of the Company) has been notified
by the Internal Revenue Service or any other taxing authority that any
issues have been raised (and no such issues are currently pending) by
the Internal Revenue Service or any other taxing authority in
connection with any Tax Return filed by or on behalf of the Company or
any Tax Affiliate; there are no pending Tax audits and no waivers of
statutes of limitations have been given or requested with respect to
the Company or any Tax Affiliate (for the years that it was a Tax
Affiliate of the Company); no Tax Encumbrances have been filed against
the Company or any Tax Affiliate (for the years that it was a Tax
Affiliate of the Company) except for Encumbrances for current Taxes not
yet due and payable for which adequate reserves, if any, have been
provided for in the Latest Balance Sheet or the Latest Compiled Balance
Sheet; no unresolved deficiencies or additions to Taxes have been
proposed, asserted, or assessed against the Company or any Tax
Affiliate (for the years that it was a Tax Affiliate of the Company);
(ii) full and adequate provision has been made (A) on
the Latest Balance Sheet and the Latest Compiled Balance Sheet, and the
Books and Records of the Company for all deferred Taxes not yet due and
payable by the Company for all periods on or prior to the Latest
Balance Sheet Date or the Latest Compiled Balance Sheet Date, as the
case may be, and (B) on the Books and Records of the Company for all
deferred Taxes payable by the Company for all periods beginning on or
after the Latest Balance Sheet Date and the Latest Compiled Balance
Sheet, including for Taxes incurred as a result of or in connection
with the transactions contemplated hereby;
(iii) the Company has not incurred any Liability for
Taxes from and after the Latest Compiled Balance Sheet Date other than
Taxes incurred in the ordinary course of business and consistent with
past practices;
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(iv) the Company has not (A) made an election (or had
an election made on its behalf by another Person) to be treated as a
"consenting corporation" under Section 341(f) of the Code or (B) been a
"personal holding company" within the meaning of Section 542 of the
Code;
(v) the Company and each Tax Affiliate has complied
with all applicable Laws relating to the collection or withholding of
Taxes (such as sales Taxes or withholding of Taxes from the wages of
employees);
(vi) the Company has never been a party to a Tax
sharing agreement;
(vii) the Company has not incurred any Liability to
make or possibly make any payments either alone or in conjunction with
any other payments that:
(A) shall be non-deductible under, or would
otherwise constitute a "parachute payment" within the meaning of
Section 280G of the Code (or any corresponding provision of state,
local or foreign income Tax Law); or
(B) are or may be subject to the imposition
of an excise Tax under Section 4999 of the Code;
(viii) the Company has not agreed to (nor has any
other Person agreed to on its behalf) and is not required to make any
adjustments or changes either on, before or after the Closing Date, to
its accounting methods pursuant to Section 481 of the Code, and the
Internal Revenue Service has not proposed any such adjustments or
changes in the accounting methods of such Persons;
(ix) no claim has been made within the last three
years by any taxing authority in a jurisdiction in which the Company
does not file Tax Returns that the Company is or may be subject to
taxation by that jurisdiction;
(d) Since September 28, 1995, the Company has been a "small
business corporation" (within the meaning of Section 1361 of the Code) and the
Company's election under Section 1362(a) of the Code to be taxed as an "S
Corporation" for Federal income Tax purposes has not been terminated or revoked.
The Company has made a corresponding election under the Tax laws of each
jurisdiction in which it has filed such Tax Returns for each of such taxable
years.
3.11 ERISA Compliance.
(a) Schedule 3.11 sets forth a true, correct and complete list
of all Employee Plans. All Employee Plans have been operated and administered in
compliance with ERISA, the Code and other applicable Laws.
(b) Except as set forth in Schedule 3.11:
(i) each Employee Plan, if intended to be "qualified"
within the meaning of Section 401(a) of the Code, has been determined
by the Internal Revenue Service to be
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so qualified and the related trusts are exempt from tax under Section
501(a) of the Code and nothing has occurred that has or could
reasonably be expected to affect adversely such qualification or
exemption;
(ii) neither the Company nor any of its ERISA
Affiliates nor any other "disqualified person" or "party in interest"
(as such terms are defined in Section 4975 of the Code and Section
3(14) of ERISA, respectively) with respect to an Employee Plan has
breached the fiduciary rules of ERISA or engaged in a prohibited
transaction that could subject the Company or any of its ERISA
Affiliates to any Tax or penalty imposed under Section 4975 of the Code
or Section 502(i), (j) or (l) of ERISA;
(iii) all required or declared Company contributions
(or premium payments) to (or in respect of) all Employee Plans have
been properly made when due, and the Company has deposited all amounts
withheld from employees for pension, welfare or other benefits into the
appropriate trusts or accounts;
(iv) no Proceedings (other than routine claims for
benefits) are pending or, to the Company's best knowledge, threatened
with respect to or involving any Employee Plan;
(v) except as may be required under Laws of general
application, none of the Employee Plans obligate the Company to provide
any employee or former employee, or their spouses, family members or
beneficiaries, any post-employment or post-retirement health or life
insurance, accident or other "welfare-type" benefits;
(vi) each Employee Plan which is subject to the
requirements of the Consolidated Omnibus Budget Reconciliation of 1985
("COBRA") and the Health Insurance Portability and Accountability Act
("HIPAA") has been maintained in compliance with COBRA and HIPAA,
including all notice requirements, and no tax payable on account of
Section 4980B or any other section of the Code has been or is expected
to be incurred;
(vii) neither the Company nor any of its ERISA
Affiliates is or has ever maintained or been obligated to contribute to
a "multiple employer plan" (as defined in Section 413 of the Code), a
"multiemployer plan" (as defined in Section 3(37) of ERISA) or a
"defined benefit pension plan" (as defined in Section 3(35) of ERISA);
(viii) all reporting and disclosure obligations
imposed under ERISA and the Code have been satisfied with respect to
each Employee Plan;
(ix) no benefit payable or which may become payable
by the Company or its ERISA Affiliates pursuant to any Employee Plan
shall constitute an "excess parachute payment," within the meaning of
Section 280G of the Code, which is or may be subject to the imposition
of an excise tax under Section 4999 of the Code or which would not be
deductible by reason or Section 280G of the Code; and
(x) each Employee Plan which is intended to meet the
requirements of Section 125 of the Code meets such requirements and
each program of benefits for which
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employee contributions are provided pursuant to elections made under
such Employee Plan meets the requirements of the Code applicable
thereto.
(c) The Company has provided the Investor with true, correct
and complete copies of all documents pursuant to which each Employee Plan is
maintained and administered, the two most recent annual reports (including Form
5500 and attachments) and financial statements therefor, all governmental
rulings, determinations, and opinions (and pending requests therefor), and the
most recent valuation of the present and future obligations under each such plan
that provides post-retirement or post-employment health and life insurance,
accident, or other "welfare-type" benefits, if any.
3.12 Title to Assets, Properties and Rights and Related Matters.
(a) The Company has such rights and interests in the
Intellectual Property Rights as provided in Section 3.14 and, except as
specifically set forth in Schedule 3.12, good and marketable title to all other
assets, properties and interests in properties, real or personal, reflected on
the Latest Compiled Balance Sheet or acquired after the Latest Compiled Balance
Sheet Date (except (i) inventory sold since the Latest Compiled Balance Sheet
Date in the ordinary course of business, and (ii) accounts receivable and notes
receivable paid in full subsequent to the Latest Compiled Balance Sheet Date),
free and clear of all Encumbrances, of any kind or character, except for those
Encumbrances set forth in Schedule 3.12 and Permitted Encumbrances. Such assets
are in good operating condition and repair (normal wear and tear excepted), are
suitable for the uses for which they are used in the Subject Business, are not
subject to any condition which materially interferes with the economic value or
use thereof, and constitute all assets, properties, interests in properties and
rights necessary to permit the Company to carry on its business after the
Closing as generally conducted by them prior thereto and as presently proposed
to be conducted subsequent thereto. With respect to any leased assets, such
assets are in such condition as to permit surrender thereof by the Company to
the lessors thereunder without any cost or expense for repair or restoration as
if the related leases were terminated upon the Closing Date in the ordinary
course of business.
(b) As of the Closing Date, the Company's Internet panel
consists of not less than 250,000 separate Households, actively participating in
the Company's studies.
3.13 Real Property-Shared or Leased.
(a) Schedule 3.13 contains a list and brief description of all
of the real property of the Company shared with Consulting (the "Shared
Property") and all real property in which the Company has a leasehold interest
held under leases (the "Leased Property"), including the name of the lessor and
any requirement of consent of the lessor to consummate the transactions
contemplated hereby. The Shared Property and the Leased Property (together, the
"Real Property") constitute all real properties used or occupied by the Company.
(b) With respect to the Real Property, except as set forth in
Schedule 3.13:
(i) no portion thereof is subject to any pending
condemnation Proceeding by any public or quasi-public authority or
Governmental Entity and, to the Company's best knowledge, there is no
threatened condemnation Proceedings with respect thereto;
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(ii) the physical condition of the Real Property is
sufficient to permit the continued conduct of the Subject Business as
presently conducted subject to the provision of usual and customary
maintenance and repair performed in the ordinary course with respect to
similar properties of like age and construction;
(iii) with respect to the Leased Property, the
Company is the owner and holder of all the leasehold estates purported
to be granted by such related lease and each such lease is in full
force and effect and constitutes a valid and binding obligation of the
Company;
(iv) no notice of any contemplated special assessment
has been received by the Company and, to the Company's best knowledge,
there is no threatened special assessment pertaining to any of the Real
Property;
(v) except for the Sublease Agreement, there are no
Contracts, written or oral, to which the Company is a party, granting
to any party or parties the right of use or occupancy of any portion of
the parcels of the Real Property;
(vi) there are no parties (other than the Company and
Consulting) in possession of the Real Property; and
(vii) with respect to the Leased Property, there have
been no discussions or correspondence with the landlord or lessor
concerning renewal terms for those leases scheduled to expire within
six months of the date hereof.
(c) Except as set forth on Schedule 3.13, the Company is not a
party to, or under any agreement to become a party to, any lease with respect to
real property other than the Leased Property, true, correct and complete copies
of which have been provided to the Investor. With respect to each lease
(including in respect of the Shared Property) (i) all rents and additional rents
have been paid, (ii) no waiver, indulgence or postponement of the lessee's
obligations has been granted by the lessor, (iii) there exists no event of
default or event, occurrence, condition or act (including the transactions
contemplated hereby) which, with the giving of notice, the lapse of time or the
happening of any other event or condition, could become a default under the
lease, and (iv) all of the covenants to be performed by any party under the
leases have been fully performed.
3.14 Intellectual Property.
(a) The "Company Intellectual Property" consists of the
following:
(i) all patents, trademarks, trade names, service
marks, mask works, domain names, copyrights and any renewal rights,
applications and registrations for any of the foregoing, and all trade
dress, net lists, schematics, technology, manufacturing processes,
supplier lists, trade secrets, know-how, computer software programs or
applications (in both source and object code form) owned by the
Company;
(ii) all goodwill associated with trademarks, trade
names, service marks and trade dress owned by the Company;
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(iii) all software and firmware listings, and updated
software source code, and complete system build software and
instructions related to all software described in Schedule 3.14 owned
by the Company;
(iv) all documents, records and files relating to
design, end user documentation, manufacturing, quality control, sales,
marketing or customer support for all intellectual property described
herein owned by the Company;
(v) all other tangible or intangible proprietary
information and materials owned by the Company; and
(vi) all license and other rights in any third party
product, intellectual property, proprietary or personal rights,
documentation, or tangible or intangible property, including, without
limitation, the types of intellectual property and tangible and
intangible proprietary information described in clauses (i) through (v)
above;
that are being, and/or have been, used, or are currently under development for
use, in the Subject Business. Company Intellectual Property described in clauses
(i) to (vi) above is referred to herein as "Company Owned Intellectual Property"
and Company Intellectual Property described in clause (vi) above is referred to
herein as "Company Licensed Intellectual Property". Unless otherwise noted, all
references to "Company Intellectual Property" shall refer to both Company Owned
Intellectual Property and Company Licensed Intellectual Property.
(b) Schedule 3.14 lists: (i) all patents, registered
copyrights, mask works, trademarks, service marks, domain names, trade dress,
any renewal rights for any of the foregoing, and any applications and
registrations for any of the foregoing, that are included in the Company Owned
Intellectual Property; (ii) all hardware products and tools, software products
and tools, and services that are currently published, offered, or under
development by the Company; and (iii) all licenses, sublicenses and other
agreements to which the Company is a party and pursuant to which any end user or
other third party is authorized to have access to or use the Company
Intellectual Property or exercise any other right with regard thereto; (iv) all
Company Licensed Intellectual Property (other than license agreements for
standard "shrink wrapped, off the shelf," commercially available, third party
products used by the Company); and (v) any obligations of exclusivity,
noncompetition, nonsolicitation, first refusal or first negotiation to which the
Company is subject under any agreement that does not fall within the ambit of
clauses (iii) or (iv) above. The disclosures described in clauses (iii), (iv),
and (v) hereof include the names and dates of the relevant agreements, as well
as the identities of the parties to the relevant agreements.
(c) The Company Intellectual Property consists solely of items
and rights which are either: (i) owned by the Company; (ii) in the public
domain; or (iii) rightfully used and authorized for use by the Company and its
successors pursuant to a valid license or other agreement. The Company has all
rights in the Company Intellectual Property necessary to carry out the Company's
current activities and has or had all rights in the Company Intellectual
Property reasonably necessary to carry out the Company's former activities,
including, without limitation, and solely to the extent necessary to carry out
such activities, rights to make, use, exclude others from using, reproduce,
modify, adapt, create derivative works based on, translate,
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distribute (directly and indirectly), disclose, transmit, display and perform
publicly, license, rent, lease, assign, and sell the Company Intellectual
Property in all geographic locations and fields of use, and to sublicense any or
all such rights to third parties, including the right to grant further
sublicenses.
(d) The Company is not, nor as a result of the execution or
delivery of this Agreement or the Related Documents, or performance of the
Company's obligations hereunder or thereunder, will the Company be, in violation
of any license, sublicense, or other agreement relating to the Company
Intellectual Property to which the Company is a party or otherwise bound. Except
as specifically described in Schedule 3.14, the Company is not obligated to
provide any consideration (whether financial or otherwise) to any third party,
nor is any third party otherwise entitled to any consideration, with respect to
any exercise of rights by the Company or its successors or licensees in the
Company Intellectual Property.
(e) The use, reproduction, modification, distribution,
licensing, sublicensing, sale, or any other exercise of rights in any Company
Owned Intellectual Property or any other authorized exercise of rights in or to
the Company Owned Intellectual Property by the Company or its successors or
licensees does not infringe any copyright, patent, trade secret, trademark,
service mark, trade name, firm name, logo, trade dress, mask work, other
intellectual property right, right of privacy, right of publicity, or right in
personal or other date of any Person. Further, the use, reproduction,
modification, distribution, licensing, sublicensing, sale, or any other exercise
of rights in any Company Licensed Intellectual Property or any other authorized
exercise of rights in or to the Company Licensed Intellectual Property by the
Company or its licensees does not infringe any copyright, patent, trade secret,
trademark, service mark, trade name, firm name, logo, trade dress, mask work,
other intellectual property right, right of privacy, right of publicity or right
in personal or other data of any Person. No claims (i) challenging the validity,
effectiveness, or ownership by the Company of any of the Company Intellectual
Property, or (ii) to the effect that the use, reproduction, modification,
manufacturing, distribution, licensing, sublicensing, sale, or any other
exercise of rights in any Company Intellectual Property by the Company or its
successors or licensees infringes on any intellectual property or other
proprietary or personal right of any Person, have been asserted or, to the
Company's best knowledge, are threatened by any Person nor, to the Company's
best knowledge, are there any valid grounds for any bona fide claim of any such
kind. All granted or issued patents and all registered, mask works, domain
names, and trademarks listed on Schedule 3.14 and all copyright registrations
held by the Company are valid, enforceable and subsisting. To the Company's best
knowledge, there is no unauthorized use, infringement, or misappropriation of
any of the Company Owned Intellectual Property by any employee, or former
employee, or other third party.
(f) No Person other than the Company possesses any current or
contingent rights to any source code that is part of the Company Owned
Intellectual Property (including, without limitation, through any escrow
account).
(g) Schedule 3.14 lists all Persons who have created any
portion of, or otherwise have any rights in or to, the Company Owned
Intellectual Property other than employees of the Company whose work product was
created by them within the scope of their employment by the Company and
constitutes works made for hire owned by the Company. The Company has
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secured from all Persons who are not employees and who have created any material
portion of, or otherwise have any rights in or to, the Company Owned
Intellectual Property valid enforceable written assignments or licensees of any
such work or other rights to the Company and has provided true and complete
copies of such assignments or licenses to the Investor.
(h) Schedule 3.14 includes a true and complete list of support
and maintenance agreements relating to Company Owned Intellectual Property or to
which the Company is a party as to Company Licensed Intellectual Property,
including the identity of the parties to and the respective dates of such
agreements.
(i) The Company has obtained legally binding written
agreements from all employees and third parties which whom the Company has
shared confidential proprietary information (i) of the Company or (ii) received
from others which the Company is obligated to treat as confidential, which
agreements require such employees and third parties to keep such information
confidential.
(j) The Company's practices regarding the collection and use
of consumer personal information are in accordance with the Company's privacy
policy as published on its website.
3.15 Agreements, No Defaults, Etc.
(a) Except as set forth in Schedule 3.15, the Company is not a
party to any:
(i)contract for the employment of any officer,
individual employee or other Person on a full-time, part-time,
consulting or other basis;
(ii)Contract with any Affiliate;
(iii) Contract relating to the borrowing of money or
to the mortgaging, pledging or otherwise placing an Encumbrance on any
asset or group of assets of the Company;
(iv) Contract relating to any guarantee of any
obligation for borrowed money or otherwise;
(v) Contract with respect to the lending or investing
of funds;
(vi) Contract or indemnification with respect to any
form of intangible property, including any Company Intellectual
Property or confidential information;
(vii) Contract or group of related Contracts with the
same party (excluding purchase orders entered into in the ordinary
course of business which are to be completed within six months of
entering into such purchase orders) for the purchase or sale of
products or services;
(viii) Contract that prohibits it from freely
engaging in business anywhere in the world;
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(ix) other Contract that is not terminable by either
party without penalty upon not more than 30 days' advance notice and
involves aggregate consideration in excess of $20,000; or
(x) Contract that involves aggregate consideration in
excess of $20,000.
(b) Except as set forth in Schedule 3.15, there are no
vehicles, boats, aircraft, apartments or other residential or recreational
properties or facilities leased, owned or operated by the Company for executive,
administrative or sales purposes or any social club memberships owned or paid
for by the Company. Except as set forth in Schedule 3.16, the Company has
performed all the obligations required to be performed by it to date and is not
in receipt of a written notice that it is in default or alleged to be in default
in any respect under any Contract, and there exists no event, condition or
occurrence which, after notice or lapse of time, or both, would constitute such
a default by such Person of any of the foregoing. The Company has furnished to
the Investor true, correct and complete copies of all documents listed in
Schedule 3.15.
3.16 Compliance with Laws.
Except as set forth on Schedule 3.16 hereto, the business of the
Company has not been and is not being conducted in violation of any applicable
Law, including all Laws relating to wages, hours, Employee Plans, equal
employment opportunity, harassment, immigration, workers' compensation,
Environmental and Safety Requirements and the payment of social security and
other Taxes. Except as set forth in Schedule 3.16, no investigation or review by
any Governmental Entity with respect to the Company is pending or, to the
Company's best knowledge, threatened, nor has any Governmental Entity notified
the Company of its intention to conduct the same. Schedule 3.16 sets forth a
list of all permits, licenses, variances, exemptions, orders and approvals of
all Governmental Entities (the "Permits") held by the Company which are material
to the Company, including, without limitation, all necessary state and county
licenses and other Permits necessary for the conduct of its business. Except as
set forth on Schedule 3.16, the Company holds all Permits necessary for the
lawful conduct of its business as presently conducted and the Company is in
compliance with all of the terms of the Permits. There is no proposed change in
any applicable Law which would require the Company to obtain any Permits not set
forth in Schedule 3.16 in order to conduct its business as presently conducted.
None of such Permits shall be adversely affected as a result of the Company's
execution and delivery of, or the performance of its obligations under, this
Agreement, any Related Document to which it is a party, or the consummation of
the transactions contemplated hereby or thereby. Since December 31, 1998, the
Company has not received any opinion or memorandum or advice from any Person to
the effect that it is exposed to any Liability or disadvantage which may result
in a Material Adverse Effect on the Company. The Company, after due inquiry, is
not aware of any proposed Law which could prohibit or restrict the Company from,
or otherwise affect the Company in, conducting its business in any jurisdiction
in which it is presently conducting business or which it presently proposes to
conduct business.
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3.17 Litigation, Etc.
Except as set forth in Schedule 3.17, there are no (i) Proceedings
pending or, to the Company's best knowledge, threatened against the Company,
whether at law or in equity, or before or by any Governmental Entity or
arbitrator or (ii) Orders of any Governmental Entity or arbitrator against the
Company. The Company has delivered to the Investor all documents and
correspondence relating to such matters referred to in Schedule 3.17.
3.18 [Intentionally Omitted.]
3.19 Labor Relations; Employees.
(a) Except as set forth in Schedule 3.19: (i) the Company is
not delinquent in payments to any of its employees for any wages, salaries,
commissions, bonuses or other compensation for any services performed by them to
date or amounts required to be reimbursed to such employees, (ii) there is no
unfair labor practice complaint against the Company pending before the National
Labor Relations Board or any other Governmental Entity, (iii) there is no labor
strike, dispute, slowdown or stoppage actually pending or, to the Company's best
knowledge, threatened against or involving the Company, (iv) no labor union
currently represents the employees of the Company and no labor union has taken
any action since inception of the Company with respect to organizing the
employees of the Company, (v) no key employee of the Company has informed the
Company that such employee will or may terminate his or her employment or
engagement with the Company, (vi) all amounts due or accrued due for all salary,
wages, bonuses, commissions, vacation with pay, pension benefits or other
employee benefits are reflected in the Books and Records of the Company;
(b) Schedule 3.19 contains a true, correct and complete list
of each employee, independent contractor and consultant of or to the Company,
earning an annual base salary in excess of $75,000, whether actively at work or
not, their salaries, wage rates, commissions and consulting fees, bonus
arrangements, benefits, positions, ages, status as full-time or part-time
employees and length of service. No employee of the Company has any agreement as
to length of notice or severance payment required to terminate his or her
employment, other than such as results by Law from the employment of an employee
without an agreement as to notice or severance.
(c) Except as set forth in Schedule 3.19, the Company's
execution and delivery of, and performance of its obligations under, this
Agreement and the Related Documents to which it is a party, and the consummation
of the transactions contemplated hereby and thereby, will not (i) result in any
payment (including, without limitation, severance, unemployment compensation,
"golden parachute," bonus or otherwise) becoming due from the Company to any
director, officer or employee of the Company, (ii) increase any such benefits
otherwise payable, or (iii) result in the acceleration of the time of payment or
vesting of any such benefits; and
(d) The Company and its ERISA Affiliates have complied in all
respects with all Laws relating to the hiring and retention of all employees,
leased employees and independent contractors relating to wages, hours, Employee
Plans, equal opportunity, collective bargaining and the payment of social
security and other Taxes.
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3.20 Environmental Matters.
The Company is presently and at all times has been in
compliance in all respects with all Environmental and Safety Requirements
applicable to the Company or its business or the Real Property. There are not
now nor have there ever been any Proceedings relating to or arising out of any
Environmental and Safety Requirements applicable to the Real Property or any
other real property previously owned, leased, or shared by the Company. The
Company has not received any notice of such Proceedings nor, to the Company's
best knowledge, is any Proceeding threatened.
3.21 Change in Control.
Except as set forth in Schedule 3.21, the Company is not a party to any
Contract which terminates, gives rise to a right of termination, requires any
payment, gives rise to any Liability, accelerates the vesting of any rights or
obligations or the maturity of any indebtedness or otherwise adversely affects
the Company as a result of a "change in control" or "potential change in
control" of the Company.
3.22 State Takeover Statutes.
The Board of Directors of the Company has approved this Agreement, the
Related Documents and the transactions contemplated hereby and thereby
(including the Purchase, the Redemption and the Reclassification) and the
provisions of any "fair price," "moratorium," "control share," "interested
Shareholders," "affiliated transaction" or other anti-takeover statute or
regulation and any anti-takeover or other restrictive provisions of the
Company's Charter Documents are not applicable to the transactions contemplated
by this Agreement or the Related Documents.
3.23 Conflicts of Interest.
Neither the Company nor any officer, employee, agent or other Person
acting on behalf of the Company has, directly or indirectly, given or agreed to
give any money, gift or similar benefit (other than legal price concessions to
customers in the ordinary course of business) to any customer, supplier,
employee or agent of a customer or supplier, or official or employee of any
Governmental Entity or other Person who was or is in a position to help or
hinder the business of the Company (or assist in connection with any actual or
proposed transaction) that (i) could reasonably be expected to subject the
Company to any damage or penalty in any Proceeding or investigation, (ii) if not
given in the past, could reasonably have resulted in a Material Adverse Effect
on the Company, or (iii) if not continued in the future, could reasonably result
in a Material Adverse Change on the Company.
3.24 Brokers.
Except as set forth on Schedule 3.24, neither the Company nor any of
its officers, directors, shareholders, employees or Affiliates has employed any
broker or finder or incurred any Liability for any brokerage fees, commissions
or finders' fees in connection with the transactions contemplated hereby.
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3.25 Related Transactions.
Except as set forth in Schedule 3.25, and except for compensation to
regular employees of the Company, no current or former Affiliate (as defined in
Rule 12b-2 promulgated under the Securities Exchange Act of 1934, as amended) of
the Company or any associate of such Person is now, or has been since the
organization of the Company, (i) a party to any transaction or Contract with the
Company, or (ii) the direct or indirect owner of an interest in any Person which
is a present or potential competitor, supplier or customer of the Company (other
than non-affiliated holdings in publicly-held companies), nor does any such
Person receive income from any source other than the Company which should
properly accrue to the Company. Except as set forth in Schedule 3.25, the
Company is not a guarantor or otherwise liable for any actual or potential
Liability or obligation, whether direct or indirect, of any of its Affiliates.
3.26 [Intentionally Omitted.]
3.27 Accounts and Notes Receivable.
Except as set forth in Schedule 3.27, all the accounts receivable and
notes receivable owing to the Company as of the date hereof constitute, and as
of the Closing Date will constitute, legal, valid and enforceable, claims
arising from bona fide transactions in the ordinary course of business, subject
to bankruptcy, insolvency, moratorium, reorganization and other similar laws
affecting creditors' rights generally, there are no asserted claims, refusals to
pay or other rights of set-off against any thereof and none of such accounts or
notes receivable is in jeopardy of non-payment. The Company has not accelerated
the collection of accounts receivable, other than in the ordinary course of
business consistent with past custom and practice. Schedule 3.27 sets forth a
complete and accurate aging of all accounts receivable as of date hereof from
both the due date and the invoice date.
3.28 Accounts and Notes Payable.
All accounts payable and notes payable by the Company to third parties
as of the date hereof arose, and as of the Closing will have arisen, in the
ordinary course of business, and there is no such account payable or note
payable delinquent in its payment other than accounts and notes payable being
disputed in good faith. The Company has not delayed or postponed the payment of
accounts payable and other obligations and Liabilities, other than in the
ordinary course of business, consistent with past custom and practice.
3.29 Bank Accounts; Power of Attorney.
Schedule 3.29 sets forth a true, correct and complete list of (i) all
bank accounts and safe deposit boxes of the Company and all Persons who are
signatories thereunder or who have access thereto and (ii) the names of all
Persons holding general or special powers of attorney from the Company and a
summary of the terms thereof (excluding ministerial powers of attorney granted
to representatives of the Company which are terminable at will).
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3.30 Suppliers and Vendors.
Except in the ordinary course of business, no supplier to or vendor of
the Company has canceled or otherwise terminated, or, to the Company's best
knowledge, threatened to cancel or otherwise terminate, its relationship with
the Company and the transactions proposed to be consummated pursuant to this
Agreement and the Related Documents shall not materially adversely affect the
relationship of the Company with any supplier, vendor, franchisee or licensee.
3.31 Customer Relations, Profitability.
Since December 31, 1998, the Company has not received notice that any
customer, agent, representative or supplier of the Company intends to
discontinue, diminish or change its relationship with the Company. Each such
relationship is in material conformity with standard industry terms and
conditions. Each such relationship wherein the Company is obligated to perform
under contract services with respect to the Subject Business is priced at a
profit level reasonably consistent with the Company's practices.
3.32 Year 2000.
(a) All hardware and software products used by the Company in
the administration and business operations of the Company are expected to be
able to accurately process date data (including, but not limited to,
calculating, comparing and sequencing) from, into and between the twentieth
century (through year 1999), the year 2000 and the twenty-first century,
including leap year calculations, when used in accordance with the product
documentation accompanying such hardware and software products.
(b) All software products offered by the Company are expected
to be able to accurately process date data (including, but not limited to,
calculating, comparing and sequencing) from, into and between the twentieth
century (through your 1999), the year 2000 and the twenty-first century,
including leap year calculations, when used in accordance with the product
documentation accompanying such software products.
3.33 [Intentionally Omitted].
3.34 Funded Indebtedness.
As of the Closing Date, the Company is not obligated with respect to
any Funded Indebtedness other than a promissory note in favor of the Shareholder
to be issued during the Transition Period, which shall be reasonably
satisfactory to Holdings and in any event shall not exceed a principal amount in
excess of $50,000 (the "Shareholder Note").
3.35 Hart-Scott-Rodino.
The Shareholder is not a Person within the meaning of the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, having total
assets in excess of $10,000,000.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDER
The Shareholder represents and warrants to the Investor as follows:
4.1 Title to Shares.
The Shareholder is the lawful owner, of record and beneficially, of the
shares of Common Stock and Class A Common, as the case may be, being sold,
transferred, conveyed and assigned by him hereunder pursuant to each of the
Redemption and the Reclassification and, with respect to the Common Stock, has,
and, with respect to the Class A Common upon consummation of the
Reclassification will have, good title to such shares, free and clear of any
Encumbrances whatsoever and with no restrictions on the voting rights and other
incidents of record and beneficial ownership pertaining thereto. Except as set
forth in Schedule 4.1, there are no agreements between the Shareholder and any
other Person with respect to voting of, or any other matters pertaining to, the
capital stock of the Company except for the Related Documents.
4.2 Authority.
The Shareholder has full and absolute legal right, capacity, power and
authority to enter into this Agreement and the Related Documents to which the
Shareholder is a party, and this Agreement is, and the Related Documents to
which the Shareholder is a party, when executed and delivered by the Shareholder
as contemplated hereby, will be, the valid and binding obligation of the
Shareholder, enforceable against the Shareholder in accordance with their
respective terms, except as enforceability thereof may be limited by any
applicable bankruptcy, reorganization, insolvency or other Laws affecting
creditors rights generally or by general principles of equity.
4.3 Noncontravention.
Neither the execution, delivery and performance of this Agreement and
the Related Documents to which the Shareholder is a party, when executed and
delivered by the Shareholder as contemplated hereby, nor the consummation of the
transactions contemplated hereby or thereby, nor compliance by the Shareholder
with any of the provisions hereof or thereof, will (i) conflict with, or result
in any violations of, or cause a default (with or without notice or lapse of
time, or both) under, or give rise to a right of termination, amendment,
cancellation or acceleration of any obligations contained in or the loss of any
benefit under any term, condition or provision of any Contract to which the
Shareholder is a party, or by which the Shareholder or any of his properties may
be bound or (ii) violate any Law applicable to the Shareholder or any of his
properties.
4.4 Consents.
Except as specified in Schedule 4.4, no Permit, Order, authorization,
consent or approval of or by, or any notification of or filing with, any Person
(governmental or private) is required in connection with the execution, delivery
and performance by the Shareholder of this Agreement
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and the Related Documents to which he is a party or the consummation by the
Shareholder of the transactions contemplated hereby or thereby.
4.5 Litigation.
There are no Proceedings against the Shareholder before any
Governmental Entity that may affect the Shareholder's ownership of or title to
the Common Stock or the Class A Common or his right or ability to enter into
this Agreement and the Related Documents and to consummate the transactions
contemplated hereby or thereby.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE INVESTOR
The Investor represents and warrants to the Company as follows:
5.1 Authority.
(a) The Investor is duly organized, validly existing and in
good standing under the Laws of the State of Delaware, has all requisite limited
liability company power and authority to enter into this Agreement and the
Related Documents to which it is a party, to perform its obligations hereunder
and thereunder and to consummate the transactions contemplated hereby and
thereby.
(b) The execution, delivery and performance of this Agreement
and the Related Documents and the consummation of the transactions contemplated
hereby and thereby have been duly and validly authorized by all necessary action
on the part of the Investor, and this Agreement has been, and the Related
Documents, when executed and delivered by the Investor will be, duly and validly
executed and delivered by the Investor; and this Agreement is and the Related
Documents, when executed and delivered by the Investor will be, the valid and
binding obligations of the Investor enforceable against the Investor in
accordance with their respective terms, except as enforceability thereof may be
limited by any applicable bankruptcy, reorganization, insolvency or other Laws
affecting creditors rights generally or by general principles of equity.
5.2 Noncontravention; Consents.
(a) Neither the execution and delivery of this Agreement and
the Related Documents to which the Investor is a party, when executed and
delivered by the Investor as contemplated hereby, nor the consummation of the
transactions contemplated hereby or thereby by the Investor shall (i) violate
any Law, the result of which would prevent the Investor 's consummation of the
transactions contemplated hereby or (ii) conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create in any party
the right to accelerate, terminate, modify, or cancel, or require any notice
under the Investor's Charter Documents or any Contract to which the Investor is
a party or by which, in each case, the Investor is bound or to which any of its
assets is subject, the result of which would prevent the consummation of the
transactions contemplated hereby.
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(b) Except as contemplated by this Agreement, no material
Permit, authorization, Order, consent or approval of or by, or any material
notification of or filing with, any Person (governmental or private) is required
in connection with the execution, delivery and performance by the Investor of
this Agreement or the Related Documents or the consummation by the Investor of
the transactions contemplated hereby or thereby.
5.3 Brokers.
The Investor has not employed any broker or finder or incurred any
Liability for any brokerage fees, commissions or finders' fees in connection
with the transactions contemplated hereby for which either the Company or the
Shareholder could become liable or obligated.
5.4 Hart-Scott-Rodino.
The Investor is not a Person within the meaning of the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, having total
assets in excess of $100,000,000.
ARTICLE VI
CONDUCT AND TRANSACTIONS PRIOR TO THE CLOSING;
ADDITIONAL AGREEMENTS
6.1 Affirmative Covenants of the Company.
From and after the date of this Agreement until the Closing or the
earlier termination of this Agreement pursuant to Article IX (the "Transition
Period"), except as otherwise consented to in writing by the Investor, the
Company shall:
(a) conduct its operations according to the ordinary and usual
course of business consistent with past custom and practice (including the
collection of receivables, the payment of payables and the maintenance of
supplies) and use best efforts to preserve intact its business organization,
keep available the services of officers and employees, and maintain satisfactory
relationships with suppliers, customers and others having business relationships
with it;
(b) maintain its assets in customary repair, order and
condition, replace in accordance with past practice inoperable, worn out or
obsolete assets with modern assets of comparable quality and, in the event of a
casualty, loss or damage to any of such assets or properties prior to the
Closing Date for which the Company is insured or the condemnation of any assets
or properties, either repair or replace such assets or property in a manner
agreed to by the Investor or, if the Investor shall direct, retain such
insurance or condemnation proceeds; and
(c) promptly after acquiring knowledge thereof, inform the
Investor in writing of any variances from the representations and warranties
contained in this Agreement or the Related Documents.
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6.2 Negative Covenants of the Company.
During the Transition Period, without the prior written consent of the
Investor, except as expressly contemplated by this Agreement or any Related
Document, the Company shall not:
(a) sell, lease, transfer or assign any of its assets,
tangible or intangible, other than as relating to the conduct of the Subject
Business in the ordinary course of business consistent with past custom and
practice;
(b) enter into any Contract (or series of related Contracts)
that requires expenditures in excess of $20,000;
(c) permit its capital expenditures and commitments therefor
to exceed or be less than $15,000;
(d) delay or postpone the payment of accounts payable and
other obligations and Liabilities or accelerate the collection of accounts
receivable, other than in the ordinary course of business consistent with past
custom and practice;
(e) enter into any employment Contract or collective
bargaining agreement, written or oral, or modify the terms of any such existing
Contract or agreement, other than in the ordinary course of business, consistent
with past practices;
(f) grant any increase in the base compensation of any of its
officers or employees, other than in the ordinary course of business, consistent
with past practices;
(g) adopt, amend, modify or terminate any Employee Plans,
bonus, incentive, severance or other plan, Contract or commitment for the
benefit of any of its officers or employees, other than in the ordinary course
of business, consistent with past practices;
(h) enter into any transaction with any of its officers,
employees or Affiliates (or any directors, officers or employees of such
Affiliate), other than ordinary course employment arrangements entered into in
accordance with past custom or practice;
(i) in any manner take or cause to be taken any action which
is designed, intended or might reasonably be anticipated to have the effect of
discouraging customers, employees, suppliers, lessors, and other associates of
the Company from maintaining the same business relationships with the Company
after the date of this Agreement as were maintained prior to the date of this
Agreement;
(j) intentionally take any action which would require
disclosure under Section 6.1(c);
(k) issue or sell any equity interests or issue or sell any
securities convertible into, exercisable or exchangeable for or options or
warrants to purchase or rights to subscribe for, any equity interests;
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(l) declare or pay a distribution on any equity interests,
change the number of authorized shares of its equity interests or reclassify,
combine, split, subdivide or redeem or otherwise repurchase any of its equity
interests, or issue, deliver, pledge or encumber any additional equity interests
or other securities equivalent to, or exchangeable for, equity interests or
enter into any Contract to do any of the foregoing;
(m) incur any Funded Indebtedness (other than the Shareholder
Note) or issue any securities evidencing any Funded Indebtedness;
(n) create or suffer to exist any Encumbrance on any of its
assets or properties other than Permitted Encumbrances;
(o) change its accounting principles or policies;
(p) change its warranty policies or decision making process in
product liability matters;
(q) make any material Tax election or compromise any Tax
Liability;
(r) amend any of its Charter Documents;
(s) take or omit to take any action which would result in the
representations and warranties contained in this Agreement and the Related
Documents being untrue on the Closing Date;
(t) create any Subsidiary or joint venture; and
(u) agree or otherwise commit to take any of the actions set
forth above.
6.3 Reasonable Efforts.
The Company and the Investor shall: (i) promptly make their respective
filings and thereafter make any other submissions required under all applicable
Laws with respect to the Purchase, the Redemption and the Reclassification and
the other transactions contemplated hereby and (ii) use their respective
reasonable efforts to promptly take, or cause to be taken, all other actions and
do, or cause to be done, all other things necessary, proper or appropriate to
consummate and make effective the transactions contemplated by this Agreement
and the Related Documents.
6.4 Representations and Warranties.
Neither the Company, the Investor nor the Shareholder, will take any
action (without the prior written consent of the other party hereto) that would
cause any of the representations and warranties made by either of such Persons
set forth in Articles III, IV and V, as the case may be, not to be true and
correct in all material respects at and as of the Closing Date.
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6.5 Consents.
Each party shall use its best efforts, and the other parties shall
cooperate with such efforts, to obtain any consents and approvals of, or effect
the notification of or filing with, each Person or authority, whether private or
governmental, whose consent or approval is required in order to permit the
consummation of the transactions contemplated hereby.
6.6 Public Announcements.
Each party agrees that, except (i) as otherwise required by Law
(including under the Hart-Scott-Rodino Antitrust Improvements Act of 1976) and
(ii) for disclosure to its respective directors, officers, employees, financial
advisors, potential financing sources, legal counsel, independent certified
public accountants or other agents, advisors or representatives on a
need-to-know basis and with whom such party has a confidential relationship, it
will not issue any reports, statements or releases, in each case pertaining to
this Agreement, the Related Documents or the transactions contemplated hereby or
thereby, without the prior written consent of the Company, as the case may be,
which consent shall not unreasonably be withheld or delayed.
6.7 Negotiation with Others.
During the Transition Period, the Company shall deal exclusively with
the Investor regarding the acquisition of or investment in the Company, whether
by way of merger, purchase of capital stock, purchase of assets or otherwise (a
"Potential Transaction") and, without the prior written consent of the Investor,
the Company shall not directly or indirectly, (i) solicit, initiate discussions
with or engage in negotiations with any Person (whether such negotiations are
initiated by the Company or otherwise), other than the Investor relating to a
Potential Transaction, (ii) provide information or documentation with respect to
the Company or the Subject Business relating to a Potential Transaction to any
Person, other than the Investor or (iii) enter into an agreement with any
Person, other than the Investor, providing for any Potential Transaction. If the
Company receives an unsolicited inquiry, offer or proposal relating to any of
the above, the Company shall immediately notify the Investor thereof. The
Company represents to the Investor that it is not bound to negotiate a Potential
Transaction with any other Person and that its execution of this Agreement and
the Related Documents will not violate any agreement to which it is bound or to
which any of the assets of the Company are subject.
6.8 Certain Tax Matters.
From the date hereof until the Closing Date, (i) the Company shall file
all tax returns and reports (the "Post-Signing Returns") required to be filed
(including extensions thereof) in a manner that is consistent with past
practices; (ii) the Company shall timely pay all Taxes shown as due and payable
on the Post-Signing Returns; (iii) the Company shall make provision for all
Taxes payable for which no Post-Signing Return is due prior to the Closing Date;
and (iv) the Company shall promptly notify the Investor of any action, suit,
proceeding, claim or audit pending against or with respect to the Company in
respect of any Tax where there is a possibility of a determination or decision
which could have a significant adverse effect on the Company's Tax Liabilities.
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6.9 Notice of Prospective Breach.
Each party shall immediately notify the other parties in writing upon
the occurrence, or failure to occur, of any event, which occurrence or failure
to occur could be reasonably likely to cause (i) any representation or warranty
of such party contained in this Agreement or any Related Document to be untrue
or inaccurate in any respect at any time during the Transition Period or (ii)
any failure of any party hereto or any officer, director, employee or agent
thereof, to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it under this Agreement or any Related Document.
6.10 Non-Compete, Non-Solicitation, Non-Disparagement.
The Shareholder acknowledges and agrees with the Company that
the Shareholder has had and will continue to have the opportunity to develop
relationships with existing employees, customers and other business associates
of the Company, which relationships constitute goodwill of the Company, and the
Company would be irreparably damaged if the Shareholder were to take actions
that would damage or misappropriate such goodwill. Accordingly, the Shareholder
agrees as follows:
(a) The Shareholder acknowledges that the Company currently
conducts the Subject Business throughout the world (the "Territory").
Accordingly, during the period commencing on the Closing Date and ending on the
third anniversary thereof (the "Non-Compete Period"), the Shareholder shall not,
directly or indirectly, enter into, engage in, assist, give or lend funds to or
otherwise finance, be employed by or consult with, or have a financial or other
interest in, any business which is a Competitor within the Territory, whether
for or by himself or as an independent contractor, agent, stockholder, partner
or joint venturer for any other Person. As used herein, "Competitor" means (i)
any Person engaged in quantitative or qualitative market research through the
Internet or (ii) any Affiliate of a Person described in clause (i) above;
provided, however, that the Shareholder, directly or indirectly, shall be
entitled to conduct qualitative market research through the Internet using the
Company's software/panel resources or through a provider other than the Company
so long as the Shareholder has first offered such opportunity to the Company and
either (A) the Company elects not to provide such service to him or (B) the
terms and conditions upon which the Company offers to provide such services are
not fair and reasonable as determined by reference to industry custom. To the
extent that the covenant provided for in this Section 6.10(a) may later be
deemed by a court to be too broad to be enforced with respect to its duration or
with respect to any particular activity or geographic area, the court making
such determination shall have the power to reduce the duration or scope of the
provision, and to add or delete specific words or phrases to or from the
provision. The provision as modified shall then be enforced.
(b) Notwithstanding the foregoing, the aggregate ownership by
the Shareholder of no more than two percent (on a fully-diluted basis) of the
outstanding equity securities of any Person, which securities are traded on a
national or foreign securities exchange, quoted on the NASDAQ stock market or
other automated quotation system, and which Person is a Competitor within the
Territory, shall not be deemed to be a violation of Section 6.10(a). In the
event that any Person in which the Shareholder has any financial or other
interest directly or indirectly becomes a Competitor during the Non-Compete
Period within the Territory, the Shareholder
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shall divest all of his interest (other than as permitted to be held pursuant to
the first sentence of this Section 6.10(b)) in such Person within 30 days after
such Person becomes a Competitor within the Territory.
(c) The Shareholder covenants and agrees that, during the
Non-Compete Period, the Shareholder will not, directly or indirectly, either for
himself or for any other Person (A) solicit any employee of the Company to
terminate his or her employment with the Company or employ any such individual
for any business venture during his or her employment with the Company and for a
period of one year after such individual terminates his or her employment with
the Company, (B) solicit any customer of the Company to purchase or distribute
information, products or services of or on behalf of the Shareholder or such
other Person that are directly competitive with the quantitative information,
products or services provided by the Company, or (c) take any action that may
cause injury to the relationships between the Company or any of its employees
and any lessor, lessee, vendor, supplier, customer, distributor, employee,
consultant or other business associate of the Company as such relationship
relates to the Company's conduct of its business. The Shareholder agrees to
cause Consulting to refrain from representing the Company as its Affiliate or
Subsidiary. Any ongoing business relationship between the Company and Consulting
shall be established by the mutual cooperation of the Company and Consulting.
(d) The Shareholder understands that the foregoing
restrictions may limit his ability to earn a livelihood in a business similar to
the business of the Company, as presently conducted, but he nevertheless
believes that he has received and will receive sufficient consideration and
other benefits hereunder (including the Purchased Shares Consideration and the
Redeemed Shares Consideration) to clearly justify such restrictions which, in
any event (given his education, skills and ability), the Shareholder does not
believe would prevent him from otherwise earning a living.
(e) Notwithstanding Sections 6.10(a), (b) and (c) above, the
Company and the Investor acknowledge and agree that the Shareholder (i) has a
business relationship with Hugh Davis through their ownership of IGain LLC; (ii)
owns, operates, and intends to continue to own and operate Strategic Focus Inc.
(a focus group company that services the needs of qualitative researchers, and
that provides facilities for online focus groups through the Company) and
Greenfield Consulting Group, Inc. (a qualitative research Company that conducts
qualitative marketing research offline, and on the Internet through the
Company). The continuation of such business relationships shall not be deemed to
violate Section 6.10 unless such business relationships become Competitors and
the Shareholder fails to comply with Section 6.10(a).
6.11 Further Assurances.
In the event that at any time after the Closing any further action is
necessary to carry out the purposes of this Agreement or the Related Documents,
each of the parties will take such further action (including the execution and
delivery of such further instruments and documents) as any other party
reasonably may request, all at the sole and expense of the requesting party.
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6.12 Guaranty.
After the Closing Date, the Company shall use its commercially
reasonable efforts to obtain a release of Consulting with respect to its
guaranties of the Company's obligations under the leases referred to on Schedule
3.15 (ix)(a), provided, however, that during the period that Consulting remains
obligated with respect thereto, the Company shall reimburse Consulting for any
payments it shall make in respect of, and in accordance with, the terms thereof.
The parties hereto agree and acknowledge that Consulting shall be a third party
beneficiary of this Section 6.12.
ARTICLE VII
CONDITIONS
7.1 Conditions to Each Party's Obligations.
The obligation of the parties hereto to consummate the transactions
contemplated by this Agreement (including the Purchase, the Redemption and the
Reclassification) are subject to the fulfillment at or prior to the Closing Date
of the following conditions, any or all of which may be waived in whole or in
part by the Company, the Shareholder and the Investor to the extent permitted by
Law:
(a) Approvals. All authorizations, consents, Orders, Permits
or approvals of, or declarations or filings with, or expiration of waiting
periods imposed by, any Governmental Entity necessary for the consummation of
the transactions contemplated hereby shall have been obtained or made.
(b) No Injunctions or Restraints. No temporary restraining
order, preliminary or permanent injunction or other Order issued by any court or
Governmental Entity of competent jurisdiction nor other legal restraint or
prohibition preventing the consummation of the transactions contemplated hereby
shall be in effect.
(c) Statutes. No action shall have been taken or threatened,
and no statute, rule, regulation or Order shall have been enacted, promulgated
or issued or deemed applicable to the transactions contemplated hereby or by the
Related Documents by any Governmental Entity that would (i) make the
consummation of the transactions contemplated hereby illegal or substantially
delay the consummation of any aspect of the transactions contemplated hereby,
(ii) affect the right of the Investor to exercise its rights as a shareholder of
the Company, or (iii) render the Company, the Shareholder or the Investor unable
to consummate the transactions contemplated hereby.
7.2 Conditions to Obligations of the Investor.
The obligation of the Investor to consummate the transactions
contemplated by this Agreement (including the Purchase) is subject to the
satisfaction of the following conditions unless waived (to the extent such
conditions can be waived) by the Investor:
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(a) Representations and Warranties. The representations and
warranties of the Company and the Shareholder set forth in this Agreement shall
be true and correct in all material respects as of the Closing Date, as though
the Closing Date was substituted for the date of this Agreement throughout such
representations and warranties (provided that the Shareholder and the Company
shall be entitled to update the Schedules relating hereto (solely with respect
to events occurring during the Transition Period) except to the extent that any
such updates relate to an event that has had or could reasonably be expected to
have a Material Adverse Change), and the Investor shall have received
certificates signed by the Chief Executive Officer of the Company and the
Shareholder to such effect.
(b) Performance of Obligations of the Company and the
Shareholder. The Company and the Shareholder shall have performed in all
respects all obligations and covenants required to be performed by such Persons
under this Agreement and the Related Documents as of the Closing Date, and the
Investor shall have received a certificate signed by the Chief Executive Officer
of the Company and the Shareholder to such effect.
(c) Authorization. All action necessary to authorize the
execution, delivery and performance of this Agreement and the Related Documents
by the Company and the Shareholder and the consummation of the transactions
contemplated hereby and thereby, shall have been duly and validly taken by the
Company and the Shareholder, and the Company and the Shareholder shall have full
power and right to consummate the transactions contemplated hereby on the terms
provided herein.
(d) Employment Agreements. The Employment Agreements between
the Company and each of Rudy Nadilo and Hugh Davis, substantially in the forms
of Exhibits B-1 and B-2 hereto, respectively (the "Employment Agreements"),
shall have been duly executed by such parties.
(e) Shareholders Agreement. The Company and its shareholders
shall have entered into the Shareholders Agreement substantially in the form of
Exhibit C (the "Shareholders Agreement").
(f) Stock Option Plan. The Company shall have adopted, and the
Shareholder shall have approved, a stock option plan substantially in the form
of Exhibit D hereto (the "Stock Option Plan").
(g) Opinions of the Company's and the Shareholder's Counsel.
The Investor shall have received a legal opinion dated the Closing Date of
Morrison & Foerster LLP, and Pepe & Hazard LLP counsel to the Company and the
Shareholder, in form and substance reasonably satisfactory to the Investor.
(h) Escrow Agreement. The Escrow Agent, the Company, the
Shareholder and the Investor shall have entered into the Escrow Agreement.
(i) Registration Rights Agreement. The Company and its
shareholders shall have entered into the Registration Rights Agreement
substantially in the form of Exhibit E hereto (the "Registration Rights
Agreement").
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(j) Note. The Company shall have issued and delivered to the
Investor a promissory note substantially in the form of Exhibit F hereto (the
"Note").
(k) Debt Contribution Agreement. The Company and the
Shareholder shall have entered into the Debt Contribution Agreement
substantially in the form of Exhibit G hereto (the "Debt Contribution
Agreement").
(l) Transition Services Agreement. The Company and Consulting
shall have entered into the Transition Services Agreement substantially in the
form of Exhibit H hereto (the "Transition Services Agreement").
(m) Sublease Agreement. The Company and Consulting shall have
entered into the Sublease Agreement, substantially in the form of Exhibit I
hereto (which shall be consented to by the landlord thereof) (the "Sublease
Agreement").
(n) Consents and Approvals. The Investor shall have received
duly executed copies of all consents and approvals, including those of the
landlord party to the lease for 116 New Montgomery Street, San Francisco, in
form and substance satisfactory to the Investor, that are (i) required of the
Company or the Shareholder for consummation of the transactions contemplated
hereby and under the Related Documents, or (ii) required in order to prevent a
breach of or a default under or a termination of any Contract set forth in
Schedule 3.15.
(o) Government Consents, Authorizations, Etc. All consents,
authorizations, Orders, Permits or approvals of, and filings or registrations
with, any Governmental Entity which are required for or in connection with the
execution and delivery by the Company and the Shareholder of this Agreement and
the Related Documents and the consummation by the Company and the Shareholder of
the transactions contemplated hereby and thereby shall have been obtained or
made.
(p) Corporate Resolutions. The Investor shall have received
certified copies of the resolutions of the Company's board of directors
approving this Agreement, the Related Documents, all other agreements and
documents contemplated hereby and the consummation of the transactions
contemplated hereby and thereby.
(q) Absence of Material Adverse Change. Since the Latest
Compiled Balance Sheet Date, there shall have been no Material Adverse Change
with respect to the Company in the reasonable judgment of the Investor.
(r) Officer's Certificates. The Company shall have delivered
an officer's certificate dated as of the Closing Date to the Investor certifying
(i) that attached thereto are true and complete copies of the Company's Charter
Documents; (ii) as to the incumbency and genuineness of the signature of each
officer of the Company executing this Agreement, the Related Documents or any of
the other documents contemplated hereby; (iii) that the Company is not as of the
Closing Date, nor has it ever been, a "U.S. real property holding corporation."
(s) Stock Certificates. The Shareholder or the Company shall
have delivered the stock certificates for the Purchased Shares and the Redeemed
Shares and the related stock powers specified in Sections 1.6 and 1.7 hereof.
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(t) Charter Documents. The Shareholder or the Company shall
have delivered a long form good standing certificate (or the equivalent) as to
the Company, issued as of a recent date by the Secretary of State of the State
of Connecticut and each jurisdiction where the Company is organized or qualified
to do business.
(u) Directors and Officers of the Company. The directors and
officers of the Company immediately prior to the consummation of the
transactions contemplated hereby shall have resigned and the new directors and
officers of the Company shall have been elected or appointed in accordance with
the terms of the Shareholders Agreement.
(v) FIRPTA Certificate. The Investor shall have received a
complete and correct certificate from the Shareholder complying with Treasury
Regulation Section 1.1445-2(6)(2).
(w) Stock Option Agreement. The Stock Option Agreement between
Joel Mesznik and the Company, substantially in the form of Exhibit J hereto (the
"Mesznik Option"), shall have been duly executed by such parties.
(x) Amended Charter. The Shareholder shall have filed the
Amended and Restated Certificate of Incorporation of the Company (the "Amended
Charter") in the form attached hereto as Exhibit K with the Secretary of State
of the State of Connecticut and the Amended Charter shall have been accepted for
filing by the Secretary of State of the State of Connecticut.
(y) Employee Bonus Payments. The Company shall have satisfied
in full the employee bonus obligations described in Section 1.9 (other than
those payable to Rudy Nadilo) with the proceeds of a capital contribution by the
Shareholder in respect of the Common Stock immediately prior to the Closing and
each of the employees with whom the Company shall have settled such bonus
obligations shall have executed an acknowledgment and release (each, an
"Employee Acknowledgment and Release") in the form attached hereto as Exhibit L.
(z) Funded Indebtedness. The Company shall be released from
all obligations in respect of Funded Indebtedness other than the Shareholder
Note and the Funded Indebtedness referenced in Schedule 3.15(ix) and shall
provide such release instruments and documents to the Investor as the Investor
shall reasonably require (including UCC-3 financing statements).
7.3 Conditions to Obligations of the Company and the Shareholder.
The obligation of the Company and the Shareholder to consummate the
transactions contemplated by this Agreement (including the Purchase, the
Redemption and the Reclassification, as applicable) is subject to the
satisfaction of the following conditions unless waived (to the extent such
conditions can be waived) by the Company and the Shareholder:
(a) Representations and Warranties. The representations and
warranties of the Investor set forth in Article V shall be true and correct in
all material respects as of the Closing Date, as though the Closing Date was
substituted for the date of this Agreement throughout such representations and
warranties (provided that the Investor shall be entitled to update the Schedules
relating thereto (solely with respect to events occurring during the Transition
Period)
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except to the extent that any such updates relate to an event that has had or
could reasonably be expected to have a Material Adverse Change), and the Company
shall have received a certificate signed by an authorized officer of the
Investor to such effect.
(b) Performance of Obligations of the Investor. The Investor
shall have performed in all respects its obligations and covenants required to
be performed by it under this Agreement and the Related Documents prior to or as
of the Closing Date, and the Company and the Shareholder shall have received a
certificate signed by an authorized officer of the Investor to such effect.
(c) Authorization. All action necessary to authorize the
execution, delivery and performance of this Agreement and the Related Documents
to which the Investor is a party and the consummation of the transactions
contemplated hereby and thereby shall have been duly and validly taken by the
Investor and the Investor shall have full power and authority to consummate the
transactions contemplated hereby on the terms provided herein.
(d) Government Consents, Authorizations, Etc. All consents,
authorizations, Orders, Permits or approvals of, and filings or registrations
with, any Governmental Entity which are required for or in connection with the
execution and delivery of this Agreement and the Related Documents by the
Investor and the consummation by the Investor of the transactions contemplated
hereby or thereby shall have been obtained or made.
(e) Consents and Approvals. The Company and the Shareholder
shall have received duly executed copies of all consents and approvals, in form
and substance reasonably satisfactory to the Company and the Shareholder and its
counsel, that are required of the Investor, for consummation of the transactions
contemplated hereby.
(f) Related Documents. The Investor shall have entered into
the Related Documents to which it is a party.
(g) Purchase Price for Purchased Shares and Redeemed Shares.
The Investor shall have delivered the Purchased Shares Consideration and
Redeemed Shares Consideration in accordance with Sections 1.2 and 1.4 hereof,
respectively.
(h) Funding of the Note. The Investor shall have made a loan
in an amount equal to the Redeemed Shares Consideration under the Note.
ARTICLE VIII
INDEMNIFICATION
8.1 Indemnification Generally; Etc.
From and after the Closing Date:
(a) By the Shareholder in Favor of the Company. The
Shareholder hereby agrees to indemnify and hold harmless the Company for any and
all Losses it may suffer, sustain or incur as a result of:
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(i) the untruth, inaccuracy or breach of any
representation or warranty of the Shareholder or the Company contained
in this Agreement (other than under Sections 3.1, 3.5, 3.24 and under
Article IV of this Agreement), any Related Document, any Schedule or
Exhibit thereto or any certificate delivered in connection therewith at
or before the Closing; or
(ii) the breach of any agreement or covenant
contained in this Agreement or any Related Document by (a) the
Shareholder to be performed by him at any time or (b) the Company to be
performed by it on or prior to the Closing Date.
(b) By the Investor in Favor of the Company. The Investor
hereby agrees to indemnify and hold harmless the Company, for any and all Losses
it may suffer, sustain or incur has a result of the untruth, inaccuracy or
breach of the representation set forth in Section 5.4 hereof or the breach of
any agreement or covenant of the Investor contained in this Agreement or any
Related Document.
(c) By the Shareholder in Favor of the Investor. The
Shareholder hereby agrees to indemnify and hold harmless the Investor for any
and all Losses it may suffer, sustain or incur as a result of the untruth,
inaccuracy or breach of any representation or warranty of the Shareholder or the
Company contained in Sections 3.1, 3.5, 3.24 and Article IV of this Agreement.
(d) By the Investor in Favor of the Shareholder. The Investor
hereby agrees to indemnify and hold harmless the Shareholder for any and all
Losses he may suffer, sustain or incur as a result of the untruth, inaccuracy or
breach of any representation or warranty of the Investor contained in Article V
of this Agreement (other than under Section 5.4 hereof).
(e) Indemnity Baskets/Limitations for the Shareholder. The
Company and the Investor shall not have the right to be indemnified pursuant to
Section 8.1(a) and Section 8.1(c) (other than for breaches of Sections 3.1, 3.2,
3.3, 3.4, 3.5, 3.10, 3.11, 3.24, 3.34 and Article IV (collectively, the
"Excluded Representations and Warranties")) unless and until the Company and the
Investor shall have incurred on a cumulative basis since the Closing Date
aggregate Losses otherwise entitled to indemnification hereunder in an amount
exceeding $300,000, in which event the right to be indemnified shall apply to
all such Losses in excess of $200,000. The sum of all Losses pursuant to which
indemnification is payable by the Shareholder pursuant to Section 8.1 (other
than for breaches of the Excluded Representations and Warranties) shall not
exceed $3,400,000 in the aggregate provided, however, that the Shareholder shall
not be obligated to make any such indemnification payments in excess of 80% of
the first $2,200,000 of such Losses (it being agreed that the Shareholder shall
be obligated to make indemnification payments in an amount equal to 100% of all
Losses in excess thereof). The parties hereto acknowledge and agree that any
Losses that are incurred in connection with the breach of the Excluded
Representations and Warranties shall not be applied against or subject to either
the threshold or limitation on liability set forth above in this Section 8.1(e).
(f) Indemnity Baskets/Limitations for the Investor. The
Company and the Shareholder shall not have the right to be indemnified pursuant
to Section 8.1(b) and Section 8.1(d) unless and until the Company and the
Shareholder shall have incurred on a cumulative
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basis since the Closing Date aggregate Losses otherwise entitled to
indemnification hereunder in an amount exceeding $300,000, in which event the
right to be indemnified shall apply to all such Losses in excess of $200,000.
The sum of all Losses pursuant to which indemnification is payable by the
Investor pursuant to Section 8.1 shall not exceed $2,800,000 in the aggregate.
8.2 Assertion of Claims.
No claim shall be brought under Section 8.1 unless the Indemnified
Persons, or any of them, at any time prior to the applicable Survival Date, give
the Indemnifying Persons (a) written notice of the existence of any such claim,
specifying the nature and basis of such claim and the amount thereof, to the
extent known or (b) written notice pursuant to Section 8.3 of any Third-Party
Claim, the existence of which might give rise to such a claim. Upon the giving
of such written notice as aforesaid, the Indemnified Persons, or any of them,
shall have the right to commence legal Proceedings subsequent to the Survival
Date for the enforcement of their rights under Section 8.1.
8.3 Notice and Defense of Third-Party Claims.
The obligations and Liabilities of an Indemnifying Person with respect
to Losses resulting from the assertion of Liability by third parties (each, a
"Third-Party Claim") shall be subject to the following terms and conditions:
(a) The Indemnified Persons shall promptly give written notice
to the Indemnifying Persons of any Third-Party Claim which might give rise to
any Loss by the Indemnified Persons, stating the nature and basis of such
Third-Party Claim and the amount thereof to the extent known. Such notice shall
be accompanied by copies of all relevant documentation with respect to such
Third-Party Claim, including, but not limited to, any summons, complaint or
other pleading which may have been served, any written demand or any other
document or instrument.
(b) If the Indemnifying Persons shall acknowledge in a writing
delivered to the Indemnified Persons that the Indemnifying Persons shall be
obligated under the terms of their indemnification obligations hereunder in
connection with such Third-Party Claim, then the Indemnifying Persons shall have
the right to assume the defense of any Third-Party Claim at their own expense
and by their own counsel, which counsel shall be satisfactory to the Indemnified
Persons; provided, however, that the Indemnifying Persons shall not have the
right to assume the defense of any Third-Party Claim, notwithstanding the giving
of such written acknowledgment, if (i) the Indemnified Persons shall have one or
more legal or equitable defenses available to them which are different from or
in addition to those available to the Indemnifying Persons, and, in the opinion
of the Indemnified Persons, counsel for the Indemnifying Persons could not
adequately represent the interests of the Indemnified Persons because such
interests could be in conflict with those of the Indemnifying Persons, (ii) such
action or Proceeding is reasonably likely to have an effect on any other matter
beyond the scope of the indemnification obligation of the Indemnifying Persons
or (iii) the Indemnifying Persons shall not have assumed the defense of the
Third-Party Claim within 30 days.
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(c) If the Indemnifying Persons shall assume the defense of a
Third-Party Claim (under circumstances in which the proviso to Section 8.3(b) is
not applicable), the Indemnifying Persons shall not be responsible for any legal
or other defense costs subsequently incurred by the Indemnified Persons in
connection with the defense thereof. If the Indemnifying Persons do not exercise
their right to assume the defense of a Third-Party Claim by giving the written
acknowledgement referred to in Section 8.3(b), or are otherwise restricted from
so assuming by the proviso to Section 8.3(b), the Indemnifying Persons shall
nevertheless be entitled to participate in such defense with their own counsel
and at their own expense; and in any such case, the Indemnified Persons may
assume the defense of the Third-Party Claim, with counsel which shall be
satisfactory to the Indemnifying Persons, and shall act reasonably and in
accordance with their good faith business judgment and shall not effect any
settlement without the consent of the Indemnifying Persons, which consent shall
not unreasonably be withheld or delayed.
(d) If the Indemnifying Persons exercise their right to assume
the defense of a Third-Party Claim, they shall not make any settlement of any
claims without obtaining in connection therewith a full release of the
Indemnified Persons, in form and substance satisfactory to the Indemnified
Persons.
8.4 Survival of Representations and Warranties.
Subject to the further provisions of this Section 8.4, the
representations and warranties of the Shareholder and the Company contained in
this Agreement shall survive for a period of 18 months, commencing on the
Closing Date provided, however, that (i) the representations and warranties of
the Company set forth in Section 3.20 shall survive the Closing until the
seventh anniversary of the Closing Date (ii) the representations and warranties
of the Company set forth in Sections 3.10 and 3.11 shall survive the Closing
until the expiration of all applicable statutes of limitations, and (iii) the
representations and warranties of the Investor contained in Article V of this
Agreement and the Excluded Representations and Warranties (other than under
Sections 3.10 and 3.11) shall survive the Closing and remain in full force and
effect indefinitely without time limit. The covenants and other agreements of
the parties contained in this Agreement shall survive the Closing until they are
otherwise terminated, whether by their terms or as a matter of applicable Law.
8.5 No Third Party Reliance.
Anything contained herein to the contrary notwithstanding, the
representations and warranties of the Company, the Shareholder and the Investor
contained in this Agreement and the Related Documents (a) are being given by
such party as an inducement to the other parties to enter into this Agreement
and the Related Documents to which they are a party (and each party acknowledges
that the other parties have expressly relied thereon) and (b) are solely for the
benefit of the parties hereto, as applicable. Accordingly, no third party or
anyone acting on behalf of any thereof other than the Indemnified Persons, and
each of them, shall be a third party or other beneficiary of such
representations and warranties and no such third party shall have any rights of
contribution against the Investor, the Shareholder or the Company with respect
to such representations or warranties or any matter subject to or resulting in
indemnification under this Article VIII, or otherwise.
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8.6 Assignment of Indemnification Rights.
The Shareholder and the Investor hereby waive any rights of
contribution, reimbursement, or indemnification against the Company with respect
to any of their indemnification obligations hereunder. The Shareholder and the
Investor each acknowledge and agree that either of them may have both
indemnification obligations and the indirect rights and benefits of
indemnification by holding the shares of Class A Common or Class B Common, as
the case may be. Notwithstanding such dual status, it is the intent of the
parties hereto that any such Person shall not be relieved of any indemnification
obligation as a Shareholder or Investor nor deprived of any indemnification
benefit or right as a shareholder of the Company but shall be treated, as to any
indemnification obligation, as any other shareholder.
8.7 General Release.
(a) The Shareholder does hereby release forever and discharge
the Investor, the Company, and each of their respective Affiliates, officers,
managers, directors, members and employees of and from any and all claims,
demands, causes of action, damages or liabilities of any kind or nature
whatsoever which relate to or arise out of any dealings, relationships or
transactions by and between him and the Company or, any of its Affiliates or any
of their respective officers, directors, managers and employees, in law or
equity which against the Company, any of its Affiliates or any of their
respective officers, directors, managers and employees he ever had, now has or
which he hereafter can, shall or may have, whether or not now known, from the
beginning of the world to the Closing Date. The Shareholder understands and
agrees that he is expressly waiving all claims, even those he may not know or
suspect to exist, which if known may have materially affected the decision to
provide this release, and the Shareholder waives any rights under applicable Law
that provide to the contrary.
(b) The release set forth in the immediately preceding
paragraph shall not apply to any rights the Shareholder has pursuant to this
Agreement or any of the Related Documents.
8.8 Remedies Exclusive.
The remedies provided for in this Article VIII shall be the exclusive
remedies (other than under Section 10.13) of the Indemnified Persons in
connection with any claim, demand, Loss, Liability or obligation for any breach
or alleged breach of any representations or warranties under this Agreement, the
Related Documents or in connection with the transactions contemplated hereby or
thereby; provided, however, that nothing in this Section 8.8 shall be construed
to limit in any way the rights and benefits of, or the remedies available to,
any party to this Agreement or the Related Documents as result of the fraudulent
acts of another party.
ARTICLE IX
TERMINATION; EFFECT OF TERMINATION
9.1 Termination.
This Agreement may be terminated at any time prior to the Closing by:
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(a) the mutual consent of the Investor, the Shareholder and
the Company; or
(b) the Shareholder or the Company if the Closing shall not
have been consummated by May 19, 1999, without liability to the terminating
party on account of such termination; provided that the right to terminate this
Agreement under this Section 9.1(b) shall not be available to a party whose
breach or violation of any representation, warranty, agreement or covenant under
this Agreement or failure to satisfy a condition precedent hereunder has been a
cause of or has resulted in the failure of the Closing to occur on or before
such date; or
(c) the Investor, if there has been a breach by the Company or
the Shareholder of any representation, warranty, covenant or agreement set forth
in this Agreement or any Related Document executed and delivered on the date
hereof on the part of the Company or the Shareholder and which the Company or
the Shareholder fails to cure by the date set forth in Section 9.1(b) after
notice thereof is given by the Investor (except no cure period shall be provided
for a breach by the Company or the Shareholder which by its nature cannot be
cured); or
(d) the Company or the Shareholder, if there has been a breach
of any representation, warranty, covenant or agreement set forth in this
Agreement or any Related Document executed and delivered on the date hereof on
the part of the Investor and which the Investor fails to cure by the date set
forth in Section 9.1(b) after notice thereof is given by the Company or the
Shareholder (except no cure period shall be provided for a breach by the
Investor which by its nature cannot be cured); or
(e) any of the Company, the Shareholder or the Investor, if
any permanent injunction or other Order of a court or other competent authority
preventing the Closing shall have become final and nonappealable; provided,
however, that none of the Company, the Shareholder or the Investor shall be
entitled to terminate this Agreement if such party's intentional breach of this
Agreement or any Related Document has prevented the satisfaction of a condition.
Any termination pursuant to Section 9.1(a) shall be effected by a written
instrument signed by the Investor, the Shareholder and the Company, and any
termination pursuant to this Section 9.1 (other than a termination pursuant to
Section 9.1(a)) shall be effected by written notice from the party or parties so
terminating to the other parties hereto, which notice shall specify the Section
hereof pursuant to which this Agreement is being terminated.
9.2 Effect of Termination.
In the event of the termination of this Agreement as provided in
Section 9.1, this Agreement shall be of no further force or effect, except for
Section 6.6, this Section 9.2 and Article X, each of which shall survive the
termination of this Agreement; provided, however, that the Liability of any
party for any breach by such party of the representations, warranties, covenants
or agreements of such party set forth in this Agreement occurring prior to the
termination of this Agreement shall survive the termination of this Agreement
and, in addition, in the event of any action for breach of contract in the event
of a termination of this Agreement, the prevailing party shall be reimbursed by
the other party to the action for reasonable attorneys' fees and expenses
relating to such action.
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ARTICLE X
MISCELLANEOUS PROVISIONS
10.1 Expenses.
The Company shall bear the Transaction Related Expenses and the
Shareholder shall bear the Shareholder Related Expenses.
10.2 Amendment.
This Agreement may not be amended except by an instrument in writing
signed by the Investor, the Company and the Shareholder.
10.3 Entire Agreement.
This Agreement and the other agreements and documents referenced herein
(including, but not limited to, the Schedules and the Exhibits (in their
executed form) attached hereto) contain all of the agreements among the parties
hereto with respect to the transactions contemplated hereby and supersede all
prior agreements or understandings among the parties with respect thereto
(including, but not limited to, the letter of intent dated as of March 4, 1999,
as amended, among InSight Capital Partners and the Company).
10.4 Severability.
It is the desire and intent of the parties that the provisions of this
Agreement be enforced to the fullest extent permissible under the Law and public
policies applied in each jurisdiction in which enforcement is sought.
Accordingly, in the event that any provision of this Agreement would be held in
any jurisdiction to be invalid, prohibited or unenforceable for any reason, such
provision, as to such jurisdiction, shall be ineffective, without invalidating
the remaining provisions of this Agreement or affecting the validity or
enforceability of such provision in any other jurisdiction. Notwithstanding the
foregoing, if such provision could be more narrowly drawn so as not to be
invalid, prohibited or unenforceable in such jurisdiction, it shall, as to such
jurisdiction, be so narrowly drawn, without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of such
provision in any other jurisdiction.
10.5 No Third-Party Beneficiaries; Successors and Assigns.
Except as expressly provided herein, this Agreement shall not confer
any rights or remedies upon any Person other than the parties hereto and their
respective successors and permitted assigns. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns, representatives, heirs and estates, as the
case may be. This Agreement shall not be assignable by any party hereto without
the consent of the other parties hereto; provided, however, that anything
contained herein to the contrary notwithstanding, the Company or the Investor
may collaterally assign this Agreement, without the prior consent of any other
party, to a financial or lending institution providing financing to the Company
or the Investor.
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10.6 Headings.
Descriptive headings are for convenience only and shall not control or
affect in any way the meaning or construction of any provision of this
Agreement.
10.7 Notices.
All notices or other communications pursuant to this Agreement shall be
in writing and shall be deemed to be sufficient if delivered personally,
telecopied, sent by nationally-recognized overnight courier or mailed by
registered or certified mail (return receipt requested), postage prepaid, to the
parties at the following addresses (or at such other address for a party as
shall be specified by like notice):
(a) if to the Company, to:
Greenfield Online, Inc.
274 Riverside Avenue
Westport, Connecticut 06880
Attention: Chief Executive Officer
Telecopier: (203) 221-0791;
with a copy to:
Preston Gates & Ellis LLP
701 Fifth Avenue
Suite 5000
Seattle, Washington 98104
Attention: Robert S. Jaffe, Esq.
Telecopier: (206) 623-7022;
and
O'Sullivan Graev & Karabell, LLP
30 Rockefeller Plaza
New York, New York 10112
Attention: Ilan S. Nissan, Esq.
Telecopier: (212) 408-2420.
(b) if to the Shareholder, to him:
c/o Greenfield Consulting Group, Inc.
274 Riverside Avenue
Westport, Connecticut 06880
Telecopier: (203)
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with a copy to:
Morrison & Foerster LLP
1290 Avenue of the Americas
New York, New York 10104
Attention: Joseph W. Bartlett, Esq.
Telecopier: (212) 468-7900;
(c) if to the Investor:
Greenfield Holdings, LLC
c/o InSight Capital Partners III, L.P.
122 East 42nd Street
Suite 2300
New York, New York 10168
Attention: Jeffrey Horing
Telecopier: (212) 681-0972;
with a copy to:
O'Sullivan Graev & Karabell, LLP
30 Rockefeller Plaza
New York, New York 10112
Attention: Ilan S. Nissan, Esq.
Telecopier: (212) 408-2420.
All such notices and other communications shall be deemed to have been given and
received (i) in the case of personal delivery, on the date of such delivery,
(ii) in the case of delivery by telecopy, on the date of such delivery, (iii) in
the case of delivery by nationally-recognized overnight courier, on the Business
Day following dispatch, and (iv) in the case of mailing, on the third Business
Day following such mailing.
10.8 Counterparts.
This Agreement may be executed in any number of counterparts, and each
such counterpart shall be deemed to be an original instrument, but all such
counterparts together shall constitute one agreement.
10.9 Governing Law.
This Agreement shall be governed by and construed in accordance with
the Laws of the State of New York without giving effect to any choice or
conflict of law provision or rule (whether of the State of New York or any other
jurisdiction) that would cause the application of the Laws of any jurisdiction
other than the State of New York.
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10.10 Incorporation of Exhibits and Schedules.
The Exhibits and Schedules identified in this Agreement are
incorporated herein by reference and made a part hereof.
10.11 Construction.
Where specific language is used to clarify by example a general
statement contained herein, such specific language shall not be deemed to
modify, limit or restrict in any manner the construction of the general
statement to which it relates. The language used in this Agreement shall be
deemed to be the language chosen by the parties to express their mutual intent,
and no rule of strict construction shall be applied against any party.
10.12 Non-Merger of Representations and Warranties.
Except as otherwise expressly provided in this Agreement, the
covenants, representations and warranties shall not merge on and shall survive
the Closing in accordance with the express terms of this Agreement,
notwithstanding the Closing or any investigation made by or on behalf of any
party, and shall continue in full force and effect. The Closing shall not
prejudice any right of one party against any other party in respect of anything
done or omitted under this Agreement or in respect of any right to damages or
other remedies.
10.13 Remedies.
Subject to the provisions of Section 8.8, the parties shall each have
and retain all other rights and remedies existing in their favor at Law or
equity, including, without limitation, any actions for specific performance
and/or injunctive or other equitable relief (including, without limitation, the
remedy of rescission) to enforce or prevent any violations of the provisions of
this Agreement.
10.14 Jurisdiction, Etc.
(a) Each of the parties hereto hereby irrevocably and
unconditionally submits, for itself and its property, to the nonexclusive
jurisdiction of any New York State court or federal court of the United States
of America sitting in the State of New York, and any appellate court from any
thereof, in any action or proceeding arising out of or relating to this
Agreement or any Related Document or for recognition or enforcement of any
judgment, and each of the parties hereto hereby irrevocably and unconditionally
agrees that all claims in respect of any such action or proceeding may be heard
and determined in any such New York State court or, to the extent permitted by
law, in such federal court. Each of the parties hereto agrees that a final
judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by Law. Nothing in this Agreement shall affect any right that any party
may otherwise have to bring any action or proceeding relating to this Agreement
in the courts of any jurisdiction.
(b) Each of the parties hereto irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so, any
objection that it may now or hereafter have to the laying of venue of any suit,
action or proceeding arising out of or relating to this
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Agreement or any Related Document in any New York State or federal court. Each
of the parties hereto irrevocably waives, to the fullest extent permitted by
Law, the defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court.
10.15 Waiver of Jury Trial.
EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL
BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO
THIS AGREEMENT.
* * *
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IN WITNESS WHEREOF, each of the parties hereto has duly
executed this Stock Purchase and Redemption Agreement as of the date first
written above.
GREENFIELD ONLINE, INC.
By: /s/ Andrew Greenfield
-------------------------------
Name: Andrew Greenfield
Title: Executive Vice President
GREENFIELD HOLDINGS, LLC
By: /s/ Jeffrey Horing
-----------------------------
Name: Jeffrey Horing
Title: President
SHAREHOLDER:
/s/ Andrew Greenfield
------------------------------------
Andrew Greenfield
<PAGE>
Annex I
DEFINITIONS
The following terms used in the Stock Purchase and Redemption
Agreement shall have the following respective meanings:
"Accounting Firm" has the meaning set forth in Section l.8(e).
"Affiliate" means, with respect to any Person, (i) a director,
officer or shareholder of such Person, (ii) a spouse, parent, sibling or
descendant of such Person (or spouse, parent, sibling or descendant of any
director or executive officer of such Person), or (iii) any other Person that,
directly or indirectly through one or more intermediaries, controls, or is
Controlled by, or is under common Control with, such Person.
"Agreement" has the meaning set forth in the caption.
"Amended Charter" shall have the meaning set forth in Section
7.2(x).
"Books and Records" means all books of account, tax records,
sales and purchase records, customer and supplier lists, computer software,
formulae, business reports, plans and projections and all other documents,
files, correspondence and other information of the Company (whether in written,
printed, electronic or computer printout form).
"Buildings and Fixtures" means all plant, buildings,
structures, erections, improvements, appurtenances and fixtures (including fixed
machinery and fixed equipment) situate on any of the Real Property.
"Business Day" means any day that is not a Saturday, Sunday or
a day on which banking institutions in New York, New York are not required to be
open.
"CERCLA" means the Comprehensive Environmental Response,
Compensation, and Liability Act.
"Charter Documents" means, (i) as to any corporation, the
articles, certificate or memorandum of incorporation or association of such
corporation, the by-laws of such corporation, and each other instrument or other
document governing such corporation's existence and internal affairs, in each
case as amended and restated and in effect at the time in question, and (ii) as
to any limited partnership, the certificate of limited partnership of such
partnership, the agreement of limited partnership of such partnership, and each
other instrument or other document governing such partnership's existence and
internal affairs, in each case as amended and restated and in effect at the time
in question.
"Class A Common" has the meaning set forth in Section 1.1.
"Class B Common" has the meaning set forth in Section 1.1.
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"Client" means any division, business unit or individual which
is responsible for the expenditure of funds pursuant to a separate budget with
respect to any product line or group of related product lines or a business
development or strategic alliance which gives rise to Referral Revenue, the
determination of which shall be in the reasonable discretion of the Board.
"Closing" has the meaning set forth in Article II.
"Closing Date" has the meaning set forth in Article II.
"COBRA" has the meaning set forth in Section 3.11(b).
"Code" has the meaning set forth in Section 3.10(a).
"Common Stock" means the common stock, no par value per share,
of the Company.
"Company" has the meaning set forth in the caption.
"Company Intellectual Property" has the meaning set forth in
Section 3.14(a).
"Company Licensed Intellectual Property" has the meaning set
forth in Section 3.14(a).
"Company Owned Intellectual Property" has the meaning set
forth in Section 3.14(a).
"Competitor" has the meaning set forth in Section 6.10(a).
"Consulting" means Greenfield Consulting Group, Inc., a
Connecticut corporation.
"Contingent Shares" means 1096 shares of Class A Common that
are held by the Shareholder as of the Closing and which are subject to
forfeiture to the Company pursuant to Section 1.8.
"Contingent Shares Component Determination Date" means the
earlier of (x) the second anniversary of the Closing Date, (y) the date that the
aggregate amount of Referral Revenue shall equal or exceed $2,500,000 during the
Referral Period and (z) the date of the consummation of a Sale of the Company.
"Contract" means any loan or credit agreement, note, bond,
mortgage, indenture, lease, sublease, purchase order or other agreement,
instrument, permit, concession, franchise or license.
"Control" means, with respect to any Person, the possession,
directly or indirectly, of the power to direct or cause the direction of the
management or policies of a Person, whether through the ownership of voting
securities, by contract or otherwise.
"Debt Contribution Agreement" has the meaning set forth in
Section 7.2(k).
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"Earned Shares" means those Contingent Shares that, on the
Contingent Shares Component Determination Date, are not subject to forfeiture
pursuant to Section 1.8(a).
"Employee Plan" means any "employee benefit plan" (as defined
in Section 3(3) of ERISA) as well as any other plan, program or arrangement
involving direct and indirect compensation, under which the Company or any ERISA
Affiliate of the Company has any present or future obligations or liability on
behalf of its employees or former employees, contractual employees or their
dependents or beneficiaries.
"Employment Agreements" has the meaning set forth in Section
7.2(d).
"Encumbrances" means and includes security interests,
mortgages, liens, pledges, charges, easements, reservations, restrictions,
clouds, equities, rights of way, options, rights of first refusal and all other
encumbrances, whether or not relating to the extension of credit or the
borrowing of money.
"Environmental and Safety Requirements" means all Laws,
Orders, contractual obligations and all common law concerning public health and
safety, worker health and safety, and pollution or protection of the
environment, including, without limitation, all of the foregoing relating to the
presence, use, production, generation, handling, transportation, treatment,
storage, disposal, distribution, labeling, testing, processing, discharge,
release, threatened release, control, or cleanup of any hazardous materials,
substances or wastes, chemical substances or mixtures, pesticides, pollutants,
contaminants, toxic chemicals, petroleum products or byproducts, asbestos,
polychlorinated biphenyls, noise or radiation, including, but not limited to,
the Solid Waste Disposal Act, as amended, 42 U.S.C.ss.ss.6901, et seq., the
Clean Air Act, as amended, 42 U.S.C.ss.ss.7401 et -- --- -- seq., the Federal
Water Pollution Control Act, as amended, 33 U.S.C.ss.ss.1251 et seq., the
Emergency Planning and -- --- Community Right-to-Know Act, 42 U.S.C.ss.ss.11001
et seq., CERCLA, the Hazardous Materials Transportation Uniform -- --- Safety
Act, as amended, 49 U.S.C.ss.1804 et seq., the Occupational Safety and Health
Act of 1970, and the -- --- regulations promulgated hereunder and the
Occupational Health and Safety Act, R.S.O. 1990, c.O.1, as amended, and the
regulations promulgated under the foregoing.
"ERISA" means the Employment Retirement Income Security Act of
1974, as amended.
"ERISA Affiliate" means, with respect to any Person, any
entity that is a member of a "controlled group of corporations" with, or is
under "common control" with, or is a member of the same "affiliated service
group" with such Person as defined in Section 414(b), 414(c) or 414(m) of the
Code.
"Escrow Account" has the meaning set forth in Section 1.5(c).
"Escrow Agent" means SunTrust Bank, Atlanta.
"Escrow Agreement" means the Escrow Agreement to be dated as
of the Closing Date, among the Investor, the Company, the Shareholder and the
Escrow Agent, substantially in the form of Exhibit A attached hereto.
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"Escrow Fund" has the meaning set forth in Section 1.5(c).
"Excluded Representations and Warranties" has the meaning set
forth in Section 8.1(e).
"Existing Clients" means any Client from which the Company has
derived revenue at any time prior to the Closing Date.
"Financial Statements" has the meaning set forth in Section
3.6(b).
"Funded Indebtedness" means, without duplication, the
aggregate amount (including the current portions thereof) of all (i)
indebtedness for money borrowed from others and purchase money indebtedness
(other than accounts payable in the ordinary course and capital lease
obligations) of the Company; (ii) indebtedness of the type described in clause
(i) above guaranteed, directly or indirectly, in any manner by the Company or
any of its subsidiaries, through an agreement, contingent or otherwise, to
supply funds to, or in any other manner invest in, the relevant debtor, or to
purchase indebtedness, or to purchase and pay for property if not delivered or
pay for services if not performed, primarily for the purpose of enabling such
debtor to make payment of the indebtedness or to assure the owners of the
indebtedness against loss (any such arrangement being hereinafter referred to as
a "Guaranty"), but excluding endorsements of checks and other instruments in the
ordinary course; (iii) indebtedness of the type described in clause (i) above
secured by any Encumbrances upon property owned by the Company, even though such
Person has not in any manner become liable for the payment of such indebtedness;
(iv) interest expense accrued but unpaid, and all prepayment premiums, on or
relating to any of such indebtedness; and (v) all obligations under capital
leases of the Company (other than those capital leases of the Company referenced
on Schedule 3.15(ix)(a)) which are required to be reflected as liabilities on
the balance sheet of such Person by GAAP. The term Funded Indebtedness shall
specifically exclude any indebtedness incurred in connection with the financing
for the transactions contemplated hereunder.
"GAAP" means with respect to any Person, generally accepted
accounting principles. For purposes of Section 3.6(b), any deviations from GAAP
which result in a change in the timing of recognition of revenue or expenses
between any year and the year immediately preceding or following that year will
not be considered a deviation from GAAP. In the case of a liability, if such
timing difference is the result of the Company's failure to adequately record
liabilities which should have been accrued under GAAP, the amount of an under
accrual of a liability shall be considered a deviation from GAAP only if it
exceeds $25,000. A deviation from GAAP shall mean an application of an
accounting policy which differs from GAAP, or which is inconsistent with, or
constitutes an incorrect application of, a GAAP policy.
"Governmental Entity" means any court, administrative agency
or commission or other governmental authority or instrumentality, domestic or
foreign, Federal, state, provincial or local.
"Guaranty" has the meaning set forth in the definition for
Funded Indebtedness.
"HIPAA" has the meaning set forth in Section 3.11(b)(vi).
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"Household" shall mean a Person or group of related Persons
living in the same home for which the Company has in excess of 25 data fields.
"Indemnified Persons" means the Persons entitled to
indemnification under Article VIII.
"Indemnifying Persons" means the Persons obligated to
indemnify an Indemnified Person under Article VIII.
"Independent Third Party" means any Person who, immediately
prior to the contemplated transaction, individually and with its Affiliates,
does not own in excess of 5% of the capital stock of the Company of a
fully-diluted basis.
"Investor" has the meaning set forth in the caption.
"Investor's Accountants" means Ernst & Young LLP.
"Latest Balance Sheet" has the meaning set forth in Section
3.6(a)(ii).
"Latest Balance Sheet Date" has the meaning set forth in
Section 3.6(a)(ii).
"Latest Compiled Balance Sheet" has the meaning set forth in
Section 3.6(a)(i). "Latest Compiled Balance Sheet Date" has
the meaning set forth in Section 3.6(a)(i).
"Law" means all international, national, federal, state or
local laws (both common and statute law and civil and criminal law) and all
legislation and regulatory codes of practice (including without limitation,
statutory instruments, guidance notes, circulars, directives, decisions, rules,
regulations, treaties and conventions) or Orders or Permits of any Governmental
Entity, in each case whether foreign or of the United States of America.
"Leased Property" has the meaning set forth in Section 3.13.
"Liability" means any liability or obligation, whether known
or unknown, asserted or unasserted, absolute or contingent, accrued or
unaccrued, liquidated or unliquidated and whether due or to become due,
regardless of when asserted.
"Losses" means any and all losses, claims, shortages, damages,
liabilities, expenses (including reasonable attorneys' and accountants' and
other professionals' fees), assessments, Tax deficiencies and Taxes (including
interest or penalties thereon) arising from or in connection with any such
matter that is the subject of indemnification under Article VIII, as reduced by
(i) the amount actually recovered under insurance policies (net of deductibles
and incidental expenses resulting therefrom) and (ii) Tax benefits actually
realized under Tax Laws in respect of such Losses, in each case net of all
reasonable costs and expenses of recovering any such insurance or tax benefits.
For purposes of this definition, Tax benefits realized shall mean the sum of all
reductions in federal, state, local and foreign Taxes payable by the Indemnified
Person solely as a result of the Losses for which the indemnification payments
are being made.
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All calculations shall be made using reasonable assumptions agreed upon by the
parties hereto including the timing of the utilization of any such Tax benefits,
and any such Tax benefits shall be assumed to be utilized in a given Tax year
only after all other Tax benefits available in such year have first been taken
into account. Future Tax benefits, if any, shall be discounted to present value
using a discount rate of 10%. If a Tax benefit that has been taken into account
for purposes of calculating Losses hereunder is wholly or partially disallowed
by a taxing authority, the Indemnifying Person shall pay the Indemnified Person
the amount that would have been paid originally with respect to such Losses had
such disallowed Tax benefit not been taken into account. The parties acknowledge
that in certain events a representation, warranty or covenant of the Company or
the Shareholder may be breached that may not entail an actual "Loss" (as defined
in the previous sentence) suffered by the Company. Accordingly, for further
certainty, notwithstanding anything in this Agreement to the contrary, the
determination of "Losses" shall assume that the Indemnified Person is the
Investor in the case of Section 8.1(a) and the Shareholder in the case of
Section 8.1(b). The term "Loss" shall specifically exclude any losses resulting
from the acceleration of the Company's obligations under the Note arising as a
result of the breach of representations and warranties hereunder.
"Material Adverse Change" means, with respect to any Person,
any material adverse change in the business, operations, assets (including
levels of working capital and components thereof), condition (financial or
otherwise), operating results, liabilities, employee relations or prospects of
such Person or any material casualty loss or damage to the assets of such
Person, whether or not covered by insurance.
"Material Adverse Effect" on any Person means a material
adverse effect on the business, operations, assets (including levels of working
capital and components thereof), condition (financial or otherwise), operating
results, liabilities, employee relations or prospects of such Person.
"Mesznik Option" has the meaning set forth in Section 7.2(w).
"New Client Referral Revenue" means 100% of the revenue
derived from New Client Referrals.
"New Client Referrals" means any New Clients of the Company
referred to the Company by Consulting during the Referral Period.
"New Clients" means any Client which is not an Existing
Client.
"Non-Compete Period" has the meaning set forth in Section
6.10(a).
"Note" has the meaning set forth in Section 7.2(j).
"Notice of Disagreement" has the meaning set forth in Section
1.8(e).
"Orders" means judgments, writs, decrees, compliance
agreements, injunctions or orders of any Governmental Entity or arbitrator.
"Permits" has the meaning set forth in Section 3.16.
A-6
<PAGE>
"Permitted Encumbrances" means (i) Encumbrances for Taxes not
yet due and payable or being contested in good faith by appropriate proceedings
and for which there are adequate reserves on the books, (ii) workers or
unemployment compensation liens arising in the ordinary course of business, and
(iii) mechanic's, materialman's, supplier's, vendor's or similar liens arising
in the ordinary course of business securing amounts that are not delinquent.
"Person" shall be construed broadly and shall include an
individual, a partnership, a corporation, a limited liability company, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization or a governmental entity (or any department, agency or political
subdivision thereof).
"Post-Signing Returns" has the meaning set forth in Section
6.8.
"Potential Transaction" has the meaning set forth in Section
6.7.
"Proceedings" means actions, suits, claims, investigations or
legal or administrative or arbitration proceedings.
"Purchase" has the meaning set forth in Section 1.1.
"Purchased Shares" has the meaning set forth in Section 1.1.
"Purchased Shares Consideration" has the meaning set forth in
Section 1.2.
"Real Property" has the meaning set forth in Section 3.13.
"Reclassification" has the meaning set forth in Section 1.1.
"Redeemed Shares" has the meaning set forth in Section 1.3.
"Redeemed Shares Consideration" has the meaning set forth in
Section 1.4.
"Redemption" has the meaning set forth in Section 1.3.
"Referral Period" means the period commencing on April 20,
1999 and ending on the Contingent Shares Component Determination Date.
"Referral Revenue" means the sum of (i) revenue derived solely
from the first project which the Company delivers to an Existing Client referred
to the Company by Consulting plus (ii) New Client Referral Revenue, as finally
determined on the Contingent Shares Component Determination Date. For purposes
of this Agreement, business shall be deemed to be "referred" to the Company when
such business is referred to the Company in a written or electronic instrument
delivered to the Company.
"Referral Revenue Certificate" has the meaning set forth in
Section 1.8(d).
"Registration Rights Agreement" has the meaning set forth in
Section 7.2(i).
A-7
<PAGE>
"Related Documents" means the Shareholders Agreement, the
Escrow Agreement, the Employment Agreements, the Registration Rights Agreement,
the Note, the Transition Services Agreement, the Mesznik Option, the Debt
Contribution Agreement, the Sublease Agreement the Stock Option Plan and the
Acknowledgment and Release Agreements.
"Sale of the Company" means the sale of the Company to an
Independent Third Party or group of Independent Third Parties that are
Affiliates pursuant to which such party or parties acquire (i) capital stock of
the Company possessing the voting power to elect a majority of the Board
(whether by merger, consolidation or issuance, sale or transfer of the Company's
capital stock (other than in connection with an initial public offering)) or
(ii) all or substantially all of the Company's assets determined on a
consolidated basis.
"Shared Property" has the meaning set forth in Section
3.13(a).
"Shareholder" has the meaning set forth in the caption.
"Shareholder Related Expenses" means all fees and expenses
incurred or charged by the Shareholder's advisors, including the fees and
expenses of Morrison & Foerster LLP and Deloitte & Touche LLP, in each case
relating to the transactions contemplated by this Agreement and the Related
Documents (including the financing of such transactions).
"Shareholders' Agreement" has the meaning set forth in Section
7.2(e).
"Shareholder Note" has the meaning set forth in Section 3.34.
"Stock Option Plan" has the meaning set forth in Section
7.2(f).
"Subject Business" has the meaning set forth in the preamble.
"Sublease Agreement" has the meaning set forth in Section
7.2(m).
"Subsidiary" of any Person means any other Person (i) whose
securities having a majority of the general voting power in electing the board
of directors or equivalent governing body of such other Person (excluding
securities entitled to vote only upon the failure to pay dividends thereon or
the occurrence of other contingencies) are, at the time as of which any
determination is being made, owned by such Person either directly or indirectly
through one or more other entities constituting subsidiaries or (ii) more than a
50% interest in the profits or capital of whom is, at the time as of which any
determination is being made, owned by such Person either directly or indirectly
through one or more other entities constituting subsidiaries.
"Survival Date" means the date, if any, upon which any
representation, warranty, covenant or other agreement contained herein shall
terminate in accordance with the terms hereof.
"Tax" means any of the Taxes.
"Tax Affiliate" has the meaning set forth in Section 3.10(a).
A-8
<PAGE>
"Tax Returns" means Federal, state, provincial, local and
foreign tax returns, reports, statements, declarations of elections, notices,
filings and information return in respect of Taxes.
"Taxes" means, with respect to any Person, (i) all income
taxes (including any tax on or based upon net income, gross income, income as
specially defined, earnings, profits or selected items of income, earnings or
profits) and all gross receipts, sales, use, ad valorem, capital and transfer,
transfer, franchise, license, tax related withholding, payroll, employment,
excise, severance, stamp, occupation, premium, property or windfall profits
taxes, alternative or add-on minimum taxes, customs duties and other taxes, tax
related fees, tax assessments or charges of any kind whatsoever, together with
all interest and penalties, additions to tax, surtaxes and other additional
amounts imposed by any taxing authority (domestic or foreign) on such entity (if
any) and (ii) any liability for the payment of any amount of the type described
in the immediately preceding clause (i) as a result of (A) being a "transferee"
(within the meaning of Section 6901 of the Code or any other applicable Law) of
another Person, (B) or a member of an affiliated or combined group or (C) a
contractual arrangement or otherwise.
"Territory" has the meaning set forth in Section 6.10(a).
"Third-Party Claim" has the meaning set forth in Section 8.3.
"Transaction Related Expenses" means all fees and expenses
incurred or charged by (i) the Investor and each of its advisors, including the
fees and expenses of O'Sullivan Graev & Karabell, LLP, and the Investor's
Accountants, (ii) advisors to Rudy Nadilo and/or Hugh Davis, including Preston
Gates & Ellis, LLP, in each case, relating to the transactions contemplated by
this Agreement and the Related Documents (including the financing of such
transactions)and (iii) the documented fees and expenses of the advisors to the
Shareholder which relate solely to the Investor's proposed election under
338(H)(10) of the Code, not to exceed $10,000 in the aggregate.
"Transition Services Agreement" has the meaning set forth in
Section 7.2(l).
"Transition Period" has the meaning set forth in Section 6.1.
A-9
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I PURCHASE AND REDEMPTION..............................................2
1.1 PURCHASE OF PURCHASED SHARES.........................................2
1.2 PURCHASE PRICE FOR PURCHASED SHARES..................................3
1.3 REDEMPTION OF REDEEMED SHARES........................................3
1.4 PURCHASE PRICE FOR REDEEMED SHARES...................................3
1.5 CONSIDERATION........................................................3
1.6 DELIVERY OF PURCHASED SHARES.........................................4
1.7 DELIVERY OF REDEEMED SHARES..........................................4
1.8 CONTINGENT SHARES COMPONENT..........................................4
1.9 SATISFACTION OF BONUS OBLIGATIONS....................................6
ARTICLE II CLOSING.............................................................6
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY......................7
3.1 ORGANIZATION; GOOD STANDING; QUALIFICATION AND POWER.................7
3.2 SUBSIDIARIES; INVESTMENTS............................................7
3.3 CAPITAL STOCK........................................................7
3.4 APPROVALS............................................................8
3.5 AUTHORITY; NONCONTRAVENTION; CONSENTS................................8
3.6 FINANCIAL STATEMENTS.................................................9
3.7 ABSENCE OF UNDISCLOSED LIABILITIES...................................9
3.8 ABSENCE OF CHANGES..................................................10
3.9 EMPLOYMENT AGREEMENTS...............................................11
3.10 TAX MATTERS.........................................................11
3.11 ERISA COMPLIANCE....................................................13
3.12 TITLE TO ASSETS, PROPERTIES AND RIGHTS AND RELATED MATTERS..........15
3.13 REAL PROPERTY-SHARED OR LEASED......................................15
3.14 INTELLECTUAL PROPERTY...............................................16
3.15 AGREEMENTS, NO DEFAULTS, ETC........................................19
3.16 COMPLIANCE WITH LAWS................................................20
3.17 LITIGATION, ETC.....................................................21
3.18 [INTENTIONALLY OMITTED.]............................................21
3.19 LABOR RELATIONS; EMPLOYEES..........................................21
3.20 ENVIRONMENTAL MATTERS...............................................22
3.21 CHANGE IN CONTROL...................................................22
3.22 STATE TAKEOVER STATUTES.............................................22
3.23 CONFLICTS OF INTEREST...............................................22
3.24 BROKERS.............................................................22
3.25 RELATED TRANSACTIONS................................................23
3.26 [INTENTIONALLY OMITTED.]............................................23
3.27 ACCOUNTS AND NOTES RECEIVABLE.......................................23
3.28 ACCOUNTS AND NOTES PAYABLE..........................................23
3.29 BANK ACCOUNTS; POWER OF ATTORNEY....................................23
3.30 SUPPLIERS AND VENDORS...............................................24
3.31 CUSTOMER RELATIONS, PROFITABILITY...................................24
3.32 YEAR 2000...........................................................24
3.33 [INTENTIONALLY OMITTED].............................................24
3.34 FUNDED INDEBTEDNESS.................................................24
3.35 HART-SCOTT-RODINO...................................................24
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDER..................25
4.1 TITLE TO SHARES.....................................................25
i
<PAGE>
4.2 AUTHORITY...........................................................25
4.3 NONCONTRAVENTION....................................................25
4.4 CONSENTS............................................................25
4.5 LITIGATION..........................................................26
ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE INVESTOR......................26
5.1 AUTHORITY...........................................................26
5.2 NONCONTRAVENTION; CONSENTS..........................................26
5.3 BROKERS.............................................................27
5.4 HART-SCOTT-RODINO...................................................27
ARTICLE VI CONDUCT AND TRANSACTIONS PRIOR TO THE CLOSING; ADDITIONAL
AGREEMENTS....................................................................27
6.1 AFFIRMATIVE COVENANTS OF THE COMPANY................................27
6.2 NEGATIVE COVENANTS OF THE COMPANY...................................28
6.3 REASONABLE EFFORTS..................................................29
6.4 REPRESENTATIONS AND WARRANTIES......................................29
6.5 CONSENTS............................................................30
6.6 PUBLIC ANNOUNCEMENTS................................................30
6.7 NEGOTIATION WITH OTHERS.............................................30
6.8 CERTAIN TAX MATTERS.................................................30
6.9 NOTICE OF PROSPECTIVE BREACH........................................31
6.10 NON-COMPETE, NON-SOLICITATION, NON-DISPARAGEMENT....................31
6.11 FURTHER ASSURANCES..................................................32
6.12 GUARANTY............................................................33
ARTICLE VII CONDITIONS........................................................33
7.1 CONDITIONS TO EACH PARTY'S OBLIGATIONS..............................33
7.2 CONDITIONS TO OBLIGATIONS OF THE INVESTOR...........................33
7.3 CONDITIONS TO OBLIGATIONS OF THE COMPANY AND THE SHAREHOLDER........36
ARTICLE VIII INDEMNIFICATION..................................................37
8.1 INDEMNIFICATION GENERALLY; ETC......................................37
8.2 ASSERTION OF CLAIMS.................................................39
8.3 NOTICE AND DEFENSE OF THIRD-PARTY CLAIMS............................39
8.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES..........................40
8.5 NO THIRD PARTY RELIANCE.............................................40
8.6 ASSIGNMENT OF INDEMNIFICATION RIGHTS................................41
8.7 GENERAL RELEASE.....................................................41
8.8 REMEDIES EXCLUSIVE..................................................41
ARTICLE IX TERMINATION; EFFECT OF TERMINATION.................................41
9.1 TERMINATION.........................................................41
9.2 EFFECT OF TERMINATION...............................................42
ARTICLE X MISCELLANEOUS PROVISIONS............................................43
10.1 EXPENSES............................................................43
10.2 AMENDMENT...........................................................43
10.3 ENTIRE AGREEMENT....................................................43
10.4 SEVERABILITY........................................................43
10.5 NO THIRD-PARTY BENEFICIARIES; SUCCESSORS AND ASSIGNS................43
10.6 HEADINGS............................................................44
10.7 NOTICES.............................................................44
10.8 COUNTERPARTS........................................................45
10.9 GOVERNING LAW.......................................................45
10.10 INCORPORATION OF EXHIBITS AND SCHEDULES..........................46
ii
<PAGE>
10.11 CONSTRUCTION.....................................................46
10.12 NON-MERGER OF REPRESENTATIONS AND WARRANTIES.....................46
10.13 REMEDIES.........................................................46
10.14 JURISDICTION, ETC................................................46
10.15 WAIVER OF JURY TRIAL.............................................47
iii
<PAGE>
List of Attachments
-------------------
Schedules
- ---------
Schedule 3.1 - Qualifications; Foreign Corporations
Schedule 3.2 - Subsidiaries; Investments
Schedule 3.3 - Capital Stock
Schedule 3.5(b) - Non contravention
Schedule 3.5(d) - Consents
Schedule 3.6(b) - Financial Statements
Schedule 3.7 - Liabilities
Schedule 3.8 - Absence of Change
Schedule 3.9 - Employment Agreements
Schedule 3.10 - Tax Matters
Schedule 3.11 - ERISA Compliance
Schedule 3.12 - Intellectual Property Rights
Schedule 3.13 - Real Property - Shared or Leased
Schedule 3.14 - Intellectual Property
Schedule 3.15 - Agreements, No Defaults, Etc.
Schedule 3.16 - Compliance with Laws
Schedule 3.17 - Litigation
Schedule 3.19 - Labor Relations; Employees
Schedule 3.21 - Change in Control
Schedule 3.24 - Brokers
Schedule 3.25 - Related Transactions
Schedule 3.27 - Accounts and Notes Receivables
Schedule 3.29 - Bank Accounts; Powers of Attorney
Schedule 4.1 - Title to Shares
Schedule 4.4 - Consents
Exhibits
- --------
Exhibit A - Form of Escrow Agreement
Exhibit B-1 - Form of Nadilo Employment Agreement
Exhibit B-2 - Form of Davis Employment Agreement
Exhibit C - Form of Shareholders' Agreement
Exhibit D - Form of Stock Option Plan
Exhibit E - Form of Registration Rights Agreement
Exhibit F - Form of Promissory Note
Exhibit G - Form of Debt Contribution Agreement
Exhibit H - Form of Transition Services Agreement
Exhibit I - Form of Sublease Agreement
Exhibit J-1 - Form of Mesznik Option Agreement
Exhibit K - Form of Amended Charter
Exhibit L - Form of Employee Acknowledgment and Release
<PAGE>
Schedule 1.8- Referral Revenue
- ------------------------------
None.
<PAGE>
Schedule 3.1 - Organization; Good Standing; Qualification and Power.
- -------------------------------------------------------------------
The Company is qualified to do business in California, Illinois and
Missouri.
-3-
<PAGE>
Schedule 3.2 - Subsidiaries; Investments.
- ----------------------------------------
Not applicable.
-4-
<PAGE>
Schedule 3.3 -Capital Stock.
- ---------------------------
None, except as contemplated by the Stock Purchase and Redemption
Agreement and the Related Documents.
-5-
<PAGE>
Schedule 3.5 - Authority; Noncontravention; Consents.
- ----------------------------------------------------
(b) Consent to the transactions contemplated by the Stock Purchase and
Redemption Agreement and Related Documents by the lessor under the
Company's San Francisco office lease is required, including delivery of 30
days' notice of a proposed assignment.
(d) 1. In order for the Company's assets to be free of Encumbrances upon
completion of the transactions contemplated by this Agreement and the
Related Documents, the lien of Fleet Bank Securing the Company's
guaranty of Consulting's indebtedness to Fleet Bank must be removed at
Closing and the Company must be released from the guaranty.
2. Consent to the transactions contemplated by the Stock Purchase and
Redemption Agreement and Related Documents by the lessor under the
Company's San Francisco office lease is required, including delivery of
30 days' notice of a proposed assignment.
-6-
<PAGE>
Schedule 3.6(b)- Financial Statements.
- -------------------------------------
(i) Set forth below are instances in which the Company's financial
statements have not been prepared in a manner which is consistent
with past practice:
1997
----
1. Certain of the Company's operating expenses were paid by
Consulting. Such expenses were recorded as "due from the Company"
in Consulting's general ledger and "due to Consulting" in general
ledger of the Company. Certain of these expenses reflect
allocations of shared services and facilities, including, but not
limited to rent, insurance, supplies, overhead and general
expenses;
2. Certain employees/departments of Consulting performed services on
behalf of the Company for part or all of year. These expenses were
recorded as expenses of Consulting with no corresponding entry in
the general ledger of the Company;
3. Certain Consulting assets were utilized by the Company with no
expense recorded on the general ledger of the Company;
4. No general ledger entries made for accrued wages and accrued
vacation;
5. Insurance coverage provided under Consulting umbrella;
6. No interest expense recorded for officer loans, advances from
Consulting or other mounts paid by Consulting to fund the
Company's operations;
7. No bad debt reserve recorded; and
8. No state sales, use, income or corporate tax expenses recorded
except for Connecticut.
1998
----
1. Certain of the Company's operating expenses were paid by
Consulting. Such expenses were recorded as "due from the Company"
in Consulting's general ledger and "due to Consulting" in the
Company's general ledger. Certain of these expenses reflect
allocations of shared services and facilities, including, but not
limited to rent, insurance, supplies, overhead and general
expenses;
2. Certain employees/departments of Consulting performed services on
behalf of the Company for part or all of the year. These expenses
were recorded as expenses of Consulting with no corresponding
entry in the Company's general ledger;
3. Certain Consulting assets were utilized by the Company with no
expense recorded on the general ledger of the Company;
4. No general ledger entries made for accrued vacation, commissions,
or amounts due iGain;
5. Insurance coverage provided under Consulting umbrella;
6. No interest expense recorded for advance from Consulting or other
amounts paid by Consulting to fund the Company's operations;
7. No bad debt reserve recorded due to historical collection
experience;
8. No foreign sales or corporate tax liability recorded; and
9. In June 1998, the Company entered into a one year mainframe
contract which was recorded as a fixed
-7-
<PAGE>
asset rather than being expensed. The book value of the asset as
of March 31, 1999 was $5,686.20.
Three-month period ended March 31, 1999
---------------------------------------
1. Certain departments of Consulting performed services on behalf of
the Company. These expenses were recorded as expenses of
Consulting with no corresponding entry in the general ledger of
the Company. Certain of these expenses reflect allocations of
shared services, including, but not limited to rent, insurance,
supplies, overhead and general expenses;
2. Certain Consulting assets were utilized by the Company with no
expense recorded on the general ledger of the Company;
3. No general ledger entries were made for accrued vacation and
commissions;
4. Insurance coverage was provided under Consulting umbrella;
5. No interest expense was recorded for officer loan, advance from
Consulting or other amounts paid by Consulting to fund the
Company's operations;
6. No bad debt reserve recorded;
7. No foreign sales or corporate tax liability recorded;
8. Amount due to iGain reflected in accounts payable;
9. No accounts for bonus payments to be made in connections with the
transactions contemplated by this Agreement or the Related
Documents; and
10. Amounts due to Consulting and to officer loans have been
reclassified to additional paid in capital.
11. The Company typically has capitalized a portion of data base costs
as of December 31st in connection with preparation of compiled
financial statements. Accordingly, the balance sheet as of March
31, 1999 does not reflect certain of such capitalized costs.
(iii) The following are potential departures from GAAP methods or
compliance therewith:
The Company's depreciation expense has been computed on the Tax
basis.
The Company uses the Direct Write-off method for recognizing Bad
Debts.
The Company's revenue recognition policy is:
For Syndicated Contracts - 50% of the contract revenue is
recognized at signing, and 50% of the revenue is recognized
monthly over the life of the contract.
For Custom projects - 20% of the contract revenue is recognized at
signing, with the balance recognized ratably over the number
of months remaining in the contract. For contracts which are 2
months in duration or less, 70% of the contract revenue is
recognized in the first month, and 30% in the second month of
the contract.
The Company accounts for database and internet programming costs
in accordance with SOP 98-1 Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use as
issued by the AICPA.
-8-
<PAGE>
Schedule 3.7 - Absence of Undisclosed Liabilities.
- -------------------------------------------------
The Company has incurred the following Liabilities since either
the Latest Balance Sheet or the Latest Compiled Balance Sheet:
Vacation accruals
Sales commission arrears (1 month)
401K payment accruals
State sales Taxes (See Schedule 3.10)
Bonus accruals for Rudy Nadilo, Hugh Davis, Steve Cook, Paul
Jacobson and Tom Kruger.
No reserves of any type have been established
CyberGold claim (See Schedules 3.14 and 3.17)
Invoice to I-Gain in the amount of $46,913.50 which was paid on
April 1,1999
-9-
<PAGE>
Schedule 3.8 - Absence of Changes.
- ---------------------------------
Sincethe Latest Compiled Balance Sheet Date the following items
represent deviations from the Company's ordinary course of
business operations (each subsection corresponds to the
subsection of Section 3.8 of the Agreement):
(h) The Shareholder has verbally agreed to make bonus payments to Rudy
Nadilo, Hugh Davis, Steve Cook, Paul Jacobson and Tom Kruger upon
completion of transactions contemplated by the Agreement. These
payments will be satisfied by the Company at Closing and shall not
exceed as $3,260,000 in the aggregate, $1,010,000 of which shall
be satisfied prior to Closing.
(i) The Shareholder has verbally agreed to make bonus payments to Rudy
Nadilo, Hugh Davis, Steve Cook, Paul Jacobson and Tom Kruger upon
completion of transactions contemplated by the Agreement. These
payments will be satisfied by the Company at Closing and shall not
exceed as $3,260,000 in the aggregate, $1,010,000 of which shall
be satisfied prior to Closing.
(j) The Shareholder has verbally agreed to make bonus payments to Rudy
Nadilo, Hugh Davis, Steve Cook, Paul Jacobson and Tom Kruger upon
completion of transactions contemplated by the Agreement. These
payments will be satisfied by the Company at Closing and shall not
exceed as $3,260,000 in the aggregate, $1,010,000 of which shall
be satisfied prior to Closing.
Contribution of capital by the Shareholder to the Company to fund
bonus payments.
Amounts due to Consulting and to officer loans have been
reclassified to additional paid in capital.
Issuance of Demand Note payable to the Shareholder in the
principal amount of $10,000.
Contribution to capital by the Shareholder on April 15, 1999 to
fund the Company's working capital requirements.
(k) The Company typically has capitalized a portion of data base costs
as of December 31st in connection with preparation of compiled
financial statements. Accordingly, the balance sheet as of March
31, 1999 does not reflect certain of such capitalized costs.
(n) The employment of Sue Hines by the Company, director of syndicated
production, has ceased.
-10-
<PAGE>
Schedule 3.9 - Employment Agreements.
- ------------------------------------
The Company has entered into employment agreements with the following
persons:
Rudy Nadilo (written)
Hugh Davis (verbal)
The Company has a verbal consulting agreement with the following
person:
R. Stuart Gross
The Company will pay bonuses to the following persons upon Closing:
Rudy Nadilo
Hugh Davis
Steve Cook
Paul Jacobsen
Tom Kruger
The Company has offer letters embodying employment terms with:
Alistair Bruce
Chris Hlavatovic
Diane Gerold
Tim Menzia
Michael Cox
Clint Klein
Belowis a list of the bonuses payable to each person who will receive
monies in connection with the completion of the transactions
contemplated by the Agreement:
Rudy Nadilo - $2,250,000
Hugh Davis - $750,000
Steve Cook - $125,000
Paul Jacobson - $125,000
Tom Kruger - $10,000
-11-
<PAGE>
Schedule 3.10 - Tax Matters.
- ---------------------------
(a)(i) & (ii) (1) The Company has engaged in certain new activities in 1998
which would require the filing of an income tax return in
Illinois. This return was not extended and is in the
process of being prepared.
(2) The Company has engaged in certain new activities in 1998
which may require the filing of an income tax return in
Virginia. The determination as to whether a filing
requirement exists has not yet been made. This return was
not extended.
(3) The Company has engaged in certain new activities in 1999
which may require the filing of an income tax return in
Missouri. The determination as to whether a filing
requirement exists has not yet been made.
(4) In accordance with industry standards, the Company has
historically not collected or remitted sales tax in any
state tax jurisdiction. Accordingly, no state sales tax
returns have been filed.
(5) As a result of the conversion to a new payroll service
provider in the second quarter of 1998, the Company did
not meet its quarterly payroll filing requirement with the
Internal Revenue Service. The Company is in the process of
filing the required form(s). The related withholding taxes
were remitted.
(c)(ii)(A) (1) No provision for deferred federal Income Taxes has been
made on the Latest Balance sheet and the Latest Compiled
Balance Sheet, and the Books and Records of the Company.
Due to the flow-through nature of the S Corporation, no
entity level tax is imposed for federal purposes. The tax
related to the net income of the S Corporation is born by
the shareholder.
(2) There is an entity level tax imposed on S corporations by
California, Connecticut and Illinois. No provision for
deferred state Income Taxes has been made on the Latest
Balance sheet and the Latest Compiled Balance Sheet, and
the Books and Records of the Company.
(c)(ii)(B) (1) NO provision for deferred federal Income Taxes has been
made on the Books and Records of the Company for periods
beginning on or after the Latest Balance Sheet Date and
the Latest Compiled Balance Sheet, including for Taxes
incurred as a result of or in connection with the
transactions contemplated hereby. Due to the flow-through
nature of the S Corporation, no entity level tax is
imposed for federal purposes. The tax related to the net
income of the S Corporation is born by the shareholder.
(2) There is an entity level tax imposed on S corporations by
California, Connecticut and Illinois. No provision for
deferred state Income Taxes has been made on the Books and
Records of the Company for periods beginning on or after
the Latest Balance Sheet Date and the Latest Compiled
Balance Sheet, including for Taxes incurred as a result of
or in connection with the transactions contemplated
hereby.
(c)(v) (1) See disclosure for Section (a)(ii)(5) above.
-12-
<PAGE>
Schedule 3.11 (a) - ERISA Compliance.
- ------------------------------------
The Company has the following employee plans:
401(k) plan: non-matching. This is a prototype plan which is administered by
Kissel, Kneale and Tobin.
Comprehensive group medical and dental insurance (including short term
disability). The policy is held by Consulting, and the Company's employees will
not be covered as of Closing.
Workers' and unemployment compensation. The policy is underwritten by Traveler's
for Consulting, and the Company's employees will not be covered as of Closing.
Life and accidental death and dismemberment insurance. The policy is held by
Consulting, and the Company's employees will not be covered as of Closing.
Section 125 Plan. This is a prototype plan administered by the Company.
-13-
<PAGE>
Schedule 3.12 - Title to Assets, Properties and Rights and Related Matters.
- --------------------------------------------------------------------------
All of the Company's assets are covered by a lien in favor of Fleet
Bank pursuant to a Line of Credit. (See Schedule 3.5)
The Company leases computer network infrastructure from Equilease
Financial Service pursuant to a lease dated July 29, 1998, and has
granted a security interest in such infrastructure to the lessor.
The lessor requires maintenance of certain levels of insurance,
which Consulting fulfilled by naming lessor as an additional
insured on its general liability policy.
The Company leases computer network infrastructure from Colonial
Pacific Corporation pursuant to a lease dated June 21, 1998, and
has granted a security interest in such infrastructure to the
lessor. The lessor requires maintenance of certain levels of
insurance, which Consulting fulfilled by naming lessor as an
additional insured on its general liability policy.
-14-
<PAGE>
Schedule 3.13 - Real Property Owned or Leased.
- ---------------------------------------------
(a) The Company leases 803 square feet of office space at 116 New
Montgomery Street, Suite 220, San Francisco, CA 94105, from 116
New Montgomery Associates, LLC ("Landlord"). Such lease requires
that the Company provide Landlord with 30 days written notice
prior to a change of control (as defined therein) of the tenant,
and also requires the Company to qualify to do business in the
State of California within 60 days of lease execution; the Company
is seeking a waiver of these requirements.
The Company shares office space with Consulting at 274 Riverside
Avenue, Westport, Connecticut ("Westport Premises") which is
leased from 274 Riverside Associates, L.L.C.
(b) (v) Strategic Focus, Inc ("SFI") uses conference room space at the
Westport Premises.
(vi) Strategic Focus, Inc ("SFI") uses conference room space at
the Westport Premises.
-15-
<PAGE>
Schedule 3.14 - Intellectual Property.
- -------------------------------------
(b) PATENTS
FocusChat (patent pending)
Mindstorm (patent pending)
NetTap (patent in development for filing)
TRADEMARKS
Digital Consumer
Digital Voter
FieldSource
FocusChat
Interactive Insights
Mindstorm
NetReach
NetTap
Research Revolution
Vets & Pets Syndicated Services
What They're Thinking Online
Dragon
Goose
NetCatch
Tradeshow Tracker
Domain Names
greenfieldonline.com
greenfieldcentral.com
surveycenter.com
tradeshowtracker.com
iquestion.com
Custom Software
FocusChat
Mindstorm
NetTap
Survey Wizard
iQuestion
SOFTWARE LICENSE AGREEMENT
The Company licenses eShare Technologies' expression chat engine to run the
FocusChat product (2-year license).
(b) The following Persons have been granted rights to use the Company's
Intellectual Property Rights:
Strategic Focus, Inc. licenses rights to Focus Chat software.
(d) The Company's users of Microsoft software may exceed the permitted number of
users under the Company's seat license.
(e) The Company has received the following infringement claims:
CyberGold claim
-16-
<PAGE>
The Company has received letters dated December 5, 1998 and February 8, 1999,
from CyberGold, Inc. and its attorneys, respectively, alleging that
Company's process of rewarding computer users for paying attention to
"negatively priced" information distributed over a computer network
infringes on United States Patent No. 5,794,210, titled "Attention
Brokerage" issued to CyberGold, Inc.
(g) All custom software/patents or patents pending are inventions of Hugh Davis,
an employee of the Company, and all rights have been transferred to the
Company.
-17-
<PAGE>
Schedule 3.15 -Agreements, No Defaults, Etc.
(a) The Company is a party to the following agreements:
(i) See Contracts set forth in Schedule 3.9
(ii) Agreements with iGain, Strategic Focus, Inc. ("SFI") and
Consulting
Officer loans payable to Andrew Greenfield and amounts due to
Consulting.
Issuance of a Demand Note payable to the Shareholder in the
principal amount of $10,000.
(iv) Fleet Bank - Line of Credit: The Company is a guarantor.
(viii) The Company is working pursuant to an unexecuted contract with
Forrester Research, Inc. which prevents the Company from:
supplying custom quantitative research data or services to, or
entering into a research partnership with, the parties named
therein; and competing, either singly or with a partner, against
certain Forrester studies described therein. The Company will also
consult with Forrester as to the potential conflict with any
studies proposed by Consulting that could compete with the
Forrester studies named therein.
The Company, pursuant to an executed term sheet with Network Event
Theatre, Inc. ("NET"), may not use NET's Pulsefinder market
research service or website to directly aid a competitor of NET,
nor solicit the employees of NET.
The Company, pursuant to a pending contract with FSA
International, Inc. ("FSA"), may not use any aspect of the
relationship created thereby to aid a competitor of FSA, nor
solicit the employees of FSA.
The Company, pursuant to an executed contract with Value Added
Interaction, Inc. ("VAI"), may not use any aspect of the
relationship created thereby to aid a competitor of VAI, nor
solicit the employees of VAI.
The Company, pursuant to a pending contract with A.C. Nielsen
International, Inc. ("ACN"), may not use any aspect of the
relationship created thereby to aid a competitor of ACN, nor
solicit the employees of ACN.
The Company, pursuant to a pending contract with Survey Sampling,
Inc. ("SSI"), may not use any aspect of the relationship created
thereby to aid a competitor of SSI, nor solicit the employees of
SSI.
In addition, the Company has entered into non-disclosure
agreements with the foregoing parties and others.
(ix) (a) The Company leases computer network infrastructure from
Equilease Financial Service pursuant to a lease dated July 29,
1998. The lessor requires maintenance of certain levels of
insurance, which Consulting fulfilled by naming lessor as an
additional insured on its general liability policy.
The Company leases computer network infrastructure from Colonial
Pacific Corporation pursuant to a lease dated June 21, 1998. The
lessor requires maintenance of certain levels of insurance, which
Consulting fulfilled by naming lessor as an additional insured on
its general liability policy.
(b) The Company leases two Minolta copiers from Fidelity Leasing
at a rate of $742 per month for a term of 30 months commencing
September 1998.
The Company leases two Dell computers from Sanwa Leasing
Corporation at a rate of $1,393 per month for a term of 36 months
commencing June 1997. The lease incorrectly identifies Consulting
as the Lessee.
-18-
<PAGE>
(x) The following is a list of all work in process as of March 31,
1999:
- --------------------------------------------------------------------------------
Job ID Amount Job Description
- --------------------------------------------------------------------------------
00199XRXD -22,500.00 Xerox
00299CWPD -16,364.00 Carter Products
01699BRID -3,668.00 Brittain Assoc
02099LIZSD -21,150.00 Liz Claiborne
02599QUAD -9,750.00 Quaker
- --------------------------------------------------------------------------------
02899DSCD -4,500.00 Novus Services
- --------------------------------------------------------------------------------
04399P&GD -6,000.00 Proctor & Gamble
- --------------------------------------------------------------------------------
04499COMD 8,000.00 Columbia House
- --------------------------------------------------------------------------------
04799UNMD -7,000.00 Unimark
- --------------------------------------------------------------------------------
04899CUPD -4,000.00 Cliff Freeman
- --------------------------------------------------------------------------------
05099LIND -2,700.00 Lincoln Snacks
- --------------------------------------------------------------------------------
05299MESD -3,000.00 MES Consulting
- --------------------------------------------------------------------------------
05499ASID -3,300.00 ASI
- --------------------------------------------------------------------------------
05999AMXD -11,000.00 American Express
- --------------------------------------------------------------------------------
06199FIDD -6,950.00 Fidelity
- --------------------------------------------------------------------------------
06299TCID -29,200.00 Ted Chin
- --------------------------------------------------------------------------------
06799CPQD -5,00.00 Compaq
- --------------------------------------------------------------------------------
06999EASD -5,500.00 Easter Seals
- --------------------------------------------------------------------------------
07099AMXD -3,000.00 American Express
- --------------------------------------------------------------------------------
07199AMXD -16,500.00 American Express
- --------------------------------------------------------------------------------
07499SRSD -4,500.00 Sears
- --------------------------------------------------------------------------------
07599CHSD -3,500.00 Chase Manhattan
- --------------------------------------------------------------------------------
07699BOZD -7,000.00 Bozell
- --------------------------------------------------------------------------------
07799SHID -27,000.00 Citibank
- --------------------------------------------------------------------------------
07999SHID -5,000.00 Shandwick
- --------------------------------------------------------------------------------
08099SPRD -2,500.00 Sprint PCS
- --------------------------------------------------------------------------------
08229CRRD -10,000.00 Cooper Roberts
- --------------------------------------------------------------------------------
08399DDCD -25,000.00 Data Development
- --------------------------------------------------------------------------------
08499MULD -3,500.00 Mullen AD
- --------------------------------------------------------------------------------
08599AIRD -17,500.00 Airtouch Cellular
- --------------------------------------------------------------------------------
08699LEVD -5,500.00 Unilever
- --------------------------------------------------------------------------------
08798YARD -19,800.00 Young & Rubicam
- --------------------------------------------------------------------------------
08899EHPD -4,500.00 West Hill
- --------------------------------------------------------------------------------
08999WHPD -10,000.00 Data Development
- --------------------------------------------------------------------------------
19098XEXD -8,000.00 Xerox
- --------------------------------------------------------------------------------
26898RALD -78,695.00 Ralston Purina
- --------------------------------------------------------------------------------
28598RALD -200.00 Intel
- --------------------------------------------------------------------------------
29798ABBO -19,091.19 Abbott Labs
- --------------------------------------------------------------------------------
30798SPRD -13,500.00 Sprint
- --------------------------------------------------------------------------------
31198BFBD -10,000.00 Brown Forman Bev
- --------------------------------------------------------------------------------
32598SPRD -15,002.00 Sprint
- --------------------------------------------------------------------------------
32698MRLD -22,500.00 Merial
- --------------------------------------------------------------------------------
The Company has committed to host a conference in San Diego in
September 1999 which is expected to cost $225,000. To date the
Company has paid $15,000.
See Schedule 3.13 for a description of the Company's real property
leases.
(b) Pursuant to the terms of its San Francisco office lease, the
Company was required to be qualified to conduct business in the
State of California within 60 days of execution of such lease. The
Company
-19-
<PAGE>
did not fulfill this requirement.
-20-
<PAGE>
Schedule 3.16 - Compliance with Laws.
No state sales, use, income or corporate tax expenses have been
recorded except for Connecticut. (See Schedule 3.10(a)(i)and(ii)
which is incorporated into this Schedule 3.16 by reference as if
stated herein in its entirety.)
-21-
<PAGE>
Schedule 3.17 - Litigation, Etc.
The following claim has been threatened against the Company:
The Company has received letters dated December 5, 1998 and February
8, 1999, from CyberGold, Inc. and its attorneys, respectively,
alleging that the Company's process of rewarding computer users
for paying attention to "negatively priced" information
distributed over a computer network infringes on United States
Patent No. 5,794,210, titled "Attention Brokerage" issued to
CyberGold, Inc.
-22-
<PAGE>
Schedule 3.19 - Labor Relations; Employees.
------------------------------------------
(a)(vi) The Company's Books and Records do not reflect the following
accruals:
The Company has not accrued bonus payments contingent upon
Closing, bonus vacation, sales commissions or 401k payments
payable to date.
(b) The following is a list of each employee, along with their current
base salaries and wage rates.
Name Current Base Salary
---- -------------------
Rudy Nadilo $200,000
Stephen Cook 120,000
Susan Rosovsky 95,000
Leigh-Brindeland Bell 90,000
Hugh Davis 90,000
Alastair Bruce 90,000
Diane Gerold 100,000
Susan Hines 88,000
Margot Turk 90,000
Ellen Guion 85,000
The transactions contemplated under the Agreement will result in bonus
payments to Rudy Nadilo, Hugh Davis, Steve Cook, Paul Jacobson and
Tom Kruger. See Schedule 3.9.
(c) The transactions contemplated under the Agreement will result in
bonus payments to Rudy Nadilo, Hugh Davis, Steve Cook, Patti
Jacobson and Tom Kruger. See Schedule 3.9.
-23-
<PAGE>
Schedule 3.21 - Change in Control.
- ---------------------------------
Upon the completion of the transactions contemplated by the Stock
Purchase and Redemption Agreement and the Related Documents, Rudy
Nadilo, Hugh Davis, Steve Cook, Paul Jacobson and Tom Kruger will
receive certain bonus payments. See Schedule 3.9.
-24-
<PAGE>
Schedule 3.24 - Brokers.
- -----------------------
The following brokers have been employed in connection with the
Agreement:
Deloitte & Touche LLP
-25-
<PAGE>
Schedule 3.25 - Related Transactions
- ------------------------------------
The Company has Contracts with the following affiliates:
1997 and 1998 loans from Shareholder and Consulting to the Company.
Issuance of Demand Note payable to the Shareholder in the principal
amount of $10,000.
Hugh Davis' interest in iGain, Inc. ("iGain").
The Company maintains service and trade relationships with four
related parties as set forth below. Three of these parties are
related by common ownership positions held by the Shareholder,
with the fourth controlled by a related party business partner of
the Shareholder.
1. Consulting
Consulting provides qualitative marketing research services and is
entirely owned by the Shareholder. Consulting and the Company are
headquartered within the same leased building in Westport,
Connecticut, and share certain overhead personnel in IT, finance
and administrative positions.
2. SFI
SFI is entirely owned by the Shareholder and leases specialized
facility space used to host focus groups primarily employing
Consulting moderators. The Company utilizes SFI's facilities in
connection with its FocusChatTM product line.
3. iGain
iGain, which is 50 percent owned by the Shareholder, provides
fulfillment services relating to online payments, iGain provides
services to the Company on an exclusive basis in connection with
the payment of survey incentive awards.
4. Imperium Solutions ("Imperium")
Imperium provides software programming and development services to the
Company, and is one of the Company's largest vendors as measured
by invoiced billings. Imperium is controlled by the Shareholder's
partner in iGain.
The Company is a guarantor on a line of credit issued by Fleet Bank for
Consulting.
-26-
<PAGE>
Schedule 3.27- Accounts and Notes Receivable.
Attached hereto is a complete aging schedule of all of the Company's
accounts receivable as of the date of the Agreement
-27-
<PAGE>
Greenfield Online Aged Receivables As
of Mar 31, 1999
<TABLE>
<CAPTION>
Invoice
Customer ID No. 0-30 31-60 61-90 Over 90 days Amount Due Date Age
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ABBOTT LABORATORIES 1491 12,550.00 12,550.00 3/29/1999 2
ABBOTT LABORATORIES 12,550.00 12,550.00
AC NIELSEN 1312 1,500.00 1,500.00 90
1330 4,002.00 4,002.00 90
1374 10,000.00 10,000.00 1/19/1999 71
1383 1,993.00 1,993.00 1/21/1999 69
AC NIELSEN 17,500.00 17,500.00
AIRTOUCH CELLULAR 1502 15,000.00 15,000.00 3/31/1999
AIRTOUCH CELLULAR 15,000.00 15,000.00
AMERICAN EXPRESS 1456 18,700.00 18,700.00 3/10/1999 21
1475 13,000.00 13,000.00 3/22/1999 9
1474 9,340.00 9,340.00 3/22/1999 9
AMERICAN EXPRESS 41,040.00 41,040.00
BOZELL 1305 11,673.00 11,673.00 121
1417 5,827.00 5,827.00 2/22/1999 37
1489 15,300.00 15,300.00 3/29/1999 2
BOZELL 15,300.00 5,827.00 11,673.00 32,800.00
</TABLE>
-28-
<PAGE>
Greenfield Online Aged Receivables As
of Mar 31, 1999
<TABLE>
<CAPTION>
Invoice
Customer ID No. 0-30 31-60 61-90 Over 90 days Amount Due Date Age
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BRITTAIN ASSOCIATES 1421 11,000.00 11,000.00 2/19/1999 40
BRITTAIN ASSOCIATES 11,000.00 11,000.00
CAMPOS 1481 14,750.00 14,750.00 3/24/1999 7
CAMPOS 14,750.00 14,750.00
CHASE MANHATTAN MORT 1490 6,700.00 6,700.00 3/31/1999
CHASE MANHATTAN MORT 6,700.00 6,700.00
CITIBANK 1395 5,003.00 5,003.00 1/28/1999 62
1444 69,300.00 69,300.00 3/4/1999 27
1486 36,000.00 36,000.00 3/26/1999 5
CITIBANK 105,300.00 3,003.00 110,303.00
CLIFF FREEMAN 1423 8,450.00 8,450.00 2/16/1999 43
CLIFF FREEMAN 8,450.00 8,450.00
COMPAQ COMPUTER CORP 1487 13,300.00 13,300.00 3/26/1999 5
COMPAQ COMPUTER CORP 13,300.00 13,300.00
COOPER-ROBERTS RESEA 1409-R 6,670.00 6,670.00 3/3/1999 28
1479 3,330.00 3,330.00 3/24/1999 7
1496 12,000.00 12,000.00 3/30/1999 1
</TABLE>
-29-
<PAGE>
Greenfield Online Aged Receivables As
of Mar 31, 1999
<TABLE>
<CAPTION>
Invoice
Customer ID No. 0-30 31-60 61-90 Over 90 days Amount Due Date Age
<S> <C> <C> <C> <C> <C> <C> <C> <C>
COOPER-ROBERTS RESEA 22,000.00 22,000.00
CRYPTOLOGIC 1374 2,380.00 2,380.00 91
1382 105 105 1/20/1999 70
CRYPTOLOGIC 105 2,380.00 2,485.00
DATA DEVELOPMENT COR 1495 26,700.00 26,700.00 3/30/1999 1
1501 11,700.00 11,700.00 3/31/1999
DATA DEVELOPMENT COR 38,400.00 38,400.00
DATAMONITOR 1361 25,013.00 25,013.00 1/8/1999 82
25,013.00 25,013.00
DOUBLEDAY DIRECT 1472 20,000.00 20,000.00 3/18/1999 13
1476 9,250.00 9,250.00 3/24/1999 7
1494 8,000.00 8,000.00 3/30/1999 1
DOUBLEDAY DIRECT 37,250.00 37,250.00
DYG, INC. 1379 9,672.00 9,672.00 1/19/1999 71
1448 4,828.00 4,828.00 3/3/1999 28
DYG, INC. 4,828.00 9,672.00 14,500.00
EASTER SEALS 1473 11,670.00 11,670.00 3/18/1999 13
</TABLE>
-30-
<PAGE>
Greenfield Online Aged Receivables As
of Mar 31, 1999
<TABLE>
<CAPTION>
Invoice
Customer ID No. 0-30 31-60 61-90 Over 90 days Amount Due Date Age
<S> <C> <C> <C> <C> <C> <C> <C> <C>
EASTER SEALS 11,670.00 11,670.00
EGUARD 1432 7,244.00 7,244.00 2/22/1999 37
1500 5,000.00 5,000.00 3/31/1999
EGUARD 5,000.00 7,244.00 12,244.00
FIDELITY INVESTMENTS 1485 18,000.00 18,000.00 3/29/1999 2
FIDELITY INVESTMENTS 18,000.00 18,000.00
FORRESTER RESEARCH 1397 40,000.00 40,000.00 1/29/1999 61
1424 3,335.00 3,335.00 2/22/1999 37
1418 750 750 2/22/1999 37
1464 2,600.00 2,600.00 3/12/1999 19
1467 1,665.00 1,665.00 3/16/1999 15
1478 1,300.00 1,300.00 3/24/1999 7
FORRESTER RESEARCH 5,565.00 4,085.00 40,000.00 49,650.00
GREY ADVERTISING 1483-RV 2,800.00 2,800.00 3/30/1999 1
GREY ADVERTISING 2,800.00 2,800.00
HEWLETT PACKARD 1440 7,070.00 7,070.00 2/26/1999 33
HEWLETT PACKARD 7,070.00 7,070.00
</TABLE>
-31-
<PAGE>
Greenfield Online Aged Receivables As
of Mar 31, 1999
<TABLE>
<CAPTION>
Invoice
Customer ID No. 0-30 31-60 61-90 Over 90 days Amount Due Date Age
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INTERBRAND 1404 8,338.00 8,338.00 2/5/1999 54
1468 5,162.00 5,162.00 3/16/1999 15
INTERBRAND 5,162.00 8,338.00 13,500.00
JD POWER & ASSOCIATE 1453 2,500.00 2,500.00 3/8/1999 23
JD POWER & ASSOCIATE 2,500.00 2,500.00
JOTTER TECHNOLOGIES 1435 7,850.59 7,850.59 2/26/1999 33
JOTTER TECHNOLOGIES 7,850.59 7,850.59
LINCOLN SNACKS CO. 1443 8,470.00 8,470.00 3/2/1999 29
LINCOLN SNACKS CO. 8,470.00 8,470.00
LIZ CLAIBORNE 1406 10,575.00 10,575.00 2/18/1999 41
LIZ CLAIBORNE 10,575.00 10,575.00
MARKETING CORPORATION 1384 4,400.00 4,400.00 1/22/1999 68
1480 2,200.00 2,200.00 3/24/1999 7
MARKETING CORPORATION 2,200.00 4,400.00 6,600.00
MES CONSULTING 1445 13,340.00 13,340.00 3/2/1999 29
MES CONSULTING 13,340.00 13,340.00
MICRON ELECTRONICS I 1482 1,500.00 1,500.00 3/24/1999 7
</TABLE>
-32-
<PAGE>
Greenfield Online Aged Receivables As
of Mar 31, 1999
<TABLE>
<CAPTION>
Invoice
Customer ID No. 0-30 31-60 61-90 Over 90 days Amount Due Date Age
<S> <C> <C> <C> <C> <C> <C> <C> <C>
MICRON ELECTRONICS I 1,500.00 1,500.00
MICROSOFT 1465 9,590.00 9,590.00 3/16/1999 15
MICROSOFT 9,590.00 9,590.00 3/30/1999 1
MULLEN ADVERTISING 1497 9,000.00 9,000.00 3/30/1999 1
MULLEN ADVERTISING 9,000.00 9,000.00
ORLANDO 1399 7,816.00 7,816.00 1/29/1999 61
ORLANDO 7,816.00 7,816.00
RALSTON PURINA
314/982-3440 1446 7,250.00 7,250.00 3/3/1999 28
1484 9,375.00 9,375.00 3/24/1999 7
RALSTON PURINA 16,625.00 16,625.00
RESEARCH SPECTRUM 1243 5,000.00 5,000.00 154
RESEARCH SPECTRUM 5,000.00 5,000.00
SEARS ROEBUCK & CO. 1488 13,000.00 13,000.00 3/29/1999 2
SEARS ROEBUCK & CO. 13,000.00 13,000.00
SHANDWICK INTERNATIONAL 1439 4,000.00 4,000.00 2/26/1999 33
1469 6,000.00 6,000.00 3/18/1999 13
1492 10,000.00 10,000.00 3/30/1999 1
</TABLE>
-33-
<PAGE>
Greenfield Online Aged Receivables As
of Mar 31, 1999
<TABLE>
<CAPTION>
Invoice
Customer ID No. 0-30 31-60 61-90 Over 90 days Amount Due Date Age
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SHANDWICK INTERNATIONAL 16,000.00 4,000.00 20,000.00
SNET 1299 500 500 126
1437 6,670.00 6,670.00 2/26/1999 33
SNET 6,670.00 500 7,170.00
SPRINT 1461 3,600.00 3,600.00 3/12/1999 19
SPRINT 3,600.00 3,600.00
SPRINT SPECTRUM PCS 1493 8,300.00 8,300.00 3/30/1999 1
SPRINT SPECTRUM PCS 8,300.00 8,300.00
STARBUCKS 1415 9,333.00 9,333.00 2/16/1999 43
STARBUCKS 9,333.00 9,333.00
STRATEGIC FOCUS INC. 1462 500 500 3/11/1999 20
1463 500 500 3/11/1999 20
STRATEGIC FOCUS INC. 1,000.00 1,000.00
TBWA-CHIAT-DAY, INC. 1427 7,160.00 7,160.00 2/16/1999 43
TBWA-CHIAT-DAY, INC. 7,160.00 7,160.00
TD BANK 1301 5,525.73 5,525.73 121
TD BANK 5,525.73 5,525.73
</TABLE>
-34-
<PAGE>
Greenfield Online Aged Receivables As
of Mar 31, 1999
<TABLE>
<CAPTION>
Invoice
Customer ID No. 0-30 31-60 61-90 Over 90 days Amount Due Date Age
<S> <C> <C> <C> <C> <C> <C> <C> <C>
TED CHIN & CO. 1460 20,000.00 20,000.00 3/11/1999 20
TED CHIN & CO. 20,000.00 20,000.001
U S WEST 1295 15,341.00 15,341.00 127
1329 3,200.00 3,200.00 105
1403 8,724.60 8,724.60 2/5/1999 54
U S WEST 8,724.60 18,541.00 27,265.60
UNILEVER HBC 1498 5,700.00 5,700.00 3/30/1999 1
UNILEVER HBC 5,700.00 5,700.00
UNIMARK 1441 10,340.00 10,340.00 2/26/1999 33
UNIMARK 10,340.00 10,340.00
UNITED DISTILLERS-NA 1433 11,400.00 11,400.00 2/23/1999 36
1451 8,670.00 8,670.00 3/4/1999 27
1471 4,330.00 4,330.00 3/16/1999 15
UNITED DISTILLERS-NA 13,000.00 11,400.00 24,400.00
US WEST MEDIA GRP 1455 8,000.00 8,000.00 3/8/1999 23
1477 4,000.00 4,000.00 3/24/1999 7
US WEST MEDIA GRP 12,000.00 12,000.00
</TABLE>
-35-
<PAGE>
Greenfield Online Aged Receivables As
of Mar 31, 1999
<TABLE>
<CAPTION>
Invoice
Customer ID No. 0-30 31-60 61-90 Over 90 days Amount Due Date Age
<S> <C> <C> <C> <C> <C> <C> <C> <C>
VANTAGE INTERNATIONAL
415-732-1743 1377 6,000.00 6,000.00 1/19/1999 71
VANTAGE INTERNATIONAL 6,000.00 6,000.00
WEST HILL PARTNERS 1459 8,670.00 8,670.00 3/11/1999 20
1499 7,700.00 7,700.00 3/31/1999
WEST HILL PARTNERS 16,370.00 16,370.00
REPORT TOTAL 546,810.00 128,067.19 115,509.00 43,619.73 834,005.92
</TABLE>
-36-
<PAGE>
The following account is in jeopardy of non-payment:
Research Spectrum 10/28/98 $5,000
The Company has made no reserve for bad debts recorded.
-i-
<PAGE>
Schedule 3.29 - Bank Accounts; Power of Attorney.
- ------------------------------------------------
The following is a complete list of the Company's bank accounts and
signatories thereunder:
Fleet Bank; Account No. 9402887901; Authorized signatories - Andrew
Greenfield, Rudy Nadilo, Hugh Davis and Ron Bergami.
-ii-
<PAGE>
4.1 Title to Shares
- -------------------
N/A
-iii-
<PAGE>
4.4 Consents; Permits
- ---------------------
None.
-iv-
<PAGE>
EXECUTION COPY
ESCROW AGREEMENT (this
"Agreement") dated as of May 17,
1999, by and among GREENFIELD
HOLDINGS, LLC, a Delaware limited
liability company (the
"Investor"), ANDREW GREENFIELD, an
individual (the "Shareholder"),
GREENFIELD ONLINE, INC., a
Connecticut corporation (the
"Company"), and SunTrust BANK,
Atlanta (the "Escrow Agent").
The Investor, the Shareholder, and the Company are parties to
a Stock Purchase and Redemption Agreement, dated as of May 12, 1999 (as amended,
the "Purchase Agreement"). This Agreement is being executed and delivered in
connection with the transactions contemplated by the Purchase Agreement.
Capitalized terms used but not otherwise defined in this Agreement shall have
the meanings given such terms in the Purchase Agreement as in effect on the date
of this Agreement.
ACCORDINGLY, the parties hereto hereby agree as follows:
1. Certain Defined Terms.
As used in this Agreement, the following terms shall have the
following meanings:
"Claim" means any claim for indemnification of Losses asserted
by the Investor on its own behalf or on behalf of the Company against the Escrow
Account (as defined below) in accordance with and subject to the limitations set
forth in Article VIII of the Purchase Agreement and pursuant to this Agreement.
"Direction Letter" means a joint letter of direction executed
by the Investor and the Shareholder and delivered to the Escrow Agent. A
Direction Letter shall (i) clearly identify itself as a Direction Letter
delivered pursuant to this Agreement, and (ii) may direct the Escrow Agent to
pay all or a specified portion of the Escrow Funds (as defined below) (and, if
less than all of the Escrow Funds, the Direction Letter shall clearly state the
"net amount payable") to a specified Person or Persons at a specified time or
times and in a specified manner or manners, and (iii) may contain such other
directions to the Escrow Agent as may be required by this Agreement, reasonably
requested by the Escrow Agent or mutually agreeable to the Investor and the
Shareholder.
"Release Date" means the first anniversary of the Closing
Date.
2. Appointment of Escrow Agent. The Company, the Shareholder and
the Investor hereby designate and appoint the Escrow Agent to serve in
accordance with the terms and conditions of this Agreement, and the Escrow Agent
hereby agrees to act as such, upon the terms and conditions provided in this
Agreement.
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3. Escrow Funds.
(a) Deposit of Escrow Funds. Concurrently with the execution
and delivery of this Agreement, the Company shall deliver or cause to be
delivered to the Escrow Agent, in accordance with the terms of the Purchase
Agreement, $1,600,000 in cash into an escrow account to be known as the "Escrow
Account." The amount deposited into the Escrow Account, together with any
proceeds of investments thereof (including any Escrow Income (as defined in
Section 3(e)), that may be held in the Escrow Account from time to time are
hereinafter referred to collectively as "Escrow Funds." The Escrow Agent shall
keep appropriate records to reflect the current value from time to time of the
Escrow Funds, including appropriate adjustments for disbursements and income
earned or losses in respect thereof, if any. Subject to the Escrow Agent's right
to resign pursuant to Section 6 hereof, all Escrow Funds shall be held by the
Escrow Agent pursuant to this Agreement as a source of recourse for certain
indemnity obligations under the Purchase Agreement. Without limiting the
foregoing, the Escrow Agent will not make any payment or distribution of Escrow
Funds except as and in the manner expressly provided by this Agreement.
(b) Rights to Escrow Funds. Except as expressly provided
herein, no Person shall have any right, title or interest in or possession of
any of the Escrow Funds. Therefore, except as otherwise provided in Section 3(f)
hereof, (i) neither the Company, the Investor nor the Shareholder shall have the
ability to pledge, convey, hypothecate or grant a security interest in any
portion of the Escrow Funds unless and until such assets have been disbursed to
such party in accordance with Section 4 or Section 5 below and (ii) until
disbursed pursuant to Section 4 or Section 5 below, the Escrow Agent shall be in
sole possession of the Escrow Funds and will not act or be deemed to act as
custodian for any party for purposes of perfecting a security interest therein.
Accordingly, except as provided in Section 3(f) hereof, no Person shall have any
right to have or to hold any of the Escrow Funds as collateral for any
obligation or be able to obtain a security interest in any assets (tangible or
intangible) contained in or relating to the Escrow Funds.
(c) Payments from Escrow Funds. Any payment to be made by the
Escrow Agent pursuant to this Agreement shall be made by check or wire transfer
(upon receipt of written wire transfer instructions of the recipient) out of the
Escrow Account and the Escrow Agent shall make such payment out of and to the
extent of any cash on hand from the Escrow Account before liquidating
prematurely any Permitted Investments to obtain cash to make such payment.
(d) Investment of Escrow Funds. From time to time and in the
same manner used to make investments for its own account or for the account of
others for which it holds funds in escrow, the Escrow Agent will invest any cash
in the Escrow Funds in Permitted Investments. As used in this Agreement,
"Permitted Investments" means (i) direct obligations of the United States or any
agency thereof, or obligations guaranteed by the United States or any agency
thereof, (ii) commercial paper rated at least A-1 by Standard & Poor's
Corporation and P-1 by Moody's Investors Service, Inc., (iii) time deposits
with, including certificates of deposit issued by, any office located in the
United States of any bank or trust company which is organized
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under the laws of the United States or any State thereof and has capital,
surplus and undivided profits aggregating at least $500,000,000 and which issues
(or the parent of which issues) certificates of deposit or commercial paper with
a rating described in clause (ii) above (a "Qualified Financial Institution"),
(iv) repurchase agreements with a Qualified Financial Institution, or (v) the
Federated Treasury Money Market Obligation Fund; provided that, in each case,
any investment referred to in clauses (i) through (iv) above matures within
ninety (90) days or less from the date of acquisition thereof by the Escrow
Agent.
(e) Escrow Income. The Escrow Agent shall retain as part of
the Escrow Funds all income, interest, increments and gains of all kinds earned
on funds in the Escrow Account (collectively referred to herein as "Escrow
Income").
(f) Security Interests in Escrow Funds. It is the intent of
the parties hereto that the Investor and the Shareholder shall have no interest
in the Escrow Funds (other any rights to be enforced solely on behalf of the
Company in accordance with this Agreement) and that neither a voluntary or
involuntary case under any applicable bankruptcy, insolvency or similar law nor
the appointment of a receiver, trustee, custodian or similar official in respect
of the Investor or the Shareholder (any of which is referred to herein as a
"Bankruptcy Event") shall give rise to any other interest in the Escrow Funds or
affect, modify, convert or otherwise change such interest. Accordingly, in order
to assure the foregoing result even if it is determined by a court of competent
jurisdiction (whether or not in connection with a Bankruptcy Event) that any
such Person has an interest in the Escrow Funds that is greater than such
interest, the parties hereto agree as follows:
(i)the Investor hereby grants (effective as of the
date hereof) to the Company a first priority security interest in, and
hereby pledges and assigns to the Company, all of its right, title and
interest in the Escrow Funds, if any, to secure the Investor's
obligations hereunder. The Escrow Agent hereby agrees to act as bailee
and possessory agent on behalf of the Company in respect of the
Company's security interest in the Escrow Funds. The Escrow Agent
shall, upon receipt of indemnification satisfactory to it from the
Company for its fees and expenses incurred in connection with taking
such actions, take all actions as may be reasonably requested in
writing of it by the Company to further perfect or maintain the
security interest created by the Investor hereunder in the Escrow
Funds. Such security interest shall automatically be released with
respect to any funds properly distributed from the Escrow Funds
pursuant to the terms of this Agreement;
(ii)the Shareholder hereby grants (effective as of
the date hereof) to the Company a first priority security interest in,
and hereby pledges and assigns to the Company, all of his right, title
and interest in the Escrow Funds, if any, to secure the Shareholder's
obligations hereunder. The Escrow Agent hereby agrees to act as bailee
and possessory agent on behalf of the Company in respect of the
Company's security interest in the Escrow Funds. The Escrow Agent
shall, upon receipt of indemnification satisfactory to it from the
Company for its fees and expenses incurred in connection with taking
such actions, take all actions as may be reasonably requested in
writing of it by the Company to further perfect or maintain the
security interest created by the Shareholder hereunder in the Escrow
Funds. Such security interest shall automatically be released
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with respect to any funds properly distributed from the Escrow Funds
pursuant to the terms of this Agreement.
The parties hereto agree and acknowledge that the
establishment and maintenance of the Escrow Funds hereunder is intended to
constitute possession of the Escrow Funds for the purposes of perfecting the
security interests therein created by this Section 3(f).
(g) Waiver of Liens, Etc. Notwithstanding anything to the
contrary contained herein or under applicable law, the Escrow Agent hereby
waives all liens, rights of set off, security interests or any other
encumbrances whatsoever in respect of the Escrow Funds, as such may relate to
any obligation of the Shareholder or the Investor to the Escrow Agent.
4. Claims, Procedures and Payment from Indemnification Escrow
Account. The Escrow Funds in the Escrow Account shall be held and disposed of by
the Escrow Agent for the benefit of the Company, the Investor or the
Shareholder, as follows:
(a) General.
(i) The Investor shall notify the Escrow Agent, the
Company, and the Shareholder in writing of the details of any Claim in
respect of any Losses for which the Investor claims it or the Company
is entitled to indemnification from the Shareholder under the Purchase
Agreement. The Investor and the Shareholder agree to use good faith
efforts to resolve amicably all Claims, to respond to requests made by
the other as promptly as is reasonably practicable under the
circumstances and to provide each other with all information reasonably
requested by the other to enable the other to assess the basis for any
Claim (or any objection to the assertion of such a Claim), or the
magnitude of any Claim, asserted. Without limiting the foregoing, the
Shareholder shall respond in writing to any Claim asserted by the
Investor on behalf of the Company as promptly as is reasonably
practicable under the circumstances, but in all events within 30 days
after receipt by the Shareholder of a notice of Claim, specifying
either that (and the extent to which) the Shareholder consents to the
payment of such Claim asserted by the Investor on behalf of the Company
or that the Shareholder objects to the payment of such Claim and
stating its reasons therefor. The Shareholder will provide the Escrow
Agent with a copy of its written response to the Claim.
(ii) If (and to the extent that) the Shareholder
consents to the payment of a Claim, the Investor and the Shareholder
shall deliver, as promptly as is reasonably practicable under the
circumstances, but in all events within 30 days after receipt by the
Shareholder of notice of such Claim, to the Escrow Agent a Direction
Letter specifying the amount that the Shareholder has consented to be
paid to the Company or the Investor with respect to such Claim (to the
extent of such consent, an "Allowed Claim") and the date such payment
is due to be made to the Company from the Escrow Account. The Escrow
Agent shall pay the Allowed Claim out of the Escrow Account in
accordance with the Direction Letter. With respect to Allowed Claims
that constitute Third Party Claims, at the time when payment of such
Allowed Claim becomes due pursuant to the Purchase Agreement, the
Investor and the Shareholder will deliver a Direction Letter to the
Escrow Agent, and the Escrow Agent will make payment of such amount
from the
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Escrow Account pursuant to the Direction Letter.
(iii) If the Shareholder objects to the payment of a
Claim (or any portion thereof) and refuses to sign the Direction Letter
submitted to him by the Investor in connection with such Claim (or such
portion thereof) as provided in Section 4(a)(ii) above (each such Claim
or portion thereof being a "Disputed Claim"), then (A) the Investor and
the Shareholder will deliver a Direction Letter pursuant to Section
4(a)(ii) above with respect to the payment of the undisputed portion
(if any) of such Claim and (B) the Investor and the Shareholder shall
use their best efforts to resolve such Disputed Claim. If the parties
are unable to resolve the Disputed Claim within 15 days after the date
the Shareholder objects to the payment of the Disputed Claim, then such
Disputed Claim shall be settled in accordance with the dispute
resolution mechanisms provided for in Article VIII of the Purchase
Agreement (the mechanism provided for in Article VIII being referred to
as a "Proceeding"), provided that the prevailing party or parties (as
determined by the mediator or the court adjudicating an action brought
hereunder upon the failure of mediation) shall be entitled to receive
from the non-prevailing party or parties, and the non-prevailing party
or parties shall pay, all reasonable costs and expenses incurred by the
prevailing party or parties in connection with the resolution of the
Disputed Claim, including reasonable attorneys' fees and the fees and
expenses of the Escrow Agent to the extent that they relate solely
thereto (collectively, "Litigation Expenses"). Notwithstanding anything
to the contrary contained in this Agreement, Litigation Expenses shall
be governed in all respects by, and borne by the parties as set forth
in, this Section 4(a)(iii).
(iv) No later than two business days following the
final resolution of the Disputed Claim (whether by judgment, decree,
settlement or otherwise), the Investor and the Shareholder shall
deliver a Direction Letter to the Escrow Agent regarding payment of
such Disputed Claim and the Escrow Agent shall make payment out of the
Escrow Account in accordance with that Direction Letter.
(v) If the Shareholder fails to respond to the notice
of a Claim pursuant to Section 4(a)(i) within 30 days of the receipt of
such notice, the Investor shall redeliver such notice to the Escrow
Agent, the Company and the Shareholder accompanied by instructions for
the method and place of payment of such Claim in the event the
Shareholder again fails to respond. The Escrow Agent shall also
promptly deliver a copy of such second notice to the Shareholder upon
the Escrow Agent's receipt of same. If the Shareholder fails to respond
to such second notice within 15 days after being delivered by the
Escrow Agent, the Shareholder shall be deemed to have agreed to the
validity of the Claim for the full amount thereof and to have consented
to the payment thereof. The Escrow Agent shall make payment of such
amount from the Escrow Account pursuant to the instructions
accompanying the second notice from the Investor.
(b) Other. In addition to the foregoing procedure, the Escrow
Agent may make payments from the Escrow Account at any time, pursuant to and (i)
upon receipt by the Escrow Agent of any Direction Letter, or (ii) 30 days after
receipt by the Escrow Agent of any order, judgment or
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decree ordering the release of all or a specified portion of the Escrow Account,
accompanied by an opinion of counsel of the recipient to the effect that such
order, judgment or decree represents a final adjudication of the rights of the
parties by a court of competent jurisdiction, and that the time for appeal from
such order, judgment or decree has expired without an appeal having been
noticed, filed or perfected (a "Final Order").
(c) Limitation on Recourse to Escrow Account. Notwithstanding
anything to the contrary in this Agreement, the Company shall have recourse to
the Escrow Account only in respect of Claims; provided, however, that the
amounts available for payment of any Claim shall be limited as funds are
released from the Escrow Account in accordance with Section 5 below; and,
provided further, however, that the Company shall not have any recourse to the
Escrow Account in respect of any Claim which arises or is asserted after the
Release Date (whether or not any funds remain in escrow after the Release Date).
If the amount of any payment to be made with respect to any Claim or any
Disputed Claim resolved in the Investor's favor (on behalf of the Company)
exceeds the amount that is available therefor pursuant to this Section 4(c), the
Escrow Agent is hereby authorized to make payment to the Company upon receipt of
a Direction Letter or Final Order of the total amount available therefor out of
the Escrow Account and upon such payment, this Agreement shall terminate and the
Escrow Agent shall be released from any further duty or obligation hereunder.
5. Release of Escrow Funds.
(a) Release from Escrow Account. Not more than two business
days after the Release Date, the Investor shall deliver to the Shareholder a
schedule (the "Schedule of Claims") of outstanding Claims asserted by the
Investor on behalf of the Company on or before the Release Date, and the amount
with respect to each such Claim to be held in escrow until such Claim is
resolved. Such amount shall not exceed the greatest amount the Investor asserts
(on behalf of itself or on behalf of the Company in its reasonable good faith
discretion) is owing or, in the case of a then unliquidated Claim, could
reasonably expect to become owing, with respect to such Claim. Promptly (but in
any event within three (3) business days) after the Schedule of Claims is
produced, the Escrow Agent shall release from the Escrow Account and promptly
pay to the Shareholder the amount (if positive) by which the balance in the
Escrow Account exceeds the aggregate amount of all amounts payable with respect
to Claims listed on the Schedule of Claims. If the Investor fails to deliver a
Schedule of Claims within two days after the Release Date, the Escrow Agent
shall within three business days after the Release Date, release to the
Shareholder the balance in the Escrow Account which is not subject to any
Claims.
(b) Final Release from Escrow Account. Upon (i) the final
resolution of each Disputed Claim (if any), the Escrow Agent shall make payment
with respect to such Disputed Claim to the Company or the Investor, as the case
may be (unless such Disputed Claim is resolved in favor of the Shareholder, in
which case it shall remain as part of the Escrow Funds), and (ii) the final
resolution of all Claims that have been asserted by the Investor (on behalf of
itself or on behalf of the Company) on or before the Release Date, all amounts
remaining in the Escrow Account shall be paid over and distributed to the
Shareholder, this Agreement shall terminate, and the Escrow Agent shall be
released from any further duty or obligation hereunder.
(c) Payments. At any time the Escrow Agent is required to
distribute or pay over any amounts held by or received by it under any of the
provisions of this Agreement, such distribution and payment shall be effected by
either (i) issuance of the Escrow Agent's check in
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the appropriate amount payable to the appropriate Person or (ii) by wire
transfer to the appropriate person in immediately available funds.
6. Escrow Agent.
(a) Protection of Escrow Agent. In consideration of this
escrow by the Escrow Agent, the parties hereto agree that:
(i) the Company, the Shareholder and the Investor may
examine the Escrow Funds at any time during regular business hours and
upon prior written notice at the office of the Escrow Agent and the
Escrow Agent shall periodically provide a written accounting of the
Escrow Funds to the Company, the Shareholder and the Investor in
accordance with the Escrow Agent's standard practices, but in no event
less often than monthly;
(ii) the Escrow Agent's duties and responsibilities
shall be limited to those expressly set forth in this Agreement, and
the Escrow Agent shall not be subject to, nor obliged to recognize, any
other agreement between, or direction or instruction of, any or all of
the parties hereto even though reference thereto may be made herein;
provided, however, that this Agreement may be amended at any time or
times in accordance with Section 8(g) below;
(iii) subject to Sections 3(f) and 7(e) hereof, no
assignment of the interest of any of the parties or their successors
shall be binding upon the Escrow Agent unless and until written
evidence of such assignment shall be filed with and accepted by the
Escrow Agent;
(iv) the Escrow Agent shall exercise the same degree
of care toward the Escrow Funds as it exercises toward its own similar
property or similar property held in escrow for the account of others
(whichever degree of care is higher), and shall not be held to any
higher standard of care under this Agreement;
(v) the Escrow Agent makes no representation as to
the validity, value, genuineness or collectibility of any security or
other document or instrument held by or delivered to it;
(vi) the Escrow Agent shall not be called upon to
advise any party as to selling or retaining, or taking or refraining
from taking any action with respect to, any securities or other
property deposited hereunder;
(vii) provided that it is not grossly negligent in
doing so, the Escrow Agent shall be entitled to rely upon any order,
judgment, Direction Letter, certification, instruction, notice or other
writing delivered to it in compliance with the provisions of this
Agreement without being required to determine the authenticity or the
correctness of any fact stated therein or the propriety or validity or
service thereof; the Escrow Agent may act in reliance upon any
instrument comporting with the provisions of this Agreement or
signature believed by it to be genuine and may assume that any Person
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purporting to give notice or receipt or advice or make any statement or
execute any document in connection with the provisions hereof has been
duly authorized to do so; the Escrow Agent may act pursuant to the
advice of counsel chosen by it with respect to any matter relating to
this Agreement and shall not be liable for any action taken or omitted
in accordance with such advice;
(viii) notwithstanding anything herein to the
contrary, the Escrow Agent shall be under no duty to monitor or enforce
compliance by any Person with any term or provision of the Purchase
Agreement;
(ix) if the Escrow Agent shall be uncertain as to its
duties or rights hereunder or shall receive instructions from any of
the undersigned with respect to any property held by it in escrow
pursuant to this Agreement which, in the opinion of the Escrow Agent,
are in conflict with any of the provisions of this Agreement, the
Escrow Agent shall be entitled to refrain from taking any action until
it shall be directed otherwise by a Direction Letter or Final Order;
(x) if the Escrow Agent becomes involved in
litigation in connection with this Agreement, it shall have the right
to retain counsel, and shall be reimbursed for all reasonable costs and
expenses, including its reasonable attorneys' fees and expenses,
incurred in connection therewith; subject to the provisions of Section
4(a)(iii) hereof, such costs and expenses shall be paid by the Company,
provided that the Escrow Agent shall not be entitled to any
reimbursement for its fees and expenses incurred as a result of its
gross negligence or willful misconduct;
(xi) the Escrow Agent shall not be liable hereunder
for, and, subject to the provisions of Section 4(a)(iii) hereof, the
Company agrees to indemnify the Escrow Agent for and hold it harmless
as to, any loss, liability or expense, including attorneys' fees and
expenses, paid or incurred by the Escrow Agent in connection with the
Escrow Agent's duties under this Agreement, unless such loss, liability
or expense was paid or incurred in violation of Section 6(b)(ii) or as
a result of the Escrow Agent's gross negligence or willful misconduct;
(xii) the Escrow Agent may, in its sole and absolute
discretion, resign in a manner consistent with Section 6(c) hereof; and
(xiii) the Company, the Investor and the Shareholder
may jointly remove and replace the Escrow Agent at any time, subject to
the provisions of Section 6(c).
(b) Fees and Expenses. In consideration for performance of its
duties hereunder, the Escrow Agent shall be entitled to receive the following
compensation:
(i) an annual fee of $3,500 payable in advance by the
Company (so long as the Escrow Agent continues to serve as such under
this Agreement at the time of payment) at the Closing and on the first
anniversay of the Closing Date; and
(ii) reimbursement, payable semi-annually in arrears
upon submission to the Company of a reasonably detailed accounting
therefor, of all reasonable expenses,
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disbursements or advances made or incurred by the Escrow Agent in
implementing any of the provisions of this Agreement, including its
attorneys' fees and expenses, except any such expense, disbursement or
advance as may arise from the Escrow Agent's gross negligence or
willful misconduct (provided that the Company shall not be obligated to
reimburse the Escrow Agent for such expenses to the extent they exceed
$1,000 in the aggregate in any calendar year unless the Company shall
have consented previously in writing to such additional expenditures).
Reasonable expenses for extraordinary services will be determined based
on time and scope of duties.
(c) New Escrow Agent. If the Escrow Agent shall be removed as
escrow agent by the Company, the Investor and the Shareholder or shall resign or
otherwise cease to act as escrow agent, the Investor and the Shareholder shall
mutually agree upon a successor which successor shall be deemed to be the Escrow
Agent for all purposes of this Agreement. If a successor escrow agent has not
been appointed and accepted such appointment by the end of the 30-day period
following such removal, resignation or cessation, the Escrow Agent may apply to
any court in which it is permitted to commence litigation pursuant to Section
7(c) hereof for the appointment of a successor Escrow Agent and deposit the
Escrow Funds with the then chief or presiding judge of such court (and upon so
depositing such property and filing its complaint in interpleader, it shall be
relieved of all responsibility under the terms hereof as to the property so
deposited), and the costs, expenses and reasonable attorneys' fees which the
Escrow Agent incurs in connection with such a proceeding shall be borne by the
Company. The removal, resignation or other ceasing to act as escrow agent by the
Escrow Agent or any successor thereto shall have no effect on this Agreement or
any of the rights of the parties hereunder, all of which shall remain in full
force and effect.
(d) Survival of Obligations. The agreements contained in
Section 6(a) and, with respect to amounts accrued prior to termination,
withdrawal or removal, Section 6(b) shall survive termination of this Agreement
and, with respect to any Escrow Agent, the withdrawal or removal of such Escrow
Agent.
(e) Taxes. Each party hereto to whom the Escrow Funds shall be
distributed in accordance with the terms hereof shall be responsible for the
payment of all income taxes on the income generated by the Escrow Funds in the
proportion by which the amount of the Escrow Funds distributed to such party
bears to $1,600,000.
7. Miscellaneous.
(a) Notices. All notices, demands or other communications to
be given or delivered under or by reason of the provisions of this Agreement
will be in writing and will be deemed to have been given when personally
delivered (including by Federal Express or other reputable courier service) or
sent by facsimile transmission (with confirmed receipt). Notices, demands and
communication to the Company, the Shareholder, the Investor or the Escrow Agent
will, unless another address is specified in writing, be sent to the respective
address indicated below:
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(i) if to the Escrow Agent to:
SunTrust Bank, Atlanta
Corporate Trust Division
25 Park Place, 24th Floor
Atlanta, Georgia 30303-2900
Attention: Rebecca Fischer
Facsimile: (404) 588-7335
Telephone: (404) 588-7262
(ii) if to the Company to:
Greenfield Online, Inc.
274 Riverside Avenue
Westport, Connecticut 06880
Attention: Chief Executive Officer
Facsimile: (203) 221-0791
Telephone: (203) 221-0411
Tax ID Number: 06-1440369
(iii) if to the Investor to:
Greenfield Holdings, LLC
c/o InSight Capital Partners III, L.P.
122 East 42nd Street
Suite 2300
New York, NY 10168
Attention: Jeffrey Horing
Facsimile: (212) 681-0972
Telephone: (212) 681-8181
Tax ID Number: 13-4059889
with a copy to:
O'Sullivan Graev & Karabell, LLP
30 Rockefeller Plaza
New York, NY 10112
Attention: Ilan S. Nissan, Esq.
Facsimile: (212) 408-2420
Telephone: (212) 408-2443;
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(iv) if to the Shareholder to:
Andrew Greenfield
c/o Greenfield Consulting, Inc.
274 Riverside Avenue
Westport, CT 06880
Facsimile: (203) 221-0791
Telephone: (203) 855-1282
Tax ID Number: ###-##-####
with a copy to:
Morrison & Foerster, LLP
1290 Avenue of the Americas
New York, New York 10104
Attention: Joseph W. Bartlett, Esq.
Facsimile: (212) 468-7900
Telephone: (212) 468-8240
(b) Governing Law. THIS AGREEMENT WILL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING
EFFECT TO ANY CHOICE OF LAW OR CONFLICTING PROVISION OR RULE (WHETHER OF THE
STATE OF NEW YORK OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE LAWS OF ANY
JURISDICTION OTHER THAN THE STATE OF NEW YORK TO BE APPLIED. IT IS THE INTENTION
OF THE PARTIES HERETO THAT THE SITUS OF THE ESCROW ACCOUNT BE, AND IT SHALL BE
ADMINISTERED IN, THE STATE IN WHICH THE PRINCIPAL OFFICE OF THE ESCROW AGENT
FROM TIME TO TIME ACTING HEREUNDER IS LOCATED.
(c) Jurisdiction and Venue. The parties to this Agreement
agree that any and all actions arising under or in respect of this Agreement
(including, without limitation, the resolution of any Disputed Claims) shall be
litigated exclusively in any federal or state court of competent jurisdiction
located in the State of New York. By execution and delivery of this Agreement,
each party to this Agreement irrevocably submits to the personal and exclusive
jurisdiction of such courts for itself, himself or herself and in respect of
its, his or her property with respect to such action. Each party to this
Agreement agrees that venue would be proper in any of such courts, and hereby
waives any objection that any such court is an improper or inconvenient forum
for the resolution of any such action. The parties further agree that the
mailing by certified or registered mail, return receipt requested, to the
addresses specified for notice in this Agreement, of any process or summons
required by any such court shall constitute valid and lawful service of process
against them, without the necessity for service by any other means provided by
statute or rule of court.
(d) Counterparts. This Agreement may be executed in separate
counterparts, each of which will be an original and all of which taken together
will constitute one and the same agreement.
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(e) Successors and Assigns. None of the parties hereto shall
assign or agree to assign or grant to any other party any rights under this
Agreement, including without limitation any rights in or to the Escrow Funds,
without the prior written consent of the other parties hereto, and this
Agreement shall be binding upon, and inure to the benefit of, the parties hereto
and their respective successors and permitted assigns.
(f) Specific Performance. The obligations of the parties
hereto (including the Escrow Agent) are unique in that time is of the essence,
and any delay in performance hereunder by any party will result in irreparable
harm to the other parties hereto. Accordingly, any party may seek specific
performance and/or injunctive relief before any court of competent jurisdiction,
in order to enforce this Agreement or to prevent violations of the provisions
hereof, and no party shall object to specific performance or injunctive relief
as an appropriate remedy. The Escrow Agent acknowledges that its obligations, as
well as the obligations of the other parties hereto are subject to the equitable
remedy of specific performance and/or injunctive relief.
(g) Amendment, Waiver, etc. This Agreement may only be
amended, modified, altered or revoked by a written instrument, signed by the
parties hereto; provided that no amendment or modification will be made to
Section 6 hereof without the written consent of the Escrow Agent. The Investor
and the Shareholder agree to give the Escrow Agent advance written notice of any
amendment or modification to this Agreement and to provide the Escrow Agent
promptly with copies of any such amendment or modification.
(h) Captions. The paragraph captions used herein are for
reference purposes only, and shall not in any way affect the meaning or
interpretation of this Agreement.
(i) Effectiveness. This Agreement shall be effective upon the
consummation of the transactions contemplated by the Purchase Agreement.
* * * * *
12
<PAGE>
EXECUTION COPY
IN WITNESS WHEREOF, the parties hereunto have duly caused this
Escrow Agreement to be executed as of the day first above written.
SUNTRUST BANK, ATLANTA
By:
----------------------------------
Name:
Title:
GREENFIELD ONLINE, INC.
By:
----------------------------------
Name:
Title:
GREENFIELD HOLDINGS, LLC
By:
----------------------------------
Name:
Title:
----------------------------------
Andrew Greenfield
<PAGE>
EXHIBIT B-1
================================================================================
EMPLOYMENT AGREEMENT
BETWEEN
GREENFIELD ONLINE, INC.
AND
RUDY NADILO
MAY 12, 1999
================================================================================
<PAGE>
EMPLOYMENT AGREEMENT dated
as of May 12, 1999, between
GREENFIELD ONLINE, INC., a
Connecticut corporation (the
"Company"), and RUDY NADILO (the
"Executive").
Reference is made to the Stock Purchase and Redemption
Agreement dated as of May 12, 1999 (as the same may be amended from time to
time, the "Purchase Agreement"; capitalized terms used herein but not defined
shall have the meanings set forth in the Purchase Agreement), among the Company,
Greenfield Holdings, LLC, a Delaware limited liability company (the "Investor"),
and the other Persons party thereto.
The Company is engaged in the business (the "Subject
Business") of providing customized and syndicated marketing research services
over the Internet. The Executive is, and prior to the date hereof has been, an
officer of the Company and as such has substantial experience that is valuable
to the Subject Business and the Company.
As an inducement to the Investor to enter into the Purchase
Agreement, the Company desires to employ the Executive, and the Executive
desires to accept such employment, on the terms and subject to the conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants
contained herein and in the Purchase Agreement and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows
Section 1. Employment.
The Company shall employ the Executive, and the Executive
accepts employment with the Company, upon the terms and conditions set forth in
this Agreement for the period beginning on the Effective Date (as defined in
Section 14(j)) and ending on the Termination Date determined pursuant to Section
4(a) (the "Employment Period"). After the initial four-year term has expired,
this Agreement will automatically renew on such expiration date and on the
anniversary date of each subsequent year thereafter for a one-year term. If
either party desires not to renew this Agreement, such party shall provide the
other party with written notice of their intent not to review the Agreement at
least ninety (90) days prior to the expiration of the initial term hereunder or
the next anniversary date, as applicable.
Section 2. Base Salary, Bonus and Benefits.
(a) During the Employment Period, the Executive's base salary
shall be $250,000 per annum or such higher rate as the Compensation Committee of
the Board (excluding the Executive if he should be a member of the Board or the
Compensation Committee at the time of such determination) may designate from
time to time (the "Base Salary"), which salary shall be reviewed by the
Compensation Committee on an annual basis and payable in such installments as is
customary for other senior executives of the Company. In addition, during the
Employment Period, the Executive shall be entitled to (i) participate in all
employee benefit programs for
<PAGE>
which other senior executives of the Company are generally eligible, (ii) be
eligible to participate in all insurance plans available generally to other
senior executives of the Company, (iii) reimbursement from the Company or its
designee of up to $1,000 per full calendar month to be used by the Executive
solely for expenditures relating to the leasing, maintenance and other related
costs of an automobile to be used by the Executive solely in performing his
duties under this Agreement, and (iv) take 4 weeks of paid vacation annually. In
the case of any partial month during the Employment Period, reimbursements,
payments and other entitlements pursuant to this Section 2 shall be made or
provided to the Executive on a per diem basis.
(b) In addition to the Base Salary and benefits set forth in paragraph
(a) above, during the Employment Period the Executive shall be entitled to
receive a bonus, if any, with respect to each full calendar year occurring
during the Employment Period, commencing with the calendar year ending December
31, 1999, such bonus, if any, to be paid in a lump sum following the end of the
calendar year with respect to which such bonus is payable (such bonus to be paid
at the same time bonuses are to be paid to other senior executives of the
Company). The bonus for any calendar year of the Employment Period shall be in
an amount not to exceed 35% of the Base Salary for such calendar year, subject
to and based upon the achievement by the Company and the Executive of certain
performance targets and/or criteria to be specified by the Board. The
performance targets and/or criteria for 1999 shall be disclosed to the Executive
within 30 days of the Effective Date, and for each succeeding year of this
Agreement shall be disclosed during the first quarter of each such year. The
amount of the bonus, if any, to be paid shall be reviewed by the Compensation
Committee on an annual basis.
(c) The Company shall reimburse the Executive for (i) all reasonable
expenses incurred by him in the course of performing his duties under this
Agreement which are consistent with the Company's policies in effect from time
to time with respect to travel, entertainment and other business expenses,
subject to the Company's requirements with respect to reporting and
documentation of such expenses, (ii) any co-pay and/or deductible amounts paid
by the Executive in connection with the insurance plans in which the Executive
participates pursuant to paragraph (a) above and (iii) the cost of Executive's
long term disability insurance coverage as in effect on the Effective Date, and
any equivalent replacement thereof.
(d) The Company shall deduct from any payments to be made by it to the
Executive under this Agreement any amounts required to be withheld in respect of
any Federal, state or local income or other taxes.
(e) The Company will grant the Executive options (the "Options") to
purchase such number of shares of Class A Common Stock, $.01 par value (the
"Class A Common"), of the Company pursuant to the Company's 1999 Stock Option
Plan (the "Option Plan") as shall be determined by the Board. The Options will
be evidenced by a Stock Option Agreement between the Executive and the Company.
The Option Plan and the Stock Option Agreement will contain all of the terms and
conditions of the Executive's Options.
Section 3. Position and Duties.
(a) During the Employment Period, the Executive shall initially
serve as President
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<PAGE>
and Chief Executive Officer of the Company, and shall report to the Board. The
Executive acknowledges and agrees that he owes a fiduciary duty of loyalty to
the Company to discharge his duties and otherwise act in a manner consistent
with the best interests of the Company and its Subsidiaries.
(b) During the Employment Period, the Executive shall devote his best
efforts and full working time, attention and energies to the performance of his
duties and responsibilities under this Agreement (except for vacations to which
he is entitled pursuant to Section 2(a) and except for illness or incapacity).
During the Employment Period, the Executive shall not engage in any business
activity which, in the reasonable judgment of the Board (excluding the Executive
if he should be a member of the Board at the time of such determination),
conflicts with the duties of the Executive hereunder, whether or not such
activity is pursued for gain, profit or other pecuniary advantage.
(c) During the Employment Period, the Company shall not reduce,
diminish or take any action which would in any way materially adversely affect
the Executive's position or duties as set forth herein.
Section 4. Termination.
(a) Termination Date. The Executive's employment under this
Agreement shall terminate upon the earliest to occur (the date of such
occurrence being the "Termination Date") of (i) the fourth anniversary of the
Effective Date, (ii) the effective date of the Executive's resignation (a
"Resignation"), (iii) the Executive's death or Disability (an "Involuntary
Termination"), (iv) the effective date of a termination of the Executive's
employment for Cause by the Board (a "Termination for Cause"), and (v) the
effective date of a termination of the Executive's employment by the Board for
reasons that do not constitute Cause or as a result of the Company's election
not to renew this Agreement pursuant to Section 1 (a "Termination Without
Cause"). The effective date of a Resignation shall be as determined under
Section 4(b); the effective date of an Involuntary Termination shall be the date
of death or, in the event of a Disability, the date specified in a notice
delivered to the Executive by the Company; and the effective date of a
Termination for Cause or a Termination Without Cause shall be the date specified
in a notice delivered to the Executive by the Company of such termination.
(b) Resignation. The Executive shall give the Company and the Board at
least 90 days' prior written notice of a Resignation, with the effective date of
such Resignation specified therein. The Board may, in its discretion, accelerate
the effective date of the Resignation.
Section 5. Effect of Termination; Severance.
(a) In the event of a Termination Without Cause, the Executive or
his beneficiaries or estate shall have the right to receive the following:
(i) the unpaid portion of the Base Salary, computed on a pro
rata basis to the Termination Date;
-3-
<PAGE>
(ii) the unpaid portion of the Base Salary for the period
beginning on the Termination Date and ending on the earlier of (A) the
first anniversary of the Termination Date and (B) the date on which the
Executive obtains subsequent employment (as an employee, consultant,
independent contractor or otherwise), payable in the same amounts and
at the same intervals as the Base Salary was paid immediately prior to
the Termination Date; provided, however, that in the event of a breach
by the Executive of Section 6, 7, 8, or 9 on or after the Termination
Date, the provisions of Section 11 shall apply;
(iii) reimbursement for any expenses for which the Executive
shall not have been previously reimbursed, as provided in Section 2(c);
and
(iv) the portion of any bonus payable in accordance with
Section 2(b) for the calendar year in which such termination occurs,
pro rated through the date of such termination on a per diem basis.
(b) In the event of a Termination for Cause, an Involuntary Termination
or a Resignation, the Executive or his beneficiaries or estate shall have the
right to receive the following:
(i) the unpaid portion of the Base Salary, computed on a pro
rata basis to the Termination Date; and
(ii) reimbursement for any expenses for which the Executive
shall not have been previously reimbursed, as provided in Section 2(c).
(c) Upon any termination, neither the Executive nor his beneficiaries
or estate shall have any further rights under this Agreement or any rights
arising out of this Agreement other than as provided in Sections 5(a) and (b)
above.
Section 6. Nondisclosure and Nonuse of Confidential Information.
The Executive will not disclose or use at any time, either
during the Employment Period and for a period of five years thereafter, any
Confidential Information of which the Executive is or becomes aware, whether or
not such information is developed by him, except to the extent that such
disclosure or use is directly related to and required by the Executive's
performance of duties assigned to the Executive by the Company.
Section 7. Inventions and Patents.
The Executive agrees that all Work Product belongs to the
Company. The Executive will promptly disclose such Work Product to the Board and
perform all actions reasonably requested by the Board (whether during or after
the Employment Period) to establish and confirm such ownership (including,
without limitation, the execution and delivery of assignments, consents, powers
of attorney and other instruments) and to provide reasonable assistance to the
Company in connection with the prosecution of any applications for patents,
-4-
<PAGE>
trademarks, trade names, service marks or reissues thereof or in the prosecution
or defense of interferences relating to any Work Product.
Section 8. Non-Compete, Non-Solicitation, Non-Disparagement.
The Executive acknowledges and agrees with the Company that,
during the course of the Executive's employment with the Company, the Executive
has had and will continue to have the opportunity to develop relationships with
existing employees, customers and other business associates of the Company and
its Subsidiaries which relationships constitute goodwill of the Company, and the
Company would be irreparably damaged if the Executive were to take actions that
would damage or misappropriate such goodwill. Accordingly, the Executive agrees
as follows:
(a) The Executive acknowledges that the Company currently
conducts the Subject Business throughout the world (the "Territory").
Accordingly, during the term hereof and until the first anniversary of the
Termination Date (the "Non-Compete Period"), the Executive shall not, directly
or indirectly, enter into, engage in, assist, give or lend funds to or otherwise
finance, be employed by or consult with, or have a financial or other interest
in, any business which competes or could, in the reasonable judgment of the
Board, be deemed to be in competition with, at the time in question, the Company
within the Territory, whether for or by himself or as an independent contractor,
agent, stockholder, partner or joint venturer for any other Person. To the
extent that the covenant provided for in this Section 8(a) may later be deemed
by a court to be too broad to be enforced with respect to its duration or with
respect to any particular activity or geographic area, the court making such
determination shall have the power to reduce the duration or scope of the
provision, and to add or delete specific words or phrases to or from the
provision. The provision as modified shall then be enforced.
(b) Notwithstanding the foregoing, the aggregate ownership by
the Executive of no more than two percent (on a fully-diluted basis) of the
outstanding equity securities of any Person, which securities are traded on a
national or foreign securities exchange, quoted on the NASDAQ stock market or
other automated quotation system, and which Person competes with the Company (or
any part thereof) within the Territory, shall not be deemed to be a violation of
Section 8(a). In the event that any Person in which the Executive has any
financial or other interest directly or indirectly enters into a business during
the Non-Compete Period that competes with the Company within the Territory, the
Executive shall divest all of his interest (other than as permitted to be held
pursuant to the first sentence of this Section 8(b)) in such Person within 15
days after such Person enters into such business that competes with the Company
within the Territory.
(c) The Executive covenants and agrees that, during the period
commencing with the Effective Date and ending on the first anniversary of the
date on which the Executive ceases to be employed by the Company for any reason
whatsoever, the Executive will not, directly or indirectly, either for himself
or for any other Person (A) solicit any employee of the Company or any of its
Subsidiaries to terminate his or her employment with the Company or any of its
Subsidiaries or employ any such individual during his or her employment with the
Company or any of its Subsidiaries and for a period of one year after such
individual terminates
-5-
<PAGE>
his or her employment with the Company or any of its Subsidiaries, (B) solicit
any customer of the Company or any of its Subsidiaries to purchase or distribute
information, products or services of or on behalf of the Executive or such other
Person that are competitive with the information, products or services provided
by the Company or any of its Subsidiaries, or (c) take any action that may cause
injury to the relationships between the Company or any of its Subsidiaries or
any of their employees and any lessor, lessee, vendor, supplier, customer,
distributor, employee, consultant or other business associate of the Company or
any of its Subsidiaries as such relationship relates to the Company's or any of
its Subsidiaries' conduct of their business.
(d) The Executive understands that the foregoing restrictions
may limit his ability to earn a livelihood in a business which is competitive
with the business of the Company and any of its Subsidiaries, but he
nevertheless believes that he has received and will receive sufficient
consideration and other benefits as an employee of the Company and as otherwise
provided hereunder or as described in the recitals hereto to clearly justify
such restrictions which, in any event (given his education, skills and ability),
the Executive does not believe would prevent him from otherwise earning a
living.
(e) The foregoing non-compete restrictions shall not apply in
the event that the Executive is forced to terminate his employment with the
Company as a result of a material breach by the Company of any of its
obligations to the Executive under this Agreement, the Shareholders' Agreement
between the Company, the Executive and the other shareholders of the Company, to
be entered into in connection with the Closing under the Purchase Agreement, and
Stock Option Agreements entered into between the Company and the Executive.
Section 9. Delivery of Materials Upon Termination of Employment.
The Executive shall deliver to the Company at the termination
of the Employment Period or at any time the Company may request all memoranda,
notes, plans, records, reports, computer tapes and software and other documents
and data (and copies thereof) relating to the Confidential Information, Work
Product or the Subject Business which he may then possess or have under his
control regardless of the location or form of such material and, if requested by
the Company, will provide the Company with written confirmation that all such
materials have been delivered to the Company.
Section 10. Insurance.
The Company may, for its own benefit, maintain "keyman" life
and disability insurance policies covering the Executive. The Executive will
cooperate with the Company and provide such information or other assistance as
the Company may reasonably request in connection with the Company obtaining and
maintaining such policies.
Section 11. Enforcement.
Because the Executive's services are unique and because the
Executive has access to Confidential Information and Work Product, the parties
hereto agree that money damages would be an inadequate remedy for any breach of
this Agreement. Therefore, in the event of a
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<PAGE>
breach or threatened breach of this Agreement, the Company or its successors or
assigns may, in addition to other rights and remedies existing in their favor,
apply to any court of competent jurisdiction for specific performance and/or
injunctive or other relief in order to enforce, or prevent any violations of,
the provisions hereof (without posting a bond or other security). In addition to
the foregoing, and not in any way in limitation thereof, or in limitation of any
right or remedy otherwise available to the Company, if the Executive violates
any provision of the foregoing Sections 6, 7, 8 or 9, any payments then or
thereafter due from the Company to the Executive pursuant to Section 5(a)(ii)
shall be terminated forthwith and the Company's obligation to pay and the
Executive's right to receive such payments shall terminate and be of no further
force or effect, in each case without limiting or affecting the Executive's
obligations under such Sections 6, 7, 8 and 9 or the Company's other rights and
remedies available at law or equity.
Section 12. Representations.
Each party hereby represents and warrants to the other party
that (a) the execution, delivery and performance of this Agreement by such party
does not and will not conflict with, breach, violate or cause a default under
any agreement, contract or instrument to which such party is a party or any
judgment, order or decree to which such party is subject, and (b) upon the
execution and delivery of this Agreement by such party, this Agreement will be a
valid and binding obligation of such party, enforceable in accordance with its
terms, except as enforcement hereof may be limited by any applicable bankruptcy,
reorganization, insolvency or other laws affecting creditors rights generally or
by general principles of equity. In addition, the Executive represents and
warrants to the Company that the Executive is not a party to or bound by any
employment agreement, consulting agreement, non-compete agreement,
confidentiality agreement or similar agreement with any other Person. The
Company and the Executive hereby terminate all existing employment or consulting
agreements between them, if any, to the extent such agreements may be in effect
after the date hereof.
Section 13. Definitions.
"Board" shall mean the board of directors of the Company.
"Business Day" shall mean any day that is not a Saturday,
Sunday, or a day on which banking institutions in New York are not required to
be open.
"Cause" shall mean (i) the Executive's material breach of any
of the terms of this Agreement; (ii) the conviction of a crime involving fraud,
theft or dishonesty by the Executive; (iii) the Executive's willful and
continuing disregard of lawful instructions of the Board or superiors (if any);
(iv) the continued use of alcohol or drugs by the Executive to an extent that,
in the good faith determination of the Board, such use interferes in any manner
with the performance of the Executive's duties and responsibilities; or (v) the
conviction of the Executive for violating any Law constituting a felony
(including the Foreign Corrupt Practices Act of 1977).
"Confidential Information" means information that is not
generally known to the
-7-
<PAGE>
public and that is used, developed or obtained by the Company or any of its
Subsidiaries in connection with the Subject Business, including, but not limited
to, (i) information, observations, procedures and data obtained by the Executive
while employed by the Company (including those obtained prior to the date of
this Agreement) concerning the business or affairs of the Company or any of its
Subsidiaries, (ii) products or services, (iii) costs and pricing structures,
(iv) analyses, (v) drawings, photographs and reports, (vi) computer software,
including operating systems, applications and program listings, (vii) flow
charts, manuals and documentation, (viii) data bases, (ix) accounting and
business methods, (x) inventions, devices, new developments, methods and
processes, whether patentable or unpatentable and whether or not reduced to
practice, (xi) customers and customer lists, (xii) other copyrightable works,
(xiii) all production methods, processes, technology and trade secrets, and
(xiv) all similar and related information in whatever form. Confidential
Information will not include any information that has been published in a form
generally available to the public prior to the date the Executive proposes to
disclose or use such information. Confidential Information will not be deemed to
have been published merely because individual portions of the information have
been separately published, but only if all material features comprising such
information have been published in combination.
"Disability" shall mean the physical or mental inability of
the Executive (i) to substantially perform all of his duties under this
Agreement for a period of 90 consecutive days or longer or for any 90 days in
any period of 365 consecutive days, or (ii) that, in the opinion of a physician
selected by the Board (excluding the Executive if the Executive is a member of
the Board at such time) is likely to prevent the Executive from substantially
performing all of his duties under this Agreement for more than 90 days in any
period of 365 consecutive days.
"Subsidiary" of the Company means and includes (i) any
corporation more than 50% of whose stock of any class or classes having by the
terms thereof ordinary voting power to elect a majority of the directors of such
corporation (irrespective of whether or not at the time stock of any class or
classes of such corporation shall have or might have voting power by reason of
the happening of any contingency) is at the time owned by the Company or
indirectly through Subsidiaries and (ii) any partnership, association, joint
venture or other entity (other than a corporation) in which the Company directly
or indirectly through Subsidiaries, has more than a 50% equity interest at the
time.
"Work Product" shall mean all inventions, innovations,
improvements, technical information, systems, software developments, methods,
designs, analyses, drawings, reports, service marks, trademarks, tradenames,
logos and all similar or related information (whether patentable or
unpatentable) which relates to the Company's or any of its Subsidiaries' actual
or anticipated business, research and development or existing or future products
or services and which are conceived, developed or made by the Executive in
connection with or relating to (whether or not during usual business hours and
whether or not alone or in conjunction with any other Person) the Executive's
position and duties while employed by the Company (including those conceived,
developed or made prior to the date of this Agreement) together with all patent
applications, letters patent, trademark, tradename and service mark applications
or registrations, copyrights and reissues thereof that may be granted for or
upon any of the foregoing.
-8-
<PAGE>
Section 14. General Provisions.
(a) Severability. It is the desire and intent of the Parties hereto
that the provisions of this Agreement be enforced to the fullest extent
permissible under the laws and public policies applied in each jurisdiction in
which enforcement is sought. Accordingly, if any particular provision of this
Agreement shall be adjudicated by a court of competent jurisdiction to be
invalid, prohibited or unenforceable for any reason, such provision, as to such
jurisdiction, shall be ineffective, without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of this
Agreement or affecting the validity or enforceability of such provision in any
other jurisdiction. Notwithstanding the foregoing, if such provision could be
more narrowly drawn so as not to be invalid, prohibited or unenforceable in such
jurisdiction, it shall, as to such jurisdiction, be so narrowly drawn, without
invalidating the remaining provisions of this Agreement or affecting the
validity or enforceability of such provision in any other jurisdiction.
(b) Notices. All notices, requests, demands, claims and other
communications hereunder shall be in writing and sufficient if (i) delivered
personally, (ii) delivered by certified United States Post Office mail, return
receipt requested, (iii) telecopied or (iv) sent to the recipient by a
nationally-recognized overnight courier service (charges prepaid) and addressed
to the intended recipient as set forth below:
(a) if to the Executive, to:
Rudy Nadilo
c/o Greenfield Online, Inc.
274 Riverside Avenue
Westport, Connecticut 06880
Telecopier: (203) 221-0791
with a copy to:
Wake, See, Dimes & Bryncizka
27 Imperial Avenue
P.O. Box 777
Westport, CT 06881
Attention: Jonathan A. Flatow
Telecopier: (203) 226-1641
(b) if to the Company, to:
Greenfield Online, Inc.
274 Riverside Avenue
Westport, Connecticut 06880
Attention: Chairman
Telecopier: (203) 221-0791
with copies to:
Greenfield Holdings, Inc.
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<PAGE>
c/o InSight Capital Partners III, L.P.
122 East 42nd Street
Suite 2300
New York, New York 10168
Attention: Jeffrey Horing
Telecopier: (212) 681-0972;
O'Sullivan Graev & Karabell, LLP
30 Rockefeller Plaza
New York, New York 10112
Attention: Ilan S. Nissan, Esq.
Telecopier: (212) 408-2420; and
Preston Gates & Ellis LLP
701 Fifth Avenue
Suite 5000
Seattle, Washington 98104
Attention: Robert Jaffe, Esq.
Telecopier: (206) 623-7022;
or such other address as the recipient party to whom notice is to be given may
have furnished to the other party in writing in accordance herewith. Any such
communication shall deemed to have been delivered and received (a) in the case
of personal delivery, on the date of such delivery, (b) in the case of delivery
by mail, on the third Business Day following such mailing, (c) if telecopied, on
the date telecopied, and (d) in the case of delivery by nationally-recognized,
overnight courier, on the Business Day following dispatch.
(c) Entire Agreement. This Agreement and the documents expressly
referred to herein embody the complete agreement and understanding among the
parties and supersede and preempt any prior understandings, agreements or
representations by or among the parties, written or oral, which may have related
to the subject matter hereof in any way.
(d) Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
(e) Successors and Assigns. Except as otherwise provided herein, this
Agreement shall bind and inure to the benefit of and be enforceable by the
Executive and the Company and their respective successors, assigns, heirs,
representatives and estate, as the case may be; provided, however, that the
obligations of the Executive under this Agreement shall not be assigned without
the prior written consent of the Company.
(f) Amendment and Waiver. The provisions of this Agreement may be
amended and waived only with the prior written consent of the Company and the
Executive, and no course of conduct or failure or delay in enforcing the
provisions of this Agreement shall affect the validity, binding effect or
enforceability of this Agreement or any provision hereof.
(g) Governing Law. This Agreement shall be governed by and construed in
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<PAGE>
accordance with the domestic laws of the State of New York without giving effect
to any choice or conflict of law provision or rule that would cause the
application of the laws of any jurisdiction other than the State of New York.
(h) Descriptive Headings; Nouns and Pronouns. Descriptive headings are
for convenience only and shall not control or affect the meaning or construction
of any provision of this Agreement. Whenever the context may require, any
pronouns used herein shall include the corresponding masculine, feminine or
neuter forms, and the singular form of nouns and pronouns shall include the
plural and vice-versa.
(i) Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
ARISING OUT OF OR RELATING TO THIS AGREEMENT.
(j) Effectiveness. This Agreement shall not be deemed effective (the
"Effective Date") until the consummation of the Closing under the Purchase
Agreement.
* * * * *
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Employment Agreement as of the date first written above.
GREENFIELD ONLINE, INC.
By:
-------------------------------
Name:
Title:
EXECUTIVE
----------------------------------
Rudy Nadilo
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<PAGE>
EXHIBIT B-2
-----------
================================================================================
EMPLOYMENT AGREEMENT
BETWEEN
GREENFIELD ONLINE, INC.
AND
HUGH DAVIS
MAY 13, 1999
================================================================================
<PAGE>
EMPLOYMENT AGREEMENT
dated as of May 13, 1999,
between GREENFIELD ONLINE,
INC., a Connecticut corporation
(the "Company"), and HUGH DAVIS
(the "Executive").
Reference is made to the Stock Purchase and Redemption
Agreement dated as of May 12, 1999 (as the same may be amended from time to
time, the "Purchase Agreement"; capitalized terms used herein but not defined
shall have the meanings set forth in the Purchase Agreement), among the Company,
Greenfield Holdings, LLC, a Delaware limited liability company (the "Investor"),
and the other Persons party thereto.
The Company is engaged in the business (the "Subject
Business") of providing customized and syndicated marketing research services
over the Internet. The Executive is, and prior to the date hereof has been, an
officer of the Company and as such has substantial experience that is valuable
to the Subject Business and the Company.
As an inducement to the Investor to enter into the Purchase
Agreement, the Company desires to employ the Executive, and the Executive
desires to accept such employment, on the terms and subject to the conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants
contained herein and in the Purchase Agreement and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
Section 1. Employment.
The Company shall employ the Executive, and the Executive
accepts employment with the Company, upon the terms and conditions set forth in
this Agreement for the period beginning on the Effective Date (as defined in
Section 14(j)) and ending on the Termination Date determined pursuant to Section
4(a) (the "Employment Period"). After the initial four-year term has expired,
this Agreement will automatically renew on such expiration date and on the
anniversary date of each subsequent year thereafter for a one-year term. If
either party desires not to renew this Agreement, such party shall provide the
other party with written notice of their intent not to review the Agreement at
least ninety (90) days prior to the expiration of the initial term hereunder or
the next anniversary date, as applicable.
Section 2. Base Salary, Bonus and Benefits.
(a) During the Employment Period, the Executive's base salary
shall be $120,000 per annum or such higher rate as the Compensation Committee of
the Board (excluding the Executive if he should be a member of the Board or the
Compensation Committee at the time of such determination) may designate from
time to time (the "Base Salary"), which salary shall be reviewed by the
Compensation Committee on an annual basis and be payable in such installments as
is customary for other senior executives of the Company. In addition, during the
Employment Period, the Executive shall be entitled to (i) participate in all
employee benefit programs for which other senior executives of the Company are
generally eligible (ii) be eligible to participate in all insurance plans
available generally to other senior executives of the
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Company, and (iii) take 4 weeks of paid vacation annually. In the case of any
partial month during the Employment Period, any reimbursements, payments or
entitlements pursuant to this Section 2 shall be made or provided to the
Executive on a per diem basis.
(b) In addition to the Base Salary and the benefits set forth
in paragraph (a) above, during the Employment Period, the Executive shall be
entitled to participate in the Company's management bonus program upon the same
terms and subject to the same conditions as are applicable generally to other
senior executives of the Company.
(c) The Company shall reimburse the Executive for all
reasonable expenses incurred by him in the course of performing his duties under
this Agreement which are consistent with the Company's policies in effect from
time to time with respect to travel, entertainment and other business expenses,
subject to the Company's requirements with respect to reporting and
documentation of such expenses.
(d) The Company shall deduct from any payments to be made by
it to the Executive under this Agreement any amounts required to be withheld in
respect of any Federal, state or local income or other taxes.
(e) The Company will grant the Executive options (the
"Options") to purchase such number of shares of Class A Common Stock, $.01 par
value (the "Class A Common"), of the Company pursuant to the Company's 1999
Stock Option Plan (the "Option Plan") as shall be determined by the Board. The
Options will be evidenced by a Stock Option Agreement between the Executive and
the Company. The Option Plan and the Stock Option Agreement will contain all of
the terms and conditions of the Executive's Options.
Section 3. Position and Duties.
(a) During the Employment Period, the Executive shall
initially serve as Director, Advanced Technology, of the Company, and shall
report to the President and the Chief Executive Officer. The Executive
acknowledges and agrees that he owes a fiduciary duty of loyalty to the Company
to discharge his duties and otherwise act in a manner consistent with the best
interests of the Company and its Subsidiaries.
(b) During the Employment Period, the Executive shall devote
his best efforts and full working time, attention and energies to the
performance of his duties and responsibilities under this Agreement (except for
vacations to which he is entitled pursuant to Section 2(a) and except for
illness or incapacity). During the Employment Period, the Executive shall not
engage in any business activity which, in the reasonable judgment of the Board
(excluding the Executive if he should be a member of the Board at the time of
such determination), conflicts with the duties of the Executive hereunder,
whether or not such activity is pursued for gain, profit or other pecuniary
advantage.
(c) During the Employment Period, the Company shall not
reduce, diminish or take any action which would in any way materially adversely
affect the Executive's position or duties as set forth herein.
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Section 4. Termination.
(a) Termination Date. The Executive's employment under this
Agreement shall terminate upon the earliest to occur (the date of such
occurrence being the "Termination Date") of (i) the fourth anniversary of the
Effective Date, (ii) the effective date of the Executive's resignation (a
"Resignation"), (iii) the Executive's death or Disability (an "Involuntary
Termination"), (iv) the effective date of a termination of the Executive's
employment for Cause by the Board (a "Termination for Cause"), and (v) the
effective date of a termination of the Executive's employment by the Board for
reasons that do not constitute Cause or as a result of the Company's election
not to renew this Agreement pursuant to Section 1 (a "Termination Without
Cause"). The effective date of a Resignation shall be as determined under
Section 4(b); the effective date of an Involuntary Termination shall be the date
of death or, in the event of a Disability, the date specified in a notice
delivered to the Executive by the Company; and the effective date of a
Termination for Cause or a Termination Without Cause shall be the date specified
in a notice delivered to the Executive by the Company of such termination.
(b) Resignation. The Executive shall give the Company and the
Board at least 90 days' prior written notice of a Resignation, with the
effective date of such Resignation specified therein. The Board may, in its
discretion, accelerate the effective date of the Resignation.
Section 5. Effect of Termination; Severance.
(a) In the event of a Termination Without Cause, the Executive
or his beneficiaries or estate shall have the right to receive the following:
(i) the unpaid portion of the Base Salary, computed
on a pro rata basis to the Termination Date;
(ii) the unpaid portion of the Base Salary for the
period beginning on the Termination Date and ending on the earlier of
(A) 90 days from the Termination Date and (B) the date on which the
Executive obtains subsequent employment (as an employee, consultant,
independent contractor, or otherwise), payable in the same amounts and
at the same intervals as the Base Salary was paid immediately prior to
the Termination Date; provided, however, that in the event of a breach
by the Executive of Section 6, 7, 8, or 9 on or after the Termination
Date, the provisions of Section 11 shall apply; and
(iii) reimbursement for any expenses for which the
Executive shall not have been previously reimbursed, as provided in
Section 2(c); and
(iv) the portion of any bonus payable in accordance
with Section 2(b) for the calendar year in which such termination
occurs, pro rated through the date of such termination on a per diem
basis.
(b) In the event of a Termination for Cause, an Involuntary
Termination or a Resignation, the Executive or his beneficiaries or estate shall
have the right to receive the following:
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(i) the unpaid portion of the Base Salary, computed
on a pro rata basis to the Termination Date; and
(ii) reimbursement for any expenses for which the
Executive shall not have been previously reimbursed, as provided in
Section 2(c).
(c) Upon any termination, neither the Executive nor his
beneficiaries or estate shall have any further rights under this Agreement or
any rights arising out of this Agreement other than as provided in Sections 5(a)
and (b) above.
Section 6. Nondisclosure and Nonuse of Confidential Information.
The Executive will not disclose or use at any time, either
during the Employment Period and for a period of five years thereafter, any
Confidential Information of which the Executive is or becomes aware, whether or
not such information is developed by him, except to the extent that such
disclosure or use is directly related to and required by the Executive's
performance of duties assigned to the Executive by the Company.
Section 7. Inventions and Patents.
The Executive agrees that all Work Product belongs to the
Company. The Executive will promptly disclose such Work Product to the Board and
perform all actions reasonably requested by the Board (whether during or after
the Employment Period) to establish and confirm such ownership (including,
without limitation, the execution and delivery of assignments, consents, powers
of attorney and other instruments) and to provide reasonable assistance to the
Company in connection with the prosecution of any applications for patents,
trademarks, trade names, service marks or reissues thereof or in the prosecution
or defense of interferences relating to any Work Product.
Section 8. Non-Compete, Non-Solicitation, Non-Disparagement.
The Executive acknowledges and agrees with the Company that,
during the course of the Executive's employment with the Company, the Executive
has had and will continue to have the opportunity to develop relationships with
existing employees, customers and other business associates of the Company and
its Subsidiaries which relationships constitute goodwill of the Company, and the
Company would be irreparably damaged if the Executive were to take actions that
would damage or misappropriate such goodwill. Accordingly, the Executive agrees
as follows:
(a) The Executive acknowledges that the Company currently
conducts the Subject Business throughout the world (the "Territory").
Accordingly, during the term hereof and until the first anniversary of the
Termination Date (the "Non-Compete Period"), the Executive shall not, directly
or indirectly, enter into, engage in, assist, give or lend funds to or otherwise
finance, be employed by or consult with, or have a financial or other interest
in, any business which competes or could, in the reasonable judgment of the
Board, be deemed to be in competition with, at the time in question, the Company
within the Territory, whether for or by himself or as an independent contractor,
agent, stockholder, partner or joint venturer for any other Person. To the
extent that the covenant provided for in this Section 8(a) may later be
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deemed by a court to be too broad to be enforced with respect to its duration or
with respect to any particular activity or geographic area, the court making
such determination shall have the power to reduce the duration or scope of the
provision, and to add or delete specific words or phrases to or from the
provision. The provision as modified shall then be enforced. The Company
acknowledges that the Executive holds a 10% membership interest in Igain, LLC, a
Connecticut limited liability company which provides incentive services to the
Company and to other customers which may be involved in on-line market research
activities, and the Company agrees that Executive's relationship with Igain, LLC
shall not be deemed to be a breach of this Section 8(a).
(b) Notwithstanding the foregoing, the aggregate ownership by
the Executive of no more than two percent (on a fully-diluted basis) of the
outstanding equity securities of any Person, which securities are traded on a
national or foreign securities exchange, quoted on the NASDAQ stock market or
other automated quotation system, and which Person competes with the Company (or
any part thereof) within the Territory, shall not be deemed to be a violation of
Section 8(a). In the event that any Person in which the Executive has any
financial or other interest directly or indirectly enters into a business during
the Non-Compete Period that competes with the Company within the Territory, the
Executive shall divest all of his interest (other than as permitted to be held
pursuant to the first sentence of this Section 8(b)) in such Person within 15
days after such Person enters into such business that competes with the Company
within the Territory.
(c) The Executive covenants and agrees that, during the period
commencing with the Effective Date and ending on the first anniversary of the
date on which the Executive ceases to be employed by the Company for any reason
whatsoever, the Executive will not, directly or indirectly, either for himself
or for any other Person (A) solicit any employee of the Company or any of its
Subsidiaries to terminate his or her employment with the Company or any of its
Subsidiaries or employ any such individual during his or her employment with the
Company or any of its Subsidiaries and for a period of one year after such
individual terminates his or her employment with the Company or any of its
Subsidiaries, (B) solicit any customer of the Company or any of its Subsidiaries
to purchase or distribute information, products or services of or on behalf of
the Executive or such other Person that are competitive with the information,
products or services provided by the Company or any of its Subsidiaries, or (c)
take any action that may cause injury to the relationships between the Company
or any of its Subsidiaries or any of their employees and any lessor, lessee,
vendor, supplier, customer, distributor, employee, consultant or other business
associate of the Company or any of its Subsidiaries as such relationship relates
to the Company's or any of its Subsidiaries' conduct of their business.
(d) The Executive understands that the foregoing restrictions
may limit his ability to earn a livelihood in a business which is competitive
with the business of the Company and any of its Subsidiaries, but he
nevertheless believes that he has received and will receive sufficient
consideration and other benefits as an employee of the Company and as otherwise
provided hereunder or as described in the recitals hereto to clearly justify
such restrictions which, in any event (given his education, skills and ability),
the Executive does not believe would prevent him from otherwise earning a
living.
(e) The foregoing non-compete restrictions shall not apply in
the event that
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the Executive is forced to terminate his employment with the Company as a result
of a material breach by the Company of any of its obligations to the Executive
under this Agreement, the Shareholders' Agreement between the Company, the
Executive and the other shareholders of the Company, to be entered into in
connection with the Closing under the Purchase Agreement, and any Stock Option
Agreement entered into between the Company and the Executive.
Section 9. Delivery of Materials Upon Termination of Employment.
The Executive shall deliver to the Company at the termination
of the Employment Period or at any time the Company may request all memoranda,
notes, plans, records, reports, computer tapes and software and other documents
and data (and copies thereof) relating to the Confidential Information, Work
Product or the Subject Business which he may then possess or have under his
control regardless of the location or form of such material and, if requested by
the Company, will provide the Company with written confirmation that all such
materials have been delivered to the Company.
Section 10. Insurance.
The Company may, for its own benefit, maintain "keyman" life
and disability insurance policies covering the Executive. The Executive will
cooperate with the Company and provide such information or other assistance as
the Company may reasonably request in connection with the Company obtaining and
maintaining such policies.
Section 11. Enforcement.
Because the Executive's services are unique and because the
Executive has access to Confidential Information and Work Product, the parties
hereto agree that money damages would be an inadequate remedy for any breach of
this Agreement. Therefore, in the event of a breach or threatened breach of this
Agreement, the Company or its successors or assigns may, in addition to other
rights and remedies existing in their favor, apply to any court of competent
jurisdiction for specific performance and/or injunctive or other relief in order
to enforce, or prevent any violations of, the provisions hereof (without posting
a bond or other security). In addition to the foregoing, and not in any way in
limitation thereof, or in limitation of any right or remedy otherwise available
to the Company, if the Executive violates any provision of the foregoing
Sections 6, 7, 8 or 9, any payments then or thereafter due from the Company to
the Executive pursuant to Section 5(a)(ii) shall be terminated forthwith and the
Company's obligation to pay and the Executive's right to receive such payments
shall terminate and be of no further force or effect, in each case without
limiting or affecting the Executive's obligations under such Sections 6, 7, 8
and 9 or the Company's other rights and remedies available at law or equity.
Section 12. Representations.
Each party hereby represents and warrants to the other party
that (a) the execution, delivery and performance of this Agreement by such party
does not and will not conflict with, breach, violate or cause a default under
any agreement, contract or instrument to which such party is a party or any
judgment, order or decree to which such party is subject, and (b) upon the
execution and delivery of this Agreement by such party, this Agreement will be a
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valid and binding obligation of such party, enforceable in accordance with its
terms, except as enforcement hereof may be limited by any applicable bankruptcy,
reorganization, insolvency or other laws affecting creditors rights generally or
by general principles of equity. In addition, the Executive represents and
warrants to the Company that the Executive is not a party to or bound by any
employment agreement, consulting agreement, non-compete agreement,
confidentiality agreement or similar agreement with any other Person (other than
the Executive's agreement with Igain, LLC referred to in Section 8(a)). The
Company and the Executive hereby terminate all existing employment or consulting
agreements between them, if any, to the extent such agreements may be in effect
after the date hereof.
Section 13. Definitions.
"Board" shall mean the board of directors of the Company.
"Business Day" shall mean any day that is not a Saturday,
Sunday, or a day on which banking institutions in New York are not required to
be open.
"Cause" shall mean (i) the Executive's material breach of any
of the terms of this Agreement; (ii) the conviction of a crime involving fraud,
theft or dishonesty by the Executive; (iii) the Executive's willful and
continuing disregard of lawful instructions of the Board or superiors (if any);
(iv) the continued use of alcohol or drugs by the Executive to an extent that,
in the good faith determination of the Board, such use interferes in any manner
with the performance of the Executive's duties and responsibilities; or (v) the
conviction of the Executive for violating any Law constituting a felony
(including the Foreign Corrupt Practices Act of 1977).
"Confidential Information" means information that is not
generally known to the public and that is used, developed or obtained by the
Company or any of its Subsidiaries in connection with the Subject Business,
including, but not limited to, (i) information, observations, procedures and
data obtained by the Executive while employed by the Company (including those
obtained prior to the date of this Agreement) concerning the business or affairs
of the Company or any of its Subsidiaries, (ii) products or services, (iii)
costs and pricing structures, (iv) analyses, (v) drawings, photographs and
reports, (vi) computer software, including operating systems, applications and
program listings, (vii) flow charts, manuals and documentation, (viii) data
bases, (ix) accounting and business methods, (x) inventions, devices, new
developments, methods and processes, whether patentable or unpatentable and
whether or not reduced to practice, (xi) customers and customer lists, (xii)
other copyrightable works, (xiii) all production methods, processes, technology
and trade secrets, and (xiv) all similar and related information in whatever
form. Confidential Information will not include any information that has been
published in a form generally available to the public prior to the date the
Executive proposes to disclose or use such information. Confidential Information
will not be deemed to have been published merely because individual portions of
the information have been separately published, but only if all material
features comprising such information have been published in combination.
"Disability" shall mean the physical or mental inability of
the Executive (i) to substantially perform all of his duties under this
Agreement for a period of 90 consecutive days
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or longer or for any 90 days in any period of 365 consecutive days, or (ii)
that, in the opinion of a physician selected by the Board (excluding the
Executive if the Executive is a member of the Board at such time) is likely to
prevent the Executive from substantially performing all of his duties under this
Agreement for more than 90 days in any period of 365 consecutive days.
"Subsidiary" of the Company means and includes (i) any
corporation more than 50% of whose stock of any class or classes having by the
terms thereof ordinary voting power to elect a majority of the directors of such
corporation (irrespective of whether or not at the time stock of any class or
classes of such corporation shall have or might have voting power by reason of
the happening of any contingency) is at the time owned by the Company or
indirectly through Subsidiaries and (ii) any partnership, association, joint
venture or other entity (other than a corporation) in which the Company directly
or indirectly through Subsidiaries, has more than a 50% equity interest at the
time.
"Work Product" shall mean all inventions, innovations,
improvements, technical information, systems, software developments, methods,
designs, analyses, drawings, reports, service marks, trademarks, tradenames,
logos and all similar or related information (whether patentable or
unpatentable) which relates to the Company's or any of its Subsidiaries' actual
or anticipated business, research and development or existing or future products
or services and which are conceived, developed or made by the Executive in
connection with or relating to (whether or not during usual business hours and
whether or not alone or in conjunction with any other Person) the Executive's
position and duties while employed by the Company (including those conceived,
developed or made prior to the date of this Agreement) together with all patent
applications, letters patent, trademark, tradename and service mark applications
or registrations, copyrights and reissues thereof that may be granted for or
upon any of the foregoing.
Section 14. General Provisions.
(a) Severability. It is the desire and intent of the Parties
hereto that the provisions of this Agreement be enforced to the fullest extent
permissible under the laws and public policies applied in each jurisdiction in
which enforcement is sought. Accordingly, if any particular provision of this
Agreement shall be adjudicated by a court of competent jurisdiction to be
invalid, prohibited or unenforceable for any reason, such provision, as to such
jurisdiction, shall be ineffective, without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of this
Agreement or affecting the validity or enforceability of such provision in any
other jurisdiction. Notwithstanding the foregoing, if such provision could be
more narrowly drawn so as not to be invalid, prohibited or unenforceable in such
jurisdiction, it shall, as to such jurisdiction, be so narrowly drawn, without
invalidating the remaining provisions of this Agreement or affecting the
validity or enforceability of such provision in any other jurisdiction.
(b) Notices. All notices, requests, demands, claims and other
communications hereunder shall be in writing and sufficient if (i) delivered
personally, (ii) delivered by certified United States Post Office mail, return
receipt requested, (iii) telecopied or (iv) sent to the recipient by a
nationally-recognized overnight courier service (charges prepaid) and addressed
to the intended recipient as set forth below:
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(a) if to the Executive, to:
Hugh Davis
c/o Greenfield Online, Inc.
274 Riverside Avenue
Westport, Connecticut 06880
Telecopier: (203) 221-0791
with a copy to:
Levett, Rockwood & Sanders, P.C.
33 Riverside Avenue
Westport, Connecticut 06881
Attention: Suzanne B. Albani, Esq.
Telecopier: (203) 226-8025;
(b) if to the Company, to:
Greenfield Online, Inc.
274 Riverside Avenue
Westport, Connecticut 06880
Attention: President
Telecopier: (203) 221-0791
with copies to:
Greenfield Holdings, Inc.
c/o InSight Capital Partners III, L.P.
122 East 42nd Street
Suite 2300
New York, New York 10168
Attention: Jeffrey Horing
Telecopier: (212) 681-0972;
O'Sullivan Graev & Karabell, LLP
30 Rockefeller Plaza
New York, New York 10112
Attention: Ilan S. Nissan, Esq.
Telecopier: (212) 408-2420; and
Preston Gates & Ellis LLP
701 Fifth Avenue
Suite 5000
Seattle, Washington 98104
Attention: Robert Jaffe, Esq.
Telecopier: (206) 623-7022;
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or such other address as the recipient party to whom notice is
to be given may have furnished to the other party in writing in accordance
herewith. Any such communication shall deemed to have been delivered and
received (a) in the case of personal delivery, on the date of such delivery, (b)
in the case of delivery by mail, on the third Business Day following such
mailing, (c) if telecopied, on the date telecopied, and (d) in the case of
delivery by nationally-recognized, overnight courier, on the Business Day
following dispatch.
(c) Entire Agreement. This Agreement and the documents
expressly referred to herein embody the complete agreement and understanding
among the parties and supersede and preempt any prior understandings, agreements
or representations by or among the parties, written or oral, which may have
related to the subject matter hereof in any way.
(d) Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
(e) Successors and Assigns. Except as otherwise provided
herein, this Agreement shall bind and inure to the benefit of and be enforceable
by the Executive and the Company and their respective successors, assigns,
heirs, representatives and estate, as the case may be; provided, however, that
the obligations of the Executive under this Agreement shall not be assigned
without the prior written consent of the Company.
(f) Amendment and Waiver. The provisions of this Agreement may
be amended and waived only with the prior written consent of the Company and the
Executive, and no course of conduct or failure or delay in enforcing the
provisions of this Agreement shall affect the validity, binding effect or
enforceability of this Agreement or any provision hereof.
(g) Governing Law. This Agreement shall be governed by and
construed in accordance with the domestic laws of the State of New York without
giving effect to any choice or conflict of law provision or rule that would
cause the application of the laws of any jurisdiction other than the State of
New York .
(h) Descriptive Headings; Nouns and Pronouns. Descriptive
headings are for convenience only and shall not control or affect the meaning or
construction of any provision of this Agreement. Whenever the context may
require, any pronouns used herein shall include the corresponding masculine,
feminine or neuter forms, and the singular form of nouns and pronouns shall
include the plural and vice-versa.
(i) Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT.
(j) Effectiveness. This Agreement shall not be deemed
effective (the "Effective Date") until the consummation of the Closing under the
Purchase Agreement.
* * * * *
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IN WITNESS WHEREOF, the parties hereto have executed this Employment Agreement
as of the date first written above.
GREENFIELD ONLINE, INC.
By:
---------------------------------
Name:
Title:
EXECUTIVE
-------------------------------------
Hugh Davis
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EXHIBIT C
---------
EXECUTION COPY
================================================================================
SHAREHOLDERS' AGREEMENT
AMONG
GREENFIELD ONLINE, INC.
AND
THE SHAREHOLDERS
(AS DEFINED HEREIN)
May 17, 1999
================================================================================
<PAGE>
TABLE OF CONTENTS
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<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Section 1. Restrictions on Transfer of Shareholder Shares; No Preemptive Rights.............................1
Section 2. Repurchase of Retained Shareholder Shares from Management Retained Shareholders..................2
Section 3. Permitted Transfers of Retained Shareholder Shares...............................................3
Section 4. Closing of Transfers.............................................................................4
Section 5. Additional Restrictions on Transfer of Shareholder Shares........................................4
Section 6. Sale of theCompany...............................................................................5
Section 7. Election of Directors; Voting....................................................................6
Section 8. Board Approval; Power of Attorney................................................................6
Section 9. Regulatory Matters...............................................................................7
Section 10. Joinders; Additional Shares of Stock.............................................................8
Section 11. No Conflicting Agreements........................................................................8
Section 12. Termination......................................................................................9
Section 13. Definitions......................................................................................9
Section 14. General Provisions...............................................................................14
</TABLE>
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Schedules and Exhibits
----------------------
Exhibit A - Form of Retained Shareholder Joinder
Exhibit B - Form of Investor Joinder
Exhibit C - Small Business Side Letter
Schedule I - Investor
Schedule II - Retained Shareholder
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SHAREHOLDERS' AGREEMENT
dated as of May 17, 1999, among
GREENFIELD ONLINE, INC., a
Connecticut corporation (the
"Company"), the Investor listed on
Schedule I hereto (together with
each Person who becomes an
Investor under this Agreement, the
"Investors"), and the Retained
Shareholder of the Company listed
on Schedule II hereto (together
with each Person who becomes a
Retained Shareholder under this
Agreement, the "Retained
Shareholders").
The Investors and the Retained Shareholders are collectively
referred to herein as the "Shareholders" and individually as a "Shareholder".
Capitalized terms used herein are defined in Section 13.
The Company and the Shareholders desire to enter into this
Agreement for the purposes, among others, of (i) assuring continuity in the
management and ownership of the capital stock of the Company and (ii) limiting
the manner and terms by which the Retained Shareholder Shares may be
transferred.
NOW, THEREFORE, in consideration of the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
Section 1. Restrictions on Transfer of Shareholder Shares;
No Preemptive Rights.
(a) No Retained Shareholder shall sell, transfer, assign or
otherwise dispose of (whether with or without consideration and whether
voluntarily or involuntarily or by operation of law or otherwise) (a "Transfer")
any interest in any Retained Shareholder Shares, except pursuant to (i) Sections
1(b) and (c) hereof, (ii) Sections 2 or 3 hereof, (iii) a Public Sale or (iv) a
Sale of the Company effected in accordance with Section 6 hereof (the Transfers
referred in clauses (ii), (iii) and (iv) being referenced herein as "Exempt
Transfers"); provided, however that a Management Retained Shareholder may not
Transfer any interest in any Retained Shareholder Shares until the fourth
anniversary of the date hereof except pursuant to the provisions of Section 3.
Notwithstanding anything in this Agreement to the contrary, no Retained
Shareholder shall Transfer any Shareholder Shares to any Competitor. As used
herein, the term "Competitor" means (i) any Person who is engaged in the Subject
Business (as such term is defined in the Purchase Agreement) and (ii) any
Affiliate of a Person identified in clause (i) above. Pursuant to Section
33-683(b)(2) of the Connecticut Business Corporation Act (the "CBCA"), the
Shareholders hereby waive any and all preemptive rights to which they may
otherwise be entitled pursuant to Section 33-683 of the CBCA.
(b) Procedure for Transfer of Retained Shareholder Shares by
Retained Shareholders. Prior to making any Transfer other than pursuant to an
Exempt Transfer, a Retained Shareholder shall give written notice (the "Sale
Notice") to the Company and the Investors. The Sale Notice shall disclose in
reasonable detail the identity of the prospective
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transferee(s), the number of Retained Shareholder Shares to be Transferred, the
terms and conditions of the proposed Transfer and shall confirm that the offer
to purchase such shares is irrevocable for at least 40 days. The Transferring
Shareholder shall not consummate such Transfer until 40 days after the Sale
Notice has been given to the Company and the Investors, unless the parties to
the Transfer have been finally determined pursuant to this Section 1 prior to
the expiration of such 40-day period (the date of the first to occur of such
events is referred to herein as the "Sale Authorization Date").
(c) First Refusal Rights with Respect to Retained Shareholder
Shares. The Company may elect to purchase all, or any portion, of the Retained
Shareholder Shares to be Transferred upon the same terms and conditions as those
set forth in the Sale Notice by delivering a written notice of such election to
the Transferring Shareholder and the Investors within 20 days after the Sale
Notice has been given to the Company and the Investors. If the Company has not
elected to purchase all of the Retained Shareholder Shares to be Transferred,
the Company shall provide notice of such election to the Investors and the
Investors may elect to purchase all (but not less than all) of their respective
Proportionate Percentage of the Retained Shareholder Shares not purchased by the
Company upon the same terms and conditions as those set forth in the Sale Notice
by giving written notice of such election to the Transferring Shareholder within
30 days after the Sale Notice has been given. In any written notice of such
acceptance, any Investor may offer to purchase any of such Retained Shareholder
Shares not purchased by the other Investors, up to such Investor's ratable share
of such unpurchased Retained Shareholder Shares actually purchased pursuant to
this Section 1(c), in which case any such Retained Shareholder Shares not
accepted by the Investors shall be deemed to have been offered to and accepted
by the Investors that exercised his, her or its option under this sentence on
the above-described terms and conditions. The Transferring Shareholder may
Transfer the Retained Shareholder Shares not elected to be purchased by the
Company and the Investors, at a price and on terms no more favorable to the
transferee(s) thereof than specified in the Sale Notice during the 90-day period
immediately following the Sale Authorization Date. Any Retained Shareholder
Shares not Transferred within such 90-day period shall be subject to the
provisions of Sections 1(b) and (c) upon subsequent Transfer.
Section 2. Repurchase of Retained Shareholder Shares from
Management Retained Shareholders.
(a) In the event of a Termination of Employment of any
Management Retained Shareholder (a "Terminated Shareholder"), the Company or its
designee shall have the right (but not the obligation) to repurchase from such
Terminated Shareholder (and each member of the Group of such Terminated
Shareholder) (x) all or any part of the Retained Shareholder Shares owned by
such Terminated Shareholder or any member of such Terminated Shareholder's Group
which constitute Non-Qualifying Retained Shareholder Shares, (y) if such
Termination of Employment shall be a Termination for Cause, all or part of the
Retained Shareholder Shares owned by such Terminated Shareholder or any member
of such Terminated Shareholder's Group which constitute Qualifying Shareholder
Shares and (z) if such Termination of Employment shall be a Termination for
Cause all or part of any vested Shareholder Shares owned by such Terminated
Shareholder or any member of such Terminated Shareholder's Group. The parties
hereto acknowledge that, as of the date hereof, Andrew Greenfield is not a
Management
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Retained Shareholder.
(b) The repurchase right of the Company or its designee under
this Section 2 may be exercised by written notice (a "Repurchase Notice"),
specifying the number of Retained Shareholder Shares to be repurchased, and
given to the Terminated Shareholder within 90 days of the Termination Date (or,
if the Company shall not have assigned its rights under this Section 2 and shall
be legally prevented (whether by contract, statute or otherwise) from making
such repurchase during the foregoing 90-day period, then such Repurchase Notice
may be delivered by the Company within 45 days after the date on which it shall
be legally permitted to make such repurchase), but in no event shall the Company
be permitted to make such election after the third anniversary of the
Termination Date. Any such Retained Shareholder Shares which are not purchased
by the Company or its designee during such period may be purchased by the
Investors, such purchase right to be exercisable upon 10 days written notice (a
"Purchase Notice") to the Terminated Shareholder after the date upon which the
number of Shareholder Shares to be repurchased by the Company, if any, shall
have been fully determined. Each such Investor may purchase up to his, her or
its Investor Percentage of such Retained Shareholder Shares. In any such
Purchase Notice, an Investor may offer to accept for purchase any of such
Retained Shareholder Shares not accepted by other Investors up to such
Investor's ratable share of such unaccepted Retained Shareholder Shares,
determined by reference to the actual number of Shareholder Shares owned by each
Investor actually purchasing Retained Shareholder Shares pursuant to this
Section 2(b). Upon the delivery of a Repurchase Notice or Purchase Notice to the
Terminated Shareholder, the Terminated Shareholder shall be obligated to sell or
cause to be sold to the Company, its designee or the Investors, as the case may
be, the Retained Shareholder Shares specified in such Repurchase Notice or
Purchase Notice, as the case may be.
(c) The price per Retained Shareholder Share to be paid under
this Section 2 shall be determined as follows:
(i) in the case of a repurchase of either (A) any
Non-Qualifying Retained Shareholder Shares or (B) any (1) Qualifying
Retained Shareholder Shares or (2) vested Shareholder Shares issued
pursuant to the exercise of an option or warrant, or options or
warrants for such vested Shareholder Shares, in each case in this
clause (B) following a Termination for Cause, the repurchase price to
be paid for each Retained Shareholder Share shall be the original cost
(subject to pro rata adjustment in the event of any stock split, stock
dividend or other subdivision of the Common Shares or reverse stock
split or other combination of the Common Shares or other similar pro
rata recapitalization event affecting the Common Shares) paid for each
such Retained Shareholder Share, provided that the original cost of an
option or warrant to purchase Stock shall be $1.00 in the aggregate for
all options or warrants which comprise a given option or warrant grant.
(d) The purchase price to be paid for any repurchase of
Retained Shareholder Shares pursuant to this Section 2 shall be paid in cash.
Section 3. Permitted Transfers of Retained Shareholder Shares.
The restrictions contained in Section 1(a) hereof shall not
apply with respect to
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any Transfer of Retained Shareholder Shares by (i) in the case of any Retained
Shareholder who is an individual, pursuant to a gift, will or the applicable
laws of descent and distribution, among such individual's Family Group or to a
trust in which such Retained Shareholder is the settlor and such Retained
Shareholder or any member of his or her Family Group is or are the beneficiaries
thereof, (ii) in the case of any Retained Shareholder who is not an individual,
to any member of the Group to which such Retained Shareholder belongs, (iii)
repurchase or acquisition of any Retained Shareholder Shares by an Investor (in
which case, such Retained Shareholder Shares shall be deemed to be Investor
Shares) or by the Company pursuant to approval by the Board, or (iv) any
Retained Shareholder to a financial institution in respect of the pledge of his
or her Retained Shareholder Shares to any such financial institution providing
financing to such Retained Shareholder; provided, however, that the restrictions
contained herein shall continue to be applicable to the Retained Shareholder
Shares after any such Transfer pursuant to clauses (i), (ii), (iii) and (iv)
above and; provided further, however, that the transferees of such Retained
Shareholder Shares shall have executed and delivered to the Company a Retained
Shareholder Joinder pursuant to Section 10 hereof.
Section 4. Closing of Transfers.
Transfers of Retained Shareholder Shares by any Shareholder to
the Company or any other Person under the terms of Section 2 or 3 hereof shall
be made at the offices of the Company on a mutually satisfactory Business Day
within 10 days after the expiration of the last applicable period described in
the relevant Section. Delivery of certificates or other instruments evidencing
such Shareholder Shares or shares of Stock, as the case may be, duly endorsed
for transfer and free and clear of all encumbrances, shall be made on such date
against payment of the purchase price therefor.
Section 5. Additional Restrictions on Transfer of Shareholder Shares.
(a) Legend. The certificates representing the Shareholder
Shares shall bear the following legend:
"THE SALE, TRANSFER, ASSIGNMENT, PLEDGE, OR ENCUMBRANCE OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE AND THE RIGHTS OF
THE HOLDER OF SUCH SECURITIES IN RESPECT OF THE ELECTION OF
DIRECTORS ARE SUBJECT TO THE TERMS AND CONDITIONS OF A
SHAREHOLDERS' AGREEMENT DATED AS OF MAY 17, 1999, AMONG
GREENFIELD ONLINE, INC. AND THE HOLDERS OF OUTSTANDING CAPITAL
STOCK OF SUCH CORPORATION. COPIES OF SUCH AGREEMENT MAY BE
OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER OF
RECORD OF THIS CERTIFICATE TO THE SECRETARY OF GREENFIELD
ONLINE, INC."
(b) Opinion of Counsel. Unless waived by the Company, no
holder of Shareholder Shares may Transfer any Shareholder Shares (except
pursuant to an effective
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registration statement under the Securities Act) without first delivering to the
Company an opinion of counsel (reasonably acceptable in form and substance to
the Company) that neither registration nor qualification under the Securities
Act and applicable state securities laws is required in connection with such
Transfer.
(c) Transfers in Violation of Agreement. Any Transfer or
attempted Transfer of any Shareholder Shares in violation of any provision of
this Agreement shall be void ab initio, and the Company shall not record such
Transfer on its books or treat any purported transferee of such Shareholder
Shares as the owner of such Shareholder Shares for any purpose.
Section 6. Sale of the Company.
(a) Approved Sale. If the Board or if the holders of a
majority of the Investor Shares then outstanding approve a Sale of the Company
(an "Approved Sale"), the holders of Retained Shareholder Shares shall consent
to and raise no objections against the Approved Sale, and if the Approved Sale
is structured as (i) a merger or consolidation of the Company or a sale of all
or substantially all of the Company's assets, each holder of Retained
Shareholder Shares hereby waives any dissenters rights, appraisal rights or
similar rights in connection with such merger, consolidation or asset sale, or
(ii) a sale of the Company's Stock, the holders of Retained Shareholder Shares
hereby agree to sell their Retained Shareholder Shares on the terms and
conditions approved by the Board or the holders of a majority of the then
outstanding Investor Shares, as the case may be. The holders of Retained
Shareholder Shares shall take all necessary and desirable actions in connection
with the consummation of the Approved Sale, including, but not limited to, the
execution of such agreements and such instruments and other actions reasonably
necessary to provide the representations, warranties, indemnities, covenants,
conditions, non-compete agreements, escrow agreements and other provisions and
agreements relating to such Approved Sale. In the event that any holder of
Retained Shareholder Shares fails for any reason to take any of the foregoing
actions, he, she or it hereby grants an irrevocable power of attorney to any
Shareholder, Board member or the Company to take all actions and execute and
deliver all documents deemed by such Persons necessary to effectuate the terms
of this Section 6. Any Retained Shareholder who shall Transfer Retained
Shareholder Shares in connection with an Approved Sale shall receive the same
type of consideration in respect of his Retained Shareholder Shares and upon the
same terms and conditions as all other Shareholders participating in such
Approved Sale.
(b) Purchaser Representative. If the Company or the holders of
the Company's securities enter into any negotiation or transaction for which
Regulation D (or any similar rule or regulation thereunder) promulgated by the
Securities and Exchange Commission may be available with respect to such
negotiation or transaction (including a merger, consolidation or other
reorganization), each holder of Retained Shareholder Shares shall, at the
request of the Company, appoint a purchaser representative (as such term is
defined in Rule 501 promulgated under Regulation D) reasonably acceptable to the
Company. If any holder of Retained Shareholder Shares appoints a purchaser
representative designated by the Company, the Company shall pay the fees of such
purchaser representative, but if any holder of Retained Shareholder Shares
declines to appoint the purchaser representative designated by the Company such
holder shall appoint another purchaser representative (reasonably acceptable to
the
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Company), and such holder shall be responsible for the fees of the purchaser
representative so appointed.
Section 7. Election of Directors; Voting.
(a) The number of directors constituting the Board of the
Company, as fixed from time to time by the Board in accordance with the
Company's by-laws, shall initially be five (5). Notwithstanding any provision in
the Company's by-laws, the number of directors constituting the Board shall not
be changed without the consent of a majority of the Investor Shares. At each
annual meeting of the holders of any class of Stock, and at each special meeting
of the holders of any class of Stock called for the purpose of electing
directors of the Company, and at any time at which holders of any class of Stock
shall have the right to, or shall, vote for or consent in writing to the
election of directors of the Company, then, and in each such event, the
Shareholders shall vote all of the Shareholder Shares owned by them or their
Affiliates, and their respective transferees shall so vote for, or consent in
writing with respect to such shares in favor of, the election of a Board of the
Company constituted as follows:
(i) two (2) directors who shall be designated and
approved by the Management Retained Shareholders holding at least a
majority of the then outstanding Retained Shareholder Shares held by
Management Retained Shareholders; and
(ii) three (3) directors who shall be designated and
approved by the holders of at least a majority of the then outstanding
Investor Shares.
The parties hereby designate and approve the following
individuals to serve as the initial members of the Board effective as of the day
after the Closing Date (i) the Management Retained Shareholders hereby designate
and approve Joel Mesznik and Rudy Nadilo as directors pursuant to Section
8(a)(i) hereof, and (ii) the Investor hereby designates and approves Jeffrey
Horing, Peter Sobiloff and Burt Manning as directors pursuant to Section
8(a)(ii) hereof. The directors designated under Section 8(a)(i) shall designate
one of such directors to serve on the Board's compensation committee. The
directors designated under Section 8(a)(ii) shall designate one of such
directors to serve on the Board's compensation committee and on each other
committee of the Board.
(b) The holders of Shareholder Shares shall vote their shares
(i) to remove any director whose removal is required by the party or parties
with the power to designate such director and (ii) to fill any vacancy created
by the removal, resignation or death of a director, in each case for the
election of a new director designated and approved, if approval is required, in
accordance with the provisions of this Section 7. Vacancies of the Board shall
be filled within 30 days of the date such vacancy is created or immediately
before the first action to be taken by the Board after the date such vacancy is
created.
Section 8. Board Approval; Power of Attorney.
(a) Consistent with the requirements of applicable law, the
Board shall act by a majority as constituted in a supervisory role with respect
to the Company and shall be
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responsible for strategic decisions relating to the Company.
(b) The following transactions by the Company or any
Subsidiary thereof shall require the specific approval of a majority of the
Board (notwithstanding any law requiring the specific approval of a percentage
higher than a majority of the Board) as constituted:
(i) the Company's annual budget and capital
expenditures which shall exceed 15% of the annual budget theretofore
approved by the Board;
(ii) the hiring or dismissal of any employee, agent,
representative or consultant who or which is or will be paid an
aggregate annual compensation or consideration in excess of $125,000;
(iii) the direct or indirect investment in, purchase
or other acquisition of, in one or a series of transactions, any
business, assets, securities or other property of another Person, other
than in the ordinary course of business;
(iv) any transaction (other than in the ordinary
course of business, consistent with past practices) involving aggregate
consideration to or from the Company or any Subsidiary in excess of
$250,000;
(v) any agreement or transaction between the Company
and any Affiliate of the Company; provided, however, that the foregoing
shall not restrict (A) transactions between the Company and any of its
Subsidiaries, if any, or among any of such Subsidiaries, if any, (B)
payments to employees of the Company in the ordinary course of business
of the Company or any of its Subsidiaries, (C) transactions pursuant to
any stock option or other incentive-based plan for employees of the
Company that is approved by the Board, and (D) transactions
contemplated by this Agreement;
(vi) any amendment or modification of the Company's
articles of incorporation or by-laws; and
(vii) an Approved Sale, or any Public Offering of the
Stock of the Company.
Section 9. Regulatory Matters.
(a) Each Shareholder agrees to cooperate with the Company in
all reasonable respects in complying with the terms and provisions of the letter
agreement dated the date hereof among the Company, the Investor and certain
other parties, a copy of which is attached hereto as Exhibit C, regarding small
business matters (the "Small Business Sideletter"), including, without
limitation, voting to approve amending the Company's articles or certificate of
incorporation, the Company's bylaws or this Agreement in a manner reasonably
acceptable to the Shareholders or any Regulated Holder (as defined in the Small
Business Sideletter) entitled to make such request pursuant to the Small
Business Sideletter in order to remedy a Regulatory Problem (as defined in the
Small Business Sideletter). Anything contained in this Section 9 to the contrary
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notwithstanding, no Shareholder shall be required under this Section 9 to take
any action that would adversely affect in any material respect such
Shareholder's rights under this Agreement or as a shareholder of the Company.
(b) The Company and each Shareholder agree not to amend or
waive the voting or other provisions of the Company's articles or certificate of
incorporation, the Company's bylaws or this Agreement if such amendment or
waiver would cause any Regulated Holder to have a Regulatory Problem (as defined
in the Small Business Sideletter). The Investor agrees to notify the Company as
to whether or not it or any of its Affiliates would have a Regulatory Problem
promptly after the Investor has notice of such amendment or waiver.
Section 10. Joinders; Additional Shares of Stock.
(a) Any transferee of Stock of the Company from an Investor
(other than the Company, a Retained Shareholder or a transferee in a Public
Sale) shall, as a condition to such Transfer, become an Investor for purposes of
this Agreement, and if such transferee is not already bound hereby as an
Investor, he, she or it shall execute and deliver to the Company an Investor
Joinder. Any transferee of Stock of the Company from a Retained Shareholder
(other than the Company, an Investor or a transferee in a Public Sale) shall, as
a condition to such Transfer, become a Retained Shareholder for purposes of this
Agreement, and if such transferee is not already bound hereby as a Retained
Shareholder, he, she or it shall execute and deliver to the Company a Retained
Shareholder Joinder. Any transferee of Stock from Andrew Greenfield shall, as a
further condition to such Transfer, agree to bound by the terms and conditions
of Section 1.8 (if applicable) of the Purchase Agreement with respect to such
Stock.
(b) In the event additional shares of Stock are issued by the
Company to a Shareholder at any time during the term of this Agreement, either
directly or upon the exercise or exchange of securities of the Company
exercisable for or exchangeable into shares of Stock, such additional shares of
Stock shall, as a condition to such issuance, become subject to the terms and
provisions of this Agreement.
(c) In the event additional shares of Stock are issued by the
Company to any Person that is (i) an employee, manager, officer, director or
consultant of the Company or (ii) a third party investor which is not an
Affiliate of the Company, such Person, as a condition to receiving such shares
of Stock shall agree to execute and deliver to the Company a joinder in
substantially the form of Exhibit A (in the case of clause (i)) or Exhibit B (in
the case of clause (ii)), and to be deemed a Shareholder hereunder and agree
that such additional shares will be subject to the terms and provisions of this
Agreement provided that if such Person was a Retained Shareholder prior thereto,
such Person shall be deemed to have continued such status and if such Person was
an Investor prior thereto, such Person shall be deemed to have continued such
status.
Section 11. No Conflicting Agreements.
No Shareholder shall enter into any stockholder agreements or
arrangements of any kind with any Person with respect to any Stock on terms
inconsistent with the provisions of
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this Agreement (whether or not such agreements or arrangements are with other
Shareholders or with Persons that are not parties to this Agreement), including,
but not limited to, agreements or arrangements with respect to the acquisition
or disposition of Stock in a manner that is inconsistent with this Agreement.
Section 12. Termination.
(a) The provisions of this Agreement specified below shall
terminate and, except as otherwise expressly provided herein, shall be of no
further force or effect and shall not be binding upon any party hereto, at the
times specified below:
(i) Sections 1, 2 (with respect to all Qualifying
Retained Shareholder Shares) 5, 6, 7, 8 and 10 hereof shall terminate
upon the first to occur of a Sale of the Company or a Qualified Public
Offering;
(ii) Section 2 hereof shall terminate as to (x) those
Non-Qualifying Retained Shareholder Shares that are registered in a
Qualified Public Offering or sold pursuant to a Sale of the Company or
(y) those Retained Shareholder Shares Transferred in compliance with
this Agreement to any Person other than to a Retained Shareholder or
other than to a member of any Retained Shareholder's Group;
(iii) all provisions of this Agreement shall
terminate upon the first to occur of (A) the dissolution, liquidation
or winding-up of the Company and (B) the approval of such termination
by (1) the Company and (2) the holders of a majority of the then
outstanding Investor Shares.
(b) As to any particular Shareholder, this Agreement shall no
longer be binding or of further force or effect as to such Shareholder, except
as noted below or otherwise expressly provided herein, as of the date such
Shareholder has Transferred all such Shareholder's Shareholder Shares and the
transferee(s) of such Shareholder Shares, if required by this Agreement, shall
have become a party hereto; provided, however, that no such termination shall be
effective if such Shareholder or such transferee(s) is/are in breach of this
Agreement.
Section 13. Definitions.
"Affiliate" means, with respect to any Person, any of (a) a
director, officer, partner or member of such Person, (b) a spouse, parent,
sibling or descendant of such Person or a spouse, parent, sibling or descendant
of a director, officer, or partner of such Person and (c) any other Person that,
directly or indirectly, through one or more intermediaries, controls, or is
controlled by, or is under common control with, another Person. The term
"control" includes, without limitation, the possession, directly or indirectly,
of the power to direct the management and policies of a Person, whether through
the ownership of voting securities, by contract or otherwise.
"Approved Sale" shall have the meaning set forth in Section 6.
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"Board" means the board of directors of the Company.
"Business Day" means any day that is not a Saturday, Sunday or
a day on which banking institutions in New York, New York are not required to be
open.
"Class A Common," means the Class A Common Stock, $0.01 par
value per share, of the Company.
"Class B Common" means the Class B Common Stock, $0.01 par
value per share, of the Company.
"Closing Date" shall have the meaning ascribed thereto in the
Purchase Agreement.
"Common Shares" means the Class A Common and/or the Class B
Common, as applicable.
"Company" shall have the meaning set forth in the Caption.
"Disability" shall have the meaning, in the case of any
Retained Shareholder, set forth in the Employment Agreement, if any, of such
Retained Shareholder, or in the absence of such an Employment Agreement, shall
mean the physical or mental inability of the Retained Shareholder (i) to
substantially perform all of his or her duties for a period of 90 consecutive
days or longer or for any 90 days in any period of 365 consecutive days, or (ii)
that, in the opinion of a physician selected by the Board (excluding the
Retained Shareholder if the Retained Shareholder is a member of the Board at
such time), is likely to prevent the Retained Shareholder from substantially
performing all of his or her duties for more than 90 days in any period of 365
consecutive days.
"Employment Agreement" shall mean the employment agreement
between the Company or any of its Subsidiaries and the appropriate Retained
Shareholder.
"Exempt Transfers" shall have the meaning set forth in Section
1.
"Family Group" means an individual's spouse and descendants
(whether natural or adopted) and any trust solely for the benefit of such
individual and/or the individual's spouse or descendants.
"Group" means:
(i) in the case of any Shareholder which is a partnership or a
limited liability company, (a) such partnership or limited liability company and
any of its limited or general partners or members, (b) any corporation or other
business organization to which such partnership or limited liability company
shall sell all or substantially all of its assets or with which it shall be
merged and (c) any Affiliate of such partnership or limited liability company;
(ii) in the case of any Shareholder which is a corporation,
(a) such corporation,
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(b) any corporation or other business organization to which such corporation
shall sell or transfer all or substantially all of its assets or with which it
shall be merged and (c) any Affiliate or shareholder of such corporation; and
(iii) in the case of any Shareholder who is an individual,
such Shareholder's Family Group.
"Independent Third Party" means any Person who, immediately
prior to the contemplated transaction, individually and with its Group does not
own in excess of 5% of the Common Shares on a fully diluted basis.
"Investor Joinder" means a joinder agreement, substantially in
the form of Exhibit B hereto, by which a Person becomes an Investor after the
date hereof.
"Investor Shares" means any Shareholder Shares held by an
Investor.
"Investor" shall have the meaning set forth in the Caption.
"Investor Percentage" means, as to each Investor, the
fraction, expressed as a percentage, the numerator of which is the total number
of shares of Stock of the Company held by such Investor, and the denominator of
which is the total number of shares of Stock of the Company held by all of the
Investors.
"Management Retained Shareholder" means any Retained
Shareholder who is an officer or employee of the Company or any Subsidiary, and
includes such officer's or employee's Family Group.
"Non-Qualifying Retained Shareholder Shares" means all
Retained Shareholder Shares constituting outstanding shares of Stock held by a
Management Retained Shareholder that are not Qualifying Retained Shareholder
Shares and which were not acquired upon the exercise of any option or warrant.
"Person" shall be construed broadly and shall include, without
limitation, an individual, a partnership, an investment fund, a limited
liability company, a corporation, an association, a joint stock company, a
trust, a joint venture, an unincorporated organization and a governmental entity
or any department, agency or political subdivision thereof.
"Proportionate Percentage" means the pro rata percentage of
Stock being offered for sale that each Investor shall be entitled to purchase,
which pro rata percentage, as to each such Investor, shall be the percentage
figure which expresses the ratio between the number of Common Shares owned by
such Investor and the aggregate number of Common Shares owned by all
Shareholders (in each case calculated on a fully diluted basis) excluding, in
the case of Sections 1(b) and (c) hereof, the Stock proposed to be Transferred
by a Retained Shareholder.
"Public Offering" means the sale, in an underwritten public
offering registered under the Securities Act, of the Common Shares, other than
any offering made in connection with a business acquisition or an employee
benefit plan.
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"Public Sale" means any sale of Shareholder Shares to the
public pursuant to an offering registered under the Securities Act or subsequent
to the Company registering any offering Shareholder Shares under the Securities
Act to the public through a broker, dealer or market maker (pursuant to the
provisions of Rule 144 promulgated under the Securities Act or otherwise).
"Purchase Agreement" means the Stock Purchase and Redemption
Agreement dated as of May 12, 1999, among the Company and the Shareholders, as
amended, modified or supplemented from time to time.
"Purchase Notice" shall have the meaning set forth in Section
2.
"Qualified Public Offering" means the sale by one or more
Persons in an underwritten Public Offering under the Securities Act of equity
securities of the Company (or its successor) which results in the aggregate
gross proceeds to the Company from such sales (before underwriters' discounts
and selling commissions) greater than or equal to $30 million and following
which such securities are listed or admitted for trading on a
nationally-recognized securities exchange or on the Nasdaq National Market
System.
"Qualifying Retained Shareholder Shares" means, in the case of
Retained Shareholder Shares constituting outstanding shares of Stock held by a
Management Retained Shareholder which were not acquired upon the exercise of any
option or warrant, (i) on the first anniversary of the applicable Retained
Shares Acquisition Date, 25% of the Retained Shareholder Shares so acquired on
such Retained Shares Acquisition Date; and (ii) on each six-month anniversary
thereafter, 12.5% of the Shareholder Shares acquired on such Retained Shares
Acquisition Date, until 100% of the Shareholder Shares acquired on such Retained
Shares Acquisition Date have become Qualifying Retained Shareholder Shares.
Prior to the first anniversary of the applicable Retained Shares Acquisition
Date, none of the Retained Shareholder Shares held by such Management
Shareholder shall be Qualifying Retained Shareholder Shares. In the case of any
Management Retained Shareholder, any Retained Shareholder Shares may be subject
to such accelerated vesting as set forth in the Joinder executed by such
Management Retained Shareholder.
"Repurchase Notice" shall have the meaning set forth in
Section 2.
"Retained Shareholder Joinder" means a joinder agreement,
substantially in the form of Exhibit A hereto, by which a person becomes a
Retained Shareholder after the date hereof.
"Retained Shareholder Shares" shall mean any Shareholder
Shares held by a Retained Shareholder or the Retained Shareholder's Group.
"Retained Shares Acquisition Date" means, as to Shareholder
Shares acquired by a Management Retained Shareholder as part of a single
transaction, the date on which the Management Retained Shareholder acquired such
Shareholder Shares.
12
<PAGE>
"Sale Authorization Date" shall have the meaning set forth in
Section 1(b).
"Sale Notice" has the meaning set forth in Section 1(b).
"Sale of the Company" means the sale of the Company to an
Independent Third Party or group of Independent Third Parties that are
Affiliates pursuant to which such party or parties acquire (i) capital stock of
the Company possessing the voting power to elect a majority of the Board
(whether by merger, consolidation or issuance, sale or transfer of the Company's
capital stock) or (ii) all or substantially all of the Company's assets
determined on a consolidated basis.
"Securities Act" means the Securities Act of 1933, as amended
from time to time.
"Shareholder" shall have the meaning set forth in the
Preamble.
"Shareholder Shares" means (i) any Common Shares purchased or
otherwise acquired by any Shareholder (including, without limitation, any shares
of Common Shares purchased upon exercise of an option or warrant to acquire
Common Shares or a similar security or Shareholder Shares acquired upon the
consummation of a merger), (ii) any equity securities issued or issuable
directly or indirectly with respect to the Common Shares referred to in clause
(i) above by way of stock dividend or stock split or in connection with a
combination of shares, exchange of capital stock, recapitalization, merger,
consolidation or other reorganization and (iii) any other shares of Stock of the
Company held by a Shareholder.
"Small Business Side Letter" has the meaning set forth in
Section 9(a).
"Stock" means, with respect to any Person, such Person's
capital stock or any options, warrants or other securities (including debt
securities) that are directly or indirectly convertible into, or exercisable or
exchangeable for, such Person's capital stock. Whenever a reference herein to
Stock is referring to any derivative security, such term shall include such
derivative security and all underlying Stock directly or indirectly issuable
upon conversion, exchange or exercise of such derivative security.
"Subsidiary" means, with respect to any Person, any other
Person of which the securities having a majority of the ordinary voting power in
electing the board of directors (or other governing body) are, at the time as of
which any determination is being made, owned by such first Person either
directly or through one or more of its Subsidiaries.
"Terminated Shareholder" shall have the meaning set forth in
Section 2(a).
"Termination Date" shall mean as to such Retained Shareholder,
the effective date of the Termination of Employment of such Retained
Shareholder.
"Termination for Cause" shall have the meaning, in the case of
any Management Retained Shareholder, set forth in the Employment Agreement, if
any, of such Management Retained Shareholder, or in the absence of such an
Employment Agreement, shall mean a Termination of Employment for Cause (as
defined herein).
13
<PAGE>
"Termination of Employment" shall mean, as to any Management
Retained Shareholder, the termination of the employment with the Company or any
of its Subsidiaries of such Management Retained Shareholder for any reason
whatsoever, including, but not limited to, termination by Resignation, discharge
(either pursuant to a Termination of Employment for Cause or otherwise),
retirement, death, Disability or non-renewal of an Employment Agreement.
"Termination of Employment for Cause" shall mean (i) the
Management Retained Shareholder's material breach of any of the terms of his
Employment Agreement; (ii) the conviction of a crime involving fraud, theft or
dishonesty by the Management Retained Shareholder; (iii) the Management Retained
Shareholder's willful and continuing disregard of lawful instructions of the
Board or superiors (if any); (iv) the continued use of alcohol or drugs by the
Management Retained Shareholder to an extent that, in the good faith
determination of the Board, such use interferes in any manner with the
performance of the Management Retained Shareholder's duties and responsibilities
as an employee of the Company; or (v) the conviction of the Management Retained
Shareholder for violating any law constituting a felony (including the Foreign
Corrupt Practices Act of 1977).
"Transfer" has the meaning set forth in Section 1(a).
"Voting Stock" means the capital stock, of any class, of the
Company entitled to vote for the election of directors of the Company.
Section 14. General Provisions.
(a) Amendment; Waiver and Release. Except as otherwise
provided herein, no modification, amendment or waiver of any provision of this
Agreement shall be effective unless such modification, amendment or waiver is
approved in writing by the Company and the holders of at least a majority of the
Voting Stock held by the Shareholders; provided, however, that no such
modification, amendment or waiver that would be adverse to the interests of any
(i) Retained Shareholder shall be made without the prior written consent of a
majority in interest of the Retained Shareholders, and (ii) Investor shall be
made without the prior written consent of a majority in interest of the
Investors. The failure of any party to enforce any of the provisions of this
Agreement shall in no way be construed as a waiver of such provisions and shall
not affect the right of such party thereafter to enforce each and every
provision of this Agreement in accordance with its terms.
(b) Severability. It is the desire and intent of the parties
hereto that the provisions of this Agreement be enforced to the fullest extent
permissible under the laws and public policies applied in each jurisdiction in
which enforcement is sought. Accordingly, if any particular provision of this
Agreement shall be adjudicated by a court of competent jurisdiction to be
invalid, prohibited or unenforceable for any reason, such provision, as to such
jurisdiction, shall be ineffective, without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of such
provision in any other jurisdiction. Notwithstanding the foregoing, if such
provision could be more narrowly drawn so as not to be invalid, prohibited or
unenforceable in such jurisdiction, it shall, as to such jurisdiction, be so
narrowly drawn, without invalidating the remaining provisions of this Agreement
or affecting the validity or enforceability
14
<PAGE>
of such provision in any other jurisdiction.
(c) Entire Agreement. Except as otherwise expressly set forth
herein, this document and the other documents referred to herein constitute the
complete agreement and understanding among the parties hereto with respect to
the subject matter hereof and thereof and supersede and preempt any prior
understandings, agreements or representations by or among the parties, written
or oral, which may have related to the subject matter hereof in any way.
(d) Successors and Assigns. Except as otherwise provided
herein, this Agreement shall bind and inure to the benefit of and be enforceable
by the Company and its successors and assigns and the Shareholders and any
subsequent holders of Shareholder Shares and the respective successors and
assigns of each of them, so long as they hold Shareholder Shares. The Investor
may assign its rights under this Agreement to any of its members without the
consent of any other party hereto. None of the provisions hereof shall create,
or be construed or deemed to create, any right of employment in favor of any
Person by the Company or any of its Subsidiaries. This Agreement is not intended
to create any third party beneficiaries.
(e) Counterparts. This Agreement may be executed in separate
counterparts each of which shall be an original and all of which taken together
shall constitute one and the same agreement.
(f) Remedies. The Company and the Shareholders shall be
entitled to enforce their rights under this Agreement specifically to recover
damages by reason of any breach of any provision of this Agreement and to
exercise all other rights existing in their favor. The parties hereto agree and
acknowledge that money damages may not be an adequate remedy for any breach of
the provisions of this Agreement and that the Company and any Shareholder may in
his, her or its sole discretion apply to any court of law or equity of competent
jurisdiction for specific performance and/or injunctive relief (without posting
a bond or other security) in order to enforce or prevent any violation of the
provisions of this Agreement.
(g) Notices. All notices or other communications pursuant to
this Agreement shall be in writing and shall be deemed to be sufficient if
delivered personally, telecopied, sent by nationally-recognized, overnight
courier or mailed by registered or certified mail (return receipt requested),
postage prepaid, to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
(i) if to the Company, to:
Greenfield Online, Inc.
274 Riverside Avenue
Westport, Connecticut 06880
Attention: Chief Executive Officer
Telecopier: (203) 221-0791;
15
<PAGE>
with copies to:
Preston Gates & Ellis LLP
701 Fifth Avenue
Suite 5000
Seattle, Washington 98014
Attention: Robert S. Jaffe, Esq.
Telecopier: (206) 623-7022
(ii) if to the Investor, to:
Greenfield Holdings, LLC
c/o InSight Capital Partners III, L.P.
122 East 42nd Street, Suite 2300
New York, New York 10168
Attention: Jeffrey Horing
Telecopier: (212) 681-0972;
with a copy to:
O'Sullivan Graev & Karabell, LLP
30 Rockefeller Plaza
41st Floor
New York, New York 10112
Attention: Ilan S. Nissan, Esq.
Telecopier: (212) 408-2420; and
(iii) if to any Retained Shareholder or any other
Investor, at the address set forth on the signature page hereto or in
the applicable Retained Shareholder Joinder or Investor Joinder.
All such notices and other communications shall be deemed to have
been given and received (A) in the case of personal delivery, on the date of
such delivery, (B) in the case of delivery by telecopy (if confirmed), on the
date of such delivery, (C) in the case of delivery by nationally-recognized,
overnight courier, on the Business Day following dispatch, and (D) in the case
of mailing, on the third Business Day following such mailing.
(h) Construction. Where specific language is used to clarify
by example a general statement contained herein, such specific language shall
not be deemed to modify, limit or restrict in any manner the construction of the
general statement to which it relates. The language used in this Agreement shall
be deemed to be the language chosen by the parties to express their mutual
intent, and no rule of strict construction shall be applied against any party.
(i) GOVERNING LAW. THIS AGREEMENT WILL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (EXCEPT WITH
RESPECT TO MATTERS RELATED SOLELY TO CORPORATE
16
<PAGE>
GOVERNANCE IN WHICH CASE THIS AGREEMENT (SOLELY AS TO SUCH MATTERS) WILL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
CONNECTICUT), WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICTING
PROVISION OR RULE (WHETHER OF THE STATE OF NEW YORK OR ANY OTHER JURISDICTION)
THAT WOULD CAUSE THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF NEW YORK
TO BE APPLIED. IN FURTHERANCE OF THE FOREGOING, THE INTERNAL LAWS OF THE STATE
OF NEW YORK WILL CONTROL THE INTERPRETATION AND CONSTRUCTION OF THIS AGREEMENT,
EVEN IF UNDER SUCH JURISDICTION'S CHOICE OF LAW OR CONFLICTS OF LAW ANALYSIS,
THE SUBSTANTIVE LAW OF SOME OTHER JURISDICTION WOULD ORDINARILY APPLY.
(j) WAIVER OF JURY TRIAL. Each of the parties hereto hereby
irrevocably waives all right to trial by jury in any action, proceeding or
counterclaim arising out of or relating to this Agreement.
(k) Descriptive Headings. The descriptive headings of this
Agreement are inserted for convenience only and do not constitute a part of this
Agreement.
(l) Nouns and Pronouns. Whenever the context may require, any
pronouns used herein shall include the corresponding masculine, feminine or
neuter forms, and the singular form of names and pronouns shall include the
plural and vice-versa.
(m) Effectiveness. This Agreement shall not be deemed
effective until the consummation of the Closing (as defined in the Purchase
Agreement) under the Purchase Agreement.
* * * * *
17
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Shareholders' Agreement on the day and year first above written.
GREENFIELD ONLINE, INC.
By: --------------------
Name:
Title:
Investor:
GREENFIELD HOLDINGS, LLC
By: --------------------
Name:
Title:
Retained Shareholder:
------------------------
Andrew Greenfield
c/o Greenfield Consulting, Inc.
274 Riverside Avenue
Westport, CT 06880
18
<PAGE>
EXHIBIT A
---------
RETAINED SHAREHOLDER JOINDER
By execution of this Retained Shareholder Joinder, the
undersigned agrees to become a party to that certain Shareholders' Agreement
dated as of May __, 1999, among Greenfield Online, Inc., a Connecticut
corporation, and its shareholders. The undersigned shall have all the rights,
and shall observe all the obligations, applicable to a Retained Shareholder.
Name:
-----------------------------
Address for with copies
Notices: to:
- ---------------------------------- ---------------------------------
- ---------------------------------- ---------------------------------
- ---------------------------------- ---------------------------------
Signature:
-----------------------
Date:
----------------------------
<PAGE>
EXHIBIT B
---------
INVESTOR JOINDER
By execution of this Investor Joinder, the undersigned agrees
to become a party to that certain Shareholders' Agreement dated as of May __,
1999, among Greenfield Online, Inc., a Connecticut corporation, and its
shareholders. The undersigned shall have all the rights, and shall observe all
the obligations, applicable to an Investor.
Name:
-----------------------------
Address for with copies
Notices: to:
- ---------------------------------- ---------------------------------
- ---------------------------------- ---------------------------------
- ---------------------------------- ---------------------------------
Signature:
-----------------------
Date:
----------------------------
<PAGE>
EXHIBIT C
SMALL BUSINESS SIDE LETTER
May 17, 1999
Greenfield Online, Inc.
274 Riverside Avenue
Westport, Connecticut 06880
Ladies and Gentlemen:
Reference is made to that certain Stock Purchase and Redemption
Agreement (the "Purchase Agreement"), dated as of May 12, 1999, among Greenfield
Online, Inc. (the "Company"), Greenfield Holdings, LLC ("Investor") and the
other parties identified therein, pursuant to which the Investor is acquiring
certain of the Company's Class B Common Shares (the "Shares"). Imprimis SB, L.P.
and UBS Capital II LLC are Small Business Investment Companies (the "SBICs")
licensed by the United States Small Business Administration ("SBA") and are
members of the Investor.
In order for the SBICs to acquire and hold, indirectly through the
Investor, the Shares, the SBICs and the Investor must obtain from the Company
certain representations and rights as set forth below. As a material inducement
to the Investor to enter into the Purchase Agreement and to acquire the Shares,
the Company hereby makes the following representations and warranties and agrees
to comply with the following covenants:
1. Small Business Matters.
(a) The Company, together with its "affiliates" (as that term is
defined in Title 13, Code of Federal Regulations, ss. 121.103), is a "small
business concern" within the meaning of the Small Business Investment Act of
1958, as amended ("SBIA"), and the regulations thereunder, including Title 13,
Code of Federal Regulations, ss. 121.301(c), because it either:
Check One
/ / (i) including its affiliates, has a tangible net worth not in
excess of $18 million, and average net income after Federal income taxes
(excluding any carry-over losses) for the preceding 2 completed fiscal years not
in excess of $6 million (after giving pro forma effect to the transactions
contemplated by the Purchase Agreement (including the financing thereof) in the
manner set forth in Title 13, Code of Federal Regulations, ss. 107.750); or
<PAGE>
/ / (ii) does not exceed the size standard in number of employees
or millions of dollars under the SIC (Standard Industrial Classification) System
for the industry in which it combined with its affiliates is primarily engaged;
and in which it alone is primarily engaged.
The information set forth in the Small Business Administration
Forms 480, 652 and Parts A and B of Form 1031 regarding the Company and its
affiliates, when delivered to the SBICs and the Investor, will be accurate and
complete and will be in form and substance acceptable to such Persons (as
defined below). Copies of such forms shall be completed and executed by the
Company and delivered at the closing under the Purchase Agreement (the
"Closing").
(b) Neither the Company's nor any of its Subsidiaries' (as defined
below) primary business activity involves, directly or indirectly, providing
funds to others, the purchase or discounting of debt obligations, factoring or
long-term leasing of equipment with no provision for maintenance or repair, and
neither the Company nor any of its Subsidiaries is classified under Major Group
65 (Real Estate) of the SIC Manual. The assets of the business of the Company
and its Subsidiaries (the "Business") will not be reduced or consumed, generally
without replacement, as the life of the Business progresses, and the nature of
the Business does not require that a stream of cash payments be made to the
Business's financing sources, on a basis associated with the continuing sale of
assets (examples of such businesses would include real estate development
projects and oil and gas wells). (See 13 CFR ss. 107.720)
(c) At Closing or within one year thereafter, no more than 49
percent of the employees or tangible assets of the Company and its Subsidiaries
will be located outside the United States. This subsection (c) does not prohibit
such proceeds from being used to acquire foreign materials and equipment or
foreign property rights for use or sale in the United States.
(d) There are no other SBICs that own any Securities (as defined
below) issued by the Company. Without the Investor's consent, the Company will
not issue Securities to any SBICs in the future if such issuance would cause the
SBICs or the Investor to be deemed to be a member of an "Investor Group" in
"Control" of the Company (as such terms are defined in 13 CFR ss. 107.865).
2. Regulatory Compliance.
(a) Regulatory Compliance Cooperation.
(i) In the event that the Investor or any of the SBICs
reasonably determines that it has a Regulatory Problem (as defined
below), the Company agrees to take all such actions as are reasonably
requested by such Person in order (A) to effectuate and facilitate any
transfer by the Investor of any Securities of the Company then held by
it to any Person designated by the Investor or the SBIC, (B) to permit
the Investor (or any of its Affiliates) to exchange all or any portion
of the voting Securities then held by such Person on a share-for-share
basis for shares of a class of non-voting Securities of the Company,
which non-voting Securities shall be identical in all respects to such
voting
<PAGE>
Securities, except that such new Securities shall be non-voting and
shall be convertible into voting Securities on such terms as are
requested by the Investor and reasonably acceptable to the Company in
light of regulatory considerations then prevailing, and (C) to continue
and preserve the respective allocation of the voting interests with
respect to the Company arising out of the Investor's ownership of
voting Securities and/or provided for in the Shareholders' Agreement
(as defined below) before the transfers and amendments referred to
above (including entering into such additional agreements as are
requested by the Investor to permit any Person(s) designated by the
Investor to exercise any voting power which is relinquished by the
Investor upon any exchange of voting Securities for non-voting
Securities of the Company). If the Investor elects to transfer
Securities of the Company to a Regulated Holder (as defined below) in
order to avoid a Regulatory Problem, the Company and such Regulated
Holder shall enter into such mutually acceptable agreements as such
Regulated Holder may reasonably request in order to assist such
Regulated Holder in complying with applicable laws and regulations to
which it is subject. Such agreements may include restrictions on the
redemption, repurchase or retirement of Securities of the Company that
would result or be reasonably expected to result in such Regulated
Holder holding more voting securities or total securities (equity and
debt) than it is permitted to hold under such laws and regulations.
(ii) In the event the Investor has the right to acquire
any of the Company's Securities from the Company or any other Person
(as the result of a preemptive offer, pro rata offer or otherwise), and
the Investor reasonably determines that it or any Affiliate has a
Regulatory Problem, at the Investor's request the Company will offer to
sell to the investor non-voting Securities (or, if the Company is not
the proposed seller, will arrange for the exchange of any voting
securities for non-voting securities immediately prior to or
simultaneous with such sale) on the same terms as would have existed
had the investor acquired the Securities so offered and immediately
requested their exchange for non-voting Securities pursuant to
subsection (i) above.
(iii) In the event that any Affiliate of the Company ever
offers to issue any of its Securities to the Investor, then the Company
will cause such Affiliate to enter into agreements with the Investor
substantially similar to this Section 2(a) and Section 2(b) below.
(b) Information Rights and Related Covenants.
(i) The Company hereby agrees to provide to the Investor
and the SBA access to its books and records for all purposes required
by the SBA.
(ii) The Company hereby agrees to provide to the Investor
and the SBA a certificate of its chief financial officer certifying
compliance by the Company with the provisions of this Agreement
(provided that such certificate may be truthfully given).
(iii) Promptly after the end of each fiscal year (but in
any event prior to February 28 of each year), the Company shall provide
to the Investor a written assessment, in form and substance reasonably
satisfactory to the Investor, of the economic impact of the financing
hereunder, specifying the full-time equivalent jobs
<PAGE>
created or retained, the impact of the financing on the consolidated
revenues and profits of the Business and on taxes paid by the Business
and its employees (See 13 CFR ss. 107.630(e)).
(iv) Upon the request of the Investor or any of its
Affiliates, the Company will (A) provide to such Person such financial
statements and other information as such Person may from time to time
reasonably request for the purpose of assessing the Company's financial
condition and (B) furnish to such Person all information reasonably
requested by it in order for it to prepare and file SBA Form 468 and
any other information reasonably requested or required by any
governmental agency asserting jurisdiction over such Person.
(v) For a period of one year following the date hereof,
neither the Company nor any of its Subsidiaries will change its
business activity if such change would render the Company ineligible to
receive financial assistance from an SBICs under the SBIA and the
regulations thereunder (within the meanings of 13 CFR ss.ss. 107.720
and 107.760(b)).
(vi) The Company will at all times comply with the
non-discrimination requirements of 13 C.F.R., Parts 112, 113 and 117.
(vii) The Company will notify the Investor from time to
time when the number of its shareholders increases to or above or
decreases below 50.
3. Definitions.
"Affiliate" means, with respect to any Person, (i) a director,
officer or stockholder of such Person, (ii) a spouse, parent, sibling or
descendant of such Person (or spouse, parent, sibling or descendant of any
director or executive officer of such Person), and (iii) any other Person that,
directly or indirectly through one or more intermediaries, Controls, or is
Controlled by, or is under common Control with, such Person.
"Control" means, with respect to any Person, the possession,
directly or indirectly, of the power to direct or cause the direction of the
management or policies of a Person, whether through the ownership of voting
securities, by contract or otherwise.
"Person" shall be construed broadly and shall include an
individual, a partnership, a corporation, a limited liability company, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization or a governmental entity (or any department, agency or political
subdivision thereof).
"Regulated Holder" means any holder of the Company's Securities
that is (or that is a subsidiary of a bank holding company that is) subject to
the various provisions of Regulation Y of the Board of Governors of the Federal
Reserve Systems, 12 C.F.R., Part 225 (or any successor to Regulation Y).
"Regulatory Problem" means (i) any set of facts or circumstances
wherein it has
<PAGE>
been asserted by any governmental regulatory agency (or the Investor believes
that there is a significant risk of such assertion) that such Person (or any
bank holding company that controls such Person) is not entitled to hold, or
exercise any material right with respect to, all or any portion of the
Securities of the Company which such Person holds or (ii) when such Person and
its Affiliates would own, Control or have power (including voting rights) over a
greater quantity of Securities of the Company than is permitted under any law or
regulation or any requirement of any governmental authority applicable to such
Person or to which such Person is subject.
"Securities" means, with respect to any Person, such Person's
capital stock or any options, warrants or other Securities which are directly or
indirectly convertible into, or exercisable or exchangeable for, such Person's
capital stock (whether or not such derivative Securities are issued by the
Company). Whenever a reference herein to Securities refers to any derivative
Securities, the rights of the Investor shall apply to such derivative Securities
and all underlying Securities directly or indirectly issuable upon conversion,
exchange or exercise of such derivative Securities.
"Shareholders' Agreement" means the Shareholders' Agreement to be
entered into on the date of the Closing among the Company and certain
shareholders of the Company.
"Subsidiary" means, with respect to any Person, any other Person
of which the securities having a majority of the ordinary voting power in
electing the board of directors (or other governing body), at the time as of
which any determination is being made, are owned by such first Person either
directly or through one or more of its Subsidiaries.
* * * *
<PAGE>
Please indicate your acceptance of the terms of this letter
agreement by returning a signed copy to the undersigned.
IMPRIMIS SB, L.P.
By:________________________
Name:
Title:
UBS CAPITAL II LLC
By:________________________
Name:
Title:
By:________________________
Name:
Title:
Agreed as of the date first set forth above:
Greenfield Online, Inc.
By:_________________________
Name:
Title:
Greenfield Holdings, LLC
By:_________________________
Name:
Title:
<PAGE>
SCHEDULE I
Investor
Greenfield Holdings, LLC
SCHEDULE II
Retained Shareholder
Andrew Greenfield
<PAGE>
EXHIBIT D
---------
GREENFIELD ONLINE, INC.
1999 Stock Option Plan
----------------------
1. PURPOSE OF THE PLAN
The purpose of the Greenfield Online, Inc. 1999 Stock Option Plan
(the "Plan") is (i) to further the growth and success of Greenfield Online, Inc.
(together with its successors and assigns, the "Corporation") and its
Subsidiaries (as defined below) by enabling directors, officers, managers or
employees of, agents of, advisors to and independent consultants or contractors
to, the Corporation or its Subsidiaries to acquire Class A Common Shares, $0.01
par value per share, in the capital of the Corporation (the "Class A Common
Shares"), thereby increasing their personal interest in such growth and success,
and (ii) to provide a means of rewarding outstanding performance by such persons
to the Corporation and its Subsidiaries. Options granted under this Plan (the
"Options") may be, and shall be designated as, either "incentive stock options"
("ISOs") under the provisions of Section 422 of the Internal Revenue Code of
1986, as amended (the "Code"), or non-qualified stock options ("NQOs"). For
purposes of the Plan, the term "Subsidiary" shall mean "Subsidiary Corporation"
as defined in Section 424(f) of the Code.
2. ADMINISTRATION OF THE PLAN
(a) Option Committee
The Plan shall be administered by the Board of Directors (the
"Board") or a committee or committees (which term includes subcommittees)
appointed by, and consisting of two or more members of, the Board (the
"Committee"). If and so long as the Common Stock is registered under Section
12(b) or 12(g) of the Exchange Act, the Board shall consider in selecting the
Plan Administrator and the membership of any committee acting as Plan
Administrator, with respect to any persons subject or likely to become subject
to Section 16 of the Exchange Act, the provisions regarding (a) "outside
directors" as contemplated by Section 162(m) of the Code and (b) "nonemployee
directors" as contemplated by Rule 16b-3 under the Exchange Act. The Board may
delegate the responsibility for administering the Plan with respect to
designated classes of eligible persons to different committees consisting of two
or more members of the Board, subject to such limitations as the Board deems
appropriate. Committee members shall serve for such term as the Board may
determine, subject to removal by the Board at any time.
(b) Procedures
If the Plan is administered by the Committee, the Board shall from
time to time select a Chairman from among the members of the Committee. The
Committee shall adopt such rules and regulations as it shall deem appropriate
concerning the holding of meetings and the administration of the Plan. A
majority of the entire Committee shall constitute a quorum and the actions of a
majority of the members of the Committee
<PAGE>
present at a meeting at which a quorum is present, or actions approved in
writing by all of the members of the Committee, shall be the actions of the
Committee.
(c) Interpretation
Except as otherwise expressly provided in the Plan, the Committee
shall have all powers with respect to the administration of the Plan, including,
without limitation, full power and authority to interpret the provisions of the
Plan and any Option Agreement (as defined in Section 5(b)), and to resolve all
questions arising under the Plan. All decisions of the Board or the Committee,
as the case may be, shall be conclusive and binding on all participants in the
Plan.
3. SHARES SUBJECT TO THE PLAN
(a) Maximum Number of Shares
Subject to the provisions of Section 9 (relating to adjustments
upon changes in capital structure and other corporate transactions), the maximum
number of Class A Common Shares subject at any one time to Options, plus the
number of Class A Common Shares theretofore issued and delivered pursuant to the
exercise of Options granted under the Plan, shall not exceed 8,219 Class A
Common Shares. If and to the extent that Options terminate, expire or are
canceled without having been fully exercised, any unissued Class A Common Shares
which have been reserved to be issued upon the exercise of such Options shall
become available to be issued upon the exercise of Options subsequently granted.
(b) Character of Shares
The Class A Common Shares issuable upon exercise of any Option
granted under the Plan shall be (i) authorized but unissued shares, (ii) Class A
Common Shares held in the Corporation's treasury, or (iii) a combination of the
foregoing.
(c) Reservation of Shares
The number of Class A Common Shares reserved for issuance under
the Plan shall at no time be less than the maximum number of shares which may be
purchased at any time pursuant to outstanding Options.
4. ELIGIBILITY
Options may be granted under the Plan only to (i) persons who are
employees of, independent consultants or contractors to, agents of and/or
advisors to the Corporation or any of its Subsidiaries and (ii) persons who are
directors, officers or managers of the Corporation or any of its Subsidiaries.
Only employees of the Corporation or any of its Subsidiaries are eligible for a
grant of ISOs. Notwithstanding the foregoing, Options may be conditionally
granted to persons who are prospective employees, directors, officers or
managers of, or independent consultants or contractors
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to, the Corporation or any of its Subsidiaries.
5. GRANT OF OPTIONS
(a) General
Options may be granted under the Plan at any time and from time to
time on or prior to the Expiration Date (as defined in Section 12). Subject to
the provisions of the Plan, the Committee shall, in its discretion, determine:
(i) the persons (from among the class of persons eligible
to receive Options under the Plan) to whom Options shall be granted
(the "Participants");
(ii) the time or times at which Options shall be granted;
(iii) the number of Class A Common Shares subject to each
Option;
and
(iv) the time or times when each Option shall become
exercisable and the duration of the exercise period.
(b) Option Agreements
Each Option granted under the Plan shall be evidenced by a written
agreement (an "Option Agreement"), containing such terms and conditions and in
such form, not inconsistent with the Plan, as the Committee shall, in its
discretion, provide. Each Option Agreement shall be executed by the Corporation
and the Participant.
(c) No Evidence of Employment or Service
Nothing contained in the Plan or in any Option Agreement shall
confer upon any Participant any right with respect to the continuation of his or
her employment by or service with the Corporation or any of its Subsidiaries or
interfere in any way with the right of the Corporation or any such Subsidiary at
any time to terminate such employment or service or to increase or decrease the
compensation of the Participant from the rate in existence at the time of the
grant of an Option.
(c) Date of Grant
The date of grant of an Option under the Plan shall be the date as
of which the Corporation and Participant execute and deliver an Option
Agreement; provided, however, that the grant shall in no event be earlier than
the date as of which the Participant becomes an employee, officer, director or
manager of, or independent consultant to, the Corporation or one of its
Subsidiaries.
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6. OPTION PRICE
(a) General
The exercise price (the "Option Price") for each Common Share
subject to an Option shall be determined by the Committee and set forth in the
Option Agreement; provided however, that, in the case of an ISO, such Option
Price shall in no event be less than 100% (or 110% if Section 6(b) hereof
applies) of the fair value of the Class A Common Shares on the date of grant
(the "Fair Market Value") as reasonably determined in good faith by the
Committee after taking into consideration all factors which it deems
appropriate, including, without limitation, recent sale and offer prices of the
Class A Common Shares in private transactions negotiated at arm's length on or
prior to the date of grant of such Option.
(b) Incentive Stock Options
No ISO may be granted under the Plan to an employee who owns,
directly or indirectly (within the meaning of Sections 422(b)(6) and 424(d) of
the Code), capital stock possessing more than 10% of the total combined voting
power of all classes of stock of the Corporation or any of its Subsidiaries,
unless (i) the Option Price of the Class A Common Shares subject to such ISO is
fixed at not less than 110% of the Fair Market Value on the date of grant of
such ISO and (ii) such ISO by its terms is not exercisable after the expiration
of five years from the date it is granted.
7. EXERCISABILITY OF OPTIONS
(a) Committee Determination
Each Option granted under the Plan shall be exercisable at such
time or times, or upon the occurrence of such event or events, (the "Vesting
Date") and for such number of Class A Common Shares subject to the Option, as
shall be determined by the Committee and set forth in the Option Agreement
evidencing such Option. If an Option is not at the time of grant immediately
exercisable, the Committee may (i) in the Option Agreement evidencing such
Option, provide for the acceleration of the Vesting Dates of the subject Option
upon the occurrence of specified events and/or (ii) at any time prior to the
complete termination of an Option, accelerate the Vesting Dates of such Option.
(b) Automatic Termination of Options
The unexercised portion of any Option granted under the Plan shall
automatically terminate and shall become null and void and be of no further
force or effect upon the first to occur of the following (the "Termination
Date"):
(i) the tenth anniversary on which such Option is granted
(or fifth anniversary if Section 6(b) hereof applies);
(ii) the expiration of 3 months from the date that the
Participant
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ceases to be an officer, manager or employee of, or independent
consultant or advisor to, the Corporation or any of its Subsidiaries
other than as a result of a Termination for Cause (as hereinafter
defined). As used herein, Termination for Cause shall mean (i) the
Participant's breach of any of the terms (as set forth therein) of his
or her employment agreement; (ii) the conviction of a crime involving
fraud, theft or dishonesty by the Participant; (iii) the Participant's
willful and continuing disregard of lawful instructions of the Board of
the Corporation or superiors (if any); (iv) the continued use of
alcohol or drugs by the Participant, to an extent that in the good
faith determination of the Board of the Corporation, such use
interferes in any manner with the performance of the Participant's
duties and responsibilities as an employee; or (v) the conviction of
the Participant for violating any law constituting a felony (including
the Foreign Corrupt Practices Act of 1977).
(iii) the expiration of 30 days from the date that
the Participant ceases to be an officer, manager or employee of, or
independent consultant or advisor to, the Corporation or any of its
Subsidiaries, if such termination is as a result of a Termination for
Cause;
(iv) the expiration of such period of time or the
occurrence of such event as the Committee in its discretion may provide
in the Option Agreement;
(v) on the effective date of a Material Transaction (as
defined in Section 9(b)(i)) to which Section 9(b)(ii) (relating to
assumptions and substitutions of Options) does not apply; and
(vi) except to the extent permitted by Section 9(b)(ii),
the date on which an Option or any part thereof or right or privilege
relating thereto is transferred (otherwise than by will or the laws of
descent and distribution), assigned, pledged, hypothecated, attached or
otherwise disposed of by the Participant.
Anything contained in the Plan to the contrary notwithstanding,
(i) an ISO granted under the Plan shall not be considered an ISO to the extent
that the aggregate Fair Market Value, determined on the date of grant of such
ISO, of all stock with respect to which ISOs are exercisable for the first time
by such Optionee during any calendar year (under all plans of the Company and
its Subsidiaries) exceeds $100,000 and (ii) unless otherwise provided in an
Option Agreement, no Option granted under the Plan shall be affected by any
change of duties or position of the Participant (including a transfer to or from
the Corporation or one of its Subsidiaries), so long as such Participant
continues to be an employee of the Corporation or one of its Subsidiaries.
8. PROCEDURE FOR EXERCISE
(a) Payment
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Unless otherwise stated in the Option Agreement, the following
forms of payment may be used by the Participant upon exercise of his or her
Option:
(i) cash or personal or certified check payable to the
Corporation in an amount equal to the aggregate Option Price of the
Class A Common Shares with respect to which the Option is being
exercised;
(ii) stock certificates (in negotiable form) representing
the Class A Common Shares that have a fair market value (as determined
by the Board) on the date of exercise equal to the aggregate Option
Price of the Class A Common Shares with respect to which the Option is
being exercised;
(iii) vested Options to purchase Class A Common Shares,
valued for such purposes at the fair market value per Common Share
thereof (as determined by the Board) on the date of exercise, net of
the exercise price for each such Common Share; or
(iv) a combination of the methods set forth in clauses
(i), (ii) and (iii).
(b) Notice
A Participant (or other person, as provided in Section 10(b)) may
exercise an Option granted under the Plan in whole or in part (but for the
purchase of whole Class A Common Shares only), as provided in the Option
Agreement evidencing his Option, by delivering a written notice (the "Notice")
to the Secretary of the Corporation. The Notice shall state, or be accompanied
by a writing stating, as the case may be:
(i) that the Participant elects to exercise the Option;
(ii) the number of Class A Common Shares with respect to
which the Option is being exercised (the "Optioned Shares");
(iii) the method of payment for the Optioned Shares;
(iv) the date upon which the Participant desires to
consummate the purchase (which date must be prior to the termination of
such Option);
(v) a copy of any election filed by the Participant
pursuant to Section 83(b) of the Code;
(vi) payment for the Optioned Shares as provided in
Section 8(a); and
(vii) such further provisions consistent with the Plan as
the Committee may from time to time require.
The exercise date of an Option shall be the date on which the
Corporation
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<PAGE>
receives the Notice from the Participant.
(c) Issuance of Certificates
The Corporation shall issue a certificate in the name of the
Participant (or such other person exercising the Option in accordance with the
provisions of Section 10(b)) for the Optioned Shares as soon as practicable
after receipt of the Notice and payment of the aggregate Option Price for such
Class A Common Shares. Neither the Participant nor any person exercising an
Option in accordance with the provisions of Section 10(b) shall have any
privileges as a holder of Class A Common Shares with respect to any Class A
Common Shares subject to an Option granted under the Plan until the date of
payment for such Class A Common Shares pursuant to the Option and the issuance
of the certificate to evidence such Class A Common Shares.
9. ADJUSTMENTS
(a) Changes in Capital Structure
Subject to Section 9(b), if the Class A Common Shares are changed
by reason of a split, reverse split or recapitalization, or converted into or
exchanged for other securities as a result of a merger, consolidation or
reorganization, the Committee shall make such adjustments in the number and
class of Class A Common Shares with respect to which Options may be granted
under the Plan as shall be equitable and appropriate in order to make such
Options, as nearly as may be practicable, equivalent to such Options immediately
prior to such change. A corresponding adjustment increasing or decreasing the
number and, if applicable, changing the class, of Class A Common Shares
allocated to, and the Option Price of, each Option or portion thereof
outstanding at the time of such change shall likewise be made.
(b) Material Transactions
The following rules shall apply in connection with the dissolution
or liquidation of the Corporation, a reorganization, merger or consolidation in
which the Corporation is not the surviving corporation, or a sale of all or
substantially all of the assets of the Corporation to another person or entity
(each, a "Material Transaction"), unless otherwise provided in the Option
Agreement or in the Shareholders' Agreement of even date herewith, among the
Corporation and the Corporation's shareholders, as the same may be amended,
supplemented or modified from time to time:
(i) each holder of an Option outstanding at such time
shall be given (A) written notice of such Material Transaction at least
10 days prior to its proposed effective date (as specified in such
notice) and (B) an opportunity, during the period commencing with
delivery of such notice and ending 5 days prior to such proposed
effective date, to exercise the Option to the full extent to which such
Option would have been exercisable by the Participant at the expiration
of such 10-day period; provided, however, that upon the occurrence of a
Material Transaction, all Options granted under the Plan and not so
exercised
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<PAGE>
shall automatically terminate; and
(ii) notwithstanding anything contained in the Plan to the
contrary, Section 9(b)(i) shall not be applicable if provision shall be
made in connection with such Material Transaction for the assumption of
outstanding Options by, or the substitution for such Options of new
options for equity securities of the surviving, successor or purchasing
corporation, or a parent or subsidiary thereof, with appropriate
adjustments as to the number, kind and option prices of shares subject
to such Options.
(c) Special Rules
The following rules shall apply in connection with Section 9(a)
and (b) above:
(i) no fractional Class A Common Shares shall be issued as
a result of any such adjustment, and any fractional Class A Common
Shares resulting from the computations pursuant to Section 9(a) or (b)
shall be eliminated and the Participant shall receive cash
consideration for such fractional Common Share at the rate of the fair
market value of such Common Share, determined in accordance with clause
(iv) below;
(ii) no adjustment shall be made for cash dividends or the
issuance of Class A Common Shares or other securities to holders of
rights to subscribe for such additional Class A Common Shares or other
securities;
(iii) any adjustments referred to in Section 9(a) or (b)
shall be made by the Board or Committee (as the case may be) in good
faith and shall be conclusive and binding on all persons holding
Options granted under the Plan; and
(iv) the fair market value of a Common Share shall be
deemed to be the price to be paid in such Material Transaction for a
Common Share.
10. RESTRICTIONS ON OPTIONS AND OPTIONED SHARES
(a) Compliance With Securities Laws
No Options shall be granted, and no Class A Common Shares shall be
issued and delivered upon the exercise of Options granted, unless and until the
Corporation and/or the Participant shall have complied with all applicable laws,
rules and regulations of all public agencies and authorities applicable to the
issuance and distribution of such Class A Common Shares and to the listing of
such Class A Common Shares on any stock exchange on which any of the shares of
the capital stock of the Corporation may be listed. As a condition of
participating in the Plan, each Participant agrees to comply with all such laws,
rules and regulations and agrees to furnish to the Corporation all information
and undertakings as may be required to permit compliance
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<PAGE>
with such laws, rules and regulations. The Committee in its discretion may, as a
condition to the exercise of any Option granted under the Plan, require a
Participant (i) to represent in writing that the Class A Common Shares received
upon exercise of an Option are being acquired for investment and not with a view
to distribution and (ii) to make such other representations and warranties as
are deemed appropriate by the Corporation. Certificates representing Class A
Common Shares acquired upon the exercise of Options that have not been
registered under the Securities Act shall, if required by the Committee, bear
the legend required by the Shareholders' Agreement (as defined herein).
(b) Nonassignability of Option Rights
No Option granted under the Plan shall be assignable or otherwise
transferable by the Participant except by will or by the laws of descent and
distribution. An Option may be exercised during the lifetime of the Participant
only by the Participant. If a Participant dies, his or her Option shall
thereafter be exercisable, during the period specified in Section 7(b)(iii) by
his or her executors or administrators to the full extent to which such Option
was exercisable by the Participant at the time of his or her death.
(c) Shareholders' Agreement.
Each Participant, as a condition to the receipt of the grant of an
Option, shall agree to be bound by the terms and conditions of the Shareholders'
Agreement dated as of May __, 1999, among the Corporation, Greenfield Holdings,
Inc., and the other parties from time to time party thereto (as amended,
restated, supplemented or otherwise modified from time to time, the
"Shareholders' Agreement") and shall execute such joinder or other agreement as
is necessary to so bind such Participant. All Options granted to the Participant
and any Class A Common Shares issued upon the exercise thereof shall be subject
to the Shareholders' Agreement.
11. EFFECTIVE DATE OF PLAN
This Plan shall become effective on the date that this Plan is
approved by the Board (the "Effective Date"); provided, however, that no Option
shall be exercisable by an Optionee unless and until the Plan shall have been
approved by the shareholders of the Corporation in accordance with the
provisions of the Corporation's articles of incorporation and by-laws, which
approval shall be obtained by a simple majority vote of the shareholders, voting
either in person or by proxy, at a duly held shareholders' meeting, or by
written consent, within 12 months after the adoption of the Plan by the Board.
12. EXPIRATION AND TERMINATION OF THE PLAN
No Options may be granted after the Expiration Date. The Plan
shall expire on the first to occur of (i) the tenth anniversary of the Effective
Date and (ii) the date as of which the Board, in its sole discretion, determines
that the Plan shall terminate (the "Expiration Date"). Any Options outstanding
as of the Expiration Date shall remain
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<PAGE>
in effect until the earlier of the exercise thereof or the termination or the
expiration of such Options in accordance with their respective terms.
13. AMENDMENT OF PLAN
The Board may at any time modify and amend the Plan in any
respect; provided, however, that the approval of a simple majority vote of the
shareholders of the Corporation entitled to vote shall be obtained prior to any
such amendment becoming effective if such approval is required by law or is
necessary to comply with regulations promulgated by the Securities and Exchange
Commission under Section 16(b) of the Securities Exchange Act of 1934, as
amended or Section 422 of the Code or the regulations promulgated by the
Treasury Department thereunder. No such amendment to the Plan shall affect the
terms or provisions of any Option granted by the Corporation prior to the
effectiveness of such amendment unless otherwise agreed to by the holder
thereof.
14. CAPTIONS
The use of captions in the Plan is for convenience. The captions
are not intended to provide substantive rights.
15. ACCOUNTS AND STATEMENTS
The Corporation shall maintain records of the Class A Common
Shares held by each Participant and the details of each Option granted to the
Participant, including (i) the number of Class A Common Shares held and their
Option Price; (ii) the number Class A Common Shares subject to, and the Option
Price of, each Option; (iii) the number of Class A Common Shares in respect of
which the Option has been exercised; (iv) the dates of such exercise; and (v)
the maximum number of Class A Common Shares which the Participant may still
purchase under the Option. Upon request therefor from a Participant and at such
other times as the Corporation shall determine, the Corporation shall furnish
the Participant with a statement setting forth the details of his shareholding
and his Options. Such statement shall be deemed to have been accepted by the
Participant as correct unless written notice to the contrary is given to the
Corporation within five (5) days after such statement is given to the
Participant.
16. WITHHOLDING TAXES
Whenever under the Plan Class A Common Shares are to be delivered
by a Participant upon exercise of an ISO or NQO, the Corporation shall be
entitled to require as a condition of delivery that the Participant remit or, in
appropriate cases, agree to remit if and when due, an amount sufficient to
satisfy any and all current or estimated future Federal, state and local income
tax withholding obligations and/or the employee's portion of any employment tax
requirements relating thereto.
17. OTHER PROVISIONS
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Each Option granted under the Plan may contain such other terms
and conditions not inconsistent with the Plan as may be determined by the
Committee, in its sole discretion. If Option Shares acquired by the exercise of
an ISO granted under this Plan are disposed of within two years following the
date of grant of the ISO or one year following the issuance of the Option Shares
to the Optionee (a "Disqualifying Disposition"), the holder of the Option Shares
shall, immediately prior to such Disqualifying Disposition, notify the
Corporation in writing of the date and terms of such Disqualifying Disposition
and provide such other information regarding the Disqualifying Disposition as
the Corporation may reasonably require.
18. NUMBER AND GENDER
With respect to words used in the Plan, the singular form shall
include the plural form, the masculine gender shall include the feminine gender,
and vice-versa, as the context requires
19. GOVERNING LAW
The validity and construction of the Plan and the instruments
evidencing the Options granted hereunder shall be governed by the laws of the
State of New York.
As adopted by the Board of Directors
of Greenfield Online, Inc. on
May 12, 1999.
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EXHIBIT E
===============================================================================
REGISTRATION RIGHTS AGREEMENT
AMONG
GREENFIELD ONLINE, INC.
AND
THE SHAREHOLDERS
(AS DEFINED HEREIN)
May 17, 1999
===============================================================================
<PAGE>
TABLE OF CONTENTS
Page
Section 1. Definitions.................................................1
Section 2. Required Registration.......................................3
Section 3. Piggyback Registration......................................4
Section 4. Registrations on Form S-3...................................5
Section 5. Holdback Agreement..........................................6
Section 6. Preparation and Filing......................................6
Section 7. Expenses....................................................9
Section 8. Indemnification............................................10
Section 9. Underwriting Agreement.....................................12
Section 10. Information by Holder......................................12
Section 11. Exchange Act Compliance....................................12
Section 12. Mergers, Etc...............................................13
Section 13. New Certificates...........................................13
Section 14. No Conflict of Rights; Selection of Underwriter............13
Section 15. Termination................................................13
Section 16. Miscellaneous..............................................13
ii
<PAGE>
REGISTRATION
RIGHTS AGREEMENT dated as
of May 17, 1999 among
GREENFIELD ONLINE, INC., a
Connecticut corporation
(the "Company"), and the
Shareholders (as defined
below).
The Shareholders own or have the right to purchase or otherwise
acquire Common Shares (as defined below) of the Company. The Company and the
Shareholders deem it to be in their respective best interests to enter into this
Agreement to set forth the rights of the Shareholders in connection with public
offerings and sales of Common Shares.
NOW, THEREFORE, in consideration of the premises and mutual
covenants and obligations hereinafter set forth, the Company and the
Shareholders hereby agree as follows:
Section 1. Definitions.
As used in this Agreement, the following terms have the following
meanings:
"Board" means the Board of Directors of the Company.
"Class A Common" means the Class A Common Stock, $0.01 par value
per share, of the Company.
"Class B Common" means the Class B Common Stock, $0.01 par
value per share, of the Company.
"Commission" means the Securities and Exchange Commission or any
other governmental body or agency succeeding to the functions thereof.
"Common Shares" means the Class A Common and/or the Class B
Common, as applicable.
"Exchange Act" means the Securities Exchange Act of 1934 or any
successor Federal statute, and the rules and regulations of the Commission
promulgated thereunder, all as the same shall be in effect from time to time.
"Holdings" means Greenfield Holdings, LLC, a Delaware limited
liability company.
"Holdings Shareholder Majority" means Holdings and those
Shareholders to whom it shall have transferred Restricted Shares who,
collectively, at the time in question own at least a majority of the Restricted
Shares held by Holdings and such Shareholders.
"Majority of Registering Shareholders" means, with respect to a
<PAGE>
registration that includes Registrable Shares, those Shareholders who at the
time in question own at least a majority of the Restricted Shares held by
Shareholders who initiated the registration.
"Other Shares" means at any time those Common Shares that do not
constitute Primary Shares or Registrable Shares.
"Person" shall be construed broadly and shall include an
individual, a partnership, a corporation, an association, a joint stock company,
a limited liability company, a trust, a joint venture, an unincorporated
organization and a governmental entity or any department, agency or political
subdivision thereof.
"Primary Shares" means at any time the authorized but unissued
Common Shares and the Common Shares held by the Company in its treasury.
"Prospectus" means the prospectus included in a Registration
Statement, including any prospectus subject to completion, and any such
prospectus as amended or supplemented by any prospectus supplement with respect
to the terms of the offering of any portion of the Registrable Shares and, in
each case, by all other amendments and supplements to such prospectus, including
post-effective amendments, and in each case including all material incorporated
by reference therein.
"Public Offering" means the closing of a public offering of Common
Shares pursuant to a Registration Statement declared effective under the
Securities Act, except that a Public Offering shall not include an offering of
securities to be issued as consideration in connection with a business
acquisition or an offering of securities issuable pursuant to an employee
benefit plan.
"Purchase and Redemption Agreement" means the Stock Purchase and
Redemption Agreement dated as of May 12, 1999, among the Company and the other
parties thereto, as amended, modified or supplemented from time to time.
"Registrable Shares" means Restricted Shares that constitute
Common Shares.
"Registration Date" means the date upon which a Registration
Statement pursuant to which the Company shall have initially registered Common
Shares under the Securities Act for sale in a Public Offering shall have been
declared effective by the Commission.
"Registration Statement" shall mean any registration statement of
the Company which covers any of the Registrable Shares and all amendments and
supplements to any such Registration Statement, including post-effective
amendments, in each case including the Prospectus contained therein, all
exhibits thereto and all material incorporated by reference therein.
"Restricted Shares" means Common Shares, and includes (i) shares
which may be issued as a dividend or distribution, (ii) any other securities
which by their terms
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are exercisable or exchangeable for or convertible into Common Shares, and (iii)
any securities received in respect of the foregoing (including securities
described in Section 12), in each case in clauses (i) through (iii) which at any
time are held by the Shareholders. As to any particular Restricted Shares, once
issued, such Restricted Shares shall cease to be Restricted Shares when (A) they
have been registered under the Securities Act, the Registration Statement in
connection therewith has been declared effective and they have been disposed of
pursuant to and in the manner described in such effective Registration
Statement, (B) they are sold pursuant to Rule 144 or may be sold by the holder
thereof pursuant to Rule 144(k), (C) they have been otherwise transferred and
new certificates or other evidences of ownership for them not bearing a
restrictive legend and not subject to any stop transfer order or other
restriction on transfer have been delivered by the Company or the issuer of
other securities issued in exchange for the Restricted Shares, or (D) they have
ceased to be outstanding.
"Rule 144" means Rule 144 promulgated under the Securities Act or
any successor rule thereto or any complementary rule thereto.
"Securities Act" means the Securities Act of 1933 or any successor
Federal statute, and the rules and regulations of the Commission thereunder, all
as the same shall be in effect from time to time.
"Shareholders" means the Persons which are shareholders of the
Company on the date hereof, and includes any successor to, or assignee or
transferee of, any such Person who or which agrees in writing to be treated as a
Shareholder hereunder and to be bound by the terms and comply with all
applicable provisions hereof.
"Shareholders' Agreement" means the Shareholders' Agreement of
even date herewith, among the Company and the other parties thereto, as the same
may be amended, supplemented or modified from time to time.
"Subsidiary" means, with respect to any Person, any other Person
of which the securities having a majority of the ordinary voting power in
electing the board of directors (or other governing body), at the time as of
which any determination is being made, are owned by such first Person either
directly or through one or more of its Subsidiaries.
Section 2. Required Registration.
(a) Subject to Section 2(b), if the Company shall be requested by
a Holdings Shareholder Majority at any time to effect the registration under the
Securities Act of Registrable Shares, the Company shall use its best efforts to
promptly effect the registration under the Securities Act of the Registrable
Shares which the Company has been so requested to register (as well as any other
Registrable Shares requested to be registered by any other Shareholder who was
previously a member of Holdings, following notice of such request by a Holdings
Shareholder Majority). The number of requests permitted pursuant to this Section
2(a) shall be unlimited.
(b) Anything contained in Section 2(a) to the contrary
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<PAGE>
notwithstanding, the Company shall not be obligated to effect any registration
under the Securities Act pursuant to Section 2(a) except in accordance with the
following provisions:
(i) with respect to any registration pursuant to this
Section 2, the Company may include in such registration any Primary
Shares or Other Shares; provided, however, that, if the managing
underwriter advises the Company that the inclusion of all Registrable
Shares, Primary Shares and/or Other Shares proposed to be included in
such registration would materially interfere with the successful
marketing (including pricing) of the Registrable Shares proposed to be
included in such registration, then the number of Registrable Shares,
Primary Shares and/or Other Shares proposed to be included in such
registration shall be included in the following order:
(A) first, all Registrable Shares requested to be
included in such registration by the Shareholders who requested such
registration pursuant to Section 2(a), pro rata among such requesting
Shareholders based on the number of Registrable Shares requested by
each such requesting Shareholder to be so registered;
(B) second, all Registrable Shares requested to be
included in such registration by the other Shareholders who requested
the inclusion of their Registrable Shares in such registration pursuant
to Section 3, pro rata among all such Shareholders based on the number
of Registrable Shares requested by each such Shareholder to be so
registered;
(C) third, the Primary Shares; and
(D) fourth, the Other Shares;
(ii) at any time before the Registration Statement
covering Registrable Shares becomes effective, the Shareholder or group
of Shareholders which requested such registration pursuant to Section
2(a) may request that the Company withdraw or not file the Registration
Statement; and
(iii) the Company may, at its sole option, elect to
satisfy a request for a Registration pursuant to Section 2(a) on Form
S-2 or Form S-3 promulgated under the Securities Act (or any successor
forms thereto), if use of any such forms are then available to the
Company; provided that, if the proposed registration pursuant to
Section 2(a) involves an underwritten public offering, the Company
shall include in such registration statement such additional
information as reasonably requested by the requesting Shareholders
and/or such underwriter (whether or not such information is required by
Form S-2 or S-3, as applicable).
Section 3. Piggyback Registration.
If the Company at any time proposes for any reason to register
Common Shares under the Securities Act (other than on Form S-4 or Form S-8
promulgated under
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the Securities Act or any successor forms thereto or in connection with any
acquisition), it shall promptly give written notice to the Shareholders of its
intention to so register such Common Shares and, upon the written request,
delivered to the Company within 30 days after delivery of any such notice by the
Company, of any Shareholder to include in such registration Registrable Shares
(which request shall specify the number of Registrable Shares proposed to be
included in such registration), the Company shall use its best efforts to cause
all such Registrable Shares to be included in such registration on the same
terms and conditions as the Common Shares otherwise being sold in such
registration; provided, however, that, if the managing underwriter advises the
Company that the inclusion of all Registrable Shares requested to be included in
such registration would interfere with the successful marketing (including
pricing) of the Primary Shares or Other Shares proposed to be registered, then
the number of Primary Shares, Registrable Shares and Other Shares proposed to be
included in such registration shall be included in the following order:
(a) in a primary registration on behalf of the Company:
(i) first, the Primary Shares proposed to be registered by
the Company;
(ii) second, the Registrable Shares requested to be
included in such registration pursuant to this Section 3, pro rata
among the holders thereof based upon the number of Registrable Shares
requested to be registered by each such holder; and
(iii) third, the Other Shares.
(b) in a secondary registration on behalf of holders of
Registrable Shares (other than
pursuant to Section 2(b)):
(i) first, the Registrable Shares requested to be included
in such registration pursuant to this Section 3, pro rata among the
holders thereof based upon the number of Registrable Shares requested
to be registered by each such holder; and
(ii) second, the Other Shares.
Section 4. Registrations on Form S-3.
Anything contained in Section 2 to the contrary notwithstanding,
at such time as the Company shall have qualified for the use of Form S-3
promulgated under the Securities Act or any successor form thereto, a Holdings
Shareholder Majority shall have the right to request in writing an unlimited
number of registrations of Registrable Shares on Form S-3 or such successor
form, which request or requests shall (i) specify the number of Registrable
Shares intended to be sold or disposed of and the holders thereof, (ii) state
the intended method of disposition of such Registrable Shares and (iii) relate
to Registrable Shares having an anticipated aggregate gross offering price
(before underwriting discounts and commissions) of at least $5,000,000, and upon
receipt of any
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such request, the Company shall use its best efforts promptly to effect the
registration under the Securities Act of the Registrable Shares so requested to
be registered.
Section 5. Holdback Agreement.
(a) If the Company at any time shall register Common Shares under
the Securities Act (including any registration pursuant to Sections 2, 3 or 4)
for sale to the public pursuant to an underwritten offering, the Shareholders
shall not sell publicly, make any short sale of, grant any option for the
purchase of, or otherwise dispose publicly of, any Registrable Shares (other
than those Common Shares included in such registration pursuant to Sections 2, 3
or 4) without the prior written consent of the Company, for such period as shall
be determined by the relevant managing underwriters. The Company shall obtain
the agreement of any Person permitted to sell shares of stock in a registration
and each of its directors and executive officers to be bound by and to comply
with this Section 5 with respect to such registration as if such Person were a
Shareholder hereunder.
(b) If the Company at any time pursuant to Sections 2 or 3 of this
Agreement shall register under the Securities Act Registrable Shares held by
Shareholders for sale to the public pursuant to an underwritten offering, the
Company shall not effect any public sale or distribution of securities similar
to those being registered, or any securities convertible into or exercisable or
exchangeable for such securities, for such period as shall be determined by the
managing underwriters.
Section 6. Preparation and Filing.
(a) If and whenever the Company is under an obligation pursuant to
the provisions of this Agreement to use its best efforts to effect the
registration of, and keep effective a Registration Statement for, any
Registrable Shares, the Company shall, as expeditiously as practicable:
(i) use its best efforts to cause a Registration Statement
that registers such Registrable Shares to become and remain effective
for a period of 90 days (extended for such period of time as the
Shareholders are required to discontinue disposition of Registrable
Shares pursuant to Section 6(b) below) or until all of such Registrable
Shares have been disposed of (if earlier);
(ii) furnish, at least five (5) business days before
filing a Registration Statement that relates to the registration of
such Registrable Shares, a Prospectus relating thereto or any
amendments or supplements relating to such a Registration Statement or
Prospectus, to one counsel (the "Shareholders' Counsel") selected by a
Majority of Registering Shareholders;
(iii) notify the Shareholders whose Registrable Shares are
included therein of the effectiveness of such Registration Statement
and prepare and promptly file with the Commission such amendments and
supplements to such Registration Statement and the Prospectus used in
connection therewith as may be necessary to (A) keep such Registration
Statement effective for at least a
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period of 90 days (extended for such period of time as Shareholders are
required to discontinue disposition of Registrable Shares pursuant to
Section 6(b) below) or until all of such Registrable Shares have been
disposed of (if earlier), (B) correct any statements or omissions if
any event with respect to the Company shall have occurred as a result
of which any such Registration Statement or Prospectus as then in
effect would include an untrue statement of material fact or omit to
state any material fact necessary to make the statements therein not
misleading, and (C) comply with the provisions of the Securities Act
with respect to the sale or other disposition of such Registrable
Shares;
(iv) notify in writing the Shareholders' Counsel, and the
Shareholders whose Registrable Shares may be included in such
Registration Statement, promptly of (A) the receipt by the Company of
any notification with respect to any comments by the Commission with
respect to such Registration Statement or Prospectus or any amendment
or supplement thereto or any request by the Commission for the amending
or supplementing thereof or for additional information with respect
thereto, (B) the receipt by the Company of any notification or written
information with respect to the issuance or threatened issuance by the
Commission of any stop order suspending the effectiveness of such
Registration Statement or Prospectus or any amendment or supplement
thereto or the initiation or threatening of any proceeding for that
purpose (and the Company shall use its best efforts to prevent the
issuance thereof or, if issued, to obtain its withdrawal) and (C) the
receipt by the Company of any notification with respect to the
suspension of the qualification of such Registrable Shares for sale in
any jurisdiction or the initiation or threatening of any proceeding for
such purposes;
(v) use its best efforts to register or qualify such
Registrable Shares under such other securities or blue sky laws of such
jurisdictions as the Shareholders reasonably request and do any and all
other acts and things which may be reasonably necessary or advisable to
enable the Shareholders to consummate the disposition in such
jurisdictions of the Registrable Shares owned by the Shareholders;
provided, however, that the Company will not be required to qualify
generally to do business, subject itself to general taxation or consent
to general service of process in any jurisdiction where it would not
otherwise be required to do so but for this clause (v);
(vi) furnish to the Shareholders holding such Registrable
Shares such number of copies of a summary Prospectus, if any, or other
Prospectus, including a preliminary Prospectus, in conformity with the
requirements of the Securities Act, and such other documents as such
Shareholders may reasonably request in order to facilitate the public
sale or other disposition of such Registrable Shares;
(vii) use its best efforts to cause such Registrable
Shares to be registered with or approved by such other governmental
agencies or authorities as may be necessary by virtue of the business
and operations of the Company to
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<PAGE>
enable the Shareholders holding such Registrable Shares to consummate
the disposition of such Registrable Shares;
(viii) notify the Shareholders holding such Registrable
Shares on a timely basis at any time when a Prospectus relating to such
Registrable Shares is required to be delivered under the Securities Act
within the appropriate period mentioned in clause (i) of this Section
6(a), of the happening of any event as a result of which the Prospectus
included in such Registration Statement, as then in effect, includes an
untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, and prepare and furnish to such Shareholders a reasonable
number of copies of, and file with the Commission, a supplement to or
an amendment of such Prospectus as may be necessary so that, as
thereafter delivered to the offerees of such Registrable Shares, such
Prospectus shall not include an untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading;
(ix) subject to the execution of confidentiality
agreements in form and substance reasonably satisfactory to the
Company, make available upon reasonable notice and during normal
business hours, for inspection by the Shareholders holding Registrable
Shares requested to be included in such registration, any underwriter
participating in any disposition pursuant to such Registration
Statement and any attorney, accountant or other agent retained by the
Shareholders or underwriter (collectively, the "Inspectors"), all
pertinent financial and other records, pertinent corporate documents
and properties of the Company (collectively, the "Records"), and cause
the Company's officers, directors and employees to supply all
information (together with the Records, the "Information") reasonably
requested by any such Inspector, in each case as shall be reasonably
necessary to enable them to exercise their due diligence responsibility
in connection with such Registration Statement; provided, however, that
any of the Information that the Company determines in good faith to be
confidential, and of which determination the Inspectors are so
notified, shall not be disclosed by the Inspectors unless (A) the
disclosure of such Information is necessary to avoid or correct a
misstatement or omission in the Registration Statement or Prospectus,
(B) the release of such Information is ordered pursuant to a subpoena
or other order from a court of competent jurisdiction or, upon the
written advice of counsel, is otherwise required by law, or (C) such
Information has been made generally available to the public, and the
Shareholders agree that they will, upon learning that disclosure of
such Information is sought in a court of competent jurisdiction, give
notice to the Company and allow the Company, at the Company's expense,
to undertake appropriate action to prevent disclosure of the
Information deemed confidential;
(x) use its best efforts to obtain from its independent
certified public accountants "cold comfort" letters in customary
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<PAGE>
form and at customary times and covering matters of the type
customarily covered by cold comfort letters;
(xi) use its best efforts to obtain from its counsel an
opinion or opinions in customary form naming the Shareholders as
additional addressees or parties who may rely thereon;
(xii) provide a transfer agent and registrar (which may be
the same entity and which may be the Company) for such Registrable
Shares;
(xiii) issue to any underwriter to which the Shareholders
holding such Registrable Shares may sell shares in such offering
certificates evidencing such Registrable Shares;
(xiv) list such Registrable Shares on any national
securities exchange on which any Common Shares are listed or, if the
Common Shares are not listed on a national securities exchange, use its
best efforts to qualify such Registrable Shares for inclusion on the
NASDAQ Stock Market;
(xv) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission and make available
to its securityholders, as soon as reasonably practicable, earnings
statements (which need not be audited) covering a period of 12 months
beginning within three months after the effective date of the
Registration Statement, which earnings statements shall satisfy the
provisions of Section 11(a) of the Securities Act; and
(xvi) use its best efforts to take all other steps
necessary to effect the registration of, and maintain an effective
Registration Statement with respect to, such Registrable Shares
contemplated hereby.
(b) Each holder of the Registrable Shares, upon receipt of any
notice from the Company of any event of the kind described in Section 6(a)(viii)
hereof, shall forthwith discontinue disposition of the Registrable Shares
pursuant to the Registration Statement covering such Registrable Shares until
such holder's receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 6(a)(viii) hereof, and, if so directed by the Company,
such holder shall deliver to the Company all copies, other than permanent file
copies then in such holder's possession, of the most recent Prospectus covering
such Registrable Shares at the time of receipt of such notice.
Section 7. Expenses.
All expenses (other than underwriting discounts and commissions
relating to the Registrable Shares) incurred by the Company and the Shareholders
in complying with this Agreement, including, without limitation, all
registration and filing fees (including all expenses incident to filings with
the National Association of Securities Dealers, Inc.), fees and expenses of
complying with securities and blue sky laws, printing expenses, fees and
expenses of the Company's counsel and accountants and fees and expenses of the
Shareholders' Counsel, shall be paid by the Company in connection with
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<PAGE>
registrations requested under Sections 2, 3 or 4; provided, however, that all
underwriting discounts and selling commissions applicable to the Registrable
Shares and Other Shares shall be borne by the holders selling such Registrable
Shares and Other Shares, in proportion to the number of Registrable Shares and
Other Shares sold by each such holder.
Section 8. Indemnification.
(a) In connection with any registration of any Registrable Shares
under the Securities Act pursuant to this Agreement, the Company shall indemnify
and hold harmless, to the fullest extent permitted by law, each holder of
Registrable Shares, each underwriter, broker or any other Person acting on
behalf of the holders of Registrable Shares and each other Person, if any, who
controls any of the foregoing Persons within the meaning of the Securities Act
(each such indemnified Person being referred to herein as an "Indemnified
Person") against any losses, claims, damages or liabilities, joint or several
(or actions in respect thereof), to which any of the foregoing Persons may
become subject under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon an untrue statement or allegedly untrue statement of a material
fact contained in or incorporated by reference in the Registration Statement
under which such Registrable Shares were registered under the Securities Act,
any preliminary Prospectus or final Prospectus contained therein or otherwise
filed with the Commission, any amendment or supplement thereto or any document
incident to registration or qualification of any Registrable Shares, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading or, with respect to any Prospectus, necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, or any violation by the Company of the Securities Act or state
securities or blue sky laws applicable to the Company and relating to action or
inaction required of the Company in connection with such registration or
qualification under such state securities or blue sky laws; and shall promptly
reimburse the Indemnified Persons for any legal or other expenses reasonably
incurred by any of them in connection with investigating or defending any such
loss, claim, damage, liability or action; provided, however, that the Company
shall not be liable in any such case to any such Indemnified Person to the
extent that any such loss, claim, damage, liability or action (including any
legal or other expenses incurred) arises out of or is based upon an untrue
statement or allegedly untrue statement or omission or alleged omission made in
said Registration Statement, preliminary Prospectus, final Prospectus,
amendment, supplement or document incident to registration or qualification of
any Registrable Shares in reliance upon and in conformity with written
information furnished to the Company through an instrument duly executed by such
Indemnified Person specifically for use in the preparation thereof.
(b) In connection with any registration of Registrable Shares
under the Securities Act pursuant to this Agreement, each holder of Registrable
Shares being registered shall, severally and not jointly, to the fullest extent
permitted by law, indemnify and hold harmless (in the same manner and to the
same extent as set forth in Section 8(a) above) the Company, each director of
the Company, each officer of the
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Company who shall have signed such Registration Statement, each other holder of
Registrable Shares or Other Shares, each agent, underwriter, broker or other
Person acting on behalf of the Company, each other holder of Registrable Shares
or Other Shares and each Person who controls any of the foregoing Persons within
the meaning of the Securities Act with respect to any statement or omission from
such Registration Statement, any preliminary Prospectus or final Prospectus
contained therein or otherwise filed with the Commission, any amendment or
supplement thereto or any document incident to registration or qualification of
any Registrable Shares, if such statement or omission was made in reliance upon
and in conformity with written information furnished to the Company or such
underwriter through an instrument duly executed by such holder specifically for
use in connection with the preparation of such Registration Statement,
preliminary Prospectus, final Prospectus, amendment, supplement or document;
provided, however, that the maximum amount of liability in respect of such
indemnification shall be limited, in the case of each seller of Registrable
Shares, to an amount equal to the net proceeds actually received by such seller
from the sale of Registrable Shares effected pursuant to such registration.
(c) Promptly after receipt by an indemnified party of notice of
the commencement of any action involving a claim referred to in Section 8(a) or
(b), such indemnified party will, if a claim in respect thereof is to be made
against an indemnifying party, give written notice to the latter of the
commencement of such action; provided, however, that the indemnified party's
failure to give such notice shall not release, relieve or in any way affect the
indemnifying party's obligation hereunder to indemnify the indemnified party,
unless and to the extent that the rights of the indemnifying party are
prejudiced thereby. In case any such action is brought against an indemnified
party, the indemnifying party will be entitled to participate in and to assume
the defense thereof, jointly with any other indemnifying party similarly
notified to the extent that he, she, or it may wish, with counsel reasonably
satisfactory to such indemnified party, and after notice from the indemnifying
party to such indemnified party of his, her or its election so to assume the
defense thereof, the indemnifying party shall not be responsible for any legal
or other expenses subsequently incurred by the indemnified party in connection
with the defense thereof; provided, however, that, if any indemnified party
shall have reasonably concluded (based on the written advice of counsel) that
there may be one or more legal or equitable defenses available to such
indemnified party which are additional to or conflict with those available to
the indemnifying party, or that such claim or litigation involves or could have
an effect upon matters beyond the scope of the indemnity agreement provided in
this Section 8, the indemnifying party shall not have the right to assume the
defense of such action on behalf of such indemnified party and such indemnifying
party shall reimburse such indemnified party and any Person controlling such
indemnified party for that portion of the fees and expenses of one counsel
retained by the indemnified party which is reasonably related to the matters
covered by the indemnity agreement provided in this Section 8.
(d) If the indemnification provided for in this Section 8 is held
by a court of competent jurisdiction to be unavailable to an indemnified party
with respect to any loss, claim, damage, liability or action referred to herein
(other than as a result of the applicability of the proviso in Section 8(a)),
then the indemnifying party, in lieu of
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<PAGE>
indemnifying such indemnified party hereunder, shall contribute to the amounts
paid or payable by such indemnified party as a result of such loss, claim,
damage, liability or action in such proportion as is appropriate to reflect the
relative fault of the indemnifying party on the one hand and of the indemnified
party on the other in connection with the statements or omissions which resulted
in such loss, claim, damage, liability or action as well as any other relevant
equitable considerations. The relative fault of the indemnifying party and of
the indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the indemnifying party or by the indemnified party and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
Section 9. Underwriting Agreement.
(a) If any registration pursuant to Sections 2, 3 or 4 is or is
requested to be an underwritten offering, the Company shall negotiate in good
faith to enter into a reasonable and customary underwriting agreement with the
underwriters thereof. The Company shall be entitled to receive indemnities from
lead institutions, underwriters, selling brokers, dealer managers and similar
securities industry professionals participating in the distribution, to the same
extent as provided above with respect to information so furnished in writing by
such Persons specifically for inclusion in any Prospectus or Registration
Statement and to the extent customary given their role in such distribution.
(b) No Shareholder may participate in any registration hereunder
that is underwritten unless such Shareholder agrees to (i) sell such
Shareholder's Registrable Shares proposed to be included therein on the basis
provided in any underwriting arrangements approved by the Company and the
Majority of Registering Shareholders and (ii) as expeditiously as possible,
notify the Company of the occurrence of any event concerning such Shareholder as
a result of which the Prospectus relating to such registration contains an
untrue statement of a material fact or omits to state a material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading.
Section 10. Information by Holder.
The Shareholders shall furnish to the Company such written
information regarding the Shareholders and the distribution proposed by the
Shareholders as the Company may reasonably request in writing and as shall be
reasonably required in connection with any registration, qualification or
compliance referred to in this Agreement.
Section 11. Exchange Act Compliance.
From the Registration Date or such earlier date as a Registration
Statement filed by the Company pursuant to the Exchange Act relating to any
class of the
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Company's securities shall have become effective, the Company shall comply with
all of the reporting requirements of the Exchange Act applicable to it (whether
or not it shall be required to do so) and shall comply with all other public
information reporting requirements of the Commission which are conditions to the
availability of Rule 144 for the sale of the Common Shares. The Company shall
cooperate with the Shareholders in supplying such information as may be
necessary for the Shareholders to complete and file any information reporting
forms presently or hereafter required by the Commission as a condition to the
availability of Rule 144.
Section 12. Mergers, Etc.
The Company shall not, directly or indirectly, enter into any
merger, consolidation or reorganization in which the Company shall not be the
surviving corporation unless the surviving corporation shall, prior to such
merger, consolidation or reorganization, agree in writing to assume the
obligations of the Company under this Agreement, and for that purpose references
hereunder to "Registrable Shares" shall be deemed to include the shares of
common stock, if any, or other securities that the Shareholders would be
entitled to receive in exchange for Common Shares under any such merger,
consolidation or reorganization; provided, however, that, to the extent the
Shareholders receive securities that are by their terms convertible into shares
of common stock of the issuer thereof, then any such shares of common stock as
are issued or issuable upon conversion of said convertible securities shall be
included within the definition of "Registrable Shares".
Section 13. New Certificates.
As expeditiously as possible after the effectiveness of any
Registration Statement filed pursuant to this Agreement, the Company will
deliver in exchange for any legended certificate evidencing Restricted Shares so
registered, new stock certificates not bearing any restrictive legends.
Section 14. No Conflict of Rights; Selection of Underwriter.
The Company shall not, at any time after the date hereof, grant
any registration rights that conflict with or impair, or have any priority over,
the registration rights granted hereby. In any Public Offering, the managing
underwriter shall be a nationally recognized investment banking firm chosen by
the Board.
Section 15. Termination.
This Agreement shall terminate and be of no further force or
effect when there shall no longer be any Restricted Shares outstanding.
Section 16. Miscellaneous.
(a) Successors and Assigns. This Agreement shall bind and inure to
the benefit of the Company and the Shareholders and, subject to Section 16(b),
the respective successors and assigns of the Company and the Shareholders. This
Agreement
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is not intended to create any third party beneficiaries.
(b) Assignment. Each Shareholder may assign its rights hereunder
to any purchaser or transferee of Registrable Shares; provided, however, that
such purchaser or transferee shall, as a condition to the effectiveness of such
assignment, unless already a party to this Agreement, be required to execute a
counterpart to this Agreement agreeing to be treated as Shareholder hereunder,
whereupon such purchaser or transferee shall have the benefits of and shall be
subject to the restrictions contained in this Agreement as if such purchaser or
transferee was originally included in the definition of a Shareholder and had
originally been a party hereto.
(c) Severability. It is the desire and intent of the parties
hereto that the provisions of this Agreement be enforced to the fullest extent
permissible under the laws and public policies applied in each jurisdiction in
which enforcement is sought. Accordingly, if any particular provision of this
Agreement shall be adjudicated by a court of competent jurisdiction to be
invalid, prohibited or unenforceable for any reason, such provision, as to such
jurisdiction, shall be ineffective, without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of this
Agreement or affecting the validity or enforceability of such provision in any
other jurisdiction. Notwithstanding the foregoing, if such provision could be
more narrowly drawn so as not to be invalid, prohibited or unenforceable in such
jurisdiction, it shall, as to such jurisdiction, be so narrowly drawn, without
invalidating the remaining provisions of this Agreement or affecting the
validity or enforceability of such provision in any other jurisdiction.
(d) Entire Agreement. This Agreement and the other writings
referred to herein or delivered pursuant hereto contain the entire agreement
among the parties with respect to the subject matter hereof and thereof and
supersede all prior and contemporaneous arrangements or understandings with
respect hereto and thereto.
(e) Notices. All communications hereunder to any party shall be
deemed to be sufficient if contained in a written instrument delivered in person
or sent by telecopy, nationally-recognized overnight courier guaranteeing next
day delivery or first class registered or certified mail, return receipt
requested, postage prepaid, addressed to such party at its address below or such
other address as such party may hereafter designate in writing:
(i) if to the Company to:
Greenfield Online, Inc.
274 Riverside Avenue
Westport, CT 06880-4807
Attention: Chief Executive Officer
Telecopier: (203) 408-2420;
with a copy to:
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Preston Gates & Ellis LLP
701 Fifth Avenue
Suite 5000
Seattle, Washington 98014
Attention: Robert S. Jaffe, Esq.
Telecopier: (206) 623-7022
(ii) if to Holdings to:
Greenfield Holdings, LLC
c/o InSight Capital Partners III, L.P.
122 East 42nd Street
Suite 2300
New York, New York 10168
Attention: Jeffrey Horing
Telecopier: (212) 681-0972;
with a copy to:
O'Sullivan Graev & Karabell, LLP
30 Rockefeller Plaza
41st Floor
New York, New York 10112
Attention: Ilan S. Nissan, Esq.
Telecopier: (212) 408-2420.
All such notices, requests, consents and other communications
shall be deemed to have been given and received (A) in the case of personal
delivery or delivery by telecopy (if confirmed), on the date of such delivery,
(B) in the case of dispatch by nationally-recognized overnight courier, on the
next business day following such dispatch and (C) in the case of mailing, on the
third business day after the posting thereof.
(f) Modifications; Amendments; Waivers. The terms and provisions
of this Agreement may not be modified or amended, nor may any provision be
waived, except pursuant to a writing signed by the Company and the Holdings
Shareholder Majority provided, however, that no such modification, amendment or
waiver shall adversely affect the rights of any party hereto without such
party's consent. The failure of any party to enforce any of the provisions of
this Agreement shall in no way be construed as a waiver of such provisions and
shall not affect the right of such party thereafter to enforce each and every
provision of this Agreement in accordance with its terms.
(g) Counterparts. This Agreement may be executed in any number of
counterparts, and each such counterpart hereof shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.
(h) Headings. The headings of the various sections of this
Agreement
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<PAGE>
have been inserted for convenience of reference only and shall not be deemed to
be a part of this Agreement.
(i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING
EFFECT TO ANY CHOICE OF LAW OR CONFLICTING PROVISION OR RULE (WHETHER OF THE
STATE OF NEW YORK OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE LAWS OF ANY
JURISDICTION OTHER THAN THE STATE OF NEW YORK TO BE APPLIED. IN FURTHERANCE OF
THE FOREGOING, THE INTERNAL LAWS OF THE STATE OF NEW YORK WILL CONTROL THE
INTERPRETATION AND CONSTRUCTION OF THIS AGREEMENT, EVEN IF UNDER SUCH
JURISDICTION'S CHOICE OF LAW OR CONFLICTS OF LAW ANALYSIS, THE SUBSTANTIVE LAW
OF SOME OTHER JURISDICTION WOULD ORDINARILY APPLY.
(j) Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT.
(k) Nouns and Pronouns. Whenever the context may require, any
pronouns used herein shall include the corresponding masculine, feminine or
neuter forms, and the singular form of nouns and pronouns shall include the
plural and vice-versa.
(l) Construction. Where specific language is used to clarify by
example a general statement contained herein, such specific language shall not
be deemed to modify, limit or restrict in any manner the construction of the
general statement to which it relates. The language used in this Agreement shall
be deemed to be the language chosen by the parties to express their mutual
intent, and no rule of strict construction shall be applied against any party.
(m) Effectiveness. This Agreement shall not be deemed effective
until the Closing (as defined in the Purchase and Redemption Agreement) under
the Purchase and Redemption Agreement.
* * * * *
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IN WITNESS WHEREOF, the parties hereto have executed this Registration Rights
Agreement on the day and year first above written.
GREENFIELD ONLINE, INC.
By:_______________________________
Name:
Title:
GREENFIELD HOLDINGS, LLC
By:______________________________
Name:
Title:
----------------------------------
Andrew Greenfield
<PAGE>
THIS NOTE HAS BEEN ACQUIRED FOR INVESTMENT PURPOSES ONLY AND HAS NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR UNDER ANY APPLICABLE STATE SECURITIES LAWS. THIS NOTE MAY NOT BE SOLD OR
OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR
PURSUANT TO AN EXEMPTION UNDER THE SECURITIES ACT AND SUCH APPLICABLE STATE
SECURITIES LAWS.
THIS NOTE WAS ISSUED WITH ORIGINAL ISSUE DISCOUNT ("OID") WITHIN THE MEANING OF
THE INTERNAL REVENUE CODE OF 1986, AS AMENDED. HOLDERS OF THIS NOTE MAY CONTACT
THE CHIEF FINANCIAL OFFICER OR CONTROLLER OF THE BORROWER AT (203) 221-0411 TO
RECEIVE INFORMATION ABOUT SUCH OID DESCRIBED IN TREASURY REGULATION ss.
1.1275-3(b)(1)(i).
$14,136,452 GREENFIELD ONLINE, INC. May 17, 1999
New York, New York
Promissory Note
Due May 17, 2009
FOR VALUE RECEIVED, the undersigned GREENFIELD ONLINE, INC., a
Connecticut corporation (the "Borrower"), hereby promises to pay to Greenfield
Holdings, LLC or its registered assigns ("Holdings"), the principal sum of
FOURTEEN MILLION ONE HUNDRED THIRTY SIX THOUSAND FOUR HUNDRED FIFTY TWO DOLLARS
($14,136,452) or such greater or lesser principal amount which may be
outstanding hereunder (including as a result of the exercise of the PIK Option)
on May 17, 2009 (the "Maturity Date"), with interest (computed on the basis of
the actual number of days elapsed over a 360-day year) on the unpaid balance of
such principal sum from the date hereof at an interest rate equal to the
Applicable Rate (or upon and during the continuance of an Event of Default (as
defined in Section 5), at the Applicable Rate in effect from time to time during
the continuance of such Event of Default plus 2%), payable in cash (unless the
Borrower elects to exercise the PIK Option in the manner set forth below) on
each May 17, (each an "Interest Payment Date"), commencing May 17, 2000, and on
the Maturity Date, until the entire principal amount hereof shall have become
due and payable, whether on the Maturity Date or at a date fixed for prepayment
or by acceleration or declaration or otherwise. As used herein, the term
"Applicable Rate" shall mean (i) during the period commencing on the date hereof
to but excluding May 17, 2001, 7.5%, (ii) during the period commencing on May
17, 2001 to but excluding May 17, 2003, 9.5% and (iii) at any time thereafter,
10.5%. If any payment of interest due hereunder becomes due and payable on a day
which is not a Business Day (as defined below), the due date thereof shall be
the next succeeding day which is a Business Day. Payments of principal and
interest shall be made in lawful money of the United States of America in
immediately available funds by check or wire transfer to the address or account
designated by Holdings. Notwithstanding the foregoing, the Borrower shall have
the option on any Interest Payment Date to pay 70% of the interest due on such
date (the "Scheduled Interest Payment") by electing (the "PIK Option") to
increase the principal amount due under this Note by 70% of the amount of such
Scheduled Interest Payment, whereupon, immediately thereafter, the principal
amount of this Note shall be increased by 70% of such Scheduled Interest Payment
and interest thereafter shall accrue on the principal amount of this Note as so
increased. As used in this Note, the term "Business Day" means any day upon
which commercial banks in the State of New York are not required or
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permitted to be closed.
Section 1. Issuance of Note. Upon the terms and subject to the
conditions contained herein (i) the Borrower has authorized the issuance to
Holdings of this Promissory Note (this "Note") in an aggregate principal amount
of up to $14,136,452 or such greater or lesser amounts as may be outstanding
hereunder (including as a result of the exercise of the PIK Option).
Section 2. Mandatory Prepayments. Upon the occurrence of any of the
following events, the principal amount of this Note, together with all accrued
interest thereon, shall become immediately due and payable: (i) the Borrower
winds up, liquidates or dissolves its affairs; (ii) the Borrower enters into any
transaction of merger or consolidation where an aggregate consideration in
excess of $20 million in cash or property shall be paid as the consideration
therefor; (iii) the Borrower conveys, sells, leases or otherwise disposes of all
or substantially all of its assets, or purchases or otherwise acquires (in one
or a series of related transactions) all or substantially all of the property or
assets of any Person (iv) the Borrower effects an initial public offering of its
equity securities or (v) the stockholders of the Borrower on the date of this
Note cease to own at least 40% of the outstanding capital stock of the Borrower
on a fully-diluted basis. As used in this Note, the term "Person" is to be
construed in the broadest sense and means and includes any natural person,
company, partnership, limited liability corporation, joint venture, corporation,
business trust, unincorporated organization or governmental authority.
Section 3. Representations and Warranties of the Borrower.
The Borrower hereby confirms that all of the representations and warranties
(including related definitions) made by the Borrower to Holdings in Article III
of the Stock Purchase and Redemption Agreement dated as of May 12, 1999 among
the Borrower, Andrew Greenfield and Holdings (as the same may be amended,
restated or otherwise modified from time to time, the "Purchase Agreement") are
hereby true and correct in all material respects. The Borrower further
represents and warrants to Holdings that no Event of Default has occurred and is
continuing.
Section 4. Covenants.
4.1 Affirmative Covenants.
(a) Information. From time to time, the Borrower will furnish to
Holdings such information or documents (financial or otherwise) as Holdings may
request with respect to the Borrower and/or any of its subsidiaries.
(b) Books, Records and Inspections. The Borrower will keep, and
will cause its subsidiaries to keep, proper books of record and account in which
full, true and correct entries in conformity with generally accepted accounting
principles and all material requirements of law shall be made. The Borrower
will, and will cause its subsidiaries to, permit officers and designated
representatives of Holdings to visit and inspect any of the properties of the
Borrower and its subsidiaries, and to examine the books of records and account
of the Borrower and its subsidiaries and discuss the affairs, finances and
accounts of the Borrower and its subsidiaries with, and be advised as to the
same by, the Borrower's and its subsidiaries' officers, all at such reasonable
times and intervals and to such reasonable extent as Holdings may request.
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(c) Maintenance of Property; Insurance. The Borrower will, and
will cause its subsidiaries to, (i) keep all material property used and
necessary in the Borrower's and its subsidiaries' respective businesses in good
working order and condition, (ii) maintain with financially sound and reputable
insurance companies insurance on all the Borrower's and its subsidiaries'
respective properties in at least such amounts and against at least such risks
as maintained by each of them prior to the date of this Note, and (iii) furnish
to Holdings, upon written request, information in reasonable detail as to the
insurance carried with respect to the Borrower and its subsidiaries.
(d) Corporate Franchises. The Borrower will, and will cause its
subsidiaries to, do or cause to be done all things necessary to preserve and
keep in full force and effect the Borrower's and its subsidiaries' existence and
all reasonable things necessary to preserve and keep in full force and effect
the Borrower's and its subsidiaries' respective material rights, franchises,
licenses and patents.
(e) Compliance with Statutes, Etc. The Borrower will, and will
cause its subsidiaries to, comply with all applicable statutes, regulations and
orders of, and all applicable restrictions imposed by, all governmental bodies,
domestic or foreign, in respect of the conduct of the Borrower's and its
subsidiaries' respective businesses and the ownership of the Borrower's and its
subsidiaries' respective properties.
(f) Performance of Obligations. The Borrower will, and will cause
its subsidiaries to, perform all of its or their respective obligations under
the terms of each mortgage, indenture, security agreement, debt instrument and
other contract by which the Borrower or its subsidiaries, as the case may be, is
bound, except where the failure to perform would not, in the aggregate, have a
material adverse effect on the business, operations or financial condition of
the Borrower or its subsidiaries, as the case may be.
(g) Taxes. The Borrower will, and will cause its subsidiaries to,
pay when due all taxes which, if not paid when due, would materially and
adversely affect the business, operations, or financial condition of the
Borrower or any of its subsidiaries, as the case may be, except as contested in
good faith and by appropriate proceedings for which adequate reserves have been
established in accordance with generally accepted accounting principles.
(h) Use of Proceeds. The Borrower shall use the proceeds of this
Note to consummate the transactions contemplated by the Purchase Agreement and
for general corporate purposes of the Borrower and its subsidiaries.
4.2 Negative Covenants. The Borrower covenants and agrees (unless
Holdings agrees otherwise) that, until this Note, together with interest and all
other obligations incurred hereunder, are paid in full:
(a) Liens. The Borrower will not, and will cause its subsidiaries
not to, create, incur, assume or suffer to exist any Lien (as defined below)
upon or with respect to any property or assets (real or personal, tangible or
intangible) of the Borrower or any of its
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<PAGE>
subsidiaries whether now owned or hereafter acquired, or sell any such property
or assets subject to an understanding or agreement, contingent or otherwise, to
repurchase such property or assets (including sales of accounts receivable with
recourse to the Borrower), or assign any right to receive income or permit the
filing of any financing statement under the UCC (as defined below) or any other
similar notice of Lien under any similar recording or notice statute, provided
that the provisions of this Section 4.2(a) shall not prevent the creation,
incurrence, assumption or existence of the following Liens (collectively, the
"Permitted Liens"):
(i) inchoate Liens for taxes not yet due and payable, or
Liens for taxes being contested in good faith and by appropriate
proceedings for which adequate reserves have been established in
accordance with generally accepted accounting principles;
(ii) Liens in respect of property or assets of the
Borrower or its subsidiaries, as the case may be, which do not in the
aggregate materially detract from the value of such property or assets
or materially impair the use thereof in the operation of the business
of the Borrower or any of its subsidiaries, as the case may be;
(iii) Liens in existence on the date hereof;
(iv) pledges or deposits in connection with worker's
compensation, unemployment insurance and other social security
legislation;
(v) Liens on the collateral not otherwise permitted by the
provisions of this Section 4.2(a) to the extent securing Indebtedness
permitted by Section 4.2(c)(ii);
(vi) Liens in respect of judgments or awards with respect
to which the Borrower or any of its subsidiaries, as the case may be,
shall in good faith currently be diligently prosecuting an appeal or
proceedings for review with respect to which an appropriate bond or a
stay of execution pending such appeal or proceedings for review shall
have been secured; and
(vii) Liens on real property existing at the time such
real property is acquired, provided that such Liens attach only on such
real property.
As used in this Note, the term "Lien" shall mean any mortgage, pledge,
hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or
other), preference, priority or other security agreement of any kind or nature
whatsoever (including, without limitation, any conditional sale or other title
retention agreement, any financing or similar statement or notice filed under
the UCC or any other similar recording or notice statute, and any lease having
substantially the same effect as any of the foregoing), and the term "UCC" shall
mean the Uniform Commercial Code, as from time to time in effect in the relevant
jurisdiction.
(b) Dividends. The Borrower will not declare or pay any dividends,
or return any capital to its stockholders or authorize or make any other
distribution, payment or delivery of property or cash to its stockholders in
their capacity as such, or redeem, retire, purchase or otherwise acquire,
directly or indirectly, for consideration, any shares of any class of its
capital
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<PAGE>
stock now or hereafter outstanding (or any options or warrants issued by the
Borrower with respect to its capital stock), or set aside any funds for any of
the foregoing purposes; provided, however, that (i) the Borrower may make such
payments to repurchase capital stock (or warrants or options) from an employee
of the Borrower upon termination of such employee's employment upon terms and
conditions (including, without limitation, price) acceptable to Holdings and
(ii) the Borrower may make any payments required or permitted by the
Shareholders Agreement, dated as of the date hereof among the Borrower and its
shareholders.
(c) Indebtedness. The Borrower will not, and will cause its
subsidiaries not to, contract, create, incur, assume or suffer to exist any
Indebtedness (as defined below), except: (i) Indebtedness of the Borrower
incurred under this Note; (ii) Indebtedness (including any refinancing thereof)
to Holdings in an aggregate principal amount not to exceed $2,000,000, the
proceeds of which are to be used solely for working capital requirements; (iii)
accrued expenses and current trade accounts payable incurred in the ordinary
course of business; (iv) intercompany Indebtedness between the Borrower and its
subsidiaries; (v) Indebtedness of any of the Borrower's subsidiaries (not
covered under clauses (ii), (iii), (iv) and (vi) of this Section 4.2(c)), not to
exceed $2,000,000 at any time outstanding incurred in the ordinary course of
business, provided such Indebtedness is not secured in any manner by any type of
property (whether tangible or intangible, including, without limitation,
intellectual property) or assets of any Person; and (vi) Indebtedness with
respect to capital leases and other purchase money Indebtedness. As used in this
Note, the term "Indebtedness" shall mean, as to any Person, without duplication,
(i) all indebtedness (including principal, interest, fees and charges) of such
Person for borrowed money or for the deferred purchase price of property or
services, (ii) the face amount of all letters of credit issued for the account
of such Person and all letters of credit issued for the account of such Person
and all drafts drawn thereunder, (iii) all liabilities secured by any Lien on
any property owned by such Person, whether or not such liabilities have been
assumed by such Person, (iv) the aggregate amount required to be capitalized
under leases under which such Person is the lessee and (v) all contingent
obligations of such Person.
(d) Advances, Investments and Loans. The Borrower will not, and
will cause its subsidiaries not to, lend money or credit or make obligations or
securities of, or any other interest in, or make any capital contribution to,
any Person, except that (i) the Borrower and its subsidiaries may acquire and
hold receivables owing to it, if created or acquired in the ordinary course of
business and payable or dischargeable in accordance with customary trade terms
and (ii) the Borrower may make loans to employees of the Borrower in an
aggregate amount not to exceed $1,000,000.
(e) Transactions with Affiliates. The Borrower will not, and will
cause its subsidiaries not to, enter into any transaction or series of related
transactions, whether or not in the ordinary course of business, with any
Affiliate of the Borrower or any of its subsidiaries, as the case may be, other
than on terms and conditions substantially as favorable to the Borrower or any
of its subsidiaries, as the case may be, as would be obtainable by the Borrower
or any of its subsidiaries, as the case may be, at the time in a comparable
arm's-length transaction with a Person other than an Affiliate. Notwithstanding
the foregoing, the Borrower shall not, and shall cause its subsidiaries not to,
enter into any management agreement, services agreement or any other similar
agreement; provided, that, so long as there does not exist an Event of Default,
the
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Borrower and its subsidiaries may make payments to their Affiliates pursuant to
a management agreement, services agreement or other similar agreement in an
aggregate amount not to exceed $500,000 per calendar year. In addition, the
Borrower may issue stock or options pursuant to its 1999 Stock Option Plan. As
used in this Note, the term "Affiliate" means, with respect to any Person, any
other Person that directly or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with such Person. For the
purpose of the above definition, the term "control" (including, with correlative
meaning, the terms "controlling", "controlled by" and "under common control
with"), as used with respect to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of such Person, whether through the ownership of voting securities, by
contract or otherwise.
(f) Limitation on Voluntary Payments and Modifications of
Indebtedness; Modification of Certificate of Incorporation, By-Laws; Etc. The
Borrower will not, and will cause its subsidiaries not to, (i) make any
voluntary or optional payment or repayment on or redemption or acquisition for
value of (including, without limitation, by way of depositing with the trustee
with respect thereto money or securities before due for the purpose of paying
when due) any Indebtedness (other than Indebtedness under this Note) or (ii)
amend or modify, or permit the amendment or modification of, any provision of
any Indebtedness (other than Indebtedness under this Note and Indebtedness
permitted under Section 4.2(c) of this Note) or of any agreement, indenture,
loan agreement or security agreement) relating to any of the foregoing or (iii)
amend, modify or change the certificate of incorporation or by-laws of the
Borrower or any of its subsidiaries without the prior written consent of
Holdings, which consent shall not be unreasonably withheld.
Section 5. Events of Default. Upon the occurrence of any of the
following specified events (each an "Event of Default"):
5.1 Payments. The Borrower shall (i) default in the payment when
due of any principal on this Note or (ii) default, and such default shall
continue unremedied for 5 or more days, in the payment when due of any interest
on this Note or other amounts owing hereunder; or
5.2 Representations, Etc. Any representation, warranty or
statement made by the Borrower or any of its subsidiaries in this Note, the
Purchase Agreement, or in any certificate delivered pursuant hereto or thereto
shall prove to be untrue in any material respect on the date as of which made or
deemed made; or
5.3 Covenants. The Borrower shall (i) default in the due
performance or observance by it of any term, convenant or agreement contained in
Section 4 of this Note or (ii) default in the due performance or observance by
it of any term, convenant or agreement (other than those referred to in Sections
5.1 and 5.2 and clause (i) of this Section 5.3) contained in this Note and such
default shall continue unremedied for a period of 30 days after written notice
to the Borrower by Holdings; or
5.4 Default Under Other Agreements. The Borrower or any of its
subsidiaries shall (i) default in any payment of any Indebtedness (other than
this Note) beyond the period of
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grace, if any, provided in the instrument or agreement under which such
Indebtedness was created or (ii) default in the observance or performance of any
agreement or condition relating to any Indebtedness (other than this Note) or
contained in any instrument or agreement evidencing, securing or relating
thereto, the effect of which default is to cause, or to permit the holder or
holders of such Indebtedness (or a trustee or agent on behalf of such holder or
holders) to cause (determined without regard to whether any notice is required),
any such Indebtedness to become due prior to its stated maturity; or any
Indebtedness of the Borrower or its subsidiaries shall be declared to be due and
payable, or required to be prepaid other than by a scheduled required
prepayment, prior to the stated maturity thereof; or
5.5 Bankruptcy, Etc. (i) The Borrower or any of its subsidiaries
shall commence a voluntary case concerning the Borrower or any of its
subsidiaries, as the case may be, under Title 11 of the United States Code
entitled "Bankruptcy," as now or hereafter in effect, or any successor thereto
(the "Bankruptcy Code"); (ii) or an involuntary case is commenced against the
Borrower or any of its subsidiaries, and the petition is not controverted within
10 days, or is not dismissed within 60 days, after commencement of the case;
(iii) or a custodian (as defined in the Bankruptcy Code) is appointed for, or
takes charge of, all or substantially all of the property of the Borrower or any
of its subsidiaries, or the Borrower or its subsidiaries commences any other
proceeding under any reorganization, arrangement, adjustment of debt, relief of
debtors, dissolution, insolvency or liquidation or similar law of any
jurisdiction whether now or hereafter in effect relating to the Borrower or any
of its subsidiaries, as the case may be, or there is commenced against the
Borrower or any of its subsidiaries any such proceeding which remains
undismissed for a period of 60 days, or the Borrower or any of its subsidiaries
is adjudicated insolvent or bankrupt; (iv) or any order of relief or other order
approving any such case or proceeding is entered; (v) or the Borrower or any of
its subsidiaries suffers any appointment of any custodian or the like for it or
any substantial part of its respective property to continue undischarged or
unstayed for a period of 60 days; (vi) or the Borrower or its subsidiaries makes
a general assignment for the benefit of creditors; (vii) or any action is taken
by the board of directors or stockholders of the Borrowers or any of its
subsidiaries for the purpose of effecting any of the foregoing; or
5.6 Judgments. One or more judgments or decrees shall be entered
against the Borrower or any of its subsidiaries involving in the aggregate a
liability (not paid by the Borrower or its subsidiaries, as the case may be,
and/or not fully covered by insurance and/or not covered by indemnification
under the Purchase Agreement) of $500,000 or more, and all such judgments or
decrees shall not have been vacated, discharged or stayed or bonded pending
appeal within 60 days after the entry thereof;
then, and in any such event, and at any time thereafter if any Event of Default
shall then be continuing, Holdings may take any or all of the following actions,
without prejudice to the rights of Holdings or the holder of the Note to enforce
its claims against the Borrower (provided, that, if an Event of Default
specified in Section 5.5 shall occur, the result which would occur upon the
giving of written notice by Holdings to the Borrower as specified below shall
occur automatically without the giving any such notice) (a) declare the
principal of and any accrued interest in respect of the Note and all other
obligations owing hereunder to be, whereupon the same shall become, forthwith
due and payable without presentment, demand, protest or other
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notice of any kind, all of which are hereby waived by the Borrower; or (b) take
any and all other remedial action that may be available at law, in equity or
otherwise.
Section 6. Optional Redemption. The Borrower may prepay this Note
(together with all accrued interest), in full or in part, at any time at a price
equal to the principal amount of the Note to be prepaid plus all accrued and
unpaid interest thereon.
Section 7. Registrar. So long as this Note is outstanding, the Borrower
shall maintain an office or agency where this Note (i) may be presented for
registration or transfer or for exchange (the "Registrar") and (ii) may be
presented for payment. The Registrar shall keep a register of the Note and its
transfer and exchange.
Section 8. Successors and Assigns. This Note shall bind and inure to
the benefit of the Borrower and Holdings and their respective successors and
assigns, provided, however, that the rights under this Note shall not be
assignable by the Borrower without the prior written consent of Holdings.
Holdings shall have the right to sell, assign, transfer or grant participations
in this Note (or any portion thereof) to any Person without the consent of any
Borrower and, upon effecting such a transaction, the Borrower agrees to amend
this Note to provide for the ability of Holdings and such other Persons to act
by a majority vote for the purpose of granting consents, amendments, or waivers
or taking any other action hereunder.
Section 9. Amendment; Supplement. This Note, except for Section 8, may
be amended or supplemented and any past default or compliance with any provision
(including any Event of Default) may be waived only upon the written consent of
the holder.
Section 10. Waiver. The Borrower hereby waives notice of acceptance
hereof as well as presentment, demand, protest and notice of non-payment and
protest as to this Note and any other document, instrument or agreement to which
the other may be a party in connection with this Note. The Borrower waives any
and all defenses based on suretyship, guaranty or any other applicable law,
including, without limitation, all rights and defenses arising out of (i) an
election of remedies by Holdings even though that election of remedies may have
destroyed rights of subrogation and reimbursement which Borrower may have, by
operation of law or otherwise, (ii) protections afforded to Borrower with
respect to antideficiency or similar laws limiting or discharging Borrower's
obligations to Holdings, (iii) the invalidity or unenforceability of Borrower's
obligations to Holdings, (iv) the failure to notify Borrower of the disposition
of collateral security granted by Borrower, (v) the commercial reasonableness of
any disposition or the impairment, however caused, of the value of collateral
security granted by the Borrower, and (vi) any duty on Holding's part (should
such duty exist) to disclose to Borrower any matter, fact or thing related to
the business operations or condition (financial or otherwise) of the other or
its Affiliates or property, whether now or hereafter known by Holdings. Holdings
may at any time, in accordance with the terms of this Note, without consent of
the Borrower, without notice to the Borrower and without affecting or impairing
the obligations of the Borrower hereunder and any other documents, instrument,
or agreement to which the Borrower may be a party in connection with this Note,
do any of the following: (i) renew, extend (including extensions beyond the
original term of the contract), modify (including changes in interest rates),
release or discharge the Borrower or any other persons obligated with respect to
the obligations hereunder; (ii) accept
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partial payments of the obligations hereunder from the Borrower; (iii) accept
substituted, new or additional documents, instruments or agreements relating to
the obligations hereunder from the Borrower; (iv) settle, release (by operation
of law or otherwise), compound, compromise, collect or liquidate any of the
obligations hereunder and collateral security of the Borrower in any manner; (v)
consent to the transfer or return of collateral security and take and hold
additional collateral security or guaranties for the obligations hereunder; (vi)
amend, exchange, release or waive any collateral security or guaranty granted by
the Borrower; or (vii) bid and purchase at any sale of the obligations hereunder
collateral security of the Borrower and apply any proceeds and collateral
security granted by the Borrower and direct the order and manner of such sale.
Section 11. Remedies on Default, Etc. In case an Event of Default shall
occur and be continuing, Holdings may, inter alia, proceed to protect and
enforce its rights by an action at law, suit in equity or other appropriate
proceeding, whether for the specific performance of any agreement contained in
this Note or for an injunction against a violation of any of the terms hereof or
thereof or in the exercise of any power granted hereby or thereby or by law. No
right conferred upon Holdings by this Note shall be exclusive of any other right
referred to herein or now or hereafter available at law, in equity, by statute
or otherwise.
Section 12. Indemnification. In addition to all rights and remedies
available to Holdings at law or in equity, the Borrower shall indemnify Holdings
and each subsequent holder of this Note, and their respective Affiliates,
stockholders, officers, directors, employees, agents, representatives,
successors and permitted assigns (collectively, the "Indemnified Persons") and
save and hold each of them harmless against and pay on behalf of or reimburse
such party as and when incurred for any loss (excluding consequential damages),
liability, demand, claim, action, cause of action, cost, damage, deficiency,
tax, penalty, fine or expense, whether or not arising out of any claims by or on
behalf of the Borrower or any third party, including interest, penalties,
reasonable attorneys' fees and expenses and all amounts paid in investigation,
defense or settlement of any of the foregoing (collectively, "Losses") which any
such party may suffer, sustain or become subject to, as a result of, in
connection with, relating or incidental to or by virtue of:
(a) any misrepresentation or breach of warranty on the part of the
Borrower under this Note;
(b) without duplication of subsection (a) above, any
misrepresentation in or omission from any of the representations,
warranties, statements, schedules and exhibits hereto, certificates or other
instruments or documents furnished to Holdings by the Borrower made in or
pursuant to this Note;
(c) any Event of Default or nonfulfillment or breach of any
covenant or agreement on the part of the Borrower under this Note;
(d) any action, demand, proceeding, investigation or claim by any
third party (including, without limitation, governmental agencies); or
(e) any claim (whenever made) relating in any way to the Borrower
9
<PAGE>
and any claim (whenever made) arising out of, relating to, resulting from or
caused by any transaction, status, event, condition, occurrence or situation
relating to, arising out of or in connection with (1) the status or conduct of
the Borrower, or (2) any actions taken by or omitted to be taken by any of the
Indemnified Persons in connection with this Note or any of the agreements
contemplated herein.
The Borrower agrees, whether or not the transactions herein
contemplated are consummated, to pay all out-of-pocket costs and expenses of
Holdings in connection with the negotiation, preparation, execution and delivery
of the this Note and the documents and instruments referred to herein and any
amendment, waiver or consent relating thereto and in connection with the
enforcement thereof.
Section 13. Survival. All indemnification rights hereunder shall
survive the execution and delivery of this Note and the consummation of the
transactions contemplated hereby indefinitely, regardless of any investigation,
inquiry or examination made for or on behalf of, or any knowledge of Holdings
and/or any of the Indemnified Persons or the acceptance by Holdings of any
certificate or opinion.
Section 14. Notices. All notices, requests, consents and other
communications hereunder to any party shall be deemed to be sufficient if
contained in a written instrument delivered in person or sent by telecopy,
nationally-recognized overnight courier or first class registered or certified
mail, return receipt requested, postage prepaid, addressed to such party at the
address set forth below or such other address as may hereafter be designated in
writing by such party to the other parties:
if to the Borrower, to:
Greenfield Online, Inc.
274 Riverside Avenue
Westport, CT 06880-4807
Attention: Chief Executive Officer
Telephone: (203) 221-0411
Facsimile: (203) 221-0791;
with a copy to:
Preston Gates & Ellis LLP
701 Fifth Avenue
Suite 5000
Seattle, Washington 98104
Attention: Robert Jaffe, Esq.
Telephone: (206) 623-7580
Facsimile: (206) 623-7022;
if to Holdings, to:
10
<PAGE>
Greenfield Holdings, LLC
c/o Insight Capital Partners III, L.P.
122 East 42nd Street, Suite 2400
New York, New York 10168
Attention: Jeffrey Horing
Telephone: (212) 681-8181
Facsimile: (212) 661-0972;
with a copy to:
O'Sullivan Graev & Karabell, LLP
30 Rockefeller Plaza, 41st Floor
New York, New York 10112
Attention: Ilan S. Nissan, Esq.
Telephone: (212) 408-2400
Facsimile: (212) 408-2420;
or to such other address as the party to whom notice is to be given may have
furnished to the other party in writing in accordance herewith. If mailed, as
aforesaid, any such communication shall be deemed to have been given on the
third Business Day following the day on which the piece of mail containing such
communication is posted.
Section 15. GOVERNING LAW. THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO
PRINCIPLES OF CONFLICTS OF LAW.
* * * *
11
<PAGE>
IN WITNESS WHEREOF, the Borrower has caused this Note to be dated
and to be executed, delivered and issued on its behalf by its duly authorized
officers.
GREENFIELD ONLINE, INC.
By: ___________________________
Rudy Nadilo
President
12
<PAGE>
DEBT CONTRIBUTION AGREEMENT
THIS DEBT CONTRIBUTION AGREEMENT, dated as of May 17, 1999 (this
"Agreement"), is made by and among Greenfield Online, Inc., a Connecticut
corporation, with headquarters located at 274 Riverside Avenue, Westport,
Connecticut (the "Company"), Greenfield Consulting, Inc., a Connecticut
corporation, with headquarters located at 274 Riverside Avenue, Westport,
Connecticut (the "Consulting") and Andrew Greenfield, an individual with an
address at 274 Riverside Avenue, Westport, Connecticut (the "Shareholder").
W I T N E S S E T H:
WHEREAS, the Shareholder is the sole Shareholder of the Company and
Consulting;
WHEREAS, Consulting had loaned an aggregate of $898,685.99 to the
Company as of March 31, 1999 (the "Consulting Loans");
WHEREAS, the Shareholder had loaned an aggregate of $2,745,763 (the
"Shareholder Loans") as of March 31, 1999 to the Company, a portion of which is
evidenced by promissory notes dated November 19, 1997 and March 8, 1999, in the
amounts of $88,000 and $2,457,945, respectively, made by the Company in favor of
the Shareholder (the "Shareholder Notes");
WHEREAS, the Shareholder has loaned an aggregate of $10,000 (the
"Interim Loan") to the Company which is evidenced by a Demand Promissory Note
made by the Company in favor of the Shareholder dated May 12, 1999;
WHEREAS, the Shareholder desires to contribute the Shareholder Loans,
including interest accrued thereon to the paid-in-capital of the Company to
improve the Company's liquidity; and
WHEREAS, the Shareholder, as the sole shareholder of Consulting,
desires to cause Consulting to contribute the Consulting Loans, including
interest accrued thereon to the paid-in-capital of the Company to improve the
Company's liquidity.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company,
Consulting and the Shareholder hereby agree as follows:
1. Cancellation of Consulting Loans and Shareholder Loans.
(a) Effective as of March 31, 1999, Consulting hereby agrees to
waive all right, title and interest in and to and all rights to receive payment
of the Consulting Loans and the Company hereby agrees to reclassify the
indebtedness associated with the Consulting Loans as paid-in-capital on the
Company's books and records.
1
<PAGE>
(b) Effective as of March 31, 1999, Shareholder hereby agrees to
waive all right, title and interest in and to and all rights to receive payment
of the Shareholder Loans, including the portion of the Shareholder Loans
evidence by the Shareholder Notes and the Company hereby agrees to reclassify
the indebtedness associated with the Consulting Loans as paid-in-capital on the
Company's books and records.
2. Surrender and Cancellation of the Shareholder Notes.
In furtherance of Section 1 (b) hereof, the Shareholder hereby
delivers the Shareholder Notes to the Company for cancellation and deems such
Shareholder Notes to be cancelled.
3. Interim Loan.
The terms and provisions of this Agreement shall have no effect on
the Interim Loan which shall remain in full force and effect.
4. Miscellaneous.
(a) The Shareholder and Consulting hereby release any claims
against the Company in respect of any and all Funded Indebtedness (as that term
is defined in that certain Stock Purchase and Redemption Agreement by and among
the Company, the Shareholder and Greenfield Holdings, LLC dated as of the date
hereof) owed to them.
(b) This Agreement shall be governed by and interpreted in
accordance with the laws of the State of New York.
(c) This Agreement constitutes the entire agreement among the
parties hereto with respect to the subject matter hereof. There are no
restrictions, promises, warranties or undertakings, other than those set forth,
or referred to herein. This Agreement supersedes all prior agreements and
understandings among the parties hereto with respect to the subject matter
hereof.
(d) This Agreement shall inure to the benefit of and be binding
upon the successors and assigns of each of the parties hereto.
2
<PAGE>
IN WITNESS WHEREOF, the parties have cause this Agreement to be
duly executed.
GREENFIELD ONLINE, INC.
By: _____________________________
Name:
Title:
GREENFIELD CONSULTING GROUP, INC.
By: ______________________________
Name: Andrew Greenfield
Title: President
-----------------------------------
Andrew Greenfield
3
<PAGE>
TRANSITION SERVICES
AGREEMENT (this "Agreement") dated as of
May __, 1999 by and between GREENFIELD
ONLINE, INC., a Connecticut corporation
("Online"), and GREENFIELD CONSULTING
GROUP, INC., a Connecticut corporation
("Consulting").
Online, Greenfield Holdings, LLC ("Holdings"), and Andrew
Greenfield have entered into a Stock Purchase and Redemption Agreement (as
amended, modified or supplemented from time to time, the "Purchase Agreement")
dated as of May 12, 1999, pursuant to which, among other things, Holdings is
acquiring the Purchased Shares (as defined in the Purchase Agreement) from
Online and, in connection therewith, Online and Consulting desire to enter into
the transition arrangements set forth herein.
Capitalized terms used but not defined herein shall have the
meanings ascribed to them in the Purchase Agreement.
NOW, THEREFORE, in consideration of mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto hereby agree as follows:
Section 1. Services to be Performed.
(a) General.
(i) Online hereby engages Consulting, and Consulting
hereby undertakes to provide to Online in accordance with the terms and
conditions of this Agreement, the services of such employees of
Consulting as are identified on Schedule I attached hereto (the
"Consulting Services") for the time periods indicated thereon.
(ii) Consulting hereby engages Online, and Online hereby
undertakes to provide to Consulting in accordance with the terms and
conditions of this Agreement, the services of such employees of Online
as are identified on Schedule I attached hereto (the "Online Services";
and together with the Consulting Services, the "Services") for the time
periods indicated thereon.
(b) Books and Records. Online and Consulting shall keep such
records of the Services each such party provides as are necessary to evidence
the Services provided and each such party, upon reasonable notice, may have
access to such other party's records.
Section 2. Compensation for Services.
(i) Consulting shall be reimbursed by Online for the
performance by Consulting of the Consulting Services in the amount of
the monthly expenses specified on Schedule I.
(ii) Online shall be reimbursed by Consulting for the
performance by
1
<PAGE>
Online of the Online Services in the amount of the monthly expenses
specified on Schedule I.
Section 3. Payment.
Each party shall pay for the Services provided to it no later than
15 days after receiving an invoice therefor, which invoice shall provide
sufficient detail for such party to independently analyze and verify the
Services provided. The parties shall be entitled to net the expenses of the
Online Services and the Consulting Services on a monthly basis.
Section 4. Manner, Quality and Performance of Services.
The Services shall be provided by each party in substantially the
same manner and quality as the Services were performed by such party prior to
the Closing Date.
Section. 5. Termination.
This Agreement shall terminate upon the earlier to occur of (i)
the mutual agreement between Online and Consulting, (ii) the failure of one
party to pay the other party for any Services rendered by such other party
within 60 days of delivery of an invoice therefor (unless such invoice is being
disputed by such party) and then only if such other party to whom payment is
owed shall consent to termination and (iii) the expiration of the last time
period set forth on Schedule I during which any Services are to be performed;
provided, however, that Section 2 hereof shall survive the termination of this
Agreement until the satisfaction or waiver thereof.
Section 6. Assignment.
The rights and obligations under this Agreement shall not be
assignable by any party without the prior written consent of the other, which
consent shall not be unreasonably withheld.
Section 7. Further Assurances.
From time to time at or after the effective date of this
Agreement, each of the parties hereto agrees to take, or to cause to be taken,
all such further actions and documentation, as may be deemed to be necessary and
reasonable to give full force and effect to the intent and purposes of this
Agreement.
Section 8. Modification.
This Agreement and Schedule I attached hereto constitute the
entire agreement between the parties with respect to the subject matter hereof.
No modifications of this Agreement shall be of any force and effect unless such
modification is in writing and signed by the party to be bound thereby.
2
<PAGE>
Section 9. Governing Laws.
This Agreement shall be construed and interpreted in accordance
with the laws of the State of New York without giving effect to conflicts of
laws principles.
Section 10. Notices.
Notices pertaining to this Agreement shall be in writing and shall
be given as set forth in Section 10.7 of the Purchase Agreement.
Section 11. Captions.
The Section captions used herein are for reference purposes only
and shall not in any way effect the meaning or interpretation of this Agreement.
Section 12. Counterparts.
This Agreement may be executed in counterparts, all of which taken
together shall constitute one instrument.
* * * *
3
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Transition
Services Agreement to be executed as of the date set forth above by their
respective duly authorized representatives.
GREENFIELD ONLINE, INC.
By:
------------------------------
Name:
Title:
GREENFIELD CONSULTING GROUP, INC.
By:
------------------------------
Name:
Title:
4
<PAGE>
SCHEDULE I
to
Transition Services Agreement
-----------------------------
<TABLE>
<CAPTION>
Monthly
Expenses Monthly
paid by Expense
Total Consulting paid by
Annual % to Online to
Expense Allocated(1) Online Consulting
------- ------------ ------ ----------
Wages & Benefits
Online Employees
----------------
<S> <C> <C> <C> <C>
Suzanne Lee - 100% GOL* 0%
Jo Simons - 100% GOL 0%
Online Employees allocated to Consulting until 7/31/99:
------------------------------------------------------
Patrick Reilly $ 75,000 50% $ 3,125
Ron Bergami 109,078 50% 4,545
Trudy Calvao 56,250 50% 2,344
Nick Coelho 40,000 50% 1,667
-----------
11,680
-----------
Consulting Employees allocated to Online until 7/31/99:
-------------------------------------------------------
Christine Antalik 66,250 50% $ 2,760
Deb Coelho 40,000 50% 1,667
Felicia Johnson 37,125 50% 1,547
Laura Livigni 37,500 50% 1,563
A/R Staff** 43,750 50% 1,823
---------
9,359
---------
Consulting Employees allocated to Online until [ ]***:
----------------------------------------------------------
Diane Karagheusian 68,750 50% 2,865
Bernice Shlian 37,500 50% 1,563
Reception** 36,250 50% 1,510
---------
5,938
Total Monthly Wage & Benefits Expense 11,680 15,297
---------- ---------
Net Monthly Wage & Benefits Expense Payable by Online to Consulting 3,617
---------
Greenfield Consulting Group
WAGES & BENEFITS ALLOCATED TO
Greenfield Online
For the year ended December 31, 1999
(cont'd next page)
</TABLE>
------------------------
(1) Represents percentage of expenses and employee's time.
* To be made available to Consulting until 5/31/99.
** Currently comprised of temporary employees; amounts determined based on
prior staff usage.
*** Date to coincide with the termination or expiration of the Sublease
Agreement when Online moves to a new location.
i
<PAGE>
<TABLE>
<CAPTION>
JAN FEB MAR
BUDGT. BUDGT. BUDGT.
------ ------ ------
Wages & Benefits
<S> <C> <C> <C>
Salaries: IT (45% of all 1999 Budgeted IT Employees) 2,838.46 2,838.46 2,838.46
Accounting (45% of all 1999 Budgeted Acct Employees) 11,684.84 11,986.90 12,211.90
Administrative Support* 9,244.22 9,244.22 9,244.22
Employee Bonus (10% of total) 2,376.75 2,406.96 2,429.46
Profit Sharing (5.25% of total) 1,247.79 1.263.65 1,275.47
Payroll Taxes (10% of total) 2,376.75 2,406.96 2,429.46
Health Insurance 1,500.00 1,500.00 1,500.00
---------- ---------- ----------
Total Wages & Benefits 31,268.82 31,647.15 31,928.96
========== ========== ==========
*Includes employees allocated at 45%: Diane Karagheusian
Bernice Shlian
Charlene Street
*Includes employee allocated at 50%: Suzanne Lee
*Includes employees allocated at 35%: Jo Simons
Barbara Katz
</TABLE>
------------------------
* To be made available to Consulting until 5/31/99.
ii
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
APR MAY JUN JUL AUG SEP OCT NOV DEC 1999
BUDGT. BUDGT. BUDGT. BUDGT. BUDGT. BUDGT. BUDGT. BUDGT. BUDGT. BUDGT.
---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- --------
- ------------- ------------ ------------ ------------ ------------ ------------- ------------ ------------ ------------ ------------
- ------------- ------------ ------------ ------------ ------------ ------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
4,257.69 2,838.46 2,383.46 3,025.38 3,122.31 4,683.46 3,122.31 3,122.31 3,122.31 36,648.08
- ------------- ------------ ------------ ------------ ------------ ------------- ------------ ------------ ------------ ------------
- ------------- ------------ ------------ ------------ ------------ ------------- ------------ ------------ ------------ ------------
17,642.85 12,125.36 13,246.21 13,021.21 13,471.21 18,906.31 12,679.21 12,679.21 12,904.21 162,559.40
- ------------- ------------ ------------ ------------ ------------ ------------- ------------ ------------ ------------ ------------
- ------------- ------------ ------------ ------------ ------------ ------------- ------------ ------------ ------------ ------------
13,866.33 9,244.22 9,244.22 9,244.22 9,244.22 13,866.33 9,244.22 9,244.22 9,244.22 120,174.89
- ------------- ------------ ------------ ------------ ------------ ------------- ------------ ------------ ------------ ------------
- ------------- ------------ ------------ ------------ ------------ ------------- ------------ ------------ ------------ ------------
3,576.69 2,420.80 2,532.89 2,529.08 2,583.77 3,745.61 2,504.57 2,504.57 2,527.07 32,138.24
- ------------- ------------ ------------ ------------ ------------ ------------- ------------ ------------ ------------ ------------
- ------------- ------------ ------------ ------------ ------------ ------------- ------------ ------------ ------------ ------------
1,877.76 1,270.92 1,329.77 1,327.77 1,356.48 1,966.45 1,314.90 1,314.90 1,326.71 16,872.57
- ------------- ------------ ------------ ------------ ------------ ------------- ------------ ------------ ------------ ------------
- ------------- ------------ ------------ ------------ ------------ ------------- ------------ ------------ ------------ ------------
3,576.69 2,420.80 2,532.89 2,529.08 2,583.77 3,745.61 2,504.57 2,504.57 2,504.57 32,138.24
- ------------- ------------ ------------ ------------ ------------ ------------- ------------ ------------ ------------ ------------
- ------------- ------------ ------------ ------------ ------------ ------------- ------------ ------------ ------------ ------------
1,500.00 1,500.00 1,500.00 1,500.00 1,500.00 1,500.00 1,500.00 1,500.00 1,500.00 18,000.00
---------- ---------- -------- -------- -------- -------- -------- -------- -------- ---------
46,298.01 31,820.58 33,224.44 33,176.74 33,861.77 48,413.77 32,869.79 32,869.79 33,151.60 420,531.41
========== ========== ========= ========= ========= ========= ========= ========= ========= ==========
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
iii
<PAGE>
SUBLEASE AGREEMENT
This sets forth a Sublease Agreement ("Sublease") made as of this 17th
day of May, 1999 between Greenfield Consulting Group, Inc. (the "Sublandlord")
and Greenfield Online, Inc. (the "Subtenant").
AGREEMENT
In consideration of mutual covenants, the parties hereby agree as
follows:
1. Premises
(a) Sublandlord leases to Subtenant and Subtenant hereby rents from
Sublandlord premises situated on the first, second and fourth floors of a
building (the "Building") located at 274 Riverside Avenue, Westport, Connecticut
(the Land and Building being hereinafter referred to as "247 Riverside"). The
premises to be leased 9"Leased Premises") is a portion of the premises
("Premises") leased by Sublandlord from 274 Riverside Associates LLC, pursuant
to a Lease Agreement dated August 5, 1998, a copy of which is attached hereto as
Schedule A..
(b) The Leased Premises shall include an aggregate of 9,411 square feet
in the Premises consisting of the following: 3,762 square feet located on the
fourth floor, 709 square feet located on the first floor, 4,940 square feet
located o the first and second floors, together with all of the common areas
therein, along with all furniture in said areas, which shall be shared by
Sublandlord and Subtenant.
(c) All of Subtenant's rights as to the Leased Premises shall be
subject to the provisions of the aforesaid Lease Agreement and Subtenant agrees
to comply with each and every term of thereof.
2. Use of Leased Premises
Subtenant's use of the Leased Premises shall be for office purposes
only and subject to all applicable zoning and other governmental regulations and
subject to the Lease Agreement.
3. Term of Sublease
(a) The term of this Sublease Agreement (the "Sublease Term") shall
commence on May 17, 1998 (the "Commencement Date") and end on August 31, 1999
(the "Termination Date"), provided, however, the Subtenant may remain in
possession of the Leased Premises on a month-to-month basis after the
Termination Date until December 31, 1999. In addition, commencing on August 1,
1999, the Subtenant may remain in possession of the Leased Premises on a
month-to-month basis after the Termination Date until December 31, 1999. In
addition, commencing on August 1, 1999, the Subtenant may deliver notice to the
Sublandlord of Subtenant's intention to terminate the Sublease on or after the
30th day following the delivery of such termination notice to the Sublandlord.
(b) At all time the expiration or earlier termination of this Sublease,
Subtenant agrees to surrender the Leased Premises in good condition, broom
clean, reasonable wear and tear expected.
4. Rent
(a) Throughout the Sublease Term, as the same may be extended or
renewed, Subtenant shall pay rent ("Rent') monthly in advance of the first day
of each month, and without prior demand, deduction, or set-off.
(b) The rent shall be $21,614.44 per month which shall be payable on
the first day of each and every month during the Sublease Term which shall
include all utility charges and cleaning services at the Leased Premises.
Sublandlord hereby acknowledges receipt of payment of rent hereunder for the
month of May 1999. Rent payable hereunder by the Subtenant shall be pro rated on
a per diem basis if the Sublease Term terminates during a monthly period.
(c) If Subtenant shall fail to pay any monthly installment of Rent
within ten days of its due date or utility payment within ten days of the
request by Sublandlord for payment thereof, then Subtenant shall pay to
1
<PAGE>
Sublandlord a service charge of five percent (5%) of the monthly installment.
This fee is not a penalty but reflects the parties' estimate as to the expected
costs and damages incurred by the Sublandlord by reason of the Subtenant's late
payment. This provision shall not be construed to modify in any way either any
due dates specified in this Sublease Agreement, or the default provisions of
Paragraph 15 below.
5. As Is
Subtenant accepts the Leased Premises and 274 Riverside in their "as
is" condition existing on the date hereof.
6. Tenant's Operation of Business
(a) Subtenant shall use the Leased Premises solely for the purposes set
forth in Paragraph 2, and only as permitted by applicable laws and regulations.
(b) Subtenant shall comply with all laws, orders and regulations of
federal, state, county and municipal authorities, with respect to Subtenant's
particular use of the Leased Premises, and with any direction of any public
officer of officers which shall impose any violation, order or duty with respect
to Subtenant's particular use of the Leased Premises. In the event that any
governmental agency shall require any alterations within or affecting the Leased
Premises, subtenant shall fully cooperate with the Sublandlord in making same.
(c) Subtenant agrees that it shall not at any time during the Sublease
Term do or permit to be done by any employee, agent or contractor of Subtenant
any act or practice which would damage the Leased Premises.
(d) Subtenant shall not use or permit any part of the Leased Premises
to be used for any unlawful purpose; or shall the Subtenant use or occupy or
permit the Leased Premises to be used or occupied, nor do or permit anything to
be done in or on the Leased Premises which will make void or voidable any
insurance then in force with respect hereto, or which will make it impossible or
uneconomical to obtain fire or other insurance required to be furnished by
Sublandlord, or which will cause or be likely to cause structural damage to the
Building or any part thereof, or which will constitute a public or private
nuisance, or which will violate any law or regulation of any governmental
authority.
7. Fixtures and Alterations
Subtenant shall not make any changes, improvements, additions or
alterations to nor do any work to the Leased Premises without the prior written
consent of the Sublandlord, which consent will not be unreasonably withheld.
8. Signs
Subtenant shall have the right, at its expense, to install signs on the
entry door to the Leased Premises, which sign shall be uniform with other signs
in the Building and which sign shall be subject to Sublandlord's prior approval.
9. Repairs and Maintenance Services
Subtenant agrees to maintain the Subleased Premises in good order and
condition.
10. Indemnification by Subtenant
(a) Subtenant shall indemnify Sublandlord and save it harmless from and
against any and all claims, actions, damages, liability and expense in
connection with loss of life, personal injury and/or damage to property arising
from or out of any occurrence in, upon, at or about the Leased Premises from or
out of the occupancy or use by Subtenant of the Leased Premises or any part
thereof, or caused wholly or in par by any act or omission of Subtenant, its
agents, contractors, employees, lessees or concessionaires. In case Sublandlord
shall, without fault on its part, be made a party to any litigation commenced by
or against Subtenant, then Subtenant agrees to protect and
2
<PAGE>
hold Sublandlord harmless. Subtenant also agrees to pay all costs, expenses and
reasonable attorney's fees that may be incurred or paid by Sublandlord
successfully enforcing the covenants and agreements in this Sublease.
(b) Subtenant shall store its property in and shall occupy and operate
in the Leased Premises and all other portions of 274 Riverside Avenue at its own
risk, and hereby releases Sublandlord, its agents and employees from any claims
for damages or injury.
11. Insurance
(a) Subtenant shall carry insurance on any personalty it brings into
the Lease Premises in an amount equal to the full insurable value of such
personal property. subtenant also agrees to carry a policy or policies of
comprehensive general liability insurance, including public liability and
personal injury and property damage, with contractual liability endorsement, in
the amount of Five Hundred Thousand Dollars ($500,000) per occurrence for
personal injuries or deaths of persons occurring in or about the Premises. Said
policies, or certificates thereof, shall be delivered to Sublandlord by
Subtenant upon insurance company licensed to do business by the State of
Connecticut and Sublandlord shall be included as an additional insured in the
Subtenant's policy.
(b) Notwithstanding anything set forth in this Sublease to the
contrary, Sublandlord and Subtenant do hereby waive any and all right of
recovery, claim, action or cause of action against the other, their respective
agents, officers and employees for any loss or damage that may occur to the
Leased Premises or any addition or improvements thereto.
12. Default by Subtenant
This Sublease Agreement is subject to the limitation that if, at any
time, any one or more of the following events (herein called an "event of
default") shall occur, then Sublandlord, in addition to other rights and
remedies it may have, shall have the right immediately to declare this Sublease
terminated and all of the right, title and interest of the Subtenant hereunder
shall wholly cease and expire upon receipt by Subtenant of a Notice of
Termination from Sublandlord. Subtenant shall then immediately quit and
surrender the Leased Premises to Sublandlord but Subtenant shall remain liable
to Sublandlord as hereinafter provided. The events of default are:
(a) If, an any proceeding, a receiver or trustee shall be appointed for
Subtenant's property and such receivership or trusteeship shall not be vacated
or set aside within ninety (90) days after appointment of such receiver or
trustee or
(b) If Subtenant shall fail to pay any installment of the Rent or
Utility Charges when the same shall become due and payable, and such failure
shall continue for ten (10) days after Sublandlord has given Subtenant written
notice of same; or
(c) If Subtenant shall fail to perform or observe any other material
requirement, material condition, material covenant or material agreement of this
Sublease Agreement.
13. Sublandlord's Remedies
(a) If this Sublease shall be terminated as provided in Paragraph 14,
Sublandlord or Sublandlord's agents or employees may by any suitable action or
proceeding at law, repossess the Leased Premises, together with all alterations,
additions and improvements thereto. In the event of such re-entry and
repossession, Sublandlord may store Subtenant's property in a public warehouse
or elsewhere at the cost and for the account of Subtenant.
(b) In the case of any such termination, re-entry or dispossession by
summary proceedings or otherwise, all rents and other charges required to be
paid up to the time of such termination, re-entry or dispossession, shall be
paid by Subtenant and Subtenants shall also pay to Sublandlord all reasonable
expenses which Sublandlord may then or thereafter incur. In addition, Subtenant
shall be liable to Sublandlord for damages incurred by Sublandlord as a result
of Subtenant's breach of this Sublease Agreement including such rent as
Sublandlord would have received from Subtenant had Subtenant honored all terms
of this Sublease Agreement.
3
<PAGE>
14. Mechanic's Liens
Subtenant agrees to pay when due or to bond out all sums of money that
may become due for any labor, services, materials, supplies or equipment
furnished to or for Subtenant in, upon or about the Leased Premises.
15. Assignment and Sublease
Subtenant shall not assign or sublet its interest herein, except to
subsidiaries or affiliates of the Subtenant.
16. Subordination
The rights of Subtenant under this Sublease Agreement shall be subject
and subordinate to any mortgage now on or hereafter placed against 274
Riverside.
17. Holdover
Should Subtenant continue to occupy the Leased Premises after the
expiration of this Sublease, such tenancy shall be a tenancy at will which may
be cancelled by Sublandlord at any time and with thirty (30) days notice and
Subtenant's holdover shall not entitle it to any lease rights and during the
said holdover period, Subtenant shall pay to Sublandlord a Rent equal to 150% of
the herein Rent, as well as all other charges described herein.
18. Entire Agreement
This Sublease Agreement contains the entire agreement between the
parties and it may not be changed orally or by any agreement between the parties
unless in writing and signed by the parties or their successors and assigns.
19. Governing Laws
This Sublease Agreement will be governed by and construed pursuant to
the laws of the State of New York without giving effect to any choice of law or
conflicting provision or rule (whether of the State of New York or any other
jurisdiction) that would cause the laws of any jurisdiction other than the State
of New York to be applied.
This Sublease Agreement has been executed as follows:
Sublandlord: Greenfield Group, Inc.
- ------------------------------------
By:
Its:
Subtenant: Greenfield Online, Inc.
- ------------------------------------
By:
Its:
4
<PAGE>
FORM OF
NON-QUALIFIED STOCK
OPTION AGREEMENT
dated as of May __,
1999 between
GREENFIELD ONLINE,
INC., a Connecticut
corporation (the
"Company"), and
JOEL MESZNIK (the
"Optionee").
The Company, acting through its Board of Directors or a
committee thereof, has granted to the Optionee, effective as of the date of this
Agreement, an option under the Company's 1999 Stock Option Plan (the "Plan"), a
copy of which is attached as Exhibit A hereto, to purchase Class A Common
Shares, $0.01 par value per share, of the Company (the "Class A Common Shares")
on the terms and subject to the conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and of the
mutual agreements contained in this Agreement, the parties hereby agree as
follows:
Section 1. Definitions. As used in this Agreement, the following terms
have the meanings set forth below:
"Board" means the Board of Directors of the Company or the
Committee (as defined in the Plan).
"Plan" means the 1999 Stock Option Plan of the Company.
"Purchase Agreement" means the Stock Purchase and Redemption
Agreement dated as of May 12, 1999, among the Company and the other parties
thereto, as the same may be amended, modified or supplemented from time to time.
"Shareholders' Agreement" means the Shareholders' Agreement
dated as of May ___, 1999, among the Company and the shareholders of the
Company, as the same may be amended, modified or supplemented from time to time.
"Transfer" means, with respect to any Class A Common Shares or
Options, to sell, or in any other way transfer, assign, pledge, distribute,
encumber or otherwise dispose of, such Class A Common Shares or Options, either
voluntarily or involuntarily and with or without consideration.
The Plan. The terms and provisions of the Plan are hereby
incorporated into this Agreement as if set forth herein in their entirety. In
the event of a conflict between any provision of this Agreement and the Plan,
the provisions of the Plan shall control. A copy of the Plan may be obtained
from the Company by the Optionee upon request. Capitalized terms used herein but
not defined herein shall have the meanings set forth in the Plan.
Section 2. Option; Option Price. On the terms and subject to the
conditions of this Agreement, the Optionee shall have the option (the "Option")
to purchase up to 2,740 Class A Common Shares of the Company (the "Option
Shares") at the price of $0.01 per Class A Common Share (the "Option Price") at
the times and in the manner set forth herein. The Option
1
<PAGE>
is not intended to qualify for federal income tax purposes as an "incentive
stock option" within the meaning of Section 422 of the Code.
Section 3. Term. The term of the Option (the "Option Term") shall
commence on the date hereof and expire on the tenth anniversary of the date
hereof, unless the Option shall theretofore have been terminated in accordance
with the terms of the Plan (including Sections 7(b) or 12 thereof) or this
Agreement (the date of such expiration or termination, the "Termination Date").
Section 4. [intentionally omitted]
All Option Shares shall be vested shares as of the date
hereof. The Option shall remain exercisable as to all Option Shares until the
Termination Date.
Section 5. Procedure for Exercise.
(a) The Option may be exercised with respect to Option Shares,
from time to time, in whole or in part (but for the purchase of whole Common
Shares only (as described in Section 9(c) of the Plan)), by delivery of a
written notice (the "Exercise Notice") from the Optionee to the Secretary of the
Company, which Exercise Notice shall:
(i) state that the Optionee elects to exercise the Option;
(ii) state the number of Option Shares with respect to
which the Optionee is exercising the Option;
(iii) include any representations of the Optionee required
under Section 8 --------- hereof;
(iv) include appropriate proof of the right of such Person
to exercise the Option in the event that the Option shall be exercised
by any Person other than the Optionee;
(v) state the date upon which the Optionee desires to
consummate the purchase of such Option Shares (which date must be prior
to the end of the Option Term); and
(vi) comply with such further provisions consistent with
the Plan as the Committee may reasonably require.
(b) Payment of the Option Price for the Option Shares to be
purchased on the exercise of the Option shall be made as provided in Section
8(a) of the Plan.
(c) The Company shall be entitled to require as a condition of
delivery of the Option Shares that the Optionee remit or, in appropriate cases,
agree to remit when due an amount in cash sufficient to satisfy all current or
estimated future federal, state and local income tax withholding and the
employee's portion of any employment taxes relating thereto.
2
<PAGE>
(d) The Optionee shall deliver to the Company a copy of any
election filed by the Optionee with the Internal Revenue Service under Section
83(b) of the Code no later than 30 days following the filing of such election
with the Internal Revenue Service.
Section 6. No Rights as a Holder of Common Shares. The Optionee shall
not have any rights or privileges of a holder of Class A Common Shares with
respect to any Option Shares until the date of payment for such Option Shares
pursuant to the exercise of the Option.
Section 7. Restriction on Transfer of Options. Notwithstanding any
provision to the contrary in the Shareholders' Agreement, the Option cannot be
Transferred and may be exercised during the lifetime of the Optionee only by the
Optionee, subject to Section 10(b) of the Plan.
Section 8. Shareholders' Agreement. The Optionee acknowledges that this
Option and all Option Shares shall be subject to the provisions of the
Shareholders' Agreement which are applicable to Retained Shareholder Shares (as
such term is defined in the Shareholders' Agreement) in addition to the
provisions of this Agreement and the Plan. The Optionee is a Retained
Shareholder (as such term is defined in the Shareholders' Agreement) and agrees
to comply with all of the terms of the Shareholders' Agreement.
Section 9. Restrictive Legend. No Options shall be granted, and no
Class A Common Shares shall be issued and delivered upon the exercise of Options
granted, unless and until the Company and/or the Optionee shall have complied
with all applicable laws, rules and regulations of all public agencies and
authorities applicable to the issuance and distribution of such Common Shares
and to the listing of such Class A Common Shares on any stock exchange on which
any of the shares of the capital stock of the Company may be listed. As a
condition of participating in the Plan, each Optionee agrees to comply with all
such laws, rules and regulations and agrees to furnish to the Company all
information and undertakings as may be required to permit compliance with such
laws, rules and regulations. The Committee in its discretion may, as a condition
to the exercise of any Option granted under the Plan, require an Optionee (i) to
represent in writing that the shares received upon exercise of an Option are
being acquired for investment and not with a view to distribution and (ii) to
make such other representations and warranties as are deemed appropriate by the
Company. All certificates representing Option Shares issued upon exercise of the
Option shall, unless otherwise determined by the Committee, have affixed thereto
the legend required by the Shareholders' Agreement.
Section 10. Notices. All notices, claims, certificates, requests,
demands and other communications hereunder shall be in writing and shall be
deemed to have been duly given and delivered if personally delivered or if sent
by nationally-recognized overnight courier, by telecopy, or by registered or
certified mail, return receipt requested and postage prepaid, addressed as
follows:
if to the Company to:
Greenfield Online, Inc.
274 Riverside Avenue
Westport, Connecticut 06880
Attention: Chief Executive Officer
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<PAGE>
Facsimile: (203) 221-0791
Telephone: (203) 221-0411
and
Preston Gates & Ellis LLP
701 Fifth Avenue
Suite 5000
Seattle, Washington 98104
Attention: Robert S. Jaffe, Esq.
Facsimile: (206) 623-7580
Telephone: (206) 623-7022
with a copy to:
Greenfield Holdings, LLC
c/o InSight Capital Partners III, L.P.
122 East 42nd Street
Suite 2300
New York, NY 10168
Attention: Jeff Horing
Facsimile: (212) 681-0972
Telephone: (212) 681-8181
and
O'Sullivan Graev & Karabell, LLP
30 Rockefeller Plaza
New York, NY 10112
Attention: Ilan S. Nissan, Esq.
Facsimile: (212) 408-2420
Telephone: (212) 408-2443
if to the Optionee, to him at:
c/o Mesco Ltd.
470 Main Street
Suite 315
Ridgefield, CT 06877
Facsimile: (203) 438-3939
Telephone: (203) 438-4242
or to such other address as the party to whom notice is to be given may have
furnished to the other party in writing in accordance herewith. Any such notice
or communication shall be deemed to have been received (i) in the case of
personal delivery, on the date of such delivery (or if such date is not a
business day, on the next business day after the date sent), (ii) in the case of
nationally-recognized overnight courier, on the next business day after the date
sent, (iii) in the
4
<PAGE>
case of telecopy transmission, when received (or if not sent on a business day,
on the next business day after the date sent), and (iv) in the case of mailing,
on the third business day following that on which the piece of mail containing
such communication is posted.
Section 11. Waiver of Breach. The waiver by either party of a breach of
any provision of this Agreement must be in writing and shall not operate or be
construed as a waiver of any other or subsequent breach.
Section 12. Optionee's Undertaking. The Optionee hereby agrees to take
whatever additional actions and execute whatever additional documents the
Company may in its reasonable judgment deem necessary or advisable in order to
carry out or effect one or more of the obligations or restrictions imposed on
the Optionee pursuant to the express provisions of this Agreement and the Plan.
Section 13. Modification of Rights. The rights of the Optionee are
subject to modification and termination in certain events as provided in this
Agreement and the Plan. This Agreement may not be amended except by written
agreement executed by the Company and the Optionee.
Section 14. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York (without giving
effect to principles of conflicts of law).
Section 15. Counterparts. This Agreement may be executed in one or more
counterparts, and each such counterpart shall be deemed to be an original, but
all such counterparts together shall constitute but one agreement.
Section 16. Entire Agreement; The Plan. This Agreement and the Plan
(and the other writings referred to herein) constitute the entire agreement
between the parties with respect to the subject matter hereof and thereof and
supersede all prior written or oral negotiations, commitments, representations
and agreements with respect thereto.
Section 17. Severability. In the event any one or more of the
provisions of this Agreement should be held invalid, illegal or unenforceable in
any respect in any jurisdiction, such provision or provisions shall be
automatically deemed amended, but only to the extent necessary to render such
provision or provisions valid, legal and enforceable in such jurisdiction, and
the validity, legality and enforceability of the remaining provisions of this
Agreement shall not in any way be affected or impaired thereby.
* * * *
5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Option
Agreement as of the date first written above.
GREENFIELD ONLINE, INC.
By:
--------------------------------
Name:
Title:
-----------------------------------
Joel Mesznik
6
<PAGE>
CERTIFICATE OF RESTATEMENT WITH RESPECT TO
THE AMENDED AND RESTATED CERTIFICATE
OF INCORPORATION FOR
GREENFIELD ONLINE, INC.
1. The name of the Corporation is Greenfield Online, Inc.
2. The text of the Amended and Restated Certificate of Incorporation is
attached hereto as Exhibit 1. ---------
3. This restatement contains an amendment which requires the approval of
the corporation's sole shareholder, and on May __, 1999 the Amended and
Restated Certificate of Incorporation was adopted by the unanimous
written consent of the Corporation's sole shareholder.
4. Pursuant to the amendment contained in this Amended and Restated
Certificate of Incorporation, each of the Two Hundred (200) shares of
the Corporation's Common Stock, no par value, authorized prior to the
filing of this Certificate (the "Existing Common") are converted
automatically into an aggregate of Two Hundred Thousand (200,000)
shares of Common Stock, consisting of One Hundred Thousand (100,000)
shares of Class A Common Stock, par value $.01 per share, and One
Hundred Thousand (100,000) shares of Class B Common Stock, par value
$.01 per share. Further, pursuant to this amendment, each share of the
issued and outstanding Common Stock on the effective date of the filing
of this Certificate is automatically and without further action
converted into One Thousand (1,000) shares of Class A Common Stock.
These conversions are summarized as follows:
- ----------------------------- ---------------------------- ---------------
Prior to Amendment Pursuant to Amendment Increase
- ----------------------------- ---------------------------- ---------------
Authorized: 200 Shares Authorized: 200,000
Common Stock, no par Shares Common Stock,
value $.01 par value 199,800
- ----------------------------- ---------------------------- --------------
Outstanding: 100 Shares Outstanding: 100,000
Common Stock, issued and Shares Class A Common
outstanding Stock, issued and
outstanding 99,900
- ----------------------------- ---------------------------- --------------
Authorized: 0 Shares Class Authorized: 100,000 Shares
B Common Stock Class B Common
Stock authorized 100,000
- ----------------------------- ---------------------------- --------------
The amendment contained in the Amended and Restated Certificate of Incorporation
also sets forth the relative rights and preferences of the Class A Common Stock
and the Class B Common Stock giving certain preferences with respect to
distributions to the
1
<PAGE>
Class B Common Stock. The Amendment and Restatement also sets forth certain
governing provisions of the Corporation and eliminates the provisions contained
in Article Sixth of the Certificate of Incorporation which is being amended.
2
<PAGE>
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
GREENFIELD ONLINE, INC.
---------------------------
ARTICLE FIRST
- -------------------------------------------------------------------------------
The name of the corporation is Greenfield Online, Inc.
ARTICLE SECOND
- -------------------------------------------------------------------------------
The address of the registered office of the Corporation in the
State of Connecticut is 274 Riverside Avenue, Westport, Connecticut 06880.
ARTICLE THIRD
- -------------------------------------------------------------------------------
The purpose of the Corporation is to engage in any lawful act
or activity for which corporations may be organized under the General
Corporation Law of the State of Connecticut.
ARTICLE FOURTH
- -------------------------------------------------------------------------------
A. AUTHORIZED SHARES
The total number of shares of common stock which the
Corporation has authority to issue is 200,000 (the " Common Stock"), consisting
of:
(1) 100,000 shares of Class A Common Stock, par
value $.01 per share (the "Class A -------
Common"); and
(2) 100,000 shares of Class B Common Stock, par
value $.01 per share (the "Class B Common").
The shares of Common Stock shall have the rights, preferences
and limitations set forth in Section B below. Certain capitalized terms used in
this Article FOURTH are defined in Section C below. Upon the effective date
hereof, all of the Company's 200 authorized shares of Common Stock, no par value
(the "Existing Common") shall be automatically converted into 100,000 shares of
Class A Common and 100,000 shares of Class B Common and each share of the issued
and outstanding Existing Common shall be converted into 1,000 shares of Class A
Common.
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<PAGE>
B. COMMON STOCK
1. Voting Rights.
(a) General. Except as otherwise provided in this
Certificate or as otherwise required by applicable law, all shares of Common
Stock shall be identical in all respects and shall entitle the holders thereof
to the same rights and privileges, subject to the same qualifications,
limitations and restrictions.
(b) Class A Common and Class B Common. Except as
otherwise required by applicable law, the holders of Class A Common and the
holders of Class B Common shall vote together as a single class on all matters
to be voted on by the Corporation's stockholders. Each holder of Class A Common
and Class B Common shall be entitled to one (1) vote (or a fraction thereof) for
each share (or fraction thereof) of Class A Common and Class B Common owned by
such holder.
2. Distributions.
(a) Class A Common and Class B Common. All
Distributions shall be distributed to the holders of Class A Common and Class B
Common in accordance with the priority set forth in this Section 2(a).
(A) With respect to any Non-Liquidating
Distribution:
(i) The holders of Class B Common shall
be entitled to receive such Non-Liquidating Distributions, ratably
based upon the aggregate Unpaid Yield of the shares of Class B
Common held by each such holder, until the holders of Class B
Common receive Non-Liquidating Distributions equal to the
aggregate Unpaid Yield on all outstanding shares of Class B
Common. All Non-Liquidating Distributions made pursuant to this
paragraph 2(a)(A)(i) to holders of Class B Common shall constitute
a payment of Yield on Class B Common.
(ii) After the payment to the holders of
Class B Common shall have been made pursuant to paragraph
2(a)(A)(i) above, the holders of Class A Common shall be entitled
to share pro rata with the Class B Common in the remainder of such
Non-Liquidating Distribution based on the number of Class A Common
and Class B Common held by such Persons.
(B) With respect to any Liquidating Distribution,
the holders of the Class A Common shall be entitled to share pro
rata with the holders of the
4
<PAGE>
Class B Common in such Liquidating Distribution based on the
number of Class A Common and Class B Common held by such Persons
provided, however, that in lieu of receiving their portion of such
Liquidating Distribution, the holders of the Class B Common may
elect to receive an amount equal to the aggregate Unreturned
Original Cost of all outstanding shares of Class B Common,
together with the aggregate Unpaid Yield thereon. In the event
that the holders of the Class B Common elect such option, after
the payment of such amounts to such holders of Class B Common, the
holders of Class A Common shall be entitled to receive the
remainder of such Liquidating Distribution, based upon the number
of Class A Common held by such Persons.
(b) Conditions Precedent. No Distribution shall be
paid to the holders of Class B Common pursuant to paragraph 2(a)(A) or 2(a)(B)
above in any form of consideration other than cash unless the holders of a
majority of the Class B Common outstanding at the time of the Distribution
approve such Distribution (including the valuation of the consideration being
distributed thereby), and no Distribution shall be paid to any holder of Class A
Common pursuant to paragraph 2(a)(A)(ii) or 2(a)(B) above, as applicable, until
the holders of Class B Common shall have received (either in cash or other
consideration, the form and value of which shall have been approved as provided
above) all Distributions to which they are entitled pursuant to paragraph
2(a)(A)(i) or 2(a)(B) above, as applicable.
3. Stock Splits and Stock Dividends. The Corporation
shall not in any manner subdivide (by stock split, stock dividend or otherwise),
or combine (by reverse stock split or otherwise) the outstanding Common Stock of
one class unless (x) the holders of a majority of Class B Common outstanding at
the time approve such subdivision or combination and (y) the outstanding Common
Stock of all other classes shall be proportionately subdivided or combined. All
such subdivisions and combinations shall be payable only in Class B Common to
the holders of Class B Common and in Class A Common to the holders of Class A
Common. In no event shall a stock split or stock dividend constitute a payment
of Yield or a return of Original Cost.
C. MISCELLANEOUS
1. Registration of Transfer. The Corporation shall keep
at its principal office (or such other place as the Corporation reasonably
designates) a register for the registration of shares of Common Stock. Upon the
surrender of any certificate representing shares of any class of Common Stock at
such place, the Corporation shall, at the request of the registered holder of
such certificate, execute and deliver a new
5
<PAGE>
certificate or certificates in exchange therefor representing in the aggregate
the number of shares of such class represented by the surrendered certificate,
and the Corporation forthwith shall cancel such surrendered certificate. Each
such new certificate will be registered in such name and will represent such
number of shares of such class as is requested by the holder of the surrendered
certificate and shall be substantially identical in form to the surrendered
certificate. The issuance of new certificates shall be made without charge to
the holders of the surrendered certificates for any issuance tax in respect
thereof or other cost incurred by the Corporation in connection with such
issuance, other than any applicable transfer tax resulting from the issuance of
the new certificate registered in a name other than the name in which the old
certificate was registered.
2. Replacement. Upon receipt of evidence reasonably
satisfactory to the Corporation (an affidavit of the registered holder will be
satisfactory) of the ownership and the loss, theft, destruction or mutilation of
any certificate evidencing one or more shares of any class of Common Stock, and
in the case of any such loss, theft or destruction, upon receipt of indemnity
reasonably satisfactory to the Corporation (provided that if the holder is a
financial institution or other institutional investor its own agreement will be
satisfactory), or, in the case of any such mutilation upon surrender of such
certificate, the Corporation shall (at its expense) execute and deliver in lieu
of such certificate a new certificate of like kind representing the number of
shares of such class represented by such lost, stolen, destroyed or mutilated
certificate and dated the date of such lost, stolen, destroyed or mutilated
certificate.
3. Notices. All notices referred to herein shall be in
writing, shall be delivered personally or by first class mail, postage prepaid,
and shall be deemed to have been given when so delivered or mailed to the
Corporation at its principal executive offices and to any stockholder at such
holder's address as it appears in the stock records of the Corporation (unless
otherwise specified in a written notice to the Corporation by such holder).
4. Amendment and Waiver. No amendment, modification or
waiver shall be binding or effective with respect to any provision of Section B
of this Article FOURTH, any term defined in this Section C that is used in
Section B of this Article FOURTH, or this paragraph 4 without the prior vote or
written consent of the holders of at least 51% of the Class B Common outstanding
at the time such action is taken; provided, however, that notwithstanding the
foregoing the holders of at least 51% of the Class A Common, outstanding at the
time such action is taken shall have the right to veto any such action to the
extent (and only to the extent) that such action would have the effect of
changing the relative rights of the Class A Common
6
<PAGE>
and the Class B Common.
5. Certain Defined Terms. As used in this Article
FOURTH, the following terms shall have the followings meanings:
"Common Stock" means, collectively, (i) the
Corporation's Class A Common, (ii) the Corporation's Class B Common and (iii)
any other class of capital stock of the Corporation hereafter authorized that is
not limited to a fixed sum or percentage of par or stated value in respect to
the rights of the holders thereof to participate in dividends or in the
distribution of assets upon any liquidation, dissolution or winding up of the
Corporation.
"Distributions" means all distributions made by the
Corporation to holders of Common Stock, whether in cash, property, or Securities
of the Corporation and whether by dividend, liquidating distributions, or
otherwise; provided that none of the following events shall be considered a
Distribution: (i) any redemption or repurchase by the Corporation of Common
Stock held by a present or former employee of the Corporation or any of its
Subsidiaries pursuant to a stock repurchase agreement, stock option agreement,
management agreement or other repurchase agreement, arrangement, option or
obligation approved by the board of directors of the Corporation of (ii) any
reclassification, subdivision (including stock dividend and stock splits),
combination (including reverse stock splits) or exchange of Common Stock.
"Liquidating Distribution" means a Distribution made in
connection with a Liquidation Event.
"Liquidation Event" means (i) any voluntary or
involuntary liquidation, dissolution or winding-up of the Corporation and (ii)
any Sale.
"Non-Liquidating Distribution" means any Distribution
which is not a Liquidating Distribution.
"Original Cost" means, with respect to any share of
Class B Common, as of any particular date, the amount originally paid for such
share when it was issued plus, on or after the date of issue, any additional
paid-in capital with respect to such Class B Common.
"Person" shall be construed broadly and shall include
an individual, a partnership, a corporation, an association, a joint stock
company, a trust, a joint venture, an unincorporated organization and a
governmental entity or any department, agency or political subdivision thereof.
7
<PAGE>
"Sale" shall mean any sale of the Corporation (through
one such transaction or a series of related transactions), whether by (i) the
sale, abandonment, transfer, lease or disposition of all or substantially all of
the properties and assets of the Corporation or any Subsidiary (which owns
substantially all of the Corporation's assets on a fully consolidated basis)
thereof, (ii) the sale, transfer or other disposition of its Securities or (iii)
the merger or consolidation of the Corporation or any Subsidiary (which owns
substantially all of the Corporation's assets on a fully consolidated basis)
thereof with or into any other entity or entities, and in the case of clause
(ii) and (iii) hereof, the holders of the authorized capital stock of the
Corporation immediately prior to such transaction shall hold, after giving
effect to such transaction, Securities of the surviving or resultant entity
representing in the aggregate less than a majority of the common stock
equivalent or substantially equivalent voting rights of such entity (on a fully
converted basis).
"Securities" means "securities" as defined in Section
2(1) of the Securities Act of 1933, as amended.
"Subsidiary" means, with respect to any Person, any
corporation of which the shares of stock having a majority of the general voting
power in electing the board of directors of such corporation are, at the time as
of which any determination is being made, owned by such Person either directly
or indirectly through Subsidiaries.
"Unpaid Yield" means, as of any time of determination
with respect to any share of Class B Common, an amount equal to the excess, if
any, of (i) the aggregate Yield accrued and accumulated on such share as of such
time over (ii) the aggregate amount of Distributions made by the Corporation
prior to such time that constitute payment of Yield on such share pursuant to
paragraph 2(a)(A)(i) and 2(a)(B) of Section B, above.
"Unreturned Original Cost" means, as of any time of
determination with respect to any share of Class B Common, an amount equal to
the excess, if any, of (i) the Original Cost of such share over (ii) the
aggregate amount of Distributions made by the Corporation prior to such time
that constitute a return of Original Cost of such share pursuant to paragraph
2(a)(B) of Section B, above.
"Yield" means, with respect to each share of Class B
Common, the amount accruing cumulatively on a daily basis on such share at a
non-compounded annual rate of 7% on such share's Unreturned Original Cost.
8
<PAGE>
ARTICLE FIFTH
- -------------------------------------------------------------------------------
A director of the Corporation shall not be personally liable
to the Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability (i) for any breach of the
director's duty of loyalty to the Corporation or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, or (iii) for any transaction from which the director
derived any improper personal benefit. If the Connecticut General Corporation
Law is amended after the date of incorporation of the Corporation to authorize
corporate action further eliminating or limiting the personal liability of
directors, then the liability of a director of the Corporation shall be
eliminated or limited to the fullest extent permitted by the Connecticut General
Corporation Law, as so amended.
Any repeal or modification of the foregoing paragraph by the
stockholders of the Corporation shall not adversely affect any right or
protection of a director of the Corporation existing at the time of such repeal
or modification.
ARTICLE SIXTH
- -------------------------------------------------------------------------------
In furtherance and not in limitation of the powers conferred
by the laws of the State of Connecticut, the board of directors of the
Corporation is expressly authorized and empowered to make, alter, amend or
repeal the By-laws in any manner not inconsistent with the laws of the State of
Connecticut or this Certificate of Incorporation.
ARTICLE SEVENTH
- -------------------------------------------------------------------------------
Whenever a compromise or arrangement is proposed between the
Corporation and its creditors or any class of them and/or between the
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Connecticut may, on the application in a
summary way of the Corporation or of any creditor or stockholder thereof or on
the application of any receiver or receivers appointed for the Corporation or on
the application of trustees in dissolution or of any receiver or receivers
appointed for the Corporation order a meeting of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of the
Corporation, as the case may be, to be summoned in such manner as the said court
directs. If a majority in number representing three-fourths in value of the
creditors or class of creditors, and/or of the stockholders or class of
stockholders of the Corporation, as the case may be, agree on any compromise or
arrangement and to any reorganization of the Corporation as a consequence of
such compromise or arrangement, the said compromise or arrangement and
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the said reorganization shall, if sanctioned by the court to which the said
application has been made, be binding on all the creditors or class of
creditors, and/or on all the stockholders or class of stockholders, of the
Corporation, as the case may be, and also on the Corporation.
ARTICLE EIGHTH
- -------------------------------------------------------------------------------
The Corporation is to have perpetual existence.
ARTICLE NINTH
- -------------------------------------------------------------------------------
Meetings of stockholders may be held within or without the State of Connecticut,
as the By-laws may provide. The books of the Corporation may be kept outside the
State of Connecticut at such place or places as may be designated from time to
time by the board of directors or in the By-laws of the Corporation.
IN WITNESS WHEREOF, the undersigned has signed this instrument
on the ___ day of May, 1999, thereby acknowledging that this instrument is the
act and deed of the undersigned and that the facts stated above are true.
---------------------------
Andrew Greenfield
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AGREEMENT AND RELEASE
Agreement entered into as of May 17, 1999, by and between
Greenfield Online, Inc., a Connecticut corporation (the "Company"), Andrew
Greenfield, the sole shareholder of the Company (the "Shareholder"), and
_______________ (the "Recipient").
WHEREAS, the Recipient has been employed by the Company or has
otherwise provided services to the Company;
WHEREAS, the Shareholder has agreed to cause the Company to make a
bonus payment (the "Bonus") to the Recipient on or before the date which he
consummates the sale of a majority of his equity ownership in the Company (the
"Sale") pursuant to that certain Stock Purchase and Redemption Agreement by and
among the Company, the Shareholder and Greenfield Holdings, LLC (the "Investor")
dated as of the date hereof (the "SPA");
WHEREAS, the Shareholder intends to consummate the Sale on or
about May 17, 1999;
WHEREAS, the parties hereto desire to mutually, amicably and
finally resolve and compromise all claims surrounding payment of the Bonus to
the Recipient;
NOW THEREFORE, in consideration for the mutual promises and
undertakings of the parties as set forth below, the Company, the Shareholder and
the Recipient enter into this Agreement and Release:
1. The Company's and the Shareholder's Consideration for Agreement:
Prior to or contemporaneous with the Closing (as defined in
the SPA), the Shareholder agrees to cause the Company to pay the Recipient the
sum of _____________________ Dollars ($________), in complete payment of the
Bonus and as and for independent consideration for this Agreement, subject to
applicable withholding taxes.
2. Employee's Consideration for Agreement: In consideration for the payment
and undertakings described above, the Recipient, individually and on behalf of
his attorneys, representatives, successors, and assigns, does hereby completely
release and forever discharge the Company and the Investor, their parents,
affiliated and subsidiary corporations, if any, and their shareholders,
including the Shareholder, officers and all other representatives, agents,
directors, employees, successors and assigns, from all claims, rights, demands,
actions, obligations, and causes of action of any and every kind, nature and
character, written or verbal, known or unknown, which Recipient may now have, or
has ever had, against them arising from or in any way connected with the Bonus,
except for a breach of this Agreement by the Shareholder or the Company.
3. Covenant Not to Sue: At no time subsequent to the execution of this
Agreement will Recipient pursue, or cause or knowingly permit the prosecution,
in any state, federal or foreign court, or before any local, state, federal or
foreign administrative agency, or any other tribunal, any charge, claim or
action of any kind, nature and character whatsoever, known or unknown, which he
may now have, or has ever had
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against the Shareholder or the Company and/or any officer, director, employee or
agent of the Company, which is based in whole or in part on any matter covered
by this Agreement except for a breach of this Agreement by the Shareholder or
the Company.
4. Savings Clause: Should any of the provisions of this Agreement be
determined to be invalid by a court or government agency of competent
jurisdiction, it is agreed that such determination shall not affect the
enforceability of the other provisions herein.
5. Complete and Voluntary Agreement: This Agreement constitutes the entire
understanding of the parties on the subjects covered. The Recipient expressly
warrants that he has read and fully understands this Agreement; that he has had
the opportunity to consult with legal counsel of his own choosing and to have
the terms of the Agreement fully explained to him; that he is not executing this
Agreement in reliance on any promises, representations or inducements other than
those contained herein; and that he is executing this Agreement voluntarily,
free of any duress or coercion.
6. Governing Law: This Agreement will be governed by and construed pursuant
to the laws of the State of New York without giving effect to any choice of law
or conflicting provision or rule (whether of the State of New York or any other
jurisdiction) that would cause the laws of any jurisdiction other than the State
of New York to be applied.
GREENFIELD ONLINE, INC.
By:
----------------------
SHAREHOLDER
- -------------------------
Andrew Greenfield
RECIPIENT
- ------------------------
2
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EXECUTION COPY
ESCROW AGREEMENT (this
"Agreement") dated as of May 17, 1999,
by and among GREENFIELD HOLDINGS, LLC, a
Delaware limited liability company (the
"Investor"), ANDREW GREENFIELD, an
individual (the "Shareholder"),
GREENFIELD ONLINE, INC., a Connecticut
corporation (the "Company"), and
SunTrust BANK, Atlanta (the "Escrow
Agent").
The Investor, the Shareholder, and the Company are parties to
a Stock Purchase and Redemption Agreement, dated as of May 12, 1999 (as amended,
the "Purchase Agreement"). This Agreement is being executed and delivered in
connection with the transactions contemplated by the Purchase Agreement.
Capitalized terms used but not otherwise defined in this Agreement shall have
the meanings given such terms in the Purchase Agreement as in effect on the date
of this Agreement.
ACCORDINGLY, the parties hereto hereby agree as follows:
1. Certain Defined Terms.
As used in this Agreement, the following terms shall have the
following meanings:
"Claim" means any claim for indemnification of Losses asserted
by the Investor on its own behalf or on behalf of the Company against the Escrow
Account (as defined below) in accordance with and subject to the limitations set
forth in Article VIII of the Purchase Agreement and pursuant to this Agreement.
"Direction Letter" means a joint letter of direction executed
by the Investor and the Shareholder and delivered to the Escrow Agent. A
Direction Letter shall (i) clearly identify itself as a Direction Letter
delivered pursuant to this Agreement, and (ii) may direct the Escrow Agent to
pay all or a specified portion of the Escrow Funds (as defined below) (and, if
less than all of the Escrow Funds, the Direction Letter shall clearly state the
"net amount payable") to a specified Person or Persons at a specified time or
times and in a specified manner or manners, and (iii) may contain such other
directions to the Escrow Agent as may be required by this Agreement, reasonably
requested by the Escrow Agent or mutually agreeable to the Investor and the
Shareholder.
"Release Date" means the first anniversary of the Closing
Date.
2. Appointment of Escrow Agent. The Company, the Shareholder and the
Investor hereby designate and appoint the Escrow Agent to serve in accordance
with the terms and conditions of this Agreement, and the Escrow Agent hereby
agrees to act as such, upon the terms and conditions provided in this Agreement.
<PAGE>
3. Escrow Funds.
(a) Deposit of Escrow Funds. Concurrently with the execution and
delivery of this Agreement, the Company shall deliver or cause to be delivered
to the Escrow Agent, in accordance with the terms of the Purchase Agreement,
$1,600,000 in cash into an escrow account to be known as the "Escrow Account."
The amount deposited into the Escrow Account, together with any proceeds of
investments thereof (including any Escrow Income (as defined in Section 3(e)),
that may be held in the Escrow Account from time to time are hereinafter
referred to collectively as "Escrow Funds." The Escrow Agent shall keep
appropriate records to reflect the current value from time to time of the Escrow
Funds, including appropriate adjustments for disbursements and income earned or
losses in respect thereof, if any. Subject to the Escrow Agent's right to resign
pursuant to Section 6 hereof, all Escrow Funds shall be held by the Escrow Agent
pursuant to this Agreement as a source of recourse for certain indemnity
obligations under the Purchase Agreement. Without limiting the foregoing, the
Escrow Agent will not make any payment or distribution of Escrow Funds except as
and in the manner expressly provided by this Agreement.
(b) Rights to Escrow Funds. Except as expressly provided herein, no
Person shall have any right, title or interest in or possession of any of the
Escrow Funds. Therefore, except as otherwise provided in Section 3(f) hereof,
(i) neither the Company, the Investor nor the Shareholder shall have the ability
to pledge, convey, hypothecate or grant a security interest in any portion of
the Escrow Funds unless and until such assets have been disbursed to such party
in accordance with Section 4 or Section 5 below and (ii) until disbursed
pursuant to Section 4 or Section 5 below, the Escrow Agent shall be in sole
possession of the Escrow Funds and will not act or be deemed to act as custodian
for any party for purposes of perfecting a security interest therein.
Accordingly, except as provided in Section 3(f) hereof, no Person shall have any
right to have or to hold any of the Escrow Funds as collateral for any
obligation or be able to obtain a security interest in any assets (tangible or
intangible) contained in or relating to the Escrow Funds.
(c) Payments from Escrow Funds. Any payment to be made by the Escrow
Agent pursuant to this Agreement shall be made by check or wire transfer (upon
receipt of written wire transfer instructions of the recipient) out of the
Escrow Account and the Escrow Agent shall make such payment out of and to the
extent of any cash on hand from the Escrow Account before liquidating
prematurely any Permitted Investments to obtain cash to make such payment.
(d) Investment of Escrow Funds. From time to time and in the same
manner used to make investments for its own account or for the account of others
for which it holds funds in escrow, the Escrow Agent will invest any cash in the
Escrow Funds in Permitted Investments. As used in this Agreement, "Permitted
Investments" means (i) direct obligations of the United States or any agency
thereof, or obligations guaranteed by the United States or any agency thereof,
(ii) commercial paper rated at least A-1 by Standard & Poor's Corporation and
P-1 by Moody's Investors Service, Inc., (iii) time deposits with, including
certificates of deposit issued by, any office located in the United States of
any bank or trust company which is organized under the laws of the United States
or any State thereof and has capital, surplus and undivided profits aggregating
at least $500,000,000 and which issues (or the parent of which issues)
certificates of deposit or commercial paper with a rating described in clause
(ii) above (a
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"Qualified Financial Institution"), (iv) repurchase agreements with a Qualified
Financial Institution, or (v) the Federated Treasury Money Market Obligation
Fund; provided that, in each case, any investment referred to in clauses (i)
through (iv) above matures within ninety (90) days or less from the date of
acquisition thereof by the Escrow Agent.
(e) Escrow Income. The Escrow Agent shall retain as part of the
Escrow Funds all income, interest, increments and gains of all kinds earned on
funds in the Escrow Account (collectively referred to herein as "Escrow
Income").
(f) Security Interests in Escrow Funds. It is the intent of the
parties hereto that the Investor and the Shareholder shall have no interest in
the Escrow Funds (other any rights to be enforced solely on behalf of the
Company in accordance with this Agreement) and that neither a voluntary or
involuntary case under any applicable bankruptcy, insolvency or similar law nor
the appointment of a receiver, trustee, custodian or similar official in respect
of the Investor or the Shareholder (any of which is referred to herein as a
"Bankruptcy Event") shall give rise to any other interest in the Escrow Funds or
affect, modify, convert or otherwise change such interest. Accordingly, in order
to assure the foregoing result even if it is determined by a court of competent
jurisdiction (whether or not in connection with a Bankruptcy Event) that any
such Person has an interest in the Escrow Funds that is greater than such
interest, the parties hereto agree as follows:
(i) the Investor hereby grants (effective as of the date hereof)
to the Company a first priority security interest in, and hereby
pledges and assigns to the Company, all of its right, title and
interest in the Escrow Funds, if any, to secure the Investor's
obligations hereunder. The Escrow Agent hereby agrees to act as bailee
and possessory agent on behalf of the Company in respect of the
Company's security interest in the Escrow Funds. The Escrow Agent
shall, upon receipt of indemnification satisfactory to it from the
Company for its fees and expenses incurred in connection with taking
such actions, take all actions as may be reasonably requested in
writing of it by the Company to further perfect or maintain the
security interest created by the Investor hereunder in the Escrow
Funds. Such security interest shall automatically be released with
respect to any funds properly distributed from the Escrow Funds
pursuant to the terms of this Agreement;
(ii) the Shareholder hereby grants (effective as of the date
hereof) to the Company a first priority security interest in, and
hereby pledges and assigns to the Company, all of his right, title and
interest in the Escrow Funds, if any, to secure the Shareholder's
obligations hereunder. The Escrow Agent hereby agrees to act as bailee
and possessory agent on behalf of the Company in respect of the
Company's security interest in the Escrow Funds. The Escrow Agent
shall, upon receipt of indemnification satisfactory to it from the
Company for its fees and expenses incurred in connection with taking
such actions, take all actions as may be reasonably requested in
writing of it by the Company to further perfect or maintain the
security interest created by the Shareholder hereunder in the Escrow
Funds. Such security interest shall automatically be released with
respect to any funds properly distributed from the Escrow Funds
pursuant to the terms of this Agreement.
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The parties hereto agree and acknowledge that the establishment and maintenance
of the Escrow Funds hereunder is intended to constitute possession of the Escrow
Funds for the purposes of perfecting the security interests therein created by
this Section 3(f).
(g) Waiver of Liens, Etc. Notwithstanding anything to the contrary
contained herein or under applicable law, the Escrow Agent hereby waives all
liens, rights of set off, security interests or any other encumbrances
whatsoever in respect of the Escrow Funds, as such may relate to any obligation
of the Shareholder or the Investor to the Escrow Agent.
4. Claims, Procedures and Payment from Indemnification Escrow Account. The
Escrow Funds in the Escrow Account shall be held and disposed of by the Escrow
Agent for the benefit of the Company, the Investor or the Shareholder, as
follows:
(a) General.
(i) The Investor shall notify the Escrow Agent, the Company, and
the Shareholder in writing of the details of any Claim in respect of
any Losses for which the Investor claims it or the Company is entitled
to indemnification from the Shareholder under the Purchase Agreement.
The Investor and the Shareholder agree to use good faith efforts to
resolve amicably all Claims, to respond to requests made by the other
as promptly as is reasonably practicable under the circumstances and to
provide each other with all information reasonably requested by the
other to enable the other to assess the basis for any Claim (or any
objection to the assertion of such a Claim), or the magnitude of any
Claim, asserted. Without limiting the foregoing, the Shareholder shall
respond in writing to any Claim asserted by the Investor on behalf of
the Company as promptly as is reasonably practicable under the
circumstances, but in all events within 30 days after receipt by the
Shareholder of a notice of Claim, specifying either that (and the
extent to which) the Shareholder consents to the payment of such Claim
asserted by the Investor on behalf of the Company or that the
Shareholder objects to the payment of such Claim and stating its
reasons therefor. The Shareholder will provide the Escrow Agent with a
copy of its written response to the Claim.
(ii) If (and to the extent that) the Shareholder consents to the
payment of a Claim, the Investor and the Shareholder shall deliver, as
promptly as is reasonably practicable under the circumstances, but in
all events within 30 days after receipt by the Shareholder of notice of
such Claim, to the Escrow Agent a Direction Letter specifying the
amount that the Shareholder has consented to be paid to the Company or
the Investor with respect to such Claim (to the extent of such consent,
an "Allowed Claim") and the date such payment is due to be made to the
Company from the Escrow Account. The Escrow Agent shall pay the Allowed
Claim out of the Escrow Account in accordance with the Direction
Letter. With respect to Allowed Claims that constitute Third Party
Claims, at the time when payment of such Allowed Claim becomes due
pursuant to the Purchase Agreement, the Investor and the Shareholder
will deliver a Direction Letter to the Escrow Agent, and the Escrow
Agent will make payment of such amount from the Escrow Account pursuant
to the Direction Letter.
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(iii) If the Shareholder objects to the payment of a Claim (or
any portion thereof) and refuses to sign the Direction Letter submitted
to him by the Investor in connection with such Claim (or such portion
thereof) as provided in Section 4(a)(ii) above (each such Claim or
portion thereof being a "Disputed Claim"), then (A) the Investor and
the Shareholder will deliver a Direction Letter pursuant to Section
4(a)(ii) above with respect to the payment of the undisputed portion
(if any) of such Claim and (B) the Investor and the Shareholder shall
use their best efforts to resolve such Disputed Claim. If the parties
are unable to resolve the Disputed Claim within 15 days after the date
the Shareholder objects to the payment of the Disputed Claim, then such
Disputed Claim shall be settled in accordance with the dispute
resolution mechanisms provided for in Article VIII of the Purchase
Agreement (the mechanism provided for in Article VIII being referred to
as a "Proceeding"), provided that the prevailing party or parties (as
determined by the mediator or the court adjudicating an action brought
hereunder upon the failure of mediation) shall be entitled to receive
from the non-prevailing party or parties, and the non-prevailing party
or parties shall pay, all reasonable costs and expenses incurred by the
prevailing party or parties in connection with the resolution of the
Disputed Claim, including reasonable attorneys' fees and the fees and
expenses of the Escrow Agent to the extent that they relate solely
thereto (collectively, "Litigation Expenses"). Notwithstanding anything
to the contrary contained in this Agreement, Litigation Expenses shall
be governed in all respects by, and borne by the parties as set forth
in, this Section 4(a)(iii).
(iv) No later than two business days following the final
resolution of the Disputed Claim (whether by judgment, decree,
settlement or otherwise), the Investor and the Shareholder shall
deliver a Direction Letter to the Escrow Agent regarding payment of
such Disputed Claim and the Escrow Agent shall make payment out of the
Escrow Account in accordance with that Direction Letter.
(v) If the Shareholder fails to respond to the notice of a Claim
pursuant to Section 4(a)(i) within 30 days of the receipt of such
notice, the Investor shall redeliver such notice to the Escrow Agent,
the Company and the Shareholder accompanied by instructions for the
method and place of payment of such Claim in the event the Shareholder
again fails to respond. The Escrow Agent shall also promptly deliver a
copy of such second notice to the Shareholder upon the Escrow Agent's
receipt of same. If the Shareholder fails to respond to such second
notice within 15 days after being delivered by the Escrow Agent, the
Shareholder shall be deemed to have agreed to the validity of the Claim
for the full amount thereof and to have consented to the payment
thereof. The Escrow Agent shall make payment of such amount from the
Escrow Account pursuant to the instructions accompanying the second
notice from the Investor.
(b) Other. In addition to the foregoing procedure, the Escrow Agent
may make payments from the Escrow Account at any time, pursuant to and (i) upon
receipt by the Escrow Agent of any Direction Letter, or (ii) 30 days after
receipt by the Escrow Agent of any order, judgment or decree ordering the
release of all or a specified portion of the Escrow Account, accompanied by an
opinion of counsel of the recipient to the effect that such order, judgment or
decree represents a final adjudication of the rights of the parties by a court
of competent
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jurisdiction, and that the time for appeal from such order, judgment or decree
has expired without an appeal having been noticed, filed or perfected (a "Final
Order").
(c) Limitation on Recourse to Escrow Account. Notwithstanding
anything to the contrary in this Agreement, the Company shall have recourse to
the Escrow Account only in respect of Claims; provided, however, that the
amounts available for payment of any Claim shall be limited as funds are
released from the Escrow Account in accordance with Section 5 below; and,
provided further, however, that the Company shall not have any recourse to the
Escrow Account in respect of any Claim which arises or is asserted after the
Release Date (whether or not any funds remain in escrow after the Release Date).
If the amount of any payment to be made with respect to any Claim or any
Disputed Claim resolved in the Investor's favor (on behalf of the Company)
exceeds the amount that is available therefor pursuant to this Section 4(c), the
Escrow Agent is hereby authorized to make payment to the Company upon receipt of
a Direction Letter or Final Order of the total amount available therefor out of
the Escrow Account and upon such payment, this Agreement shall terminate and the
Escrow Agent shall be released from any further duty or obligation hereunder.
5. Release of Escrow Funds.
(a) Release from Escrow Account. Not more than two business days
after the Release Date, the Investor shall deliver to the Shareholder a schedule
(the "Schedule of Claims") of outstanding Claims asserted by the Investor on
behalf of the Company on or before the Release Date, and the amount with respect
to each such Claim to be held in escrow until such Claim is resolved. Such
amount shall not exceed the greatest amount the Investor asserts (on behalf of
itself or on behalf of the Company in its reasonable good faith discretion) is
owing or, in the case of a then unliquidated Claim, could reasonably expect to
become owing, with respect to such Claim. Promptly (but in any event within
three (3) business days) after the Schedule of Claims is produced, the Escrow
Agent shall release from the Escrow Account and promptly pay to the Shareholder
the amount (if positive) by which the balance in the Escrow Account exceeds the
aggregate amount of all amounts payable with respect to Claims listed on the
Schedule of Claims. If the Investor fails to deliver a Schedule of Claims within
two days after the Release Date, the Escrow Agent shall within three business
days after the Release Date, release to the Shareholder the balance in the
Escrow Account which is not subject to any Claims.
(b) Final Release from Escrow Account. Upon (i) the final resolution
of each Disputed Claim (if any), the Escrow Agent shall make payment with
respect to such Disputed Claim to the Company or the Investor, as the case may
be (unless such Disputed Claim is resolved in favor of the Shareholder, in which
case it shall remain as part of the Escrow Funds), and (ii) the final resolution
of all Claims that have been asserted by the Investor (on behalf of itself or on
behalf of the Company) on or before the Release Date, all amounts remaining in
the Escrow Account shall be paid over and distributed to the Shareholder, this
Agreement shall terminate, and the Escrow Agent shall be released from any
further duty or obligation hereunder.
(c) Payments. At any time the Escrow Agent is required to distribute
or pay over any amounts held by or received by it under any of the provisions of
this Agreement, such distribution and payment shall be effected by either (i)
issuance of the Escrow Agent's check in
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the appropriate amount payable to the appropriate Person or (ii) by wire
transfer to the appropriate person in immediately available funds.
6. Escrow Agent.
(a) Protection of Escrow Agent. In consideration of this escrow by
the Escrow Agent, the parties hereto agree that:
(i) the Company, the Shareholder and the Investor may examine the
Escrow Funds at any time during regular business hours and upon prior
written notice at the office of the Escrow Agent and the Escrow Agent
shall periodically provide a written accounting of the Escrow Funds to
the Company, the Shareholder and the Investor in accordance with the
Escrow Agent's standard practices, but in no event less often than
monthly;
(ii) the Escrow Agent's duties and responsibilities shall be
limited to those expressly set forth in this Agreement, and the Escrow
Agent shall not be subject to, nor obliged to recognize, any other
agreement between, or direction or instruction of, any or all of the
parties hereto even though reference thereto may be made herein;
provided, however, that this Agreement may be amended at any time or
times in accordance with Section 8(g) below;
(iii) subject to Sections 3(f) and 7(e) hereof, no assignment of
the interest of any of the parties or their successors shall be binding
upon the Escrow Agent unless and until written evidence of such
assignment shall be filed with and accepted by the Escrow Agent;
(iv) the Escrow Agent shall exercise the same degree of care
toward the Escrow Funds as it exercises toward its own similar property
or similar property held in escrow for the account of others (whichever
degree of care is higher), and shall not be held to any higher standard
of care under this Agreement;
(v) the Escrow Agent makes no representation as to the validity,
value, genuineness or collectibility of any security or other document
or instrument held by or delivered to it;
(vi) the Escrow Agent shall not be called upon to advise any
party as to selling or retaining, or taking or refraining from taking
any action with respect to, any securities or other property deposited
hereunder;
(vii) provided that it is not grossly negligent in doing so, the
Escrow Agent shall be entitled to rely upon any order, judgment,
Direction Letter, certification, instruction, notice or other writing
delivered to it in compliance with the provisions of this Agreement
without being required to determine the authenticity or the correctness
of any fact stated therein or the propriety or validity or service
thereof; the Escrow Agent may act in reliance upon any instrument
comporting with the provisions of this Agreement or signature believed
by it to be genuine and may assume that any Person purporting to give
notice or receipt or advice or make any statement or execute any
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document in connection with the provisions hereof has been duly
authorized to do so; the Escrow Agent may act pursuant to the advice of
counsel chosen by it with respect to any matter relating to this
Agreement and shall not be liable for any action taken or omitted in
accordance with such advice;
(viii) notwithstanding anything herein to the contrary, the
Escrow Agent shall be under no duty to monitor or enforce compliance by
any Person with any term or provision of the Purchase Agreement;
(ix) if the Escrow Agent shall be uncertain as to its duties or
rights hereunder or shall receive instructions from any of the
undersigned with respect to any property held by it in escrow pursuant
to this Agreement which, in the opinion of the Escrow Agent, are in
conflict with any of the provisions of this Agreement, the Escrow Agent
shall be entitled to refrain from taking any action until it shall be
directed otherwise by a Direction Letter or Final Order;
(x) if the Escrow Agent becomes involved in litigation in
connection with this Agreement, it shall have the right to retain
counsel, and shall be reimbursed for all reasonable costs and expenses,
including its reasonable attorneys' fees and expenses, incurred in
connection therewith; subject to the provisions of Section 4(a)(iii)
hereof, such costs and expenses shall be paid by the Company, provided
that the Escrow Agent shall not be entitled to any reimbursement for
its fees and expenses incurred as a result of its gross negligence or
willful misconduct;
(xi) the Escrow Agent shall not be liable hereunder for, and,
subject to the provisions of Section 4(a)(iii) hereof, the Company
agrees to indemnify the Escrow Agent for and hold it harmless as to,
any loss, liability or expense, including attorneys' fees and expenses,
paid or incurred by the Escrow Agent in connection with the Escrow
Agent's duties under this Agreement, unless such loss, liability or
expense was paid or incurred in violation of Section 6(b)(ii) or as a
result of the Escrow Agent's gross negligence or willful misconduct;
(xii) the Escrow Agent may, in its sole and absolute discretion,
resign in a manner consistent with Section 6(c) hereof; and
(xiii) the Company, the Investor and the Shareholder may jointly
remove and replace the Escrow Agent at any time, subject to the
provisions of Section 6(c).
(b) Fees and Expenses. In consideration for performance of its duties
hereunder, the Escrow Agent shall be entitled to receive the following
compensation:
(i) an annual fee of $3,500 payable in advance by the Company (so
long as the Escrow Agent continues to serve as such under this
Agreement at the time of payment) at the Closing and on the first
anniversay of the Closing Date; and
(ii) reimbursement, payable semi-annually in arrears upon
submission to the Company of a reasonably detailed accounting therefor,
of all reasonable expenses, disbursements or advances made or incurred
by the Escrow Agent in implementing any
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of the provisions of this Agreement, including its attorneys' fees and
expenses, except any such expense, disbursement or advance as may arise
from the Escrow Agent's gross negligence or willful misconduct
(provided that the Company shall not be obligated to reimburse the
Escrow Agent for such expenses to the extent they exceed $1,000 in the
aggregate in any calendar year unless the Company shall have consented
previously in writing to such additional expenditures). Reasonable
expenses for extraordinary services will be determined based on time
and scope of duties.
(c) New Escrow Agent. If the Escrow Agent shall be removed as escrow
agent by the Company, the Investor and the Shareholder or shall resign or
otherwise cease to act as escrow agent, the Investor and the Shareholder shall
mutually agree upon a successor which successor shall be deemed to be the Escrow
Agent for all purposes of this Agreement. If a successor escrow agent has not
been appointed and accepted such appointment by the end of the 30-day period
following such removal, resignation or cessation, the Escrow Agent may apply to
any court in which it is permitted to commence litigation pursuant to Section
7(c) hereof for the appointment of a successor Escrow Agent and deposit the
Escrow Funds with the then chief or presiding judge of such court (and upon so
depositing such property and filing its complaint in interpleader, it shall be
relieved of all responsibility under the terms hereof as to the property so
deposited), and the costs, expenses and reasonable attorneys' fees which the
Escrow Agent incurs in connection with such a proceeding shall be borne by the
Company. The removal, resignation or other ceasing to act as escrow agent by the
Escrow Agent or any successor thereto shall have no effect on this Agreement or
any of the rights of the parties hereunder, all of which shall remain in full
force and effect.
(d) Survival of Obligations. The agreements contained in Section 6(a)
and, with respect to amounts accrued prior to termination, withdrawal or
removal, Section 6(b) shall survive termination of this Agreement and, with
respect to any Escrow Agent, the withdrawal or removal of such Escrow Agent.
(e) Taxes. Each party hereto to whom the Escrow Funds shall be
distributed in accordance with the terms hereof shall be responsible for the
payment of all income taxes on the income generated by the Escrow Funds in the
proportion by which the amount of the Escrow Funds distributed to such party
bears to $1,600,000.
7. Miscellaneous.
(a) Notices. All notices, demands or other communications to be given
or delivered under or by reason of the provisions of this Agreement will be in
writing and will be deemed to have been given when personally delivered
(including by Federal Express or other reputable courier service) or sent by
facsimile transmission (with confirmed receipt). Notices, demands and
communication to the Company, the Shareholder, the Investor or the Escrow Agent
will, unless another address is specified in writing, be sent to the respective
address indicated below:
9
<PAGE>
(i) if to the Escrow Agent to:
SunTrust Bank, Atlanta
Corporate Trust Division
25 Park Place, 24th Floor
Atlanta, Georgia 30303-2900
Attention: Rebecca Fischer
Facsimile: (404) 588-7335
Telephone: (404) 588-7262
(ii) if to the Company to:
Greenfield Online, Inc.
274 Riverside Avenue
Westport, Connecticut 06880
Attention: Chief Executive Officer
Facsimile: (203) 221-0791
Telephone: (203) 221-0411
Tax ID Number: 06-1440369
(iii) if to the Investor to:
Greenfield Holdings, LLC
c/o InSight Capital Partners III, L.P.
122 East 42nd Street
Suite 2300
New York, NY 10168
Attention: Jeffrey Horing
Facsimile: (212) 681-0972
Telephone: (212) 681-8181
Tax ID Number: 13-4059889
with a copy to:
O'Sullivan Graev & Karabell, LLP
30 Rockefeller Plaza
New York, NY 10112
Attention: Ilan S. Nissan, Esq.
Facsimile: (212) 408-2420
Telephone: (212) 408-2443;
10
<PAGE>
(iv) if to the Shareholder to:
Andrew Greenfield
c/o Greenfield Consulting, Inc.
274 Riverside Avenue
Westport, CT 06880
Facsimile: (203) 221-0791
Telephone: (203) 855-1282
Tax ID Number: ###-##-####
with a copy to:
Morrison & Foerster, LLP
1290 Avenue of the Americas
New York, New York 10104
Attention: Joseph W. Bartlett, Esq.
Facsimile: (212) 468-7900
Telephone: (212) 468-8240
(b) Governing Law. THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO
ANY CHOICE OF LAW OR CONFLICTING PROVISION OR RULE (WHETHER OF THE STATE OF NEW
YORK OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE LAWS OF ANY JURISDICTION
OTHER THAN THE STATE OF NEW YORK TO BE APPLIED. IT IS THE INTENTION OF THE
PARTIES HERETO THAT THE SITUS OF THE ESCROW ACCOUNT BE, AND IT SHALL BE
ADMINISTERED IN, THE STATE IN WHICH THE PRINCIPAL OFFICE OF THE ESCROW AGENT
FROM TIME TO TIME ACTING HEREUNDER IS LOCATED.
(c) Jurisdiction and Venue. The parties to this Agreement agree that
any and all actions arising under or in respect of this Agreement (including,
without limitation, the resolution of any Disputed Claims) shall be litigated
exclusively in any federal or state court of competent jurisdiction located in
the State of New York. By execution and delivery of this Agreement, each party
to this Agreement irrevocably submits to the personal and exclusive jurisdiction
of such courts for itself, himself or herself and in respect of its, his or her
property with respect to such action. Each party to this Agreement agrees that
venue would be proper in any of such courts, and hereby waives any objection
that any such court is an improper or inconvenient forum for the resolution of
any such action. The parties further agree that the mailing by certified or
registered mail, return receipt requested, to the addresses specified for notice
in this Agreement, of any process or summons required by any such court shall
constitute valid and lawful service of process against them, without the
necessity for service by any other means provided by statute or rule of court.
(d) Counterparts. This Agreement may be executed in separate
counterparts, each of which will be an original and all of which taken together
will constitute one and the same agreement.
11
<PAGE>
(e) Successors and Assigns. None of the parties hereto shall assign
or agree to assign or grant to any other party any rights under this Agreement,
including without limitation any rights in or to the Escrow Funds, without the
prior written consent of the other parties hereto, and this Agreement shall be
binding upon, and inure to the benefit of, the parties hereto and their
respective successors and permitted assigns.
(f) Specific Performance. The obligations of the parties hereto
(including the Escrow Agent) are unique in that time is of the essence, and any
delay in performance hereunder by any party will result in irreparable harm to
the other parties hereto. Accordingly, any party may seek specific performance
and/or injunctive relief before any court of competent jurisdiction, in order to
enforce this Agreement or to prevent violations of the provisions hereof, and no
party shall object to specific performance or injunctive relief as an
appropriate remedy. The Escrow Agent acknowledges that its obligations, as well
as the obligations of the other parties hereto are subject to the equitable
remedy of specific performance and/or injunctive relief.
(g) Amendment, Waiver, etc. This Agreement may only be amended,
modified, altered or revoked by a written instrument, signed by the parties
hereto; provided that no amendment or modification will be made to Section 6
hereof without the written consent of the Escrow Agent. The Investor and the
Shareholder agree to give the Escrow Agent advance written notice of any
amendment or modification to this Agreement and to provide the Escrow Agent
promptly with copies of any such amendment or modification.
(h) Captions. The paragraph captions used herein are for reference
purposes only, and shall not in any way affect the meaning or interpretation of
this Agreement.
(i) Effectiveness. This Agreement shall be effective upon the
consummation of the transactions contemplated by the Purchase Agreement.
* * * * *
12
<PAGE>
IN WITNESS WHEREOF, the parties hereunto have duly caused this
Escrow Agreement to be executed as of the day first above written.
SUNTRUST BANK, ATLANTA
By: /s/ Rebecca Fisher
---------------------------
Name: Rebecca Fisher
Title: Trust Officer
GREENFIELD ONLINE, INC.
By: /s/ Rudy Nadilo
---------------------------
Name: Rudy Nadilo
Title: President + CEO
GREENFIELD HOLDINGS, LLC
By: /s/ Jeffrey Horing
---------------------------
Name: Jeffrey Horing
Title: President
/s/ Andrew Greenfield
----------------------------
Andrew Greenfield
<PAGE>
LICENSE AGREEMENT
This Agreement made this 22nd day of December, 1999 by and between
Greenfield Consulting Group, Inc., a corporation organized and existing under
the laws of the State of Connecticut, whose principal place of business is
located at 274 Riverside Avenue, Westport, Connecticut 06880 ("Licensor"), and
Greenfield Online, Inc., a corporation organized and existing under the laws of
the State of Connecticut, whose principal place of business is located at 15
River Road, Wilton, Connecticut 06897 ("Licensee").
WHEREAS the Licensor is the owner of the service mark GREENFIELD ONLINE
("Mark") and the federal service mark application Serial No. 75-694,707 for the
Mark, and
WHEREAS it is the desire and the intention of the parties that the Licensee
be permitted to use the Mark throughout the world ("Territory").
NOW THEREFORE, in consideration of the above and other valuable
consideration, the parties hereby agree as follows:
1. License. The Licensor grants to the Licensee a perpetual, royalty free
right and license to use the Mark in the Territory in connection with full
service marketing research services specializing in utilizing a global computer
information network to conduct business ("Services").
2. Quality of Services. The Licensee shall use the Mark only with the
Services rendered by or for the Licensee with the quality of the Services
satisfactory to the Licensor.
3. Exclusivity. Licensor agrees that, effective during the term of this
license, Licensor will itself neither use nor grant any other licenses for the
use of the Mark. Notwithstanding any provision of this Agreement to the
contrary, Licensor reserves any and all rights in and related to the Mark that
are not explicitly licensed in this Agreement including but not limited to the
right to use, in connection with any and all services, any and all marks (except
for GREENFIELD ONLINE), whether or not currently in use or later adopted and/or
used, that consist of or comprise "Greenfield" as a mark or mark element.
4. Inspection. The Licensee will permit duly authorized representatives of
the Licensor to inspect the premises of the Licensee, at all reasonable times
and upon reasonable prior written notice for the purpose of ascertaining or
determining compliance with paragraphs 1 and 2 hereof.
5. Use of Mark. At Licensor's request, Licensee shall provide Licensor with
samples of all literature, brochures, signs, advertising and promotional
materials prepared by or for Licensee, and licensee shall obtain the approval of
Licensor with respect to all such brochures, signs, advertising and promotional
materials bearing the Mark, which approval shall not be unreasonably withheld.
When using the Mark under this Agreement, Licensee undertakes
<PAGE>
to comply substantially with all laws pertaining to service marks in force at
any time in the Territory.
6. Registration of Licensee. if the law permits, the Licensor may make
application to register the Licensee as a Permitted User or Registered User of
the Mark and if necessary, of if requested by the Licensor or its duly
authorized representative, the Licensee undertakes to join in such application
under the conditions of this Agreement and to execute any such documents and to
take such action as may be necessary or requested by the Licensor to implement
such application or retain, enforce or defend the Mark.
7. Extent of License. The License herein granted shall not be assignable or
transferable in any manner whatsoever without the prior written consent of the
Licensor except to an entity under common ownership and control of Licensee but
only if such entity agrees also to be bound by all of the terms and conditions
of this Agreement and the license granted in this Agreement.
8. Indemnity. The Licensor assumes no liability to the Licensee or to any
third parties with respect to the quality or performance characteristics of the
Services rendered by the Licensee under the Mark or to the use of the Mark in
the Territory, and the Licensee shall indemnify and hold harmless Licensor
against all losses, damages and expenses, including attorneys' fees, incurred as
a result of or related to claims of third persons against Licensor involving
Licensee's Services or use of the Mark.
9. Termination.
a. Except as otherwise provided below in Section 9(b), this Agreement
shall be perpetual.
b. If the Licensee makes any assignment of assets or business for the
benefit of creditors, or if a trustee or receiver is appointed to
administer or conduct its business or affairs, or if it is adjudged in any
legal proceeding to be either a voluntary or involuntary bankrupt, then all
the rights granted herein shall forthwith cease and terminate without prior
notice or legal action by the Licensor.
10. Ownership and Protection of the Mark.
The Licensee acknowledges the Licensor's exclusive worldwide right, title,
and interest in and to the Mark, and any state, federal, foreign or
international trade or service mark registration and/or application associated
therewith and will not at any time do or cause to be done any act or thing
contesting or in any way impairing or intending to impair any part of such
right, title, and interest. In connection with the use of the Mark, the Licensee
shall not in any manner represent that it has any ownership in the Mark or any
state, federal, foreign or international registrations and/or applications
thereof, and the licensee acknowledges that use of the Mark shall not create in
the Licensee's favor any right, title, or interest in or to the Mark. Upon
termination of this Agreement as provided in Section 9(b) above, the Licensee
will cease and desist from all use of the Mark and will deliver up to Licensor,
or its duly authorized
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<PAGE>
representatives, all material and papers upon which the Mark appears, and the
Licensee shall at no time thereafter adopt or use, without the Licensor's prior
written consent, any word or mark which is likely to be similar to or to be
confused with the Mark.
b. Licensor agrees to take reasonable steps directed towards
terminating any activities deemed by Licensor to infringe on the Mark.
Licensee shall notify Licensor in writing of any infringements or
imitations by others of the Mark on services similar to those covered by
this Agreement which may come to Licensee's attention. Notwithstanding such
notification by Licensee, Licensor shall have the sole right to determine
whether or not any action shall be taken on account of any such
infringements or imitations. Licensee agrees to assist Licensor to the
extent necessary to protect any of Licensor's rights to the Mark, and
Licensor, if it so desires, may commence or prosecute any claims or suits
in its own name or in the name of Licensee or join Licensee as a party
thereto. Licensee hereby further agrees to execute any and all instruments,
declarations, affidavits and other documents reasonably requested by
Licensor and to provide any and all testimony as reasonably requested by
Licensor in connection with the foregoing. In the event that any claim or
cause of action is brought pursuant to this Paragraph 10(b) as a result of
any mark or trade name that includes mark or trade name elements similar to
"on" or "line" or both or that is used for or otherwise pertains to
services closely related to the Services set forth in Paragraph 1 of this
Agreement, then Licensor and Licensee shall each be entitled, after first
subtracting any and all of Licensor's attorneys fees incurred and
Licensor's other costs related thereto, to one half of the recovery
therefrom including, but not limited to, any damages and/or attorneys fees
awarded and/or profits recovered. Licensee shall, at its own expense, pay
any and all attorneys fees and other costs incurred by Licensee as a result
of Licensee's representation, if at all, by or retainer of its own legal
counsel, experts and/or other persons or entities.
c. Notwithstanding the failure by Licensor to bring any claim or cause
of action with respect to any infringements or imitations of the Mark,
Licensee shall not institute any suit or take any action on account of any
such infringements or imitations without first obtaining the written
consent, which consent will not be unreasonably withheld, of the Licensor
so to do. In the event that Licensor does not assert any claim or cause of
action as provided in Paragraph l0(b) above but instead grants permission
for Licensee to assert claims or causes of action, Licensee shall pay any
and all attorneys fees and other costs in connection therewith or related
thereto. In the event of litigation pursuant to this Paragraph 10(c), both
Licensor and Licensee shall each be entitled, after first subtracting any
and all attorneys fees incurred and other costs of litigation, to one half
of the recovery therefrom including, but not limited to, any damages and/or
attorneys fees awarded and/or profits recovered.
d. Licensee agrees to assist Licensor in the procurement of any
protection including the registration of the Mark in any states, in the
United States and on any and all foreign and international trademark
registers. Licensee hereby agrees to execute any and all instruments,
declarations, affidavits and other documents reasonably requested by
Licensor and to provide any and all testimony as reasonably requested by
Licensor to accomplish, confirm or maintain the foregoing. Notwithstanding
the foregoing, Licensor shall be under no obligation to procure any
registrations in any state, country, foreign or international register.
Licensee agrees to pay all attorneys fees, filing fees and other costs
associated with procuring and maintaining
-3-
<PAGE>
any and all foreign and international registrations. Licensee acknowledges
and agrees that neither Licensee nor any other person or entity controlled
by, related to, successor to or in concert with Licensee shall file any
application or obtain any registration on the Mark or on any other mark
similar to the Mark.
11. Validity. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect, nor shall the invalidity or unenforceability of a portion of any
provision of this Agreement affect the validity or enforceability of the balance
of such provision. If any provision of this Agreement, or portion thereof is so
broad, in scope or duration, as to be unenforceable, such provision or portion
thereof shall be interpreted to be only so broad as is enforceable.
12. Binding Effect. This Agreement shall be binding upon and ensure to the
benefit of the successors and assigns of the parties-hereto; provided, however,
in accordance with Paragraph 6 hereof, the rights of the Licensee hereunder
shall not be assignable or transferable without the prior written consent of the
Licensor.
13. Entire Agreement. This License Agreement represents the entire
understanding between the parties with respect to the subject matter hereof and
supersedes all such other understandings and agreements, whether written or
oral, between the parties.
14. Notices. Any notices required or permitted to be given under this
Agreement shall be deemed sufficiently given if mailed by registered mail,
postage prepaid, addressed to the party to be notified at its address shown at
the beginning of this Agreement, or at such other address as may be furnished in
writing to the notifying party.
15. Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Connecticut.
IN WITNESS WHEREOF this Agreement has been executed as of the day and year
first above written.
LICENSOR LICENSEE
GREENFIELD CONSULTING GROUP, INC. GREENFIELD ONLINE, INC.
By /s/ By /s/
---------------------------- ----------------------
Andrew Greenfield, President Rudy Nadilo, President
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<PAGE>
SUPPLEMENT TO LICENSE AGREEMENT
This Supplement to License Agreement is dated January 27, 2000, by and between
Greenfield Consulting Group, LLC., (Licensor) and Greenfield Online, Inc.,
(Licensee).
WHEREAS: The parties entered into a License Agreement dated December 22, 1999,
wherein Licensor granted Licensee an exclusive license to use the Mark
GREENFIELD ONLINE;
WHEREAS: Licensee desires to use the Domain Name GREENFIELD.COM in connection
with its full service marketing research business throughout the world
("Territory");
WHEREAS: Licensor is the owner of the service mark GREENFIELD reg #2,286,932;
NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which is acknowledged, the parties agree that the License Agreement shall be
supplemented as follows:
1. License: Notwithstanding anything to the contrary contained in the License
Agreement, the Licensor grants to Licensee a royalty free right and license
to use the GREENFIELD mark solely as a part of the description of the
Uniform Resource Locator GREENFIELD.COM (the "URL" or "Domain Name") used
by Licensee in conjunction with the Services (including in any advertising
or other materials listing the URL or Domain Name). Such right and license
shall continue for as long as Licensee continues to offer the Services
under the name Greenfield Online, or such other name incorporating the
GREENFIELD mark as may be agreed to between the parties.
2. Exclusivity: Licensor agrees that during the term of this license, Licensor
will not grant any other license for use of the stand-alone GREENFIELD mark
in connection with a URL or Domain Name to any other non-affiliated entity
which provides services which are competitive with the Services offered by
Licensee, it being understood that nothing in this paragraph restricts in
any way the use, in any form, of the GREENFIELD mark by Licensor or any
person or entity that controls, is controlled by, or is under common
control with Licensor.
3. Link: In order to minimize the risk of confusion, Licensee agrees that, for
as long as it uses the URL or Domain Name, and for as long as Licensor
continues to conduct business using the GREENFIELD mark as all or a portion
of its tradename, Licensee shall maintain a link on the Greenfield.com home
page allowing visitors to link to a Web Site designated by Licensor. The
size, location, content and appearance of said link will be mutually agreed
upon by Licensor and Licensee from time to time in good faith.
1
<PAGE>
4. No Other Changes: Except as expressly provided in this Supplement, all
other terms of the License Agreement are Remain in full force and effect.
Unless otherwise defined, all capitalized terms in this Supplement have the
same meaning as in he License Agreement
LICENSOR
/s/
----------------------------------
Greenfield Consulting Group, LLC.
By Andrew Greenfield, President
LICENSEE
/s/
----------------------------------
Greenfield Online, Inc.
By Rudy Nadilo, President
2
<PAGE>
Greenfield Online, Inc. & Greenfield Consulting
Group, Inc. Agreement
This Agreement is effective as of the 20th day of April, 1999 (Effective Date)
by and between Greenfield Online, Inc. (GFO), having a place of business at:
Greenfield Online, Inc.
274 Riverside Avenue
Westport, CT 06880
And Greenfield Consulting Group, Inc. (GCG), having a place of business at:
Greenfield Consulting Group, Inc.
274 Riverside Avenue
Westport, CT 06880
NOW, THEREFORE, in consideration of the mutual covenants and conditions set
forth herein, it is agreed as follows:
DEFINITIONS
Unless the context requires otherwise, as used herein.
Services:
Services mean those items listed in "Agreement" to be services provided by GFO
for GCG and services provided by GCG to GFO.
Confidential Information:
Confidential Information means any proprietary information, technical data,
trade secrets or know-how, including, but not limited to, research, product
plans, products, services, customers, customer lists, markets, marketing,
finances or other business information disclosed by either party (GFO OR GCG)
either directly or indirectly in writing, or orally. Confidential Information
shall also include any information that should reasonably be understood by the
receiving party to be confidential.
Confidentiality: As per currently signed Confidential Non-disclosure Agreement
and attached hereto and made a part of this Agreement.
Non-Competition:
Neither party will utilize any aspect of this relationship to directly aid a
competitor of the other party, nor solicit the employees of the other party for
employment.
<PAGE>
AGREEMENT:
Terms of Agreement
o GFO and GCG agree to enter into a strategic partnership that will
enable GFO and GCG to develop and market joint products/services for
sales to new and existing clients of GFO and GCG.
o GFO agrees to give GCG rights to MindStorm and Focus Chat as well as
future technological developments related to these products. In
addition, GCG agrees to work with GFO to brand these products.
o GFO recruits and maintains a database for online marketing research
purposes, and solely owns the complete database. The database is
defined as the people/households and related information such as name,
address, demographic profile, etc. in the GFO database.
o This agreement shall be interpreted under the laws of the State of
Connecticut. Any dispute shall be settled by arbitration in Fairfield
County, Connecticut.
o This agreement cannot be amended except by written agreement of both
parties.
Responsibility of Parties
GFO and GCG will:
o Use each other as exclusive providers for any new projects and/or
services that require offline qualitative research, GCG's expertise,
and online research, Greenfield Online's expertise.
o Use each other as the exclusive recipient of referrals for offline
qualitative (GCG) and online quantitative (GFO), respectively, to new
and existing clients.
o Get each other's agreement and sign-off to any and all references to
each other's products, services and capabilities cited within sales
presentations and printed marketing materials, and, appropriately
reference all trademarks and copyrights of each other.
o Identify the other as a Strategic Partner in all press releases and
media interviews relating to this partnership or any other projects
that are jointly developed in the future.
New Product/New Service Addendum's
For each specific new product and new service identified, a jointly written and
agreed upon addendum to this contract will be developed specifying and including
each company's respective responsibilities, rights, service description and
compensation.
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<PAGE>
TERM OF CONTRACT AND TERMINATION
Term. The term of this agreement shall be three years beginning upon date
of the execution of the final agreement.
Notice of Termination. At the end the three year period, either party may notify
the other of termination. Termination shall be deemed given upon delivery if
personally delivered, or forty-eight (48) hours after deposited in the United
States mail, postage prepaid, registered or certified mail, return receipt
requested.
Effect of Termination. Upon such termination, all rights and duties of the
parties toward each other shall cease except: that each party shall be obliged
to pay, within sixty (60) days of the effective date of termination, all
collected amounts owing to the other party for unreimbursed expenses and unpaid
services.
Notices. All notices required or permitted under this Agreement shall be in
writing, reference this Agreement and be deemed given: (a) when delivered
personally to an authorized representative of the receiving party; (b) when
delivered by e-mail where the sending party requests confirmation of receipt of
e-mail; one (1) day after deposit with a commercial overnight carrier for
overnight delivery, with written verification of receipt.
All communications will be sent to the following addresses:
Rudy Nadilo
President & CEO
Greenfield Online, Inc.
274 Riverside Avenue
Westport, CT 06880
203-221-0411
[email protected]
Andy Greenfield
President & CEO
Greenfield Consulting Group, Inc.
274 Riverside Avenue
Westport, CT 06880
203-221-0411
[email protected]
Attorney Fees
Should any litigation or any other formal type of dispute resolution commence
between the parties hereto concerning this Agreement or the rights and duties in
relation thereto, the party presiding in such litigation or dispute resolution
shall be entitled, in addition to other relief as may be granted, to its
reasonable attorneys' fees and court costs for such litigation or dispute
resolution.
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<PAGE>
GCG and GFO agree to first attempt to settle any disputes through the use of
mediation and arbitration, and agree to submit to the rules of the American
Arbitration Association when and if arbitration is necessary.
IN WITNESS HEREOF, the parties have executed this Agreement as of the date set
forth under their names.
Greenfield Online, Inc. Greenfield Consulting Group, Inc.
By: Rudy Nadilo, Pres + CEO By: Andy Greenfield
Name: /s/ Name: /s/
--------------------------------------- ----------------------------
Date: 5/14/99 Date: May 14, 1999
--------------------------------------- ----------------------------
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<PAGE>
GREENFIELD ONLINE, INC./Digital Idea, Inc. Agreement
This Agreement is effective as of the first day of December 1999 by and between
Greenfield Online, Inc. (Greenfield Online) having a place of business at:
Greenfield Online, Inc.
15 River Road
Wilton, CT 06897
And Digital Idea, LLC. (Digital Idea), having a place of business at:
Digital Idea, LLC
274 Riverside Avenue
Westport, CT 06880
NOW, THEREFORE, in consideration of the mutual covenants and conditions set
forth therein, it is agreed as follows:
DEFINITIONS
Unless the contest requires otherwise, as used herein.
Services:
Services mean those items listed in "Agreement" to be services provided by
Greenfield Online to Digital Idea.
Confidential Information:
Confidential Information means any proprietary information, technical data,
trade secrets or know-how, including, but not limited to, research, product
plans, products, services, customers, customer lists, panel data, marketing,
finances or other business information disclosed by either party (Greenfield
Online or Digital Idea) either directly or indirectly in writing, or orally.
Confidential Information shall also include any information that should
reasonably be understood by the receiving party to be confidential.
Confidentiality:
As per separate Confidential Non-disclosure Agreement and attached hereto and
made a part of this Agreement.
Non-Competition:
During the term of this Agreement and for a period of one year after its
expiration or termination, neither party will solicit/employ the employees of
the other party.
Digital Idea will exclusively purchase online panel based qualitative and
quantitative market research data from Greenfield online under the terms
detailed below and will not purchase such online data from a competitor of
Greenfield Online unless Greenfield Online is unable to satisfy
<PAGE>
GREENFIELD ONLINE, INC./Digital Idea, Inc. Agreement
the requirements of the project. If Greenfield Online is offered a project
by Digital Idea which it rejects or is unable to perform, Digital Idea may offer
the project under the same terms and conditions to a Greenfield competitor. If
Digital Idea decides to alter or amend the terms of the previously rejected
project, it must offer it to Greenfield again before offering it to competitors.
Greenfield Online will retain the right to sell its panel data to competitors of
Digital Idea. Greenfield agrees that it will not, during the term of this
Agreement, enter into an "exclusive provide" agreement such as this Agreement
with an internet focused strategic consulting services company in the marketing
services category. A competitor of Digital Idea is defined as a company, entity,
or individual providing Internet focused strategic consulting services within
the marketing services category including but not exhaustive of the following:
Agency.com, Liminant, and Scient. A competitor of Greenfield Online is defined
as a company, entity, or individual providing Internet based research services
including but not exhaustive of the following: NPD, NFO Interactive, and Harris
Interactive.
Digital Idea
Service Description
Digital Idea provides marketing consulting services to guide companies'
decisions about building or optimizing an interactive product, presence or
strategy. The company's primary target market is marketing professionals and
senior business managers who have strategic issues and problems they need
guidance with related to the Internet or an interactive customer base.
The deliverable is strategic marketing advice/solutions, along with supporting
research when research is needed. Research tools/services may be utilized in any
combination deemed appropriate by Digital Idea, (subject to the restrictions
contained in this Agreement) in order to deliver an optimal, fact-based solution
to the client's issue or problem.
AGREEMENT:
Terms of Agreement
o Greenfield Online and Digital Idea agree to enter into a strategic alliance
that will enable Digital Idea to utilize Greenfield Online's internet-based
research services, for new and existing clients of Digital Idea. The
partnership will be based upon Greenfield Online's FieldSource model where
access to the Greenfield Online panel is provided to market research
companies at a reduced cost for the purposes of conducting their own
studies. Specifically, Digital Idea's online quantitative and qualitative
research needs will be satisfied through sample recruitment and online
survey implementation via the Greenfield Online panel.
o Digital Idea will hire and maintain its own in-house quantitative and
qualitative research expertise to oversee the design and implementation of
any/all online quantitative or qualitative research requirements.
o Any Digital Idea research executed utilizing Greenfield Online data will
explicitly reference Greenfield Online as the provider of the data
(reference language to be mutually agreed upon).
-2-
<PAGE>
GREENFIELD ONLINE, INC./Digital Idea, Inc. Agreement
o Any/all Digital Idea research executed via Greenfield Online will be the
sole property of Digital Idea, and cannot be used in any way without the
prior approval of Digital Idea.
o Greenfield Online recruits and maintains a database for online marketing
research purposes, and solely owns the complete database. Digital Idea
shall not gain any right, title or interest in or to the database by virtue
of the execution or performance of this Agreement. No respondent
identifiable information will be disclosed to Digital Idea.
o This agreement shall be interpreted under the laws of the State of
Connecticut. Any dispute shall be settled by arbitration in Fairfield
County, Connecticut.
o This agreement cannot be amended except by written agreement of both
parties.
Responsibility of Parties
o The flow of business and service from and between Digital Idea and
Greenfield Online will be handled as follows:
-Digital Idea will offer Greenfield Online the right of first refusal to
supply any/all of its needs for internet-based quantitative and qualitative
research services.
-Greenfield Online will have the choice as to whether they elect to provide
such services to Digital Idea.
-If Greenfield Online elects to provide such services to Digital Idea, then
Digital Idea shall utilize the Greenfield Online panel at a cost equivalent
to a 15% reduction off of standard FieldSource costs for the first $2
Million in project cost, with an additional 5% reduction for every $1
Million in project cost up to and beyond $4 Million as follows:
$0 to $2M--15% off standard FieldSource pricing
$2M to $3M--20% off
$3M to $4M--25% off
$4M plus--
-If Greenfield Online elects not to provide such services to Digital Idea,
then Digital Idea can choose an alternative online data supplier.
o Digital Idea and Greenfield Online will:
-Secure each other's agreement and sign-off to any and all references to
each other's products, services and capabilities cited within sales
presentations and printed marketing materials, and appropriately reference
all trademarks and copyrights of each other.
-Identify the other as a Strategic Partner in all press releases and media
interviews relating to this alliance or any projects that may be jointly
developed in the future.
-3-
<PAGE>
GREENFIELD ONLINE, INC./Digital Idea, Inc. Agreement
TERM OF CONTRACT AND TERMINATION
Term. The term of this agreement shall be two years beginning upon date of the
execution of the final agreement. This Agreement shall renew for successive two
year terms unless either party gives notice to the other of this intention not
to renew within 90 days of the expiration of the original term or any renewal
term.
Notice of Termination. Either party may terminate this Agreement during the
first two year term as a result of the other party's breach of the terms of this
Agreement if the breaching party shall have failed to cure such breach within 15
days of receipt of a written notice from the non-breaching party specifying the
nature of the breach. Either party may terminate this Agreement on 15 days
written notice if all or substantially all of the assets or a controlling
majority of the stock of the other party is sold to a competitor of the
canceling party. At the end of the initial two-year period either party may
notify the other of termination. Any such notice shall be deemed given upon
delivery if personally delivered, or forty-eight (48) hours after deposited i
the United States mail, postage prepaid, registered or certified mail, return
receipt requested.
Effect of Termination. Upon such termination, all rights and duties of the
parties toward each other shall cease except that each party shall be obliged to
pay, within sixty (60) days of the effective date of termination, all collected
amounts owing to the other party for unreimbursed expenses and unpaid services.
Notices. All notices required or permitted under this Agreement shall be in
writing, reference this Agreement and be deemed given: (a) when delivered
personally to an authorized representative of the receiving party; (b) when
delivered by e-mail where the sending party requests confirmation of receipt of
e-mail; one (1) day after deposit with a commercial overnight carrier for
overnight delivery, with written verification of receipt.
All communications will be sent to the following addresses:
Rudy Nadilo
President & CEO
Greenfield Online, Inc.
15 River Road
Wilton, CT 06897
203-834-8585
[email protected]
With a Copy to
Jonathan A. Flatow, Esq.
Wake, See, Dimes & Bryniczka
27 Imperial Ave.
Westport, CT 06880
[email protected]
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<PAGE>
GREENFIELD ONLINE, INC./Digital Idea, Inc. Agreement
Peter Mackey
President
Digital Idea, LLC
274 Riverside Avenue
Westport CT 06880
203-429-0200
[email protected]
Attorney Fees
Should any litigation or any other formal type of dispute resolution commence
between the parties hereto concerning this Agreement or the rights and duties in
relation thereto, the party presiding in such litigation or dispute resolution
shall be entitled. In addition to other relief as may be granted, to its
reasonable attorneys' fees and court costs for such litigation or dispute
resolution shall be entitled, in addition to other relief as may be granted, to
its reasonable attorneys' fees and court costs for such litigation or dispute
resolution.
Digital Idea and Greenfield Online agree to first attempt to settle any disputes
through the use of mediation and arbitration, and agree to submit to the rules
of the American Arbitration Association when and if arbitration is necessary.
IN WITNESS HEREOF, the parties have executed this Agreement as of the date set
forth under their names.
Greenfield Online, Inc. Digital Idea, Inc.
BY: /s/ BY: /s/
------------------------------ ---------------------------
Name: Leigh-Brindeland Bell Name: Peter Mackey
------------------------------ ---------------------------
Date: 12/2/99 Date: 11-29-99
------------------------------ ---------------------------
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<PAGE>
SHAREHOLDERS' AGREEMENT
AMONG
GREENFIELD ONLINE, INC.
AND
THE SHAREHOLDERS
(AS DEFINED HEREIN)
May 17, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
Section 1. Restrictions on Transfer of Shareholder Shares; No Preemptive Rights................................1
Section 2. Repurchase of Retained Shareholder Shares from Management Retained Shareholders.....................2
Section 3. Permitted Transfers of Retained Shareholder Shares..................................................3
Section 4. Closing of Transfers................................................................................4
Section 5. Additional Restrictions on Transfer of Shareholder Shares...........................................4
Section 6. Sale of the Company.................................................................................5
Section 7. Election of Directors; Voting.......................................................................6
Section 8. Board Approval; Power of Attorney...................................................................6
Section 9. Regulatory Matters..................................................................................7
Section 10. Joinders; Additional Shares of Stock................................................................8
Section 11. No Conflicting Agreements...........................................................................8
Section 12. Termination.........................................................................................9
Section 13. Definitions.........................................................................................9
Section 14. General Provisions..................................................................................14
</TABLE>
ii
<PAGE>
SCHEDULES AND EXHIBITS
Exhibit A - Form of Retained Shareholder Joinder
Exhibit B - Form of Investor Joinder
Exhibit C - Small Business Side Letter
Schedule I - Investor
Schedule II - Retained Shareholder
iii
<PAGE>
SHAREHOLDERS'
AGREEMENT dated as of May
17, 1999, among GREENFIELD
ONLINE, INC., a Connecticut
corporation (the
"Company"), the Investor
listed on Schedule I hereto
(together with each Person
who becomes an Investor
under this Agreement, the
"Investors"), and the
Retained Shareholder of the
Company listed on Schedule
II hereto (together with
each Person who becomes a
Retained Shareholder under
this Agreement, the
"Retained Shareholders").
The Investors and the Retained Shareholders are collectively referred
to herein as the "Shareholders" and individually as a "Shareholder". Capitalized
terms used herein are defined in Section 13.
The Company and the Shareholders desire to enter into this Agreement
for the purposes, among others, of (i) assuring continuity in the management and
ownership of the capital stock of the Company and (ii) limiting the manner and
terms by which the Retained Shareholder Shares may be transferred.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereby agree as follows:
Section 1. Restrictions on Transfer of Shareholder Shares; No
Preemptive Rights.
(a) No Retained Shareholder shall sell, transfer, assign or otherwise
dispose of (whether with or without consideration and whether voluntarily or
involuntarily or by operation of law or otherwise) (a "Transfer") any interest
in any Retained Shareholder Shares, except pursuant to (i) Sections 1(b) and (c)
hereof, (ii) Sections 2 or 3 hereof, (iii) a Public Sale or (iv) a Sale of the
Company effected in accordance with Section 6 hereof (the Transfers referred in
clauses (ii), (iii) and (iv) being referenced herein as "Exempt Transfers");
provided, however that a Management Retained Shareholder may not Transfer any
interest in any Retained Shareholder Shares until the fourth anniversary of the
date hereof except pursuant to the provisions of Section 3. Notwithstanding
anything in this Agreement to the contrary, no Retained Shareholder shall
Transfer any Shareholder Shares to any Competitor. As used herein, the term
"Competitor" means (i) any Person who is engaged in the Subject Business (as
such term is defined in the Purchase Agreement) and (ii) any Affiliate of a
Person identified in clause (i) above. Pursuant to Section 33-683(b)(2) of the
Connecticut Business Corporation Act (the "CBCA"), the Shareholders hereby waive
any and all preemptive rights to which they may otherwise be entitled pursuant
to Section 33-683 of the CBCA.
(b) Procedure for Transfer of Retained Shareholder Shares by Retained
Shareholders. Prior to making any Transfer other than pursuant to an Exempt
Transfer, a Retained Shareholder shall give written notice (the "Sale Notice")
to the Company and the Investors. The Sale Notice shall disclose in reasonable
detail the identity of the prospective transferee(s), the number of Retained
Shareholder Shares to be Transferred, the terms and
<PAGE>
conditions of the proposed Transfer and shall confirm that the offer to purchase
such shares is irrevocable for at least 40 days. The Transferring Shareholder
shall not consummate such Transfer until 40 days after the Sale Notice has been
given to the Company and the Investors, unless the parties to the Transfer have
been finally determined pursuant to this Section 1 prior to the expiration of
such 40-day period (the date of the first to occur of such events is referred to
herein as the "Sale Authorization Date").
(c) First Refusal Rights with Respect to Retained Shareholder Shares.
The Company may elect to purchase all, or any portion, of the Retained
Shareholder Shares to be Transferred upon the same terms and conditions as those
set forth in the Sale Notice by delivering a written notice of such election to
the Transferring Shareholder and the Investors within 20 days after the Sale
Notice has been given to the Company and the Investors. If the Company has not
elected to purchase all of the Retained Shareholder Shares to be Transferred,
the Company shall provide notice of such election to the Investors and the
Investors may elect to purchase all (but not less than all) of their respective
Proportionate Percentage of the Retained Shareholder Shares not purchased by the
Company upon the same terms and conditions as those set forth in the Sale Notice
by giving written notice of such election to the Transferring Shareholder within
30 days after the Sale Notice has been given. In any written notice of such
acceptance, any Investor may offer to purchase any of such Retained Shareholder
Shares not purchased by the other Investors, up to such Investor's ratable share
of such unpurchased Retained Shareholder Shares actually purchased pursuant to
this Section 1(c), in which case any such Retained Shareholder Shares not
accepted by the Investors shall be deemed to have been offered to and accepted
by the Investors that exercised his, her or its option under this sentence on
the above-described terms and conditions. The Transferring Shareholder may
Transfer the Retained Shareholder Shares not elected to be purchased by the
Company and the Investors, at a price and on terms no more favorable to the
transferee(s) thereof than specified in the Sale Notice during the 90-day period
immediately following the Sale Authorization Date. Any Retained Shareholder
Shares not Transferred within such 90-day period shall be subject to the
provisions of Sections 1(b) and (c) upon subsequent Transfer.
Section 2. Repurchase of Retained Shareholder Shares from
Management Retained Shareholders.
(a) In the event of a Termination of Employment of any Management
Retained Shareholder (a "Terminated Shareholder"), the Company or its designee
shall have the right (but not the obligation) to repurchase from such Terminated
Shareholder (and each member of the Group of such Terminated Shareholder) (x)
all or any part of the Retained Shareholder Shares owned by such Terminated
Shareholder or any member of such Terminated Shareholder's Group which
constitute Non-Qualifying Retained Shareholder Shares, (y) if such Termination
of Employment shall be a Termination for Cause, all or part of the Retained
Shareholder Shares owned by such Terminated Shareholder or any member of such
Terminated Shareholder's Group which constitute Qualifying Shareholder Shares
and (z) if such Termination of Employment shall be a Termination for Cause all
or part of any vested Shareholder Shares owned by such Terminated Shareholder or
any member of such Terminated Shareholder's Group. The parties hereto
acknowledge that, as of the date hereof, Andrew Greenfield is not a Management
Retained Shareholder.
-2-
<PAGE>
(b) The repurchase right of the Company or its designee under this
Section 2 may be exercised by written notice (a "Repurchase Notice"), specifying
the number of Retained Shareholder Shares to be repurchased, and given to the
Terminated Shareholder within 90 days of the Termination Date (or, if the
Company shall not have assigned its rights under this Section 2 and shall be
legally prevented (whether by contract, statute or otherwise) from making such
repurchase during the foregoing 90-day period, then such Repurchase Notice may
be delivered by the Company within 45 days after the date on which it shall be
legally permitted to make such repurchase), but in no event shall the Company be
permitted to make such election after the third anniversary of the Termination
Date. Any such Retained Shareholder Shares which are not purchased by the
Company or its designee during such period may be purchased by the Investors,
such purchase right to be exercisable upon 10 days written notice (a "Purchase
Notice") to the Terminated Shareholder after the date upon which the number of
Shareholder Shares to be repurchased by the Company, if any, shall have been
fully determined. Each such Investor may purchase up to his, her or its Investor
Percentage of such Retained Shareholder Shares. In any such Purchase Notice, an
Investor may offer to accept for purchase any of such Retained Shareholder
Shares not accepted by other Investors up to such Investor's ratable share of
such unaccepted Retained Shareholder Shares, determined by reference to the
actual number of Shareholder Shares owned by each Investor actually purchasing
Retained Shareholder Shares pursuant to this Section 2(b). Upon the delivery of
a Repurchase Notice or Purchase Notice to the Terminated Shareholder, the
Terminated Shareholder shall be obligated to sell or cause to be sold to the
Company, its designee or the Investors, as the case may be, the Retained
Shareholder Shares specified in such Repurchase Notice or Purchase Notice, as
the case may be.
(c) The price per Retained Shareholder Share to be paid under this
Section 2 shall be determined as follows:
(i) in the case of a repurchase of either (A) any
Non-Qualifying Retained Shareholder Shares or (B) any (1) Qualifying
Retained Shareholder Shares or (2) vested Shareholder Shares issued
pursuant to the exercise of an option or warrant, or options or
warrants for such vested Shareholder Shares, in each case in this
clause (B) following a Termination for Cause, the repurchase price to
be paid for each Retained Shareholder Share shall be the original cost
(subject to pro rata adjustment in the event of any stock split, stock
dividend or other subdivision of the Common Shares or reverse stock
split or other combination of the Common Shares or other similar pro
rata recapitalization event affecting the Common Shares) paid for each
such Retained Shareholder Share, provided that the original cost of an
option or warrant to purchase Stock shall be $1.00 in the aggregate for
all options or warrants which comprise a given option or warrant grant.
(d) The purchase price to be paid for any repurchase of Retained
Shareholder Shares pursuant to this Section 2 shall be paid in cash.
Section 3. Permitted Transfers of Retained Shareholder Shares.
The restrictions contained in Section 1(a) hereof shall not apply with
respect to any Transfer of Retained Shareholder Shares by (i) in the case of any
Retained Shareholder who is an individual, pursuant to a gift, will or the
applicable laws of descent and distribution, among such individual's Family
Group or to a trust in which such Retained Shareholder is the settlor and
-3-
<PAGE>
such Retained Shareholder or any member of his or her Family Group is or are the
beneficiaries thereof, (ii) in the case of any Retained Shareholder who is not
an individual, to any member of the Group to which such Retained Shareholder
belongs, (iii) repurchase or acquisition of any Retained Shareholder Shares by
an Investor (in which case, such Retained Shareholder Shares shall be deemed to
be Investor Shares) or by the Company pursuant to approval by the Board, or (iv)
any Retained Shareholder to a financial institution in respect of the pledge of
his or her Retained Shareholder Shares to any such financial institution
providing financing to such Retained Shareholder; provided, however, that the
restrictions contained herein shall continue to be applicable to the Retained
Shareholder Shares after any such Transfer pursuant to clauses (i), (ii), (iii)
and (iv) above and; provided further, however, that the transferees of such
Retained Shareholder Shares shall have executed and delivered to the Company a
Retained Shareholder Joinder pursuant to Section 10 hereof.
Section 4. Closing of Transfers.
Transfers of Retained Shareholder Shares by any Shareholder to the
Company or any other Person under the terms of Section 2 or 3 hereof shall be
made at the offices of the Company on a mutually satisfactory Business Day
within 10 days after the expiration of the last applicable period described in
the relevant Section. Delivery of certificates or other instruments evidencing
such Shareholder Shares or shares of Stock, as the case may be, duly endorsed
for transfer and free and clear of all encumbrances, shall be made on such date
against payment of the purchase price therefor.
Section 5. Additional Restrictions on Transfer of Shareholder
Shares.
(a) Legend. The certificates representing the Shareholder Shares shall
bear the following legend:
"THE SALE, TRANSFER, ASSIGNMENT, PLEDGE, OR
ENCUMBRANCE OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE AND THE RIGHTS OF THE HOLDER OF SUCH
SECURITIES IN RESPECT OF THE ELECTION OF DIRECTORS ARE
SUBJECT TO THE TERMS AND CONDITIONS OF A
SHAREHOLDERS' AGREEMENT DATED AS OF MAY 17, 1999,
AMONG GREENFIELD ONLINE, INC. AND THE HOLDERS OF
OUTSTANDING CAPITAL STOCK OF SUCH CORPORATION. COPIES OF SUCH
AGREEMENT MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY
THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE SECRETARY OF
GREENFIELD ONLINE, INC."
(b) Opinion of Counsel. Unless waived by the Company, no holder of
Shareholder Shares may Transfer any Shareholder Shares (except pursuant to an
effective registration statement under the Securities Act) without first
delivering to the Company an opinion of counsel (reasonably acceptable in form
and substance to the Company) that neither registration nor qualification under
the Securities Act and applicable state securities laws is required in
connection with such Transfer.
-4-
<PAGE>
(c) Transfers in Violation of Agreement. Any Transfer or attempted
Transfer of any Shareholder Shares in violation of any provision of this
Agreement shall be void ab initio, and the Company shall not record such
Transfer on its books or treat any purported transferee of such Shareholder
Shares as the owner of such Shareholder Shares for any purpose.
Section 6. Sale of the Company.
(a) Approved Sale. If the Board or if the holders of a majority of the
Investor Shares then outstanding approve a Sale of the Company (an "Approved
Sale"), the holders of Retained Shareholder Shares shall consent to and raise no
objections against the Approved Sale, and if the Approved Sale is structured as
(i) a merger or consolidation of the Company or a sale of all or substantially
all of the Company's assets, each holder of Retained Shareholder Shares hereby
waives any dissenters rights, appraisal rights or similar rights in connection
with such merger, consolidation or asset sale, or (ii) a sale of the Company's
Stock, the holders of Retained Shareholder Shares hereby agree to sell their
Retained Shareholder Shares on the terms and conditions approved by the Board or
the holders of a majority of the then outstanding Investor Shares, as the case
may be. The holders of Retained Shareholder Shares shall take all necessary and
desirable actions in connection with the consummation of the Approved Sale,
including, but not limited to, the execution of such agreements and such
instruments and other actions reasonably necessary to provide the
representations, warranties, indemnities, covenants, conditions, non-compete
agreements, escrow agreements and other provisions and agreements relating to
such Approved Sale. In the event that any holder of Retained Shareholder Shares
fails for any reason to take any of the foregoing actions, he, she or it hereby
grants an irrevocable power of attorney to any Shareholder, Board member or the
Company to take all actions and execute and deliver all documents deemed by such
Persons necessary to effectuate the terms of this Section 6. Any Retained
Shareholder who shall Transfer Retained Shareholder Shares in connection with an
Approved Sale shall receive the same type of consideration in respect of his
Retained Shareholder Shares and upon the same terms and conditions as all other
Shareholders participating in such Approved Sale.
(b) Purchaser Representative. If the Company or the holders of the
Company's securities enter into any negotiation or transaction for which
Regulation D (or any similar rule or regulation thereunder) promulgated by the
Securities and Exchange Commission may be available with respect to such
negotiation or transaction (including a merger, consolidation or other
reorganization), each holder of Retained Shareholder Shares shall, at the
request of the Company, appoint a purchaser representative (as such term is
defined in Rule 501 promulgated under Regulation D) reasonably acceptable to the
Company. If any holder of Retained Shareholder Shares appoints a purchaser
representative designated by the Company, the Company shall pay the fees of such
purchaser representative, but if any holder of Retained Shareholder Shares
declines to appoint the purchaser representative designated by the Company such
holder shall appoint another purchaser representative (reasonably acceptable to
the Company), and such holder shall be responsible for the fees of the purchaser
representative so appointed.
-5-
<PAGE>
Section 7. Election of Directors; Voting.
(a) The number of directors constituting the Board of the Company, as
fixed from time to time by the Board in accordance with the Company's by-laws,
shall initially be five (5). Notwithstanding any provision in the Company's
by-laws, the number of directors constituting the Board shall not be changed
without the consent of a majority of the Investor Shares. At each annual meeting
of the holders of any class of Stock, and at each special meeting of the holders
of any class of Stock called for the purpose of electing directors of the
Company, and at any time at which holders of any class of Stock shall have the
right to, or shall, vote for or consent in writing to the election of directors
of the Company, then, and in each such event, the Shareholders shall vote all of
the Shareholder Shares owned by them or their Affiliates, and their respective
transferees shall so vote for, or consent in writing with respect to such shares
in favor of, the election of a Board of the Company constituted as follows:
(i) two (2) directors who shall be designated and approved by
the Management Retained Shareholders holding at least a majority of the
then outstanding Retained Shareholder Shares held by Management
Retained Shareholders; and
(ii) three (3) directors who shall be designated and approved
by the holders of at least a majority of the then outstanding Investor
Shares.
The parties hereby designate and approve the following individuals to
serve as the initial members of the Board effective as of the day after the
Closing Date (i) the Management Retained Shareholders hereby designate and
approve Joel Mesznik and Rudy Nadilo as directors pursuant to Section 8(a)(i)
hereof, and (ii) the Investor hereby designates and approves Jeffrey Horing,
Peter Sobiloff and Burt Manning as directors pursuant to Section 8(a)(ii)
hereof. The directors designated under Section 8(a)(i) shall designate one of
such directors to serve on the Board's compensation committee. The directors
designated under Section 8(a)(ii) shall designate one of such directors to serve
on the Board's compensation committee and on each other committee of the Board.
(b) The holders of Shareholder Shares shall vote their shares (i) to
remove any director whose removal is required by the party or parties with the
power to designate such director and (ii) to fill any vacancy created by the
removal, resignation or death of a director, in each case for the election of a
new director designated and approved, if approval is required, in accordance
with the provisions of this Section 7. Vacancies of the Board shall be filled
within 30 days of the date such vacancy is created or immediately before the
first action to be taken by the Board after the date such vacancy is created.
Section 8. Board Approval; Power of Attorney.
(a) Consistent with the requirements of applicable law, the Board
shall act by a majority as constituted in a supervisory role with respect to the
Company and shall be responsible for strategic decisions relating to the
Company.
-6-
<PAGE>
(b) The following transactions by the Company or any Subsidiary
thereof shall require the specific approval of a majority of the Board
(notwithstanding any law requiring the specific approval of a percentage higher
than a majority of the Board) as constituted:
(i) the Company's annual budget and capital expenditures
which shall exceed 15% of the annual budget theretofore approved by the
Board;
(ii) the hiring or dismissal of any employee, agent,
representative or consultant who or which is or will be paid an
aggregate annual compensation or consideration in excess of $125,000;
(iii) the direct or indirect investment in, purchase or other
acquisition of, in one or a series of transactions, any business,
assets, securities or other property of another Person, other than in
the ordinary course of business;
(iv) any transaction (other than in the ordinary course of
business, consistent with past practices) involving aggregate
consideration to or from the Company or any Subsidiary in excess of
$250,000;
(v) any agreement or transaction between the Company and any
Affiliate of the Company; provided, however, that the foregoing shall
not restrict (A) transactions between the Company and any of its
Subsidiaries, if any, or among any of such Subsidiaries, if any, (B)
payments to employees of the Company in the ordinary course of business
of the Company or any of its Subsidiaries, (C) transactions pursuant to
any stock option or other incentive-based plan for employees of the
Company that is approved by the Board, and (D) transactions
contemplated by this Agreement;
(vi) any amendment or modification of the Company's articles
of incorporation or by-laws; and
(vii) an Approved Sale, or any Public Offering of the Stock of
the Company.
Section 9. Regulatory Matters.
(a) Each Shareholder agrees to cooperate with the Company in all
reasonable respects in complying with the terms and provisions of the letter
agreement dated the date hereof among the Company, the Investor and certain
other parties, a copy of which is attached hereto as Exhibit C, regarding small
business matters (the "Small Business Sideletter"), including, without
limitation, voting to approve amending the Company's articles or certificate of
incorporation, the Company's bylaws or this Agreement in a manner reasonably
acceptable to the Shareholders or any Regulated Holder (as defined in the Small
Business Sideletter) entitled to make such request pursuant to the Small
Business Sideletter in order to remedy a Regulatory Problem (as defined in the
Small Business Sideletter). Anything contained in this Section 9 to the contrary
notwithstanding, no Shareholder shall be required under this Section 9 to take
any action that would adversely affect in any material respect such
Shareholder's rights under this Agreement or as a shareholder of the Company.
-7-
<PAGE>
(b) The Company and each Shareholder agree not to amend or waive the
voting or other provisions of the Company's articles or certificate of
incorporation, the Company's bylaws or this Agreement if such amendment or
waiver would cause any Regulated Holder to have a Regulatory Problem (as defined
in the Small Business Sideletter). The Investor agrees to notify the Company as
to whether or not it or any of its Affiliates would have a Regulatory Problem
promptly after the Investor has notice of such amendment or waiver.
Section 10. Joinders; Additional Shares of Stock.
(a) Any transferee of Stock of the Company from an Investor (other
than the Company, a Retained Shareholder or a transferee in a Public Sale)
shall, as a condition to such Transfer, become an Investor for purposes of this
Agreement, and if such transferee is not already bound hereby as an Investor,
he, she or it shall execute and deliver to the Company an Investor Joinder. Any
transferee of Stock of the Company from a Retained Shareholder (other than the
Company, an Investor or a transferee in a Public Sale) shall, as a condition to
such Transfer, become a Retained Shareholder for purposes of this Agreement, and
if such transferee is not already bound hereby as a Retained Shareholder, he,
she or it shall execute and deliver to the Company a Retained Shareholder
Joinder. Any transferee of Stock from Andrew Greenfield shall, as a further
condition to such Transfer, agree to bound by the terms and conditions of
Section 1.8 (if applicable) of the Purchase Agreement with respect to such
Stock.
(b) In the event additional shares of Stock are issued by the Company
to a Shareholder at any time during the term of this Agreement, either directly
or upon the exercise or exchange of securities of the Company exercisable for or
exchangeable into shares of Stock, such additional shares of Stock shall, as a
condition to such issuance, become subject to the terms and provisions of this
Agreement.
(c) In the event additional shares of Stock are issued by the Company
to any Person that is (i) an employee, manager, officer, director or consultant
of the Company or (ii) a third party investor which is not an Affiliate of the
Company, such Person, as a condition to receiving such shares of Stock shall
agree to execute and deliver to the Company a joinder in substantially the form
of Exhibit A (in the case of clause (i)) or Exhibit B (in the case of clause
(ii)), and to be deemed a Shareholder hereunder and agree that such additional
shares will be subject to the terms and provisions of this Agreement provided
that if such Person was a Retained Shareholder prior thereto, such Person shall
be deemed to have continued such status and if such Person was an Investor prior
thereto, such Person shall be deemed to have continued such status.
Section 11. No Conflicting Agreements.
No Shareholder shall enter into any stockholder agreements or
arrangements of any kind with any Person with respect to any Stock on terms
inconsistent with the provisions of this Agreement (whether or not such
agreements or arrangements are with other Shareholders or with Persons that are
not parties to this Agreement), including, but not limited to, agreements or
arrangements with respect to the acquisition or disposition of Stock in a manner
that is inconsistent with this Agreement.
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Section 12. Termination.
(a) The provisions of this Agreement specified below shall terminate
and, except as otherwise expressly provided herein, shall be of no further force
or effect and shall not be binding upon any party hereto, at the times specified
below:
(i) Sections 1, 2 (with respect to all Qualifying Retained
Shareholder Shares) 5, 6, 7, 8 and 10 hereof shall terminate upon the
first to occur of a Sale of the Company or a Qualified Public Offering;
(ii) Section 2 hereof shall terminate as to (x) those
Non-Qualifying Retained Shareholder Shares that are registered in a
Qualified Public Offering or sold pursuant to a Sale of the Company or
(y) those Retained Shareholder Shares Transferred in compliance with
this Agreement to any Person other than to a Retained Shareholder or
other than to a member of any Retained Shareholder's Group;
(iii) all provisions of this Agreement shall terminate upon
the first to occur of (A) the dissolution, liquidation or winding-up of
the Company and (B) the approval of such termination by (1) the Company
and (2) the holders of a majority of the then outstanding Investor
Shares.
(b) As to any particular Shareholder, this Agreement shall no longer be
binding or of further force or effect as to such Shareholder, except as noted
below or otherwise expressly provided herein, as of the date such Shareholder
has Transferred all such Shareholder's Shareholder Shares and the transferee(s)
of such Shareholder Shares, if required by this Agreement, shall have become a
party hereto; provided, however, that no such termination shall be effective if
such Shareholder or such transferee(s) is/are in breach of this Agreement.
Section 13. Definitions.
"Affiliate" means, with respect to any Person, any of (a) a director,
officer, partner or member of such Person, (b) a spouse, parent, sibling or
descendant of such Person or a spouse, parent, sibling or descendant of a
director, officer, or partner of such Person and (c) any other Person that,
directly or indirectly, through one or more intermediaries, controls, or is
controlled by, or is under common control with, another Person. The term
"control" includes, without limitation, the possession, directly or indirectly,
of the power to direct the management and policies of a Person, whether through
the ownership of voting securities, by contract or otherwise.
"Approved Sale" shall have the meaning set forth in Section 6.
"Board" means the board of directors of the Company.
"Business Day" means any day that is not a Saturday, Sunday or a day
on which banking institutions in New York, New York are not required to be open.
"Class A Common," means the Class A Common Stock, $0.01 par value per
share, of the Company.
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"Class B Common" means the Class B Common Stock, $0.01 par value per
share, of the Company.
"Closing Date" shall have the meaning ascribed thereto in the Purchase
Agreement.
"Common Shares" means the Class A Common and/or the Class B Common, as
applicable.
"Company" shall have the meaning set forth in the Caption.
"Disability" shall have the meaning, in the case of any Retained
Shareholder, set forth in the Employment Agreement, if any, of such Retained
Shareholder, or in the absence of such an Employment Agreement, shall mean the
physical or mental inability of the Retained Shareholder (i) to substantially
perform all of his or her duties for a period of 90 consecutive days or longer
or for any 90 days in any period of 365 consecutive days, or (ii) that, in the
opinion of a physician selected by the Board (excluding the Retained Shareholder
if the Retained Shareholder is a member of the Board at such time), is likely to
prevent the Retained Shareholder from substantially performing all of his or her
duties for more than 90 days in any period of 365 consecutive days.
"Employment Agreement" shall mean the employment agreement between the
Company or any of its Subsidiaries and the appropriate Retained Shareholder.
"Exempt Transfers" shall have the meaning set forth in Section 1.
"Family Group" means an individual's spouse and descendants (whether
natural or adopted) and any trust solely for the benefit of such individual
and/or the individual's spouse or descendants.
"Group" means:
(i) in the case of any Shareholder which is a partnership or a limited
liability company, (a) such partnership or limited liability company and any of
its limited or general partners or members, (b) any corporation or other
business organization to which such partnership or limited liability company
shall sell all or substantially all of its assets or with which it shall be
merged and (c) any Affiliate of such partnership or limited liability company;
(ii) in the case of any Shareholder which is a corporation, (a) such
corporation, (b) any corporation or other business organization to which such
corporation shall sell or transfer all or substantially all of its assets or
with which it shall be merged and (c) any Affiliate or shareholder of such
corporation; and
(iii) in the case of any Shareholder who is an individual, such
Shareholder's Family Group.
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<PAGE>
"Independent Third Party" means any Person who, immediately prior to
the contemplated transaction, individually and with its Group does not own in
excess of 5% of the Common Shares on a fully diluted basis.
"Investor Joinder" means a joinder agreement, substantially in the
form of Exhibit B hereto, by which a Person becomes an Investor after the date
hereof.
"Investor Shares" means any Shareholder Shares held by an Investor.
"Investor" shall have the meaning set forth in the Caption.
"Investor Percentage" means, as to each Investor, the fraction,
expressed as a percentage, the numerator of which is the total number of shares
of Stock of the Company held by such Investor, and the denominator of which is
the total number of shares of Stock of the Company held by all of the Investors.
"Management Retained Shareholder" means any Retained Shareholder who
is an officer or employee of the Company or any Subsidiary, and includes such
officer's or employee's Family Group.
"Non-Qualifying Retained Shareholder Shares" means all Retained
Shareholder Shares constituting outstanding shares of Stock held by a Management
Retained Shareholder that are not Qualifying Retained Shareholder Shares and
which were not acquired upon the exercise of any option or warrant.
"Person" shall be construed broadly and shall include, without
limitation, an individual, a partnership, an investment fund, a limited
liability company, a corporation, an association, a joint stock company, a
trust, a joint venture, an unincorporated organization and a governmental entity
or any department, agency or political subdivision thereof.
"Proportionate Percentage" means the pro rata percentage of Stock
being offered for sale that each Investor shall be entitled to purchase, which
pro rata percentage, as to each such Investor, shall be the percentage figure
which expresses the ratio between the number of Common Shares owned by such
Investor and the aggregate number of Common Shares owned by all Shareholders (in
each case calculated on a fully diluted basis) excluding, in the case of
Sections 1(b) and (c) hereof, the Stock proposed to be Transferred by a Retained
Shareholder.
"Public Offering" means the sale, in an underwritten public offering
registered under the Securities Act, of the Common Shares, other than any
offering made in connection with a business acquisition or an employee benefit
plan.
"Public Sale" means any sale of Shareholder Shares to the public
pursuant to an offering registered under the Securities Act or subsequent to the
Company registering any offering Shareholder Shares under the Securities Act to
the public through a broker, dealer or market maker (pursuant to the provisions
of Rule 144 promulgated under the Securities Act or otherwise).
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<PAGE>
"Purchase Agreement" means the Stock Purchase and Redemption Agreement
dated as of May 12, 1999, among the Company and the Shareholders, as amended,
modified or supplemented from time to time.
"Purchase Notice" shall have the meaning set forth in Section 2.
"Qualified Public Offering" means the sale by one or more Persons in
an underwritten Public Offering under the Securities Act of equity securities of
the Company (or its successor) which results in the aggregate gross proceeds to
the Company from such sales (before underwriters' discounts and selling
commissions) greater than or equal to $30 million and following which such
securities are listed or admitted for trading on a nationally-recognized
securities exchange or on the Nasdaq National Market System.
"Qualifying Retained Shareholder Shares" means, in the case of
Retained Shareholder Shares constituting outstanding shares of Stock held by a
Management Retained Shareholder which were not acquired upon the exercise of any
option or warrant, (i) on the first anniversary of the applicable Retained
Shares Acquisition Date, 25% of the Retained Shareholder Shares so acquired on
such Retained Shares Acquisition Date; and (ii) on each six-month anniversary
thereafter, 12.5% of the Shareholder Shares acquired on such Retained Shares
Acquisition Date, until 100% of the Shareholder Shares acquired on such Retained
Shares Acquisition Date have become Qualifying Retained Shareholder Shares.
Prior to the first anniversary of the applicable Retained Shares Acquisition
Date, none of the Retained Shareholder Shares held by such Management
Shareholder shall be Qualifying Retained Shareholder Shares. In the case of any
Management Retained Shareholder, any Retained Shareholder Shares may be subject
to such accelerated vesting as set forth in the Joinder executed by such
Management Retained Shareholder.
"Repurchase Notice" shall have the meaning set forth in Section 2.
"Retained Shareholder Joinder" means a joinder agreement,
substantially in the form of Exhibit A hereto, by which a person becomes a
Retained Shareholder after the date hereof.
"Retained Shareholder Shares" shall mean any Shareholder Shares held
by a Retained Shareholder or the Retained Shareholder's Group.
"Retained Shares Acquisition Date" means, as to Shareholder Shares
acquired by a Management Retained Shareholder as part of a single transaction,
the date on which the Management Retained Shareholder acquired such Shareholder
Shares.
"Sale Authorization Date" shall have the meaning set forth in Section
1(b).
"Sale Notice" has the meaning set forth in Section 1(b).
"Sale of the Company" means the sale of the Company to an Independent
Third Party or group of Independent Third Parties that are Affiliates pursuant
to which such party or parties acquire (i) capital stock of the Company
possessing the voting power to elect a majority
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<PAGE>
of the Board (whether by merger,
consolidation or issuance, sale or transfer of the Company's capital stock) or
(ii) all or substantially all of the Company's assets determined on a
consolidated basis.
"Securities Act" means the Securities Act of 1933, as amended from
time to time.
"Shareholder" shall have the meaning set forth in the Preamble.
"Shareholder Shares" means (i) any Common Shares purchased or
otherwise acquired by any Shareholder (including, without limitation, any shares
of Common Shares purchased upon exercise of an option or warrant to acquire
Common Shares or a similar security or Shareholder Shares acquired upon the
consummation of a merger), (ii) any equity securities issued or issuable
directly or indirectly with respect to the Common Shares referred to in clause
(i) above by way of stock dividend or stock split or in connection with a
combination of shares, exchange of capital stock, recapitalization, merger,
consolidation or other reorganization and (iii) any other shares of Stock of the
Company held by a Shareholder.
"Small Business Side Letter" has the meaning set forth in Section
9(a).
"Stock" means, with respect to any Person, such Person's capital stock
or any options, warrants or other securities (including debt securities) that
are directly or indirectly convertible into, or exercisable or exchangeable for,
such Person's capital stock. Whenever a reference herein to Stock is referring
to any derivative security, such term shall include such derivative security and
all underlying Stock directly or indirectly issuable upon conversion, exchange
or exercise of such derivative security.
"Subsidiary" means, with respect to any Person, any other Person of
which the securities having a majority of the ordinary voting power in electing
the board of directors (or other governing body) are, at the time as of which
any determination is being made, owned by such first Person either directly or
through one or more of its Subsidiaries.
"Terminated Shareholder" shall have the meaning set forth in Section
2(a).
"Termination Date" shall mean as to such Retained Shareholder, the
effective date of the Termination of Employment of such Retained Shareholder.
"Termination for Cause" shall have the meaning, in the case of any
Management Retained Shareholder, set forth in the Employment Agreement, if any,
of such Management Retained Shareholder, or in the absence of such an Employment
Agreement, shall mean a Termination of Employment for Cause (as defined herein).
"Termination of Employment" shall mean, as to any Management Retained
Shareholder, the termination of the employment with the Company or any of its
Subsidiaries of such Management Retained Shareholder for any reason whatsoever,
including, but not limited to, termination by Resignation, discharge (either
pursuant to a Termination of Employment for Cause or otherwise), retirement,
death, Disability or non-renewal of an Employment Agreement.
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<PAGE>
"Termination of Employment for Cause" shall mean (i) the Management
Retained Shareholder's material breach of any of the terms of his Employment
Agreement; (ii) the conviction of a crime involving fraud, theft or dishonesty
by the Management Retained Shareholder; (iii) the Management Retained
Shareholder's willful and continuing disregard of lawful instructions of the
Board or superiors (if any); (iv) the continued use of alcohol or drugs by the
Management Retained Shareholder to an extent that, in the good faith
determination of the Board, such use interferes in any manner with the
performance of the Management Retained Shareholder's duties and responsibilities
as an employee of the Company; or (v) the conviction of the Management Retained
Shareholder for violating any law constituting a felony (including the Foreign
Corrupt Practices Act of 1977).
"Transfer" has the meaning set forth in Section 1(a).
"Voting Stock" means the capital stock, of any class, of the Company
entitled to vote for the election of directors of the Company.
Section 14. General Provisions.
(a) Amendment; Waiver and Release. Except as otherwise provided herein,
no modification, amendment or waiver of any provision of this Agreement shall be
effective unless such modification, amendment or waiver is approved in writing
by the Company and the holders of at least a majority of the Voting Stock held
by the Shareholders; provided, however, that no such modification, amendment or
waiver that would be adverse to the interests of any (i) Retained Shareholder
shall be made without the prior written consent of a majority in interest of the
Retained Shareholders, and (ii) Investor shall be made without the prior written
consent of a majority in interest of the Investors. The failure of any party to
enforce any of the provisions of this Agreement shall in no way be construed as
a waiver of such provisions and shall not affect the right of such party
thereafter to enforce each and every provision of this Agreement in accordance
with its terms.
(b) Severability. It is the desire and intent of the parties hereto
that the provisions of this Agreement be enforced to the fullest extent
permissible under the laws and public policies applied in each jurisdiction in
which enforcement is sought. Accordingly, if any particular provision of this
Agreement shall be adjudicated by a court of competent jurisdiction to be
invalid, prohibited or unenforceable for any reason, such provision, as to such
jurisdiction, shall be ineffective, without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of such
provision in any other jurisdiction. Notwithstanding the foregoing, if such
provision could be more narrowly drawn so as not to be invalid, prohibited or
unenforceable in such jurisdiction, it shall, as to such jurisdiction, be so
narrowly drawn, without invalidating the remaining provisions of this Agreement
or affecting the validity or enforceability of such provision in any other
jurisdiction
(c) Entire Agreement. Except as otherwise expressly set forth herein,
this document and the other documents referred to herein constitute the complete
agreement and understanding among the parties hereto with respect to the subject
matter hereof and thereof and supersede and preempt any prior understandings,
agreements or representations by or among the parties, written or oral, which
may have related to the subject matter hereof in any way.
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<PAGE>
(d) Successors and Assigns. Except as otherwise provided herein, this
Agreement shall bind and inure to the benefit of and be enforceable by the
Company and its successors and assigns and the Shareholders and any subsequent
holders of Shareholder Shares and the respective successors and assigns of each
of them, so long as they hold Shareholder Shares. The Investor may assign its
rights under this Agreement to any of its members without the consent of any
other party hereto. None of the provisions hereof shall create, or be construed
or deemed to create, any right of employment in favor of any Person by the
Company or any of its Subsidiaries. This Agreement is not intended to create any
third party beneficiaries.
(e) Counterparts. This Agreement may be executed in separate
counterparts each of which shall be an original and all of which taken together
shall constitute one and the same agreement.
(f) Remedies. The Company and the Shareholders shall be entitled to
enforce their rights under this Agreement specifically to recover damages by
reason of any breach of any provision of this Agreement and to exercise all
other rights existing in their favor. The parties hereto agree and acknowledge
that money damages may not be an adequate remedy for any breach of the
provisions of this Agreement and that the Company and any Shareholder may in
his, her or its sole discretion apply to any court of law or equity of competent
jurisdiction for specific performance and/or injunctive relief (without posting
a bond or other security) in order to enforce or prevent any violation of the
provisions of this Agreement.
(g) Notices. All notices or other communications pursuant to this
Agreement shall be in writing and shall be deemed to be sufficient if delivered
personally, telecopied, sent by nationally-recognized, overnight courier or
mailed by registered or certified mail (return receipt requested), postage
prepaid, to the parties at the following addresses (or at such other address for
a party as shall be specified by like notice):
(i) if to the Company, to:
Greenfield Online, Inc.
274 Riverside Avenue
Westport, Connecticut 06880
Attention: Chief Executive Officer
Telecopier: (203) 221-0791;
with copies to:
Preston Gates & Ellis LLP
701 Fifth Avenue
Suite 5000
Seattle, Washington 98014
Attention: Robert S. Jaffe, Esq.
Telecopier: (206) 623-7022
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<PAGE>
(ii) if to the Investor, to:
Greenfield Holdings, LLC
c/o InSight Capital Partners III, L.P.
122 East 42nd Street, Suite 2300
New York, New York 10168
Attention: Jeffrey Horing
Telecopier: (212) 681-0972;
with a copy to:
O'Sullivan Graev & Karabell, LLP
30 Rockefeller Plaza
41st Floor
New York, New York 10112
Attention: Ilan S. Nissan, Esq.
Telecopier: (212) 408-2420; and
(iii) if to any Retained Shareholder or any other Investor, at
the address set forth on the signature page hereto or in the applicable
Retained Shareholder Joinder or Investor Joinder.
All such notices and other communications shall be deemed to have been
given and received (A) in the case of personal delivery, on the date of such
delivery, (B) in the case of delivery by telecopy (if confirmed), on the date of
such delivery, (C) in the case of delivery by nationally-recognized, overnight
courier, on the Business Day following dispatch, and (D) in the case of mailing,
on the third Business Day following such mailing.
(h) Construction. Where specific language is used to clarify by example
a general statement contained herein, such specific language shall not be deemed
to modify, limit or restrict in any manner the construction of the general
statement to which it relates. The language used in this Agreement shall be
deemed to be the language chosen by the parties to express their mutual intent,
and no rule of strict construction shall be applied against any party.
(i) GOVERNING LAW. THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (EXCEPT WITH RESPECT TO
MATTERS RELATED SOLELY TO CORPORATE GOVERNANCE IN WHICH CASE THIS AGREEMENT
(SOLELY AS TO SUCH MATTERS) WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF CONNECTICUT), WITHOUT GIVING EFFECT TO ANY CHOICE OF
LAW OR CONFLICTING PROVISION OR RULE (WHETHER OF THE STATE OF NEW YORK OR ANY
OTHER JURISDICTION) THAT WOULD CAUSE THE LAWS OF ANY JURISDICTION OTHER THAN THE
STATE OF NEW YORK TO BE APPLIED. IN FURTHERANCE OF THE FOREGOING, THE INTERNAL
LAWS OF THE STATE OF NEW YORK WILL CONTROL THE INTERPRETATION AND CONSTRUCTION
OF THIS AGREEMENT, EVEN IF UNDER SUCH JURISDICTION'S CHOICE OF LAW OR
<PAGE>
CONFLICTS OF LAW ANALYSIS, THE SUBSTANTIVE LAW OF SOME OTHER JURISDICTION WOULD
ORDINARILY APPLY.
(j) WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
ARISING OUT OF OR RELATING TO THIS AGREEMENT.
(k) Descriptive Headings. The descriptive headings of this Agreement
are inserted for convenience only and do not constitute a part of this
Agreement.
(l) Nouns and Pronouns. Whenever the context may require, any pronouns
used herein shall include the corresponding masculine, feminine or neuter forms,
and the singular form of names and pronouns shall include the plural and
vice-versa.
(m) Effectiveness. This Agreement shall not be deemed effective until
the consummation of the Closing (as defined in the Purchase Agreement) under the
Purchase Agreement.
* * * * *
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IN WITNESS WHEREOF, the parties hereto have executed this
Shareholders' Agreement on the day and year first above written.
GREENFIELD ONLINE, INC.
/s/ Rudy Nadilo
----------------------------
Name: Rudy Nadilo
Title: President
Investor:
GREENFIELD HOLDINGS, LLC
/s/ Jeffrey Horing
----------------------------
Name: Jeffrey Horing
Title: President
Retained Shareholder:
/s/ Andrew Greenfield
----------------------------
Andrew Greenfield
c/o Greenfield Consulting, Inc.
274 Riverside Avenue
Westport, CT 06880
<PAGE>
EXHIBIT A
RETAINED SHAREHOLDER JOINDER
By execution of this Retained Shareholder Joinder, the undersigned
agrees to become a party to that certain Shareholders' Agreement dated as of May
__, 1999, among Greenfield Online, Inc., a Connecticut corporation, and its
shareholders. The undersigned shall have all the rights, and shall observe all
the obligations, applicable to a Retained Shareholder.
Name:_________________________
Address for with copies
Notices: to:
- ------------------------------ ------------------------------
- ------------------------------ ------------------------------
- ------------------------------ ------------------------------
- ------------------------------ ------------------------------
Signature:
--------------------
Date:
------------------------
<PAGE>
Page 20
EXHIBIT B
INVESTOR JOINDER
By execution of this Investor Joinder, the undersigned agrees to
become a party to that certain Shareholders' Agreement dated as of May __, 1999,
among Greenfield Online, Inc., a Connecticut corporation, and its shareholders.
The undersigned shall have all the rights, and shall observe all the
obligations, applicable to an Investor.
Name:_________________________
Address for with copies
Notices: to:
- ------------------------------ ------------------------------
- ------------------------------ ------------------------------
- ------------------------------ ------------------------------
- ------------------------------ ------------------------------
Signature:
--------------------
Date:
------------------------
<PAGE>
Page 21
EXHIBIT C
SMALL BUSINESS SIDE LETTER
May 17, 1999
Greenfield Online, Inc.
274 Riverside Avenue
Westport, Connecticut 06880
Ladies and Gentlemen:
Reference is made to that certain Stock Purchase and Redemption
Agreement (the "Purchase Agreement"), dated as of May 12, 1999, among Greenfield
Online, Inc. (the "Company"), Greenfield Holdings, LLC ("Investor") and the
other parties identified therein, pursuant to which the Investor is acquiring
certain of the Company's Class B Common Shares (the "Shares"). Imprimis SB, L.P.
and UBS Capital II LLC are Small Business Investment Companies (the "SBICs")
licensed by the United States Small Business Administration ("SBA") and are
members of the Investor.
In order for the SBICs to acquire and hold, indirectly through the
Investor, the Shares, the SBICs and the Investor must obtain from the Company
certain representations and rights as set forth below. As a material inducement
to the Investor to enter into the Purchase Agreement and to acquire the Shares,
the Company hereby makes the following representations and warranties and agrees
to comply with the following covenants:
Small Business Matters.
(n) The Company, together with its "affiliates" (as that term is
defined in Title 13, Code of Federal Regulations,ss. 121.103), is a "small
business concern" within the meaning of the Small Business Investment Act of
1958, as amended ("SBIA"), and the regulations thereunder, including Title 13,
Code of Federal Regulations,ss. 121.301(c), because it either:
Check One
<PAGE>
Page 22
(i) including its affiliates, has a tangible net worth not in excess of
$18 million, and average net income after Federal income taxes (excluding any
carry-over losses) for the preceding 2 completed fiscal years not in
excess of $6 million (after giving pro forma effect to the transactions
contemplated by the Purchase Agreement (including the financing thereof) in the
manner set forth in Title 13, Code of Federal Regulations,ss. 107.750); or
(ii) does not exceed the size standard in number of employees or
millions of dollars under the SIC (Standard Industrial Classification) System
for the industry in which it combined with its affiliates is primarily engaged;
and in which it alone is primarily engaged.
The information set forth in the Small Business Administration Forms
480, 652 and Parts A and B of Form 1031 regarding the Company and its
affiliates, when delivered to the SBICs and the Investor, will be accurate and
complete and will be in form and substance acceptable to such Persons (as
defined below). Copies of such forms shall be completed and executed by the
Company and delivered at the closing under the Purchase Agreement (the
"Closing").
(o) Neither the Company's nor any of its Subsidiaries' (as defined
below) primary business activity involves, directly or indirectly, providing
funds to others, the purchase or discounting of debt obligations, factoring or
long-term leasing of equipment with no provision for maintenance or repair, and
neither the Company nor any of its Subsidiaries is classified under Major Group
65 (Real Estate) of the SIC Manual. The assets of the business of the Company
and its Subsidiaries (the "Business") will not be reduced or consumed, generally
without replacement, as the life of the Business progresses, and the nature of
the Business does not require that a stream of cash payments be made to the
Business's financing sources, on a basis associated with the continuing sale of
assets (examples of such businesses would include real estate development
projects and oil and gas wells). (See 13 CFRss. 107.720)
(p) At Closing or within one year thereafter, no more than 49 percent
of the employees or tangible assets of the Company and its Subsidiaries will be
located outside the United States. This subsection (c) does not prohibit such
proceeds from being used to acquire foreign materials and equipment or foreign
property rights for use or sale in the United States.
(q) There are no other SBICs that own any Securities (as defined below)
issued by the Company. Without the Investor's consent, the Company will not
issue Securities to any SBICs in the future if such issuance would cause the
SBICs or the Investor to be deemed to be a member of an "Investor Group" in
"Control" of the Company (as such terms are defined in 13 CFRss. 107.865).
2. Regulatory Compliance.
(a) Regulatory Compliance Cooperation.
<PAGE>
Page 23
(i) In the event that the Investor or any of the SBICs
reasonably determines that it has a Regulatory Problem (as defined
below), the Company agrees to take all such actions as are reasonably
requested by such Person in order (A) to effectuate and facilitate any
transfer by the Investor of any Securities of the Company then held by
it to any Person designated by the Investor or the SBIC, (B) to permit
the Investor (or any of its Affiliates) to exchange all or any portion
of the voting Securities then held by such Person on a share-for-share
basis for shares of a class of non-voting Securities of the Company,
which non-voting Securities shall be identical in all respects to such
voting Securities, except that such new Securities shall be non-voting
and shall be convertible into voting Securities on such terms as are
requested by the Investor and reasonably acceptable to the Company in
light of regulatory considerations then prevailing, and (C) to continue
and preserve the respective allocation of the voting interests with
respect to the Company arising out of the Investor's ownership of
voting Securities and/or provided for in the Shareholders' Agreement
(as defined below) before the transfers and amendments referred to
above (including entering into such additional agreements as are
requested by the Investor to permit any Person(s) designated by the
Investor to exercise any voting power which is relinquished by the
Investor upon any exchange of voting Securities for non-voting
Securities of the Company). If the Investor elects to transfer
Securities of the Company to a Regulated Holder (as defined below) in
order to avoid a Regulatory Problem, the Company and such Regulated
Holder shall enter into such mutually acceptable agreements as such
Regulated Holder may reasonably request in order to assist such
Regulated Holder in complying with applicable laws and regulations to
which it is subject. Such agreements may include restrictions on the
redemption, repurchase or retirement of Securities of the Company that
would result or be reasonably expected to result in such Regulated
Holder holding more voting securities or total securities (equity and
debt) than it is permitted to hold under such laws and regulations.
(ii) In the event the Investor has the right to acquire any of
the Company's Securities from the Company or any other Person (as the
result of a preemptive offer, pro rata offer or otherwise), and the
Investor reasonably determines that it or any Affiliate has a
Regulatory Problem, at the Investor's request the Company will offer to
sell to the investor non-voting Securities (or, if the Company is not
the proposed seller, will arrange for the exchange of any voting
securities for non-voting securities immediately prior to or
simultaneous with such sale) on the same terms as would have existed
had the investor acquired the Securities so offered and immediately
requested their exchange for non-voting Securities pursuant to
subsection (i) above.
(iii) In the event that any Affiliate of the Company ever
offers to issue any of its Securities to the Investor, then the Company
will cause such Affiliate to enter into
<PAGE>
Page 24
agreements with the Investor substantially similar to this Section 2(a) and
Section 2(b) below.
(b) Information Rights and Related Covenants.
(i) The Company hereby agrees to provide to the Investor and
the SBA access to its books and records for all purposes required by
the SBA.
(ii) The Company hereby agrees to provide to the Investor and
the SBA a certificate of its chief financial officer certifying
compliance by the Company with the provisions of this Agreement
(provided that such certificate may be truthfully given).
(iii) Promptly after the end of each fiscal year (but in any
event prior to February 28 of each year), the Company shall provide to
the Investor a written assessment, in form and substance reasonably
satisfactory to the Investor, of the economic impact of the financing
hereunder, specifying the full-time equivalent jobs created or
retained, the impact of the financing on the consolidated revenues and
profits of the Business and on taxes paid by the Business and its
employees (See 13 CFRss. 107.630(e)).
(iv) Upon the request of the Investor or any of its
Affiliates, the Company will (A) provide to such Person such financial
statements and other information as such Person may from time to time
reasonably request for the purpose of assessing the Company's financial
condition and (B) furnish to such Person all information reasonably
requested by it in order for it to prepare and file SBA Form 468 and
any other information reasonably requested or required by any
governmental agency asserting jurisdiction over such Person.
(v) For a period of one year following the date hereof,
neither the Company nor any of its Subsidiaries will change its
business activity if such change would render the Company ineligible to
receive financial assistance from an SBICs under the SBIA and the
regulations thereunder (within the meanings of 13 CFRss.ss. 107.720 and
107.760(b)).
(vi) The Company will at all times comply with the
non-discrimination requirements of 13 C.F.R., Parts 112, 113 and 117.
(vii) The Company will notify the Investor from time to time
when the number of its shareholders increases to or above or decreases
below 50.
3. Definitions.
-----------
<PAGE>
Page 25
"Affiliate" means, with respect to any Person, (i) a director, officer
or stockholder of such Person, (ii) a spouse, parent, sibling or descendant of
such Person (or spouse, parent, sibling or descendant of any director or
executive officer of such Person), and (iii) any other Person that, directly or
indirectly through one or more intermediaries, Controls, or is Controlled by, or
is under common Control with, such Person.
"Control" means, with respect to any Person, the possession, directly
or indirectly, of the power to direct or cause the direction of the management
or policies of a Person, whether through the ownership of voting securities, by
contract or otherwise.
"Person" shall be construed broadly and shall include an individual, a
partnership, a corporation, a limited liability company, an association, a joint
stock company, a trust, a joint venture, an unincorporated organization or a
governmental entity (or any department, agency or political subdivision
thereof).
"Regulated Holder" means any holder of the Company's Securities that
is (or that is a subsidiary of a bank holding company that is) subject to the
various provisions of Regulation Y of the Board of Governors of the Federal
Reserve Systems, 12 C.F.R., Part 225 (or any successor to Regulation Y).
"Regulatory Problem" means (i) any set of facts or circumstances
wherein it has been asserted by any governmental regulatory agency (or the
Investor believes that there is a significant risk of such assertion) that such
Person (or any bank holding company that controls such Person) is not entitled
to hold, or exercise any material right with respect to, all or any portion of
the Securities of the Company which such Person holds or (ii) when such Person
and its Affiliates would own, Control or have power (including voting rights)
over a greater quantity of Securities of the Company than is permitted under any
law or regulation or any requirement of any governmental authority applicable to
such Person or to which such Person is subject.
"Securities" means, with respect to any Person, such Person's capital
stock or any options, warrants or other Securities which are directly or
indirectly convertible into, or exercisable or exchangeable for, such Person's
capital stock (whether or not such derivative Securities are issued by the
Company). Whenever a reference herein to Securities refers to any derivative
Securities, the rights of the Investor shall apply to such derivative Securities
and all underlying Securities directly or indirectly issuable upon conversion,
exchange or exercise of such derivative Securities.
"Shareholders' Agreement" means the Shareholders' Agreement to be
entered into on the date of the Closing among the Company and certain
shareholders of the Company.
<PAGE>
Page 26
"Subsidiary" means, with respect to any Person, any other Person of
which the securities having a majority of the ordinary voting power in electing
the board of directors (or other governing body), at the time as of which any
determination is being made, are owned by such first Person either directly or
through one or more of its Subsidiaries.
* * * *
<PAGE>
Page 27
Please indicate your acceptance of the terms of this letter agreement
by returning a signed copy to the undersigned.
IMPRIMIS SB, L.P.
By:
-----------------------------------
Name:
Title:
UBS CAPITAL II LLC
By:
-----------------------------------
Name:
Title:
By:
-----------------------------------
Name:
Title:
Agreed as of the date
first set forth above:
Greenfield Online, Inc.
By:
-------------------------
Name:
Title:
Greenfield Holdings, LLC
-------------------------
Name:
Title:
<PAGE>
Page 28
SCHEDULE I
Investor
Greenfield Holdings, LLC
<PAGE>
Page 29
SCHEDULE II
Retained Shareholder
Andrew Greenfield
<PAGE>
================================================================================
REGISTRATION RIGHTS AGREEMENT
AMONG
GREENFIELD ONLINE, INC.
AND
THE SHAREHOLDERS
(AS DEFINED HEREIN)
May 17, 1999
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
Section 1. Definitions....................................................1
Section 2. Required Registration..........................................3
Section 3. Piggyback Registration.........................................5
Section 4. Registrations on Form S-3......................................5
Section 5. Holdback Agreement.............................................6
Section 6. Preparation and Filing.........................................6
Section 7. Expenses......................................................10
Section 8. Indemnification...............................................10
Section 9. Underwriting Agreement........................................12
Section 10. Information by Holder.........................................13
Section 11. Exchange Act Compliance.......................................13
Section 12. Mergers, Etc..................................................13
Section 13. New Certificates..............................................14
Section 14. No Conflict of Rights; Selection of Underwriter...............14
Section 15. Termination...................................................14
Section 16. Miscellaneous.................................................14
<PAGE>
REGISTRATION RIGHTS AGREEMENT dated as of May 17, 1999 among
GREENFIELD ONLINE, INC., a Connecticut corporation (the
"Company"), and the Shareholders (as defined below).
The Shareholders own or have the right to purchase or otherwise
acquire Common Shares (as defined below) of the Company. The Company and the
Shareholders deem it to be in their respective best interests to enter into this
Agreement to set forth the rights of the Shareholders in connection with public
offerings and sales of Common Shares.
NOW, THEREFORE, in consideration of the premises and mutual covenants
and obligations hereinafter set forth, the Company and the Shareholders hereby
agree as follows:
Section 1. Definitions.
As used in this Agreement, the following terms have the following
meanings:
"Board" means the Board of Directors of the Company.
"Class A Common" means the Class A Common Stock, $0.01 par value per
share, of the Company.
"Class B Common" means the Class B Common Stock, $0.01 par value per
share, of the Company.
"Commission" means the Securities and Exchange Commission or any other
governmental body or agency succeeding to the functions thereof.
"Common Shares" means the Class A Common and/or the Class B Common, as
applicable.
"Exchange Act" means the Securities Exchange Act of 1934 or any
successor Federal statute, and the rules and regulations of the Commission
promulgated thereunder, all as the same shall be in effect from time to time.
"Holdings" means Greenfield Holdings, LLC, a Delaware limited
liability company.
"Holdings Shareholder Majority" means Holdings and those Shareholders
to whom it shall have transferred Restricted Shares who, collectively, at the
time in question own at least a majority of the Restricted Shares held by
Holdings and such Shareholders.
<PAGE>
"Majority of Registering Shareholders" means, with respect to a
registration that includes Registrable Shares, those Shareholders who at the
time in question own at least a majority of the Restricted Shares held by
Shareholders who initiated the registration.
"Other Shares" means at any time those Common Shares that do not
constitute Primary Shares or Registrable Shares.
"Person" shall be construed broadly and shall include an individual, a
partnership, a corporation, an association, a joint stock company, a limited
liability company, a trust, a joint venture, an unincorporated organization and
a governmental entity or any department, agency or political subdivision
thereof.
"Primary Shares" means at any time the authorized but unissued Common
Shares and the Common Shares held by the Company in its treasury.
"Prospectus" means the prospectus included in a Registration
Statement, including any prospectus subject to completion, and any such
prospectus as amended or supplemented by any prospectus supplement with respect
to the terms of the offering of any portion of the Registrable Shares and, in
each case, by all other amendments and supplements to such prospectus, including
post-effective amendments, and in each case including all material incorporated
by reference therein.
"Public Offering" means the closing of a public offering of Common
Shares pursuant to a Registration Statement declared effective under the
Securities Act, except that a Public Offering shall not include an offering of
securities to be issued as consideration in connection with a business
acquisition or an offering of securities issuable pursuant to an employee
benefit plan.
"Purchase and Redemption Agreement" means the Stock Purchase and
Redemption Agreement dated as of May 12, 1999, among the Company and the other
parties thereto, as amended, modified or supplemented from time to time.
"Registrable Shares" means Restricted Shares that constitute Common
Shares.
"Registration Date" means the date upon which a Registration Statement
pursuant to which the Company shall have initially registered Common Shares
under the Securities Act for sale in a Public Offering shall have been declared
effective by the Commission.
"Registration Statement" shall mean any registration statement of the
Company which covers any of the Registrable Shares and all amendments and
supplements to any such Registration Statement, including post-effective
amendments, in each case including the Prospectus contained therein, all
exhibits thereto and all material incorporated by reference therein.
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<PAGE>
"Restricted Shares" means Common Shares, and includes (i) shares which
may be issued as a dividend or distribution, (ii) any other securities which by
their terms are exercisable or exchangeable for or convertible into Common
Shares, and (iii) any securities received in respect of the foregoing (including
securities described in Section 12), in each case in clauses (i) through (iii)
which at any time are held by the Shareholders. As to any particular Restricted
Shares, once issued, such Restricted Shares shall cease to be Restricted Shares
when (A) they have been registered under the Securities Act, the Registration
Statement in connection therewith has been declared effective and they have been
disposed of pursuant to and in the manner described in such effective
Registration Statement, (B) they are sold pursuant to Rule 144 or may be sold by
the holder thereof pursuant to Rule 144(k), (C) they have been otherwise
transferred and new certificates or other evidences of ownership for them not
bearing a restrictive legend and not subject to any stop transfer order or other
restriction on transfer have been delivered by the Company or the issuer of
other securities issued in exchange for the Restricted Shares, or (D) they have
ceased to be outstanding.
"Rule 144" means Rule 144 promulgated under the Securities Act or any
successor rule thereto or any complementary rule thereto.
"Securities Act" means the Securities Act of 1933 or any successor
Federal statute, and the rules and regulations of the Commission thereunder, all
as the same shall be in effect from time to time.
"Shareholders" means the Persons which are shareholders of the Company
on the date hereof, and includes any successor to, or assignee or transferee of,
any such Person who or which agrees in writing to be treated as a Shareholder
hereunder and to be bound by the terms and comply with all applicable provisions
hereof.
"Shareholders' Agreement" means the Shareholders' Agreement of even
date herewith, among the Company and the other parties thereto, as the same may
be amended, supplemented or modified from time to time.
"Subsidiary" means, with respect to any Person, any other Person of
which the securities having a majority of the ordinary voting power in electing
the board of directors (or other governing body), at the time as of which any
determination is being made, are owned by such first Person either directly or
through one or more of its Subsidiaries.
Section 2. Required Registration.
(a) Subject to Section 2(b), if the Company shall be requested by a
Holdings Shareholder Majority at any time to effect the registration under the
Securities Act of Registrable Shares, the Company shall use its best efforts to
promptly effect the registration under the Securities Act of the Registrable
Shares which the Company has been so requested to register (as well as any other
Registrable Shares requested to be registered by any other Shareholder who was
previously a member of Holdings,
3
<PAGE>
following notice of such request by a Holdings Shareholder Majority). The number
of requests permitted pursuant to this Section 2(a) shall be unlimited.
(b) Anything contained in Section 2(a) to the contrary
notwithstanding, the Company shall not be obligated to effect any registration
under the Securities Act pursuant to Section 2(a) except in accordance with the
following provisions:
(i) with respect to any registration pursuant to this Section 2,
the Company may include in such registration any Primary Shares or
Other Shares; provided, however, that, if the managing underwriter
advises the Company that the inclusion of all Registrable Shares,
Primary Shares and/or Other Shares proposed to be included in such
registration would materially interfere with the successful marketing
(including pricing) of the Registrable Shares proposed to be included
in such registration, then the number of Registrable Shares, Primary
Shares and/or Other Shares proposed to be included in such
registration shall be included in the following order:
(A) first, all Registrable Shares requested to be included
in such registration by the Shareholders who requested such
registration pursuant to Section 2(a), pro rata among such
requesting Shareholders based on the number of Registrable Shares
requested by each such requesting Shareholder to be so
registered;
(B) second, all Registrable Shares requested to be included
in such registration by the other Shareholders who requested the
inclusion of their Registrable Shares in such registration
pursuant to Section 3, pro rata among all such Shareholders based
on the number of Registrable Shares requested by each such
Shareholder to be so registered;
(C) third, the Primary Shares; and
(D) fourth, the Other Shares;
(ii) at any time before the Registration Statement covering
Registrable Shares becomes effective, the Shareholder or group of
Shareholders which requested such registration pursuant to Section
2(a) may request that the Company withdraw or not file the
Registration Statement; and
(iii) the Company may, at its sole option, elect to satisfy a
request for a Registration pursuant to Section 2(a) on Form S-2 or
Form S-3 promulgated under the Securities Act (or any successor forms
thereto), if use of any such forms are then available to the Company;
provided that, if the proposed registration pursuant to Section 2(a)
involves an underwritten public offering, the Company shall include in
such registration statement such additional information as reasonably
requested by the requesting
4
<PAGE>
Shareholders and/or such underwriter (whether or not such information
is required by Form S-2 or S-3, as applicable).
Section 3. Piggyback Registration.
If the Company at any time proposes for any reason to register Common
Shares under the Securities Act (other than on Form S-4 or Form S-8 promulgated
under the Securities Act or any successor forms thereto or in connection with
any acquisition), it shall promptly give written notice to the Shareholders of
its intention to so register such Common Shares and, upon the written request,
delivered to the Company within 30 days after delivery of any such notice by the
Company, of any Shareholder to include in such registration Registrable Shares
(which request shall specify the number of Registrable Shares proposed to be
included in such registration), the Company shall use its best efforts to cause
all such Registrable Shares to be included in such registration on the same
terms and conditions as the Common Shares otherwise being sold in such
registration; provided, however, that, if the managing underwriter advises the
Company that the inclusion of all Registrable Shares requested to be included in
such registration would interfere with the successful marketing (including
pricing) of the Primary Shares or Other Shares proposed to be registered, then
the number of Primary Shares, Registrable Shares and Other Shares proposed to be
included in such registration shall be included in the following order:
(a) in a primary registration on behalf of the Company:
(i) first, the Primary Shares proposed to be registered by the
Company;
(ii) second, the Registrable Shares requested to be included in
such registration pursuant to this Section 3, pro rata among the
holders thereof based upon the number of Registrable Shares requested
to be registered by each such holder; and
(iii) third, the Other Shares.
(b) in a secondary registration on behalf of holders of Registrable
Shares (other than pursuant to Section 2(b)):
(i) first, the Registrable Shares requested to be included
in such registration pursuant to this Section 3, pro rata among
the holders thereof based upon the number of Registrable Shares
requested to be registered by each such holder; and
(ii) second, the Other Shares.
Section 4. Registrations on Form S-3.
Anything contained in Section 2 to the contrary notwithstanding, at
such time as the Company shall have qualified for the use of Form S-3
promulgated under the
5
<PAGE>
Securities Act or any successor form thereto, a Holdings Shareholder Majority
shall have the right to request in writing an unlimited number of registrations
of Registrable Shares on Form S-3 or such successor form, which request or
requests shall (i) specify the number of Registrable Shares intended to be sold
or disposed of and the holders thereof, (ii) state the intended method of
disposition of such Registrable Shares and (iii) relate to Registrable Shares
having an anticipated aggregate gross offering price (before underwriting
discounts and commissions) of at least $5,000,000, and upon receipt of any such
request, the Company shall use its best efforts promptly to effect the
registration under the Securities Act of the Registrable Shares so requested to
be registered.
Section 5. Holdback Agreement.
(a) If the Company at any time shall register Common Shares under the
Securities Act (including any registration pursuant to Sections 2, 3 or 4) for
sale to the public pursuant to an underwritten offering, the Shareholders shall
not sell publicly, make any short sale of, grant any option for the purchase of,
or otherwise dispose publicly of, any Registrable Shares (other than those
Common Shares included in such registration pursuant to Sections 2, 3 or 4)
without the prior written consent of the Company, for such period as shall be
determined by the relevant managing underwriters. The Company shall obtain the
agreement of any Person permitted to sell shares of stock in a registration and
each of its directors and executive officers to be bound by and to comply with
this Section 5 with respect to such registration as if such Person were a
Shareholder hereunder.
(b) If the Company at any time pursuant to Sections 2 or 3 of this
Agreement shall register under the Securities Act Registrable Shares held by
Shareholders for sale to the public pursuant to an underwritten offering, the
Company shall not effect any public sale or distribution of securities similar
to those being registered, or any securities convertible into or exercisable or
exchangeable for such securities, for such period as shall be determined by the
managing underwriters.
Section 6. Preparation and Filing.
(a) If and whenever the Company is under an obligation pursuant to the
provisions of this Agreement to use its best efforts to effect the registration
of, and keep effective a Registration Statement for, any Registrable Shares, the
Company shall, as expeditiously as practicable:
(i) use its best efforts to cause a Registration Statement that
registers such Registrable Shares to become and remain effective for a
period of 90 days (extended for such period of time as the
Shareholders are required to discontinue disposition of Registrable
Shares pursuant to Section 6(b) below) or until all of such
Registrable Shares have been disposed of (if earlier);
(ii) furnish, at least five (5) business days before filing a
Registration Statement that relates to the registration of such
Registrable
6
<PAGE>
Shares, a Prospectus relating thereto or any amendments or supplements
relating to such a Registration Statement or Prospectus, to one
counsel (the "Shareholders' Counsel") selected by a Majority of
Registering Shareholders;
(iii) notify the Shareholders whose Registrable Shares are
included therein of the effectiveness of such Registration Statement
and prepare and promptly file with the Commission such amendments and
supplements to such Registration Statement and the Prospectus used in
connection therewith as may be necessary to (A) keep such Registration
Statement effective for at least a period of 90 days (extended for
such period of time as Shareholders are required to discontinue
disposition of Registrable Shares pursuant to Section 6(b) below) or
until all of such Registrable Shares have been disposed of (if
earlier), (B) correct any statements or omissions if any event with
respect to the Company shall have occurred as a result of which any
such Registration Statement or Prospectus as then in effect would
include an untrue statement of material fact or omit to state any
material fact necessary to make the statements therein not misleading,
and (C) comply with the provisions of the Securities Act with respect
to the sale or other disposition of such Registrable Shares;
(iv) notify in writing the Shareholders' Counsel, and the
Shareholders whose Registrable Shares may be included in such
Registration Statement, promptly of (A) the receipt by the Company of
any notification with respect to any comments by the Commission with
respect to such Registration Statement or Prospectus or any amendment
or supplement thereto or any request by the Commission for the
amending or supplementing thereof or for additional information with
respect thereto, (B) the receipt by the Company of any notification or
written information with respect to the issuance or threatened
issuance by the Commission of any stop order suspending the
effectiveness of such Registration Statement or Prospectus or any
amendment or supplement thereto or the initiation or threatening of
any proceeding for that purpose (and the Company shall use its best
efforts to prevent the issuance thereof or, if issued, to obtain its
withdrawal) and (C) the receipt by the Company of any notification
with respect to the suspension of the qualification of such
Registrable Shares for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purposes;
(v) use its best efforts to register or qualify such Registrable
Shares under such other securities or blue sky laws of such
jurisdictions as the Shareholders reasonably request and do any and
all other acts and things which may be reasonably necessary or
advisable to enable the Shareholders to consummate the disposition in
such jurisdictions of the Registrable Shares owned by the
Shareholders; provided, however, that the Company will not be required
to qualify generally to do business,
7
<PAGE>
subject itself to general taxation or consent to general service of
process in any jurisdiction where it would not otherwise be required
to do so but for this clause (v);
(vi) furnish to the Shareholders holding such Registrable Shares
such number of copies of a summary Prospectus, if any, or other
Prospectus, including a preliminary Prospectus, in conformity with the
requirements of the Securities Act, and such other documents as such
Shareholders may reasonably request in order to facilitate the public
sale or other disposition of such Registrable Shares;
(vii) use its best efforts to cause such Registrable Shares to be
registered with or approved by such other governmental agencies or
authorities as may be necessary by virtue of the business and
operations of the Company to enable the Shareholders holding such
Registrable Shares to consummate the disposition of such Registrable
Shares;
(viii) notify the Shareholders holding such Registrable Shares on
a timely basis at any time when a Prospectus relating to such
Registrable Shares is required to be delivered under the Securities
Act within the appropriate period mentioned in clause (i) of this
Section 6(a), of the happening of any event as a result of which the
Prospectus included in such Registration Statement, as then in effect,
includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they
were made, not misleading, and prepare and furnish to such
Shareholders a reasonable number of copies of, and file with the
Commission, a supplement to or an amendment of such Prospectus as may
be necessary so that, as thereafter delivered to the offerees of such
Registrable Shares, such Prospectus shall not include an untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading;
(ix) subject to the execution of confidentiality agreements in
form and substance reasonably satisfactory to the Company, make
available upon reasonable notice and during normal business hours, for
inspection by the Shareholders holding Registrable Shares requested to
be included in such registration, any underwriter participating in any
disposition pursuant to such Registration Statement and any attorney,
accountant or other agent retained by the Shareholders or underwriter
(collectively, the "Inspectors"), all pertinent financial and other
records, pertinent corporate documents and properties of the Company
(collectively, the "Records"), and cause the Company's officers,
directors and employees to supply all information (together with the
Records, the "Information") reasonably requested by any such
Inspector, in each case as shall be reasonably necessary to enable
them to exercise their due diligence responsibility in
8
<PAGE>
connection with such Registration Statement; provided, however, that
any of the Information that the Company determines in good faith to be
confidential, and of which determination the Inspectors are so
notified, shall not be disclosed by the Inspectors unless (A) the
disclosure of such Information is necessary to avoid or correct a
misstatement or omission in the Registration Statement or Prospectus,
(B) the release of such Information is ordered pursuant to a subpoena
or other order from a court of competent jurisdiction or, upon the
written advice of counsel, is otherwise required by law, or (C) such
Information has been made generally available to the public, and the
Shareholders agree that they will, upon learning that disclosure of
such Information is sought in a court of competent jurisdiction, give
notice to the Company and allow the Company, at the Company's expense,
to undertake appropriate action to prevent disclosure of the
Information deemed confidential;
(x) use its best efforts to obtain from its independent certified
public accountants "cold comfort" letters in customary form and at
customary times and covering matters of the type customarily covered
by cold comfort letters;
(xi) use its best efforts to obtain from its counsel an opinion
or opinions in customary form naming the Shareholders as additional
addressees or parties who may rely thereon;
(xii) provide a transfer agent and registrar (which may be the
same entity and which may be the Company) for such Registrable Shares;
(xiii) issue to any underwriter to which the Shareholders holding
such Registrable Shares may sell shares in such offering certificates
evidencing such Registrable Shares;
(xiv) list such Registrable Shares on any national securities
exchange on which any Common Shares are listed or, if the Common
Shares are not listed on a national securities exchange, use its best
efforts to qualify such Registrable Shares for inclusion on the NASDAQ
Stock Market;
(xv) otherwise use its best efforts to comply with all applicable
rules and regulations of the Commission and make available to its
securityholders, as soon as reasonably practicable, earnings
statements (which need not be audited) covering a period of 12 months
beginning within three months after the effective date of the
Registration Statement, which earnings statements shall satisfy the
provisions of Section 11(a) of the Securities Act; and
9
<PAGE>
(xvi) use its best efforts to take all other steps necessary to
effect the registration of, and maintain an effective Registration
Statement with respect to, such Registrable Shares contemplated
hereby.
(b) Each holder of the Registrable Shares, upon receipt of any notice
from the Company of any event of the kind described in Section 6(a)(viii)
hereof, shall forthwith discontinue disposition of the Registrable Shares
pursuant to the Registration Statement covering such Registrable Shares
until such holder's receipt of the copies of the supplemented or amended
Prospectus contemplated by Section 6(a)(viii) hereof, and, if so directed
by the Company, such holder shall deliver to the Company all copies, other
than permanent file copies then in such holder's possession, of the most
recent Prospectus covering such Registrable Shares at the time of receipt
of such notice.
Section 7. Expenses.
All expenses (other than underwriting discounts and commissions
relating to the Registrable Shares) incurred by the Company and the Shareholders
in complying with this Agreement, including, without limitation, all
registration and filing fees (including all expenses incident to filings with
the National Association of Securities Dealers, Inc.), fees and expenses of
complying with securities and blue sky laws, printing expenses, fees and
expenses of the Company's counsel and accountants and fees and expenses of the
Shareholders' Counsel, shall be paid by the Company in connection with
registrations requested under Sections 2, 3 or 4; provided, however, that all
underwriting discounts and selling commissions applicable to the Registrable
Shares and Other Shares shall be borne by the holders selling such Registrable
Shares and Other Shares, in proportion to the number of Registrable Shares and
Other Shares sold by each such holder.
Section 8. Indemnification.
(a) In connection with any registration of any Registrable Shares
under the Securities Act pursuant to this Agreement, the Company shall indemnify
and hold harmless, to the fullest extent permitted by law, each holder of
Registrable Shares, each underwriter, broker or any other Person acting on
behalf of the holders of Registrable Shares and each other Person, if any, who
controls any of the foregoing Persons within the meaning of the Securities Act
(each such indemnified Person being referred to herein as an "Indemnified
Person") against any losses, claims, damages or liabilities, joint or several
(or actions in respect thereof), to which any of the foregoing Persons may
become subject under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon an untrue statement or allegedly untrue statement of a material
fact contained in or incorporated by reference in the Registration Statement
under which such Registrable Shares were registered under the Securities Act,
any preliminary Prospectus or final Prospectus contained therein or otherwise
filed with the Commission, any amendment or supplement thereto or any document
incident to registration or qualification of any Registrable Shares, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading
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or, with respect to any Prospectus, necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, or any
violation by the Company of the Securities Act or state securities or blue sky
laws applicable to the Company and relating to action or inaction required of
the Company in connection with such registration or qualification under such
state securities or blue sky laws; and shall promptly reimburse the Indemnified
Persons for any legal or other expenses reasonably incurred by any of them in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Company shall not be liable in
any such case to any such Indemnified Person to the extent that any such loss,
claim, damage, liability or action (including any legal or other expenses
incurred) arises out of or is based upon an untrue statement or allegedly untrue
statement or omission or alleged omission made in said Registration Statement,
preliminary Prospectus, final Prospectus, amendment, supplement or document
incident to registration or qualification of any Registrable Shares in reliance
upon and in conformity with written information furnished to the Company through
an instrument duly executed by such Indemnified Person specifically for use in
the preparation thereof.
(b) In connection with any registration of Registrable Shares under
the Securities Act pursuant to this Agreement, each holder of Registrable Shares
being registered shall, severally and not jointly, to the fullest extent
permitted by law, indemnify and hold harmless (in the same manner and to the
same extent as set forth in Section 8(a) above) the Company, each director of
the Company, each officer of the Company who shall have signed such Registration
Statement, each other holder of Registrable Shares or Other Shares, each agent,
underwriter, broker or other Person acting on behalf of the Company, each other
holder of Registrable Shares or Other Shares and each Person who controls any of
the foregoing Persons within the meaning of the Securities Act with respect to
any statement or omission from such Registration Statement, any preliminary
Prospectus or final Prospectus contained therein or otherwise filed with the
Commission, any amendment or supplement thereto or any document incident to
registration or qualification of any Registrable Shares, if such statement or
omission was made in reliance upon and in conformity with written information
furnished to the Company or such underwriter through an instrument duly executed
by such holder specifically for use in connection with the preparation of such
Registration Statement, preliminary Prospectus, final Prospectus, amendment,
supplement or document; provided, however, that the maximum amount of liability
in respect of such indemnification shall be limited, in the case of each seller
of Registrable Shares, to an amount equal to the net proceeds actually received
by such seller from the sale of Registrable Shares effected pursuant to such
registration.
(c) Promptly after receipt by an indemnified party of notice of the
commencement of any action involving a claim referred to in Section 8(a) or (b),
such indemnified party will, if a claim in respect thereof is to be made against
an indemnifying party, give written notice to the latter of the commencement of
such action; provided, however, that the indemnified party's failure to give
such notice shall not release, relieve or in any way affect the indemnifying
party's obligation hereunder to indemnify the indemnified party, unless and to
the extent that the rights of the indemnifying party are prejudiced thereby. In
case any such action is brought against an indemnified party, the
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indemnifying party will be entitled to participate in and to assume the defense
thereof, jointly with any other indemnifying party similarly notified to the
extent that he, she, or it may wish, with counsel reasonably satisfactory to
such indemnified party, and after notice from the indemnifying party to such
indemnified party of his, her or its election so to assume the defense thereof,
the indemnifying party shall not be responsible for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof; provided, however, that, if any indemnified party shall have reasonably
concluded (based on the written advice of counsel) that there may be one or more
legal or equitable defenses available to such indemnified party which are
additional to or conflict with those available to the indemnifying party, or
that such claim or litigation involves or could have an effect upon matters
beyond the scope of the indemnity agreement provided in this Section 8, the
indemnifying party shall not have the right to assume the defense of such action
on behalf of such indemnified party and such indemnifying party shall reimburse
such indemnified party and any Person controlling such indemnified party for
that portion of the fees and expenses of one counsel retained by the indemnified
party which is reasonably related to the matters covered by the indemnity
agreement provided in this Section 8.
(d) If the indemnification provided for in this Section 8 is held by a
court of competent jurisdiction to be unavailable to an indemnified party with
respect to any loss, claim, damage, liability or action referred to herein
(other than as a result of the applicability of the proviso in Section 8(a)),
then the indemnifying party, in lieu of indemnifying such indemnified party
hereunder, shall contribute to the amounts paid or payable by such indemnified
party as a result of such loss, claim, damage, liability or action in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party on the one hand and of the indemnified party on the other in connection
with the statements or omissions which resulted in such loss, claim, damage,
liability or action as well as any other relevant equitable considerations. The
relative fault of the indemnifying party and of the indemnified party shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the indemnifying party or by
the indemnified party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
Section 9. Underwriting Agreement.
(a) If any registration pursuant to Sections 2, 3 or 4 is or is
requested to be an underwritten offering, the Company shall negotiate in good
faith to enter into a reasonable and customary underwriting agreement with the
underwriters thereof. The Company shall be entitled to receive indemnities from
lead institutions, underwriters, selling brokers, dealer managers and similar
securities industry professionals participating in the distribution, to the same
extent as provided above with respect to information so furnished in writing by
such Persons specifically for inclusion in any Prospectus or Registration
Statement and to the extent customary given their role in such distribution.
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(b) No Shareholder may participate in any registration hereunder that
is underwritten unless such Shareholder agrees to (i) sell such Shareholder's
Registrable Shares proposed to be included therein on the basis provided in any
underwriting arrangements approved by the Company and the Majority of
Registering Shareholders and (ii) as expeditiously as possible, notify the
Company of the occurrence of any event concerning such Shareholder as a result
of which the Prospectus relating to such registration contains an untrue
statement of a material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
Section 10. Information by Holder.
The Shareholders shall furnish to the Company such written information
regarding the Shareholders and the distribution proposed by the Shareholders as
the Company may reasonably request in writing and as shall be reasonably
required in connection with any registration, qualification or compliance
referred to in this Agreement.
Section 11. Exchange Act Compliance.
From the Registration Date or such earlier date as a Registration
Statement filed by the Company pursuant to the Exchange Act relating to any
class of the Company's securities shall have become effective, the Company shall
comply with all of the reporting requirements of the Exchange Act applicable to
it (whether or not it shall be required to do so) and shall comply with all
other public information reporting requirements of the Commission which are
conditions to the availability of Rule 144 for the sale of the Common Shares.
The Company shall cooperate with the Shareholders in supplying such information
as may be necessary for the Shareholders to complete and file any information
reporting forms presently or hereafter required by the Commission as a condition
to the availability of Rule 144.
Section 12. Mergers, Etc.
The Company shall not, directly or indirectly, enter into any merger,
consolidation or reorganization in which the Company shall not be the surviving
corporation unless the surviving corporation shall, prior to such merger,
consolidation or reorganization, agree in writing to assume the obligations of
the Company under this Agreement, and for that purpose references hereunder to
"Registrable Shares" shall be deemed to include the shares of common stock, if
any, or other securities that the Shareholders would be entitled to receive in
exchange for Common Shares under any such merger, consolidation or
reorganization; provided, however, that, to the extent the Shareholders receive
securities that are by their terms convertible into shares of common stock of
the issuer thereof, then any such shares of common stock as are issued or
issuable upon conversion of said convertible securities shall be included within
the definition of "Registrable Shares".
13
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Section 13. New Certificates.
As expeditiously as possible after the effectiveness of any
Registration Statement filed pursuant to this Agreement, the Company will
deliver in exchange for any legended certificate evidencing Restricted Shares so
registered, new stock certificates not bearing any restrictive legends.
Section 14. No Conflict of Rights; Selection of Underwriter.
The Company shall not, at any time after the date hereof, grant any
registration rights that conflict with or impair, or have any priority over, the
registration rights granted hereby. In any Public Offering, the managing
underwriter shall be a nationally recognized investment banking firm chosen by
the Board.
Section 15. Termination.
This Agreement shall terminate and be of no further force or effect
when there shall no longer be any Restricted Shares outstanding.
Section 16. Miscellaneous.
(a) Successors and Assigns. This Agreement shall bind and inure to the
benefit of the Company and the Shareholders and, subject to Section 16(b), the
respective successors and assigns of the Company and the Shareholders. This
Agreement is not intended to create any third party beneficiaries.
(b) Assignment. Each Shareholder may assign its rights hereunder to
any purchaser or transferee of Registrable Shares; provided, however, that such
purchaser or transferee shall, as a condition to the effectiveness of such
assignment, unless already a party to this Agreement, be required to execute a
counterpart to this Agreement agreeing to be treated as Shareholder hereunder,
whereupon such purchaser or transferee shall have the benefits of and shall be
subject to the restrictions contained in this Agreement as if such purchaser or
transferee was originally included in the definition of a Shareholder and had
originally been a party hereto.
(c) Severability. It is the desire and intent of the parties hereto
that the provisions of this Agreement be enforced to the fullest extent
permissible under the laws and public policies applied in each jurisdiction in
which enforcement is sought. Accordingly, if any particular provision of this
Agreement shall be adjudicated by a court of competent jurisdiction to be
invalid, prohibited or unenforceable for any reason, such provision, as to such
jurisdiction, shall be ineffective, without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of this
Agreement or affecting the validity or enforceability of such provision in any
other jurisdiction. Notwithstanding the foregoing, if such provision could be
more narrowly drawn so as not to be invalid, prohibited or unenforceable in such
jurisdiction, it shall, as to such jurisdiction, be so narrowly drawn, without
invalidating the remaining provisions of this Agreement or affecting the
validity or enforceability of such provision in any other jurisdiction.
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(d) Entire Agreement. This Agreement and the other writings referred
to herein or delivered pursuant hereto contain the entire agreement among the
parties with respect to the subject matter hereof and thereof and supersede all
prior and contemporaneous arrangements or understandings with respect hereto and
thereto.
(e) Notices. All communications hereunder to any party shall be deemed
to be sufficient if contained in a written instrument delivered in person or
sent by telecopy, nationally-recognized overnight courier guaranteeing next day
delivery or first class registered or certified mail, return receipt requested,
postage prepaid, addressed to such party at its address below or such other
address as such party may hereafter designate in writing:
(i) if to the Company to:
Greenfield Online, Inc.
274 Riverside Avenue
Westport, CT 06880-4807
Attention: Chief Executive Officer
Telecopier: (203) 408-2420;
with a copy to:
Preston Gates & Ellis LLP
701 Fifth Avenue
Suite 5000
Seattle, Washington 98014
Attention: Robert S. Jaffe, Esq.
Telecopier: (206) 623-7022
(ii) if to Holdings to:
Greenfield Holdings, LLC
c/o InSight Capital Partners III, L.P.
122 East 42nd Street
Suite 2300
New York, New York 10168
Attention: Jeffrey Horing
Telecopier: (212) 681-0972;
with a copy to:
O'Sullivan Graev & Karabell, LLP
30 Rockefeller Plaza
41st Floor
New York, New York 10112
Attention: Ilan S. Nissan, Esq.
Telecopier: (212) 408-2420.
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<PAGE>
All such notices, requests, consents and other communications shall be
deemed to have been given and received (A) in the case of personal delivery or
delivery by telecopy (if confirmed), on the date of such delivery, (B) in the
case of dispatch by nationally-recognized overnight courier, on the next
business day following such dispatch and (C) in the case of mailing, on the
third business day after the posting thereof.
(f) Modifications; Amendments; Waivers. The terms and provisions of
this Agreement may not be modified or amended, nor may any provision be waived,
except pursuant to a writing signed by the Company and the Holdings Shareholder
Majority provided, however, that no such modification, amendment or waiver shall
adversely affect the rights of any party hereto without such party's consent.
The failure of any party to enforce any of the provisions of this Agreement
shall in no way be construed as a waiver of such provisions and shall not affect
the right of such party thereafter to enforce each and every provision of this
Agreement in accordance with its terms.
(g) Counterparts. This Agreement may be executed in any number of
counterparts, and each such counterpart hereof shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.
(h) Headings. The headings of the various sections of this Agreement
have been inserted for convenience of reference only and shall not be deemed to
be a part of this Agreement.
(i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO
ANY CHOICE OF LAW OR CONFLICTING PROVISION OR RULE (WHETHER OF THE STATE OF NEW
YORK OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE LAWS OF ANY JURISDICTION
OTHER THAN THE STATE OF NEW YORK TO BE APPLIED. IN FURTHERANCE OF THE FOREGOING,
THE INTERNAL LAWS OF THE STATE OF NEW YORK WILL CONTROL THE INTERPRETATION AND
CONSTRUCTION OF THIS AGREEMENT, EVEN IF UNDER SUCH JURISDICTION'S CHOICE OF LAW
OR CONFLICTS OF LAW ANALYSIS, THE SUBSTANTIVE LAW OF SOME OTHER JURISDICTION
WOULD ORDINARILY APPLY.
(j) Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT.
(k) Nouns and Pronouns. Whenever the context may require, any pronouns
used herein shall include the corresponding masculine, feminine or neuter forms,
and the singular form of nouns and pronouns shall include the plural and
vice-versa.
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<PAGE>
(l) Construction. Where specific language is used to clarify by
example a general statement contained herein, such specific language shall not
be deemed to modify, limit or restrict in any manner the construction of the
general statement to which it relates. The language used in this Agreement shall
be deemed to be the language chosen by the parties to express their mutual
intent, and no rule of strict construction shall be applied against any party.
(m) Effectiveness. This Agreement shall not be deemed effective until
the Closing (as defined in the Purchase and Redemption Agreement) under the
Purchase and Redemption Agreement.
* * * * *
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IN WITNESS WHEREOF, the parties hereto have executed this Registration Rights
Agreement on the day and year first above written.
GREENFIELD ONLINE, INC.
By: /s/
-----------------------
Name: Rudy Nadilo
Title: President
GREENFIELD HOLDINGS, LLC
By: /s/
-----------------------
Name: Jeffrey Horing
Title: President
/s/
---------------------
Andrew Greenfield
<PAGE>
THIS NOTE HAS BEEN ACQUIRED FOR INVESTMENT PURPOSES ONLY AND HAS NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR UNDER ANY APPLICABLE STATE SECURITIES LAWS. THIS NOTE MAY NOT BE SOLD OR
OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR
PURSUANT TO AN EXEMPTION UNDER THE SECURITIES ACT AND SUCH APPLICABLE STATE
SECURITIES LAWS.
THIS NOTE WAS ISSUED WITH ORIGINAL ISSUE DISCOUNT ("OID") WITHIN THE MEANING OF
THE INTERNAL REVENUE CODE OF 1986, AS AMENDED. HOLDERS OF THIS NOTE MAY CONTACT
THE CHIEF FINANCIAL OFFICER OR CONTROLLER OF THE BORROWER AT (203) 221-0411 TO
RECEIVE INFORMATION ABOUT SUCH OID DESCRIBED IN TREASURY REGULATION ss.
1.1275-3(b)(1)(i).
$14,136,452 GREENFIELD ONLINE, INC. May 17, 1999
New York, New York
Promissory Note
Due May 17, 2009
FOR VALUE RECEIVED, the undersigned GREENFIELD ONLINE, INC., a
Connecticut corporation (the "Borrower"), hereby promises to pay to Greenfield
Holdings, LLC or its registered assigns ("Holdings"), the principal sum of
FOURTEEN MILLION ONE HUNDRED THIRTY SIX THOUSAND FOUR HUNDRED FIFTY TWO DOLLARS
($14,136,452) or such greater or lesser principal amount which may be
outstanding hereunder (including as a result of the exercise of the PIK Option)
on May 17, 2009 (the "Maturity Date"), with interest (computed on the basis of
the actual number of days elapsed over a 360-day year) on the unpaid balance of
such principal sum from the date hereof at an interest rate equal to the
Applicable Rate (or upon and during the continuance of an Event of Default (as
defined in Section 5), at the Applicable Rate in effect from time to time during
the continuance of such Event of Default plus 2%), payable in cash (unless the
Borrower elects to exercise the PIK Option in the manner set forth below) on
each May 17, (each an "Interest Payment Date"), commencing May 17, 2000, and on
the Maturity Date, until the entire principal amount hereof shall have become
due and payable, whether on the Maturity Date or at a date fixed for prepayment
or by acceleration or declaration or otherwise. As used herein, the term
"Applicable Rate" shall mean (i) during the period commencing on the date hereof
to but excluding May 17, 2001, 7.5%, (ii) during the period commencing on May
17, 2001 to but excluding May 17, 2003, 9.5% and (iii) at any time thereafter,
10.5%. If any payment of interest due hereunder becomes due and payable on a day
which is not a Business Day (as defined below), the due date thereof shall be
the next succeeding day which is a Business Day. Payments of principal and
interest shall be made in lawful money of the United States of America in
immediately available funds by check or wire transfer to the address or account
designated by Holdings. Notwithstanding the foregoing, the Borrower shall have
the option on any Interest Payment Date to pay 70% of the interest due on such
date (the "Scheduled Interest Payment") by electing (the "PIK Option") to
increase the principal amount due under this Note by 70% of the amount of such
Scheduled Interest Payment, whereupon, immediately thereafter, the principal
amount of this Note shall be increased by 70% of such Scheduled Interest Payment
and interest thereafter shall accrue on the principal amount of this Note as so
increased. As used in this Note, the term "Business Day"
<PAGE>
means any day upon which commercial banks in the State of New York are not
required or permitted to be closed.
Section 1. Issuance of Note. Upon the terms and subject to the
conditions contained herein (i) the Borrower has authorized the issuance to
Holdings of this Promissory Note (this "Note") in an aggregate principal amount
of up to $14,136,452 or such greater or lesser amounts as may be outstanding
hereunder (including as a result of the exercise of the PIK Option).
Section 2. Mandatory Prepayments. Upon the occurrence of any of the
following events, the principal amount of this Note, together with all accrued
interest thereon, shall become immediately due and payable: (i) the Borrower
winds up, liquidates or dissolves its affairs; (ii) the Borrower enters into any
transaction of merger or consolidation where an aggregate consideration in
excess of $20 million in cash or property shall be paid as the consideration
therefor; (iii) the Borrower conveys, sells, leases or otherwise disposes of all
or substantially all of its assets, or purchases or otherwise acquires (in one
or a series of related transactions) all or substantially all of the property or
assets of any Person (iv) the Borrower effects an initial public offering of its
equity securities or (v) the stockholders of the Borrower on the date of this
Note cease to own at least 40% of the outstanding capital stock of the Borrower
on a fully-diluted basis. As used in this Note, the term "Person" is to be
construed in the broadest sense and means and includes any natural person,
company, partnership, limited liability corporation, joint venture, corporation,
business trust, unincorporated organization or governmental authority.
Section 3. Representations and Warranties of the Borrower. The Borrower
hereby confirms that all of the representations and warranties (including
related definitions) made by the Borrower to Holdings in Article III of the
Stock Purchase and Redemption Agreement dated as of May 12, 1999 among the
Borrower, Andrew Greenfield and Holdings (as the same may be amended, restated
or otherwise modified from time to time, the "Purchase Agreement") are hereby
true and correct in all material respects. The Borrower further represents and
warrants to Holdings that no Event of Default has occurred and is continuing.
Section 4. Covenants.
4.1 Affirmative Convenants.
(a) Information. From time to time, the Borrower will
furnish to Holdings such information or documents (financial or otherwise) as
Holdings may request with respect to the Borrower and/or any of its
subsidiaries.
(b) Books, Records and Inspections. The Borrower will keep,
and will cause its subsidiaries to keep, proper books of record and account in
which full, true and correct entries in conformity with generally accepted
accounting principles and all material requirements of law shall be made. The
Borrower will, and will cause its subsidiaries to, permit officers and
designated representatives of Holdings to visit and inspect any of the
properties of the Borrower and its subsidiaries, and to examine the books of
records and account of the Borrower and its subsidiaries and discuss the
affairs, finances and accounts of the Borrower and its subsidiaries
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<PAGE>
with, and be advised as to the same by, the Borrower's and its subsidiaries'
officers, all at such reasonable times and intervals and to such reasonable
extent as Holdings may request.
(c) Maintenance of Property; Insurance. The Borrower will,
and will cause its subsidiaries to, (i) keep all material property used and
necessary in the Borrower's and its subsidiaries' respective businesses in good
working order and condition, (ii) maintain with financially sound and reputable
insurance companies insurance on all the Borrower's and its subsidiaries'
respective properties in at least such amounts and against at least such risks
as maintained by each of them prior to the date of this Note, and (iii) furnish
to Holdings, upon written request, information in reasonable detail as to the
insurance carried with respect to the Borrower and its subsidiaries.
(d) Corporate Franchises. The Borrower will, and will cause
its subsidiaries to, do or cause to be done all things necessary to preserve and
keep in full force and effect the Borrower's and its subsidiaries' existence and
all reasonable things necessary to preserve and keep in full force and effect
the Borrower's and its subsidiaries' respective material rights, franchises,
licenses and patents.
(e) Compliance with Statutes, Etc. The Borrower will, and
will cause its subsidiaries to, comply with all applicable statutes, regulations
and orders of, and all applicable restrictions imposed by, all governmental
bodies, domestic or foreign, in respect of the conduct of the Borrower's and its
subsidiaries' respective businesses and the ownership of the Borrower's and its
subsidiaries' respective properties.
(f) Performance of Obligations. The Borrower will, and will
cause its subsidiaries to, perform all of its or their respective obligations
under the terms of each mortgage, indenture, security agreement, debt instrument
and other contract by which the Borrower or its subsidiaries, as the case may
be, is bound, except where the failure to perform would not, in the aggregate,
have a material adverse effect on the business, operations or financial
condition of the Borrower or its subsidiaries, as the case may be.
(g) Taxes. The Borrower will, and will cause its
subsidiaries to, pay when due all taxes which, if not paid when due, would
materially and adversely affect the business, operations, or financial condition
of the Borrower or any of its subsidiaries, as the case may be, except as
contested in good faith and by appropriate proceedings for which adequate
reserves have been established in accordance with generally accepted accounting
principles.
(h) Use of Proceeds. The Borrower shall use the proceeds of
this Note to consummate the transactions contemplated by the Purchase Agreement
and for general corporate purposes of the Borrower and its subsidiaries.
4.2 Negative Covenants. The Borrower covenants and agrees (unless
Holdings agrees otherwise) that, until this Note, together with interest and all
other obligations incurred hereunder, are paid in full:
(a) Liens. The Borrower will not, and will cause its
subsidiaries not to, create, incur, assume or suffer to exist any Lien (as
defined below) upon or with respect to any property or assets (real or personal,
tangible or intangible) of the Borrower or any of its
3
<PAGE>
subsidiaries whether now owned or hereafter acquired, or sell any such property
or assets subject to an understanding or agreement, contingent or otherwise, to
repurchase such property or assets (including sales of accounts receivable with
recourse to the Borrower), or assign any right to receive income or permit the
filing of any financing statement under the UCC (as defined below) or any other
similar notice of Lien under any similar recording or notice statute, provided
that the provisions of this Section 4.2(a) shall not prevent the creation,
incurrence, assumption or existence of the following Liens (collectively, the
"Permitted Liens"):
(i) inchoate Liens for taxes not yet due and payable, or
Liens for taxes being contested in good faith and by appropriate proceedings for
which adequate reserves have been established in accordance with generally
accepted accounting principles;
(ii) Liens in respect of property or assets of the Borrower
or its subsidiaries, as the case may be, which do not in the aggregate
materially detract from the value of such property or assets or materially
impair the use thereof in the operation of the business of the Borrower or any
of its subsidiaries, as the case may be;
(iii) Liens in existence on the date hereof;
(iv) pledges or deposits in connection with worker's
compensation, unemployment insurance and other social security legislation;
(v) Liens on the collateral not otherwise permitted by the
provisions of this Section 4.2(a) to the extent securing Indebtedness permitted
by Section 4.2(c)(ii);
(vi) Liens in respect of judgments or awards with respect
to which the Borrower or any of its subsidiaries, as the case may be, shall in
good faith currently be diligently prosecuting an appeal or proceedings for
review with respect to which an appropriate bond or a stay of execution pending
such appeal or proceedings for review shall have been secured; and
(vii) Liens on real property existing at the time such real
property is acquired, provided that such Liens attach only on such real
property.
As used in this Note, the term "Lien" shall mean any mortgage, pledge,
hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or
other), preference, priority or other security agreement of any kind or nature
whatsoever (including, without limitation, any conditional sale or other title
retention agreement, any financing or similar statement or notice filed under
the UCC or any other similar recording or notice statute, and any lease having
substantially the same effect as any of the foregoing), and the term "UCC" shall
mean the Uniform Commercial Code, as from time to time in effect in the relevant
jurisdiction.
(b) Dividends. The Borrower will not declare or pay any dividends, or
return any capital to its stockholders or authorize or make any other
distribution, payment or delivery of property or cash to its stockholders in
their capacity as such, or redeem, retire, purchase or otherwise acquire,
directly or indirectly, for consideration, any shares of any class of
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<PAGE>
its capital stock now or hereafter outstanding (or any options or warrants
issued by the Borrower with respect to its capital stock), or set aside any
funds for any of the foregoing purposes; provided, however, that (i) the
Borrower may make such payments to repurchase capital stock (or warrants or
options) from an employee of the Borrower upon termination of such employee's
employment upon terms and conditions (including, without limitation, price)
acceptable to Holdings and (ii) the Borrower may make any payments required or
permitted by the Shareholders Agreement, dated as of the date hereof among the
Borrower and its shareholders.
(c) Indebtedness. The Borrower will not, and will cause its
subsidiaries not to, contract, create, incur, assume or suffer to exist any
Indebtedness (as defined below), except: (i) Indebtedness of the Borrower
incurred under this Note; (ii) Indebtedness (including any refinancing thereof)
to Holdings in an aggregate principal amount not to exceed $2,000,000, the
proceeds of which are to be used solely for working capital requirements; (iii)
accrued expenses and current trade accounts payable incurred in the ordinary
course of business; (iv) intercompany Indebtedness between the Borrower and its
subsidiaries; (v) Indebtedness of any of the Borrower's subsidiaries (not
covered under clauses (ii), (iii), (iv) and (vi) of this Section 4.2(c)), not to
exceed $2,000,000 at any time outstanding incurred in the ordinary course of
business, provided such Indebtedness is not secured in any manner by any type of
property (whether tangible or intangible, including, without limitation,
intellectual property) or assets of any Person; and (vi) Indebtedness with
respect to capital leases and other purchase money Indebtedness. As used in this
Note, the term "Indebtedness" shall mean, as to any Person, without duplication,
(i) all indebtedness (including principal, interest, fees and charges) of such
Person for borrowed money or for the deferred purchase price of property or
services, (ii) the face amount of all letters of credit issued for the account
of such Person and all letters of credit issued for the account of such Person
and all drafts drawn thereunder, (iii) all liabilities secured by any Lien on
any property owned by such Person, whether or not such liabilities have been
assumed by such Person, (iv) the aggregate amount required to be capitalized
under leases under which such Person is the lessee and (v) all contingent
obligations of such Person.
(d) Advances, Investments and Loans. The Borrower will not,
and will cause its subsidiaries not to, lend money or credit or make obligations
or securities of, or any other interest in, or make any capital contribution to,
any Person, except that (i) the Borrower and its subsidiaries may acquire and
hold receivables owing to it, if created or acquired in the ordinary course of
business and payable or dischargeable in accordance with customary trade terms
and (ii) the Borrower may make loans to employees of the Borrower in an
aggregate amount not to exceed $1,000,000.
(e) Transactions with Affiliates. The Borrower will not,
and will cause its subsidiaries not to, enter into any transaction or series of
related transactions, whether or not in the ordinary course of business, with
any Affiliate of the Borrower or any of its subsidiaries, as the case may be,
other than on terms and conditions substantially as favorable to the Borrower or
any of its subsidiaries, as the case may be, as would be obtainable by the
Borrower or any of its subsidiaries, as the case may be, at the time in a
comparable arm's-length transaction with a Person other than an Affiliate.
Notwithstanding the foregoing, the Borrower shall not, and shall cause its
subsidiaries not to, enter into any management agreement, services agreement or
any other similar agreement; provided, that, so long as there does not exist an
Event of Default, the Borrower and its subsidiaries may make payments to their
Affiliates pursuant to a management
5
<PAGE>
agreement, services agreement or other similar agreement in an aggregate amount
not to exceed $500,000 per calendar year. In addition, the Borrower may issue
stock or options pursuant to its 1999 Stock Option Plan. As used in this Note,
the term "Affiliate" means, with respect to any Person, any other Person that
directly or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with such Person. For the purpose of
the above definition, the term "control" (including, with correlative meaning,
the terms "controlling", "controlled by" and "under common control with"), as
used with respect to any Person, means the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities, by contract or
otherwise.
(f) Limitation on Voluntary Payments and Modifications of
Indebtedness; Modification of Certificate of Incorporation, By-Laws; Etc. The
Borrower will not, and will cause its subsidiaries not to, (i) make any
voluntary or optional payment or repayment on or redemption or acquisition for
value of (including, without limitation, by way of depositing with the trustee
with respect thereto money or securities before due for the purpose of paying
when due) any Indebtedness (other than Indebtedness under this Note) or (ii)
amend or modify, or permit the amendment or modification of, any provision of
any Indebtedness (other than Indebtedness under this Note and Indebtedness
permitted under Section 4.2(c) of this Note) or of any agreement, indenture,
loan agreement or security agreement) relating to any of the foregoing or (iii)
amend, modify or change the certificate of incorporation or by-laws of the
Borrower or any of its subsidiaries without the prior written consent of
Holdings, which consent shall not be unreasonably withheld.
Section 5. Events of Default. Upon the occurrence of any of the
following specified events (each an "Event of Default"):
5.1 Payments. The Borrower shall (i) default in the payment
when due of any principal on this Note or (ii) default, and such default shall
continue unremedied for 5 or more days, in the payment when due of any interest
on this Note or other amounts owing hereunder; or
5.2 Representations, Etc. Any representation, warranty or
statement made by the Borrower or any of its subsidiaries in this Note, the
Purchase Agreement, or in any certificate delivered pursuant hereto or thereto
shall prove to be untrue in any material respect on the date as of which made or
deemed made; or
5.3 Covenants. The Borrower shall (i) default in the due
performance or observance by it of any term, convenant or agreement contained in
Section 4 of this Note or (ii) default in the due performance or observance by
it of any term, convenant or agreement (other than those referred to in Sections
5.1 and 5.2 and clause (i) of this Section 5.3) contained in this Note and such
default shall continue unremedied for a period of 30 days after written notice
to the Borrower by Holdings; or
5.4 Default Under Other Agreements. The Borrower or any of
its subsidiaries shall (i) default in any payment of any Indebtedness (other
than this Note) beyond the period of grace, if any, provided in the instrument
or agreement under which such Indebtedness was created or (ii) default in the
observance or performance of any agreement or condition relating to
6
<PAGE>
any Indebtedness (other than this Note) or contained in any instrument or
agreement evidencing, securing or relating thereto, the effect of which default
is to cause, or to permit the holder or holders of such Indebtedness (or a
trustee or agent on behalf of such holder or holders) to cause (determined
without regard to whether any notice is required), any such Indebtedness to
become due prior to its stated maturity; or any Indebtedness of the Borrower or
its subsidiaries shall be declared to be due and payable, or required to be
prepaid other than by a scheduled required prepayment, prior to the stated
maturity thereof; or
5.5 Bankruptcy, Etc. (i) The Borrower or any of its
subsidiaries shall commence a voluntary case concerning the Borrower or any of
its subsidiaries, as the case may be, under Title 11 of the United States Code
entitled "Bankruptcy," as now or hereafter in effect, or any successor thereto
(the "Bankruptcy Code"); (ii) or an involuntary case is commenced against the
Borrower or any of its subsidiaries, and the petition is not controverted within
10 days, or is not dismissed within 60 days, after commencement of the case;
(iii) or a custodian (as defined in the Bankruptcy Code) is appointed for, or
takes charge of, all or substantially all of the property of the Borrower or any
of its subsidiaries, or the Borrower or its subsidiaries commences any other
proceeding under any reorganization, arrangement, adjustment of debt, relief of
debtors, dissolution, insolvency or liquidation or similar law of any
jurisdiction whether now or hereafter in effect relating to the Borrower or any
of its subsidiaries, as the case may be, or there is commenced against the
Borrower or any of its subsidiaries any such proceeding which remains
undismissed for a period of 60 days, or the Borrower or any of its subsidiaries
is adjudicated insolvent or bankrupt; (iv) or any order of relief or other order
approving any such case or proceeding is entered; (v) or the Borrower or any of
its subsidiaries suffers any appointment of any custodian or the like for it or
any substantial part of its respective property to continue undischarged or
unstayed for a period of 60 days; (vi) or the Borrower or its subsidiaries makes
a general assignment for the benefit of creditors; (vii) or any action is taken
by the board of directors or stockholders of the Borrowers or any of its
subsidiaries for the purpose of effecting any of the foregoing; or
5.6 Judgments. One or more judgments or decrees shall be
entered against the Borrower or any of its subsidiaries involving in the
aggregate a liability (not paid by the Borrower or its subsidiaries, as the case
may be, and/or not fully covered by insurance and/or not covered by
indemnification under the Purchase Agreement) of $500,000 or more, and all such
judgments or decrees shall not have been vacated, discharged or stayed or bonded
pending appeal within 60 days after the entry thereof;
then, and in any such event, and at any time thereafter if any Event of Default
shall then be continuing, Holdings may take any or all of the following actions,
without prejudice to the rights of Holdings or the holder of the Note to enforce
its claims against the Borrower (provided, that, if an Event of Default
specified in Section 5.5 shall occur, the result which would occur upon the
giving of written notice by Holdings to the Borrower as specified below shall
occur automatically without the giving any such notice) (a) declare the
principal of and any accrued interest in respect of the Note and all other
obligations owing hereunder to be, whereupon the same shall become, forthwith
due and payable without presentment, demand, protest or other notice of any
kind, all of which are hereby waived by the Borrower; or (b) take any and all
other remedial action that may be available at law, in equity or otherwise.
8
<PAGE>
Section 6. Optional Redemption. The Borrower may prepay this Note
(together with all accrued interest), in full or in part, at any time at a price
equal to the principal amount of the Note to be prepaid plus all accrued and
unpaid interest thereon.
Section 7. Registrar. So long as this Note is outstanding, the Borrower
shall maintain an office or agency where this Note (i) may be presented for
registration or transfer or for exchange (the "Registrar") and (ii) may be
presented for payment. The Registrar shall keep a register of the Note and its
transfer and exchange.
Section 8. Successors and Assigns. This Note shall bind and inure to
the benefit of the Borrower and Holdings and their respective successors and
assigns, provided, however, that the rights under this Note shall not be
assignable by the Borrower without the prior written consent of Holdings.
Holdings shall have the right to sell, assign, transfer or grant participations
in this Note (or any portion thereof) to any Person without the consent of any
Borrower and, upon effecting such a transaction, the Borrower agrees to amend
this Note to provide for the ability of Holdings and such other Persons to act
by a majority vote for the purpose of granting consents, amendments, or waivers
or taking any other action hereunder.
Section 9. Amendment; Supplement. This Note, except for Section 8, may
be amended or supplemented and any past default or compliance with any provision
(including any Event of Default) may be waived only upon the written consent of
the holder.
Section 10. Waiver. The Borrower hereby waives notice of acceptance
hereof as well as presentment, demand, protest and notice of non-payment and
protest as to this Note and any other document, instrument or agreement to which
the other may be a party in connection with this Note. The Borrower waives any
and all defenses based on suretyship, guaranty or any other applicable law,
including, without limitation, all rights and defenses arising out of (i) an
election of remedies by Holdings even though that election of remedies may have
destroyed rights of subrogation and reimbursement which Borrower may have, by
operation of law or otherwise, (ii) protections afforded to Borrower with
respect to antideficiency or similar laws limiting or discharging Borrower's
obligations to Holdings, (iii) the invalidity or unenforceability of Borrower's
obligations to Holdings, (iv) the failure to notify Borrower of the disposition
of collateral security granted by Borrower, (v) the commercial reasonableness of
any disposition or the impairment, however caused, of the value of collateral
security granted by the Borrower, and (vi) any duty on Holding's part (should
such duty exist) to disclose to Borrower any matter, fact or thing related to
the business operations or condition (financial or otherwise) of the other or
its Affiliates or property, whether now or hereafter known by Holdings. Holdings
may at any time, in accordance with the terms of this Note, without consent of
the Borrower, without notice to the Borrower and without affecting or impairing
the obligations of the Borrower hereunder and any other documents, instrument,
or agreement to which the Borrower may be a party in connection with this Note,
do any of the following: (i) renew, extend (including extensions beyond the
original term of the contract), modify (including changes in interest rates),
release or discharge the Borrower or any other persons obligated with respect to
the obligations hereunder; (ii) accept partial payments of the obligations
hereunder from the Borrower; (iii) accept substituted, new or additional
documents, instruments or agreements relating to the obligations hereunder from
the Borrower; (iv) settle, release (by operation of law or otherwise), compound,
compromise, collect or liquidate any of the obligations hereunder and collateral
security of the Borrower in any
8
<PAGE>
manner; (v) consent to the transfer or return of collateral security and take
and hold additional collateral security or guaranties for the obligations
hereunder; (vi) amend, exchange, release or waive any collateral security or
guaranty granted by the Borrower; or (vii) bid and purchase at any sale of the
obligations hereunder collateral security of the Borrower and apply any proceeds
and collateral security granted by the Borrower and direct the order and manner
of such sale.
Section 11. Remedies on Default, Etc. In case an Event of Default shall
occur and be continuing, Holdings may, inter alia, proceed to protect and
enforce its rights by an action at law, suit in equity or other appropriate
proceeding, whether for the specific performance of any agreement contained in
this Note or for an injunction against a violation of any of the terms hereof or
thereof or in the exercise of any power granted hereby or thereby or by law. No
right conferred upon Holdings by this Note shall be exclusive of any other right
referred to herein or now or hereafter available at law, in equity, by statute
or otherwise.
Section 12. Indemnification. In addition to all rights and remedies
available to Holdings at law or in equity, the Borrower shall indemnify Holdings
and each subsequent holder of this Note, and their respective Affiliates,
stockholders, officers, directors, employees, agents, representatives,
successors and permitted assigns (collectively, the "Indemnified Persons") and
save and hold each of them harmless against and pay on behalf of or reimburse
such party as and when incurred for any loss (excluding consequential damages),
liability, demand, claim, action, cause of action, cost, damage, deficiency,
tax, penalty, fine or expense, whether or not arising out of any claims by or on
behalf of the Borrower or any third party, including interest, penalties,
reasonable attorneys' fees and expenses and all amounts paid in investigation,
defense or settlement of any of the foregoing (collectively, "Losses") which any
such party may suffer, sustain or become subject to, as a result of, in
connection with, relating or incidental to or by virtue of:
(a) any misrepresentation or breach of warranty on the part
of the Borrower under this Note;
(b) without duplication of subsection (a) above, any
misrepresentation in or omission from any of the representations, warranties,
statements, schedules and exhibits hereto, certificates or other instruments or
documents furnished to Holdings by the Borrower made in or pursuant to this
Note;
(c) any Event of Default or nonfulfillment or breach of any
covenant or agreement on the part of the Borrower under this Note;
(d) any action, demand, proceeding, investigation or claim
by any third party (including, without limitation, governmental agencies); or
(e) any claim (whenever made) relating in any way to the
Borrower and any claim (whenever made) arising out of, relating to, resulting
from or caused by any transaction, status, event, condition, occurrence or
situation relating to, arising out of or in connection with (1) the status or
conduct of the Borrower, or (2) any actions taken by or omitted to be taken by
any of the Indemnified Persons in connection with this Note or any of the
agreements contemplated herein.
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<PAGE>
The Borrower agrees, whether or not the transactions herein
contemplated are consummated, to pay all out-of-pocket costs and expenses of
Holdings in connection with the negotiation, preparation, execution and delivery
of the this Note and the documents and instruments referred to herein and any
amendment, waiver or consent relating thereto and in connection with the
enforcement thereof.
Section 13. Survival. All indemnification rights hereunder shall
survive the execution and delivery of this Note and the consummation of the
transactions contemplated hereby indefinitely, regardless of any investigation,
inquiry or examination made for or on behalf of, or any knowledge of Holdings
and/or any of the Indemnified Persons or the acceptance by Holdings of any
certificate or opinion.
Section 14. Notices. All notices, requests, consents and other
communications hereunder to any party shall be deemed to be sufficient if
contained in a written instrument delivered in person or sent by telecopy,
nationally-recognized overnight courier or first class registered or certified
mail, return receipt requested, postage prepaid, addressed to such party at the
address set forth below or such other address as may hereafter be designated in
writing by such party to the other parties:
if to the Borrower, to:
Greenfield Online, Inc.
274 Riverside Avenue
Westport, CT 06880-4807
Attention: Chief Executive Officer
Telephone: (203) 221-0411
Facsimile: (203) 221-0791;
with a copy to:
Preston Gates & Ellis LLP
701 Fifth Avenue
Suite 5000
Seattle, Washington 98104
Attention: Robert Jaffe, Esq.
Telephone: (206) 623-7580
Facsimile: (206) 623-7022;
if to Holdings, to:
Greenfield Holdings, LLC
c/o Insight Capital Partners III, L.P.
122 East 42nd Street, Suite 2400
New York, New York 10168
Attention: Jeffrey Horing
Telephone: (212) 681-8181
Facsimile: (212) 661-0972;
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<PAGE>
with a copy to:
O'Sullivan Graev & Karabell, LLP
30 Rockefeller Plaza, 41st Floor
New York, New York 10112
Attention: Ilan S. Nissan, Esq.
Telephone: (212) 408-2400
Facsimile: (212) 408-2420;
or to such other address as t he party to whom notice is to be given may have
furnished to the other party in writing in accordance herewith. If mailed, as
aforesaid, any such communication shall be deemed to have been given on the
third Business Day following the day on which the piece of mail containing such
communication is posted.
Section 15. GOVERNING LAW. THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO
PRINCIPLES OF CONFLICTS OF LAW.
* * * *
11
<PAGE>
IN WITNESS WHEREOF, the Borrower has caused this Note to be dated and
to be executed, delivered and issued on its behalf by its duly authorized
officers.
GREENFIELD ONLINE, INC.
By: /s/ Rudy Nadilo
--------------------------
Rudy Nadilo
President
<PAGE>
NOTE AND WARRANT PURCHASE AGREEMENT
AMONG
GREENFIELD ONLINE, INC.
AND
GREENFIELD HOLDINGS, LLC
Dated as of March 3, 2000
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
Section 1. Issuance of the Notes and the Warrants.....................1
Section 2. Reservation of Class A Common Shares.......................1
Section 3. Sale and Purchase of Notes and Warrants....................1
Section 4. The Closings; The Initial Closing..........................2
Section 5. Representations and Warranties of the Corporation..........2
Section 6. Investment Representations of the Purchaser................5
Section 7. Certain Definitions........................................5
Section 8. Stockholders' Agreement....................................6
Section 9. Parties in Interest........................................6
Section 10. Entire Agreement...........................................6
Section 11. Notices....................................................6
Section 12. Amendments.................................................7
Section 13. Counterparts...............................................8
Section 14. Headings...................................................8
Section 15. Governing Law..............................................8
Section 16. Expenses...................................................8
i
<PAGE>
NOTE AND WARRANT PURCHASE
AGREEMENT, dated as of March 3, 2000, among
GREENFIELD ONLINE, INC., a Delaware
corporation (the "Corporation"), and
GREENFIELD HOLDINGS, LLC, a Delaware limited
liability company (the "Purchaser").
WHEREAS, the Corporation desires to sell to the Purchaser and the
Purchaser desires to purchase from the Corporation (i) up to an aggregate of
$5,000,000 in principal amount of the Corporation's 10% subordinated promissory
notes and (ii) warrants to purchase shares of the Corporation's Class A Common
Stock, $0.01 par value per share (the "Class A Common Shares"), on the terms and
subject to the conditions set forth in this Agreement.
NOW, THEREFORE, the parties hereto hereby agree as follows:
Section 1. Issuance of the Notes and the Warrants.
Upon the terms and subject to the conditions contained in this Agreement,
the Corporation has authorized the issuance to the Purchaser of, and the
Purchaser has committed to purchase from the Corporation, (a) up to $5,000,000
(the "Total Commitment") in aggregate principal amount of its 10% subordinated
promissory notes (the "10% Notes") due on the date (the "Maturity Date") which
is the earlier to occur of (i) any Fundamental Change, Change of Control or
Liquidity Event and (ii) June 30, 2000, each such 10% Note to be substantially
in the form of Exhibit A attached hereto, and (b) warrants (the "Warrants") to
purchase up to 69,930 Class A Common Shares (the "Warrant Shares"), each such
Warrant to be substantially in the form of Exhibit B attached hereto.
Section 2. Reservation of Class A Common Shares.
Upon the terms and subject to the conditions contained in this Agreement,
the Corporation shall reserve up to 69,930 Class A Common Shares for issuance
upon exercise of the Warrants.
Section 3. Sale and Purchase of Notes and Warrants.
At each Closing (as defined herein), the Corporation shall sell to the
Purchaser, and the Purchaser shall purchase from the Corporation, upon the terms
and subject to the conditions set forth herein 10% Notes in the aggregate
principal amount to be funded at such Closing as requested by the Corporation in
a written request for funding pursuant to Section 4(a). At the Initial Closing
(as defined herein), the Corporation shall sell to the Purchaser, and the
Purchaser shall purchase from the Corporation, a Warrant to purchase that number
of Warrant Shares as may be determined by dividing $500,000 by the Exercise
Price. Anything contained in the Financing Documents to the contrary
notwithstanding, in no event shall the Purchaser be obligated to purchase an
aggregate principal amount of 10% Notes in excess of the Total Commitment. The
Corporation and the Purchaser agree that 99.5% of the aggregate purchase price
to be paid by the Purchaser for the 10% Notes and the Warrants shall be
allocated to the
<PAGE>
sale and purchase of the 10% Notes. No party hereto shall take a position
inconsistent with this allocation unless otherwise required by law.
Section 4. The Closings; The Initial Closing.
(a) The sale of the 10% Notes and the Warrants to be purchased
hereunder shall take place at the offices of Wake, See, Dimes & Bryniczka, 27
Imperial Avenue, Westport, Connecticut 06880, at a closing occurring
simultaneously with the execution and delivery hereof (the "Initial Closing")
and on not more than one other date subsequent to the date hereof as may be
agreed upon by the Corporation and the Purchaser, but in any event not less than
10 business days following receipt by the Purchaser from the Corporation of a
written request for funding pursuant hereto (the "Second Closing", together with
the Initial Closing, are collectively referred to as the "Closings" and each a
"Closing"). At each Closing, the Purchaser shall purchase and the Corporation
shall sell an aggregate principal amount of 10% Notes equal to $2,500,000 of the
Total Commitment.
(b) At the Initial Closing, the Corporation shall deliver to the
Purchaser: (i) a 10% Note registered in the name of the Purchaser in the
aggregate principal amount equal to $2,500,000, (ii) a warrant certificate
representing the Warrant to be purchased by the Purchaser pursuant to Section 3,
(iii) an opinion of Wake, See, Dimes & Bryniczka, counsel to the Corporation,
dated as of the Initial Closing date with respect to the matters set forth in
Exhibit C and in form and substance satisfactory to the Purchaser and (iv) a
certificate signed by the chief financial officer or treasurer of the
Corporation to the effect that, both before and immediately after the
consummation of the Initial Closing and the other transactions contemplated to
take place on the Initial Closing date, (a) no Event of Default shall have
occurred and be continuing under the 10% Notes, and (b) the representations and
warranties of the Corporation made in or pursuant to the Financing Documents are
true in all respects (or in all material respects in the case of any such
representation or warranty that is not by its terms already qualified as to
materiality).
(c) In the event of a Second Closing, the Corporation shall deliver to
the Purchaser: (i) a 10% Note registered in the name of the Purchaser in the
aggregate principal amount equal to $2,500,000, (ii) an opinion of Wake, See,
Dimes & Bryniczka, counsel to the Corporation, dated as of the Second Closing
date with respect to the matters set forth in Exhibit C and in form and
substance satisfactory to the Purchaser and (iii) a certificate signed by the
chief financial officer or treasurer of the Corporation to the effect that, both
before and immediately after the consummation of the Second Closing and the
other transactions contemplated to take place on the Second Closing date, (a) no
Event of Default shall have occurred and be continuing under the 10% Notes, and
(b) the representations and warranties of the Corporation made in or pursuant to
the Financing Documents are true in all respects (or in all material respects in
the case of any such representation or warranty that is not by its terms already
qualified as to materiality).
(d) It being understood that this Agreement does not constitute a
revolving loan commitment, any amounts repaid or prepaid on 10% Notes purchased
hereunder may not be reborrowed.
2
<PAGE>
Section 5. Representations and Warranties of the Corporation.
The Corporation hereby represents and warrants to the Purchaser as
follows:
5.1. Organization.
Each of the Corporation and its subsidiaries is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation or formation, as listed on Schedule 5.1, and has all requisite
corporate or other power and authority to own, lease and operate its properties
and other assets and to carry on its business as presently conducted and as a
foreign Person in those jurisdictions listed on Schedule 5.1, which constitute
all the jurisdictions in which the character of the property owned or leased by
the Corporation or such subsidiary or the nature of the activities conducted by
the Corporation or such subsidiary makes such qualification necessary. Attached
hereto as Exhibit D is a correct and complete copy of the Certificate of
Incorporation of the Corporation (the "Charter") and attached hereto as Exhibit
E is a correct and complete copy of the By-Laws of the Corporation (the
"By-Laws"), in each case as currently in effect.
5.2. Capitalization.
(a) The authorized capital stock of the Corporation as of the date of
the Initial Closing shall consist of:
(i) 4,000,000 duly authorized shares of Class A Common Stock, of
which:
(A) 1,900,750 shares of Class A Common Stock shall be validly
issued and outstanding, fully paid and nonassessable, with no personal
liability attaching to the ownership thereof; and
(B) 2,210,179 shares of Class A Common Stock shall be duly
reserved for issuance upon the exercise of the Warrants and outstanding
options and other warrants listed on Schedule 5.2 (whether or not
presently exercisable);
(ii) 15,000,000 duly authorized shares of Class B Common Stock, of
which 10,927,575 shares shall have been validly issued and outstanding,
fully paid and nonassessable, with no personal liability attaching to the
ownership thereof.
All of such outstanding shares in each case are owned of record and beneficially
by the Persons identified on Schedule I attached hereto, without Encumbrance, in
the amounts set forth thereon.
(b) Schedule 5.2 hereto contains a list, as of the date hereof and
assuming the consummation at each Closing of all the transactions contemplated
by the Financing Documents (as defined in Section 5.3), of all outstanding
warrants, options, agreements, convertible securities or other commitments
pursuant to which the Corporation or any stockholder thereof is or may become
obligated to issue, sell or otherwise transfer any capital stock or other
securities of the Corporation, which list (i) names all parties entitled to
receive such shares of capital stock or other securities, (ii) indicates whether
or not such shares of capital stock or other securities are entitled to any
anti-dilution or similar adjustments upon the issuance of additional securities
of
3
<PAGE>
the Corporation or otherwise and (iii) sets forth the capital stock or other
securities required to be issued thereunder. Except as contemplated hereby,
there are, and immediately upon consummation at each Closing of the transactions
contemplated hereby, there will be, no preemptive or similar rights to purchase
or otherwise acquire the capital stock of the Corporation pursuant to any
provision of law, the Charter, the By-Laws or any agreement to which the
Corporation or any shareholder thereof is a party other than as set forth in the
Stockholders' Agreement dated as of May 17, 1999 by and among the parties
thereto (the "Stockholders' Agreement"). Except as set forth on Schedule 5.2,
there is, and immediately upon the consummation at each Closing of the
transactions contemplated hereby, there will be, no agreement, restriction or
encumbrance (such as a right of first refusal, right of first offer, proxy,
voting trust, voting agreement, etc.) with respect to the sale or voting of any
capital stock of the Corporation (whether outstanding or issuable upon
conversion or exercise of outstanding securities) other than as set forth in the
Stockholders' Agreement.
(c) All of the outstanding shares of capital stock of the Corporation
have been issued in accordance with applicable foreign, state and federal laws
and regulations governing the sale and purchase of securities.
5.3. Authorization of Agreement, Etc.
The execution, delivery and performance by the Corporation of this
Agreement, the 10% Notes, the Warrants and each other document or instrument
contemplated hereby (collectively, the "Financing Documents") have been duly
authorized by all requisite action (corporate or otherwise) by the Corporation;
and this Agreement and each other Financing Document has been duly executed and
delivered by the Corporation. Each of the Financing Documents is or, in the case
of the 10% Notes and the Warrants, will be, the valid and binding obligation of
the Corporation, enforceable against the Corporation in accordance with its
terms.
5.4. No Conflicts.
The execution, delivery and performance by the Corporation of this
Agreement or the other Financing Documents, the issuance, sale and delivery of
the 10% Notes and the Warrants (and the issuance of any Class A Common Shares
issuable upon the exercise of the Warrants), and compliance with the provisions
hereof by the Corporation, will not (a) violate any provision of law, statute,
rule or regulation (whether foreign or domestic) applicable to the Corporation
or any ruling, writ, injunction, order, judgment or decree of any court,
arbitrator, administrative agency or other governmental body (whether foreign or
domestic) applicable to the Corporation or any of its properties or assets or
(b) conflict with or result in any breach of any of the terms, conditions or
provisions of, or constitute (with notice or lapse of time or both) a default
(or give rise to any right of termination, cancellation or acceleration) under,
or result in the creation of, any Encumbrance upon any of the properties or
assets of the Corporation under, the Charter or By-Laws of the Corporation or
any material contract to which it is a party.
5.5. Approvals.
Except for (a) the filing of any notice subsequent to any Closing which
may be required under applicable foreign, federal or state securities law
(which, if required, will be filed on a
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timely basis as may be so required) and (b) obtaining the approval of existing
holders of the Corporation's outstanding capital stock, no permit,
authorization, consent or approval of or by, or any notification of or filing
with, any person (governmental or private) is required in connection with the
execution, delivery or performance of the Financing Documents by the
Corporation.
5.6. Authorization of the Class A Common Shares, Etc.
The issuance, sale and delivery by the Corporation of the 10% Notes, the
Warrants and the Warrant Shares have been duly authorized by all requisite
corporate action of the Corporation, and, when issued as contemplated by the
Warrants, the Warrant Shares will be validly issued and outstanding, fully paid
and nonassessable and not subject to preemptive or any other similar rights of
the stockholders of the Corporation or others.
5.7. Brokers and Finders.
The Corporation has not employed any broker or finder in connection with
the transactions contemplated by this Agreement.
Section 6. Investment Representations of the Purchaser.
The Purchaser hereby represents and warrants to the Corporation as
follows:
(a) The Purchaser is acquiring the Notes and Warrants to be purchased
by the Purchaser hereunder and, in the event that the Purchaser should acquire
any Class A Common Shares, will be acquiring such Class A Common Shares, for its
own account, for investment and not with a view to the distribution thereof in
violation of the Securities Act or applicable foreign or state securities laws.
(b) The Purchaser understands that (i) the 10% Notes and the Warrants
have not been, and that the Class A Common Shares will not be, registered under
the Securities Act or applicable foreign or state securities laws, by reason of
their issuance by the Corporation in a transaction exempt from the registration
requirements of the Securities Act and applicable foreign and state securities
laws and (ii) the Notes and Warrants and the Class A Common Shares must be held
by the Purchaser indefinitely unless a subsequent disposition thereof is
registered under the Securities Act and applicable foreign and state securities
Laws or is exempt from registration thereof. The Purchaser is an "accredited
investor" (as defined in Rule 501(a) of Regulation D promulgated under the
Securities Act).
(c) The Purchaser has not employed any broker or finder in connection
with the transactions contemplated by this Agreement.
Section 7. Certain Definitions.
"Bankruptcy Code" shall mean the United States Bankruptcy Code, 11
U.S.C.ss.101 et seq., as amended from time to time.
"Change of Control" shall be deemed to have occurred at such time as a
"person" or "group" (within the meaning of Section 13(d) and 14(d)(2) of the
Securities Exchange Act of
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1934) becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Securities Exchange Act of 1934), directly or indirectly, of more than 20% of
the total voting power of all classes of stock then outstanding of the
Corporation normally entitled to vote in the election of directors.
"Encumbrance" shall mean any liens, charges, encumbrances, equities,
claims, options, proxies, pledges, security interests, or other similar rights
of any nature.
"Exercise Price" shall mean $7.15, as adjusted pursuant to the Warrants.
"Fundamental Change" shall mean any acquisition, merger, consolidation,
reorganization, or recapitalization, or reclassification of the Corporation's
capital stock, or liquidation, winding up, or dissolution of the Corporation, or
conveyance, sale, assignment, lease, transfer, or other disposition of, in one
transaction or a series of transactions, all or any substantial part of the
Corporation's business, property, or assets, or the acquisition by purchase or
otherwise of all or substantially all of the properties, assets, stock, or other
evidence of beneficial ownership of the Corporation; provided, however, that any
conversion of existing securities by the holders of Class B Common Stock,
including mandatory conversion pursuant to the terms of the Charter pursuant to
an offering by the Corporation of its securities to the general public pursuant
to a registration statement filed under the Securities Act, shall not be deemed
to be a Fundamental Change.
"Liquidity Event" shall mean any transaction (or series of related
transactions) in which the Corporation receives more than $10,000,000 in gross
proceeds from the sale of its capital stock or other securities that are
directly or indirectly convertible or exchangeable into or exercisable for
shares of the Corporation's capital stock.
Section 8. Stockholders' Agreement.
The Warrants and the Warrant Shares shall be subject to the provisions of
the Stockholders' Agreement, including, but not limited to, the registration
rights set forth therein, as if the same were Investor Shares.
Section 9. Parties in Interest.
This Agreement shall bind and inure to the benefit of the Corporation, the
Purchasers and their respective successors and assigns.
Section 10. Entire Agreement.
This Agreement and the other writings and agreements referred to herein or
delivered pursuant hereto contain the entire understanding of the parties with
respect to the subject matter hereof and supersede all prior agreements and
understandings among the parties with respect thereto.
Section 11. Notices.
All notices, demands and requests of any kind to be delivered to any party
in connection with this Agreement shall be in writing and shall be deemed to
have been duly given if
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personally delivered or if sent by nationally-recognized overnight courier or by
registered or certified mail, return receipt requested and postage prepaid,
addressed as follows:
(a) if to the Corporation, to:
Greenfield Online, Inc.
15 River Road
Wilton, Connecticut 06897
Tel: (203) 846-5700
Fax: (203) 834-2283
Attention: Jonathan Flatow, Esq.;
with a copy to:
Wake, See, Dimes & Bryniczka
27 Imperial Avenue
Westport, CT 06880
Tel: (203) 227-9545
Fax: (203) 226-1641
Attention: Jacob P. Bryniczka, Esq.
(b) if to the Purchaser, to:
Greenfield Holdings, LLC
c/o InSight Capital Partners
527 Madison Avenue
10th Floor
New York, New York 10022
Attention: Jeffrey Horing
Tel: (212) 230-9200
Fax: (212) 230-9222
(c) with a copy to:
O'Sullivan Graev & Karabell, LLP
30 Rockefeller Plaza
New York, New York 10112
Tel: (212) 408-2400
Fax: (212) 408-2420
Attention: Ilan S. Nissan, Esq.;
or to such other address as the party to whom notice is to be given may have
furnished to the other parties hereto in writing in accordance with the
provisions of this Section 11. Any such notice or communication shall be deemed
to have been received (i) in the case of personal delivery, on the date of such
delivery, (ii) in the case of nationally-recognized overnight courier, on the
next business day after the date when sent and (iii) in the case of mailing, on
the third business day following that on which the piece of mail containing such
communication is posted.
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<PAGE>
Section 12. Amendments.
This Agreement may not be modified or amended, or any of the provisions
hereof waived, except by written agreement of the Corporation and the Purchaser.
Section 13. Counterparts.
This Agreement may be executed in any number of counterparts, and each
such counterpart hereof shall be deemed to be an original instrument, but all
such counterparts together shall constitute but one agreement.
Section 14. Headings.
The section and paragraph headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
Section 15. Governing Law.
This Agreement shall be governed by and construed in accordance with the
laws of the State of New York (without giving effect to principles of conflicts
of laws).
Section 16. Expenses.
The Corporation agrees to pay, and hold the Purchaser and all holders of
10% Notes and Warrants or Warrant Shares harmless against liability for the
payment of: (i) the reasonable out-of-pocket expenses (including attorneys' fees
and expenses) of the Purchaser arising in connection with its due diligence and
the negotiation and execution of the Financing Documents and the consummation of
the transactions contemplated by the Financing Documents which shall be payable
at each Closing and with respect to any amendments or waivers (whether or not
the same become effective) under or in respect of the Financing Documents, or
the other agreements contemplated thereby, including the Charter, (ii) stamp and
other taxes which may be payable in respect of the execution and delivery of the
Financing Documents or the issuance, delivery or acquisition of the 10% Notes,
the Warrants or any Warrant Shares and (iii) the reasonable fees and expenses
incurred with respect to the enforcement of the rights granted under the
Financing Documents, the agreements contemplated thereby and the Charter.
* * * * *
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<PAGE>
IN WITNESS WHEREOF, each of the undersigned has duly executed this Note
and Warrant Purchase Agreement as of the date first written above.
GREENFIELD ONLINE, INC.
By: /s/
---------------------
Name: Rudy Nadilo
Title: President + CEO
GREENFIELD HOLDINGS, LLC
By: /s/
---------------------
Name: Jeffrey Horing
Title: President
9
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EXHIBIT A
---------
Form of 10% Note
----------------
See attached.
10
<PAGE>
EXHIBIT B
---------
Form of Warrant
---------------
See attached.
11
<PAGE>
EXHIBIT C
---------
Form of Opinion
See attached.
12
<PAGE>
EXHIBIT C
---------
March 3, 2000
Greenfield Holdings, LLC
C/o InSight Capital Partners
122 East 42nd Street, Suite 2300
New York, NY 10168
Ladies and Gentlemen:
We have acted as counsel to Greenfield Online, Inc. (the "Company") in
connection with the execution and delivery of the Note and Warrant Purchase
Agreement (the "Purchase Agreement") by and among Greenfield Holdings, LLC (the
"Purchaser") and the Company, and the other agreements and instruments listed on
Schedule A attached hereto (together with the Purchase Agreement, the
"Documents"), dated as of the date hereof. This Opinion is being delivered
pursuant to Section 4(b) of the Purchase Agreement. Capitalized terms used but
not defined herein shall have the respective meanings given to such terms in the
Purchase Agreement.
Based upon and subject to the foregoing, we are of the opinion that:
1. The Company is a corporation duly organized, validly existing and in
good standing under, and by virtue of, the laws of the State of Delaware.
The Company has requisite corporate power and authority to execute and
deliver the Purchase Agreement and the Documents, to own and operate its
properties and assets, and to carry on its business as presently
conducted. The Company is either presently qualified or has submitted
applications to be qualified to do business as a foreign corporation in
the States of Washington, California, Missouri, New Jersey, Illinois and
Connecticut.
2. The Company has all requisite legal and corporate power to carry out
and perform its obligations under the terms of the Purchase Agreement and
the Documents.
3. As of March 2, 2000, the authorized capital stock of the Company
consists of 4,000,000 duly authorized shares of Class A Common Stock of
which 1,900,750 shares of Class A Common Stock are validly issued and
outstanding, fully paid and nonassessable, with no personal liability
attaching to the ownership thereof and 2,210,179 shares of Class A Common
Stock are duly reserved for issuance upon the exercise of the Warrants and
outstanding options and other warrants (whether or not presently
exercisable); and 15,000,000 duly authorized shares of Class B Common
Stock, of which 10,927,575 shares shall have been validly issued and
outstanding, fully paid and nonassessable, with no personal liability
attaching to the ownership thereof. There are a sufficient number of
shares of authorized but unissued Class A Common Stock to effect the
exercise of the Warrants.
The Class A Common Stock issuable upon exercise of the Warrants shall be
duly and validly reserved, and when issued in accordance with the
Company's Certificate of Incorporation will be validly issued, fully paid
and non-assessable, and free of any liens or encumbrances. Except for such
rights previously granted to the Purchasers, no holders of the Company's
securities have registration rights and there are no other options, other
than those granted to employees, warrants, conversion privileges, or other
rights presently outstanding to purchase or otherwise acquire any
authorized but unissued shares of capital stock or other securities of the
Company, or any agreements to issue such securities or rights.
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<PAGE>
4. The execution, delivery and performance of and compliance with the
Purchase Agreement and the Documents by the Company will not violate or
constitute a default under the Certificate of Incorporation or Bylaws of
the Company.
5. All corporate action on the part of the Company, its directors and
stockholders necessary for the authorization, execution and delivery of
the Purchase Agreement and the Documents by the Company, the performance
of the Company's obligations under the Purchase Agreement and the
Documents has been taken. The Purchase Agreement and the Documents have
been duly and validly executed and delivered by the Company and constitute
valid and binding obligations of the Company, enforceable against the
Company in accordance with their terms.
6. There are no actions, suits, proceedings or investigations pending
against the Company, any of its officers, directors, employees or its
properties, before any court or governmental agency (nor has the Company
received any actual threat thereof) except as provided in Schedule A,
attached hereto.
7. No consent, approval or authorization of or designation, declaration or
filing with any governmental authority on the part of the Company is
required in connection with the valid execution and delivery of the
Purchase Agreement and the Documents, or the consummation of any other
transaction contemplated by the Purchase Agreement and the Documents.
This opinion is for the Purchaser alone and may not be disclosed, quoted
or relied upon by any other person or entity without our prior written
permission. No opinion is implied, or may be inferred, beyond the opinions
expressly stated herein.
We do not purport to be experts in the laws of any jurisdiction other than
the laws of the State of Connecticut, Delaware General Corporation Law (the
"DGCL") and United States federal law insofar as such laws apply, and we express
no opinion as to conflicts of law, rules or the laws of any states or
jurisdictions other than Connecticut, the DGCL, United States federal law, to
the extent those laws are relevant to the transactions contemplated by the
Documents. To the extent that matters expressed in our opinion below are
governed by laws other than the laws of the State of Connecticut, the DGCL or
the federal laws of the United States, we have assumed, with your permission and
without independent investigation, for the purposes of such opinions that such
laws are identical in all respects to the laws of Connecticut and we express no
opinion as to whether such assumption is reasonable or correct. We note in
particular that the Documents purport to be governed by the laws of the State of
New York.
Very truly yours,
Wake, See, Dimes & Bryniczka
By_________________________
Jacob P. Bryniczka,
Its Partner
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EXHIBIT D
---------
Charter
-------
See attached
15
<PAGE>
EXHIBIT E
---------
By-Laws
-------
See attached.
16
<PAGE>
EXHIBIT A
THIS NOTE AND THE SECURITIES REPRESENTED BY THIS NOTE HAVE BEEN
ACQUIRED FOR INVESTMENT PURPOSES ONLY AND HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR UNDER ANY
APPLICABLE STATE SECURITIES LAWS. THIS NOTE MAY NOT BE SOLD OR OTHERWISE
TRANSFERRED OR PLEDGED, EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OR SUCH APPLICABLE STATE SECURITIES LAWS, OR IF THE
PROPOSED TRANSFER MAY BE EFFECTED WITHOUT REGISTRATION UNDER THE SECURITIES ACT
OR REGISTRATION OR QUALIFICATION UNDER APPLICABLE STATE SECURITIES LAWS. THIS
NOTE IS SUBJECT TO THE TERMS AND PROVISIONS OF THE NOTE AND WARRANT PURCHASE
AGREEMENT AMONG GREENFIELD ONLINE, INC. AND GREENFIELD HOLDINGS, LLC, DATED AS
OF MARCH 3, 2000, AS AMENDED FROM TIME TO TIME, AND IS ENTITLED TO THE BENEFITS
THEREOF.
GREENFIELD ONLINE, INC.
PROMISSORY NOTE DUE JUNE 30, 2000
New York, New York
$2,500,000 March 3, 2000
Section 1. General.
For value received, GREENFIELD ONLINE, INC., a Delaware corporation
(including any successor thereto, the "Payor"), hereby promises to pay to the
order of GREENFIELD HOLDINGS, LLC or assigns (the "Payee"), the principal amount
of TWO MILLION FIVE HUNDRED THOUSAND DOLLARS ($2,500,000) or such greater or
lesser principal amount which may be outstanding hereunder, on the date (the
"Maturity Date") which is the earlier to occur of: (a) the occurrence of a
Fundamental Change, Change of Control, or Liquidity Event; and (b) June 30,
2000. All payments hereunder shall be made in such coin or currency of the
United States of America as at the time of payment shall be legal tender therein
for the payment of public and private debts. The Payor shall pay interest in
arrears on the Maturity Date, payable in cash, on the unpaid balance of the
principal amount of this Note from time to time at the rate of ten percent (10%)
(computed in either event on the basis of a 360-day year and the actual number
of days elapsed) (the "Interest Rate"). The principal of, and interest on, this
Note shall be payable by wire transfer of immediately available funds to the
account of the Payee or by certified or official bank check payable to the Payee
mailed to the Payee at the address of the Payee as set forth on the records of
the Payor or such other address as shall be designated in writing by the Payee
to the Payor. This Note is being issued pursuant to the Note and Warrant
Purchase Agreement, dated as of the date hereof (the "Purchase Agreement"),
among the Payor and Greenfield Holdings, LLC, as amended from time to time.
Capitalized terms used and not otherwise defined herein have the meanings
ascribed thereto in the Purchase Agreement.
<PAGE>
Section 2. Subordination.
The Payee agrees not to ask, demand, sue for, take or receive payment
of, or discharge the Payor from the all or any part of this Note unless and
until the Senior Debt (as defined below) shall have been fully paid and
discharged, and all commitments by the Senior Creditor (as defined below) to
extend credit to the Payor shall have been terminated. So long as no "Default"
or "Event of Default" has occurred and is continuing with respect to the Senior
Debt, Payor shall be permitted to make scheduled payments of principal and
interest as set forth in the Note (the "Permitted Payments"). Permitted Payments
do not include mandatory payments due upon a Change of Control, Liquidity Event
or Fundamental Change, or prepayment by the Payor.
Notwithstanding the terms or provisions of any agreement or arrangement
which the Senior Creditor or Payee may now or hereafter have with the Payor, any
rule of law and irrespective of the time, order or method of perfection of any
security interest or the recordation or other filing in any public record of any
financing statement, any security interest in the assets of Payor (the "Senior
Creditor Collateral") granted to the Senior Creditor by the Payor, whether or
not perfected, are and shall remain senior to any security interest therein now
or hereafter granted by the Payor to the Payee.
The Payee shall have no right to take any action with respect to the
Senior Creditor Collateral, whether by judicial or non-judicial foreclosure,
notification to the Payor's account debtors or otherwise, unless and until all
Senior Debt has been fully and indefeasibly paid, and the Senior Creditor shall
have no commitment to extend any further credit to Payor.
Any proceeds of the Senior Creditor Collateral, or proceeds thereof
(whether or not identifiable), received by the Payee shall be paid to the Senior
Creditor on demand.
This terms of this Section 2 shall remain in full force and effect
notwithstanding the filing of a petition for relief by or against the Payor
under the Bankruptcy Code and shall apply with full force and effect with
respect to all Senior Creditor Collateral acquired by the Payor, or obligations
incurred by the Payor to the Payee, subsequent to the date of said petition.
Upon the distribution of any assets of Payor (whether by reason of
sale, reorganization, liquidation, dissolution, arrangement, bankruptcy,
receivership, assignment for the benefit of creditors, foreclosure or otherwise)
the Senior Creditor shall be entitled to receive payment in full of the Senior
Debt (including, without limitation, interest arising subsequent to the date of
the filing by or against Payor of any petition for relief under the Bankruptcy
Code or the making of any assignment for the benefit of creditors, whether or
not such interest is recoverable from or provable against Payor) prior to the
payment of all of any part of this Note, other than Permitted Payments, and the
Senior Creditor is hereby irrevocably appointed attorney-in-fact for the Payee
with full power to act in the place and stead of the Payee in all matters
relating to or affecting this Note, including the right to make, present, file
and vote such proofs of claim against Payor on account of all or any part of
this Note as the Senior Creditor may deem advisable and to receive and collect
any and all dividends or other payments ("Dividends") made thereon and to apply
the same on account of the Senior Debt. The Payee will execute and deliver to
the Senior Creditor such instruments as may be required by the Senior Creditor
to enforce any and all of this Note, to effectuate the aforesaid power of
attorney and to effect collection of any and all
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<PAGE>
Dividends which may be made at any time on account thereof. The Senior Creditor
agrees to exercise the power of attorney provided for in this paragraph only so
long as a "Default" or "Event of Default" has occurred and is continuing with
respect to the Senior Debt.
The Payee will not, without the Senior Creditor's prior written
consent, assign to or subordinate in favor of any other entity any right, claim
or interest in any part of this Note or commence or join with any other creditor
in commencing any bankruptcy, reorganization or insolvency proceeding against
Payor; provided that, notwithstanding the foregoing, the Payee may assign this
Note so long as the assignee accepts such an assignment subject to and with
notice of, and agrees in writing to be bound by, the terms and conditions
hereof.
The Senior Creditor may at any time, in its discretion, renew or extend
the time of payment of any portion of the Senior Debt, or waive or release any
collateral which may be held therefor, and the Senior Creditor may enter into
such agreements with Payor as it may deem desirable without notice to or further
assent from the Payee and without in any way affecting the rights of the Senior
Creditor hereunder.
This Note is and shall be deemed to be a continuing subordination and
shall be irrevocable. The Payor acknowledges that attempted or purported
termination of this Note by the Payee shall constitute a default in the terms
and conditions of the Senior Debt.
"Senior Debt" means principal and interest (including interest accruing
after the date on which the Payor becomes subject to the jurisdiction of any
federal or state debtor relief statute, whether or not recoverable against the
Payor) of any and all present and future debts and obligations of Payor to
Greyrock Capital as Senior Creditor, not to exceed $7,000,000 in the aggregate
with respect to principal (exclusive of interest, fees, expenses, and costs
owing by the Payor to the Senior Creditor), whether absolute or contingent, due
or to become due, and whether direct or acquired by the Senior Creditor by
transfer, assignment or otherwise whether or not such debts are contemplated by
the Payor, the Senior Creditor, or the Payee and to Youthstream Media Networks,
Inc., as Senior Creditor not to exceed $5,000,000 (pursuant to a contemplated
Loan Agreement to close on or about March 24, 2000), in the aggregate with
respect to principal (exclusive of interest, fees, expenses, and costs owing by
the Payor to the Senior Creditor), whether absolute or contingent, due or to
become due, and whether direct or acquired by the Senior Creditor by transfer,
assignment or otherwise whether or not such debts are contemplated by the Payor,
the Senior Creditor, or the Payee.
"Senior Creditor" means Greyrock Capital, a division of Banc of America
Commercial Finance Corporation and Youthstream Media Networks, Inc.
Section 3. Events of Default.
(a) Definitions.
In each case of the happening of the following events (each of which is
an "Event of Default"):
(i) if any representation or warranty made by the Corporation or
any of its subsidiaries in any Financing Document, or in any report,
certificate, financial statement
3
<PAGE>
or other instrument furnished in connection with the Financing
Documents shall prove to have been false or misleading in any material
respect when made;
(ii) if a default occurs in the payment of any premium, installment
of principal of, interest on, or other obligation with respect to, this
Note, whether at the due date hereof or upon acceleration hereof, and
such default shall continue for more than five (5) days after notice
thereof from the Payee;
(iii) if a default occurs in the due observance or performance of
any covenant or agreement on the part of the Payor to be observed or
performed pursuant to the terms of any Financing Document and such
default remains uncured for thirty (30) days;
(iv) if the Payor shall (1) discontinue its business, (2) apply for
or consent to the appointment of a receiver, trustee, custodian or
liquidator of it or any of its property, (3) admit in writing its
inability to pay its debts as they mature, (4) make a general
assignment for the benefit of creditors, or (5) file a voluntary
petition in bankruptcy, or a petition or an answer seeking
reorganization or an arrangement with creditors, or to take advantage
of any bankruptcy, reorganization, insolvency, readjustment of debt,
dissolution or liquidation laws or statutes, or an answer admitting the
material allegations of a petition filed against it in any proceeding
under any such law;
(v) there shall be filed against the Payor an involuntary petition
seeking reorganization of the Payor or the appointment of a receiver,
trustee, custodian or liquidator of the Payor or a substantial part of
its assets, or an involuntary petition under any bankruptcy,
reorganization or insolvency law of any jurisdiction, whether now or
hereafter in effect (any of the foregoing petitions being hereinafter
referred to as an "Involuntary Petition") and such Involuntary Petition
shall not have been dismissed within sixty (60) days after it was
filed;
(vi) if final judgment(s) for the payment of money in excess of an
aggregate of $100,000 shall be rendered against the Payor and the same
shall remain undischarged for a period of thirty (30) consecutive days,
during which time execution shall not be effectively stayed;
(vii) if a default occurs in the due observance or performance of
any material covenant, condition or agreement on the part of the Payor
under any debt instrument having a value of more than $100,000, and
such default shall permit the holder thereof to accelerate such
indebtedness;
then, upon each and every such Event of Default and at any time thereafter
during the continuance of such Event of Default, at the election of the holders
of a majority of the outstanding principal amount of all 10% Notes, the 10%
Notes and any and all indebtedness of the Payor to the holders of the 10% Notes
shall immediately become due and payable (subject to Section 2 hereof), both as
to principal and interest (including any deferred interest and any accrued and
unpaid interest), without presentment, demand, or protest, all of which are
hereby
4
<PAGE>
expressly waived, anything contained herein or in any other Financing Document
or other evidence of such indebtedness to the contrary notwithstanding (except
in the case of an Event of Default under paragraphs (iv) or (v) of this Section
3(a), in which event such indebtedness shall automatically become due and
payable).
(b) Remedies on Default, Etc.
In case any one or more Events of Default shall occur and be continuing
and acceleration of the 10% Notes or any other indebtedness of the Payor to the
Payee shall have occurred, the Payee may (subject to Section 2 hereof), among
other things, proceed to protect and enforce its rights by an action at law,
suit in equity or other appropriate proceeding, whether for the specific
performance of any agreement contained herein or in any other Financing
Document, or for an injunction against a violation of any of the terms hereof or
thereof or in and of the exercise of any power granted hereby or thereby or by
law. No right conferred upon the Payee hereby or by any other Financing Document
shall be exclusive of any other right referred to herein or therein or now or
hereafter available at law, in equity, by statute or otherwise.
Section 4. Prepayment.
Subject to Section 2 hereof, this Note, together with interest accrued
thereon, may be prepaid in whole or in part without penalty.
Section 5. Defenses.
The obligations of the Payor under this Note shall not be subject to
reduction, limitation, impairment, termination, defense, set-off, counterclaim
or recoupment for any reason.
Section 6. Exchange or Replacement of Notes.
(a) The Payee may, at its option, in person or by duly authorized
attorney, surrender this Note for exchange, at the principal business office of
the Payor, and receive in exchange therefor, a new Note in the same principal
amount as the unpaid principal amount of this Note and bearing interest at the
same annual rate as this Note, each such new Note to be dated as of the date of
this Note and to be in such principal amount as remains unpaid and payable to
such person or persons, or order, as the Payee may designate in writing.
(b) Upon receipt by the Payor of evidence satisfactory to it of the
loss, theft, destruction, or mutilation of this Note, and (in case of loss,
theft or destruction) of an indemnity reasonably satisfactory to it, and upon
surrender and cancellation of this Note, if mutilated, the Payor will deliver a
new Note of like tenor in lieu of this Note. Any Note delivered in accordance
with the provisions of this Section 6 shall be dated as of the date of this
Note.
Section 7. Extension of Maturity. Should the principal of or interest
on this Note become due and payable on other than a business day, the maturity
date thereof shall be extended to the next succeeding business day, and, in the
case of principal, interest shall be payable thereon at the rate per annum
herein specified during such extension. For the purposes of the preceding
sentence, a business day shall be any day that is not a Saturday, Sunday, or
legal holiday in the State of New York.
5
<PAGE>
Section 8. Attorneys' and Collection Fees. Should the indebtedness
evidenced by this Note or any part hereof be collected at law or in equity or in
bankruptcy, receivership or other court proceedings, or this Note be placed in
the hands of attorneys for collection, the Payor agrees to pay, in addition to
principal and interest due and payable hereon, all costs of collection,
including reasonable attorneys' fees and expenses, incurred by the Payee in
collecting or enforcing this Note.
Section 9. Waivers. The Payor hereby waives presentment, demand for
payment, notice of dishonor, notice of protest and all other notices or demands
in connection with the delivery, acceptance, performance or default of this
Note.
No delay by the Payee in exercising any power or right hereunder shall
operate as a waiver of any power or right, nor shall any single or partial
exercise of any power or right preclude other or further exercise thereof, or
the exercise of any other power or right hereunder or otherwise; and no waiver
whatsoever or modification of the terms hereof shall be valid unless set forth
in writing by the Payee and then only to the extent set forth therein.
Section 10. Amendments and Waivers. No provision of this Note may be
amended or waived except as provided in the Purchase Agreement. In Addition, any
proposed amendment or modification of the subordination provisions set forth in
Section 2 of this Note must be consented to in writing by the Senior Creditor.
The Senior Creditor is a direct and intended beneficiary of the terms and
covenants of the subordination provisions of Section 2.
Section 11. Governing Law. This Note is made and delivered in, and
shall be governed by and construed in accordance with the laws of, the State of
New York (without giving effect to principles of conflicts of laws).
Section 12. Notices. The terms and provisions of Section 11 of the
Purchase Agreement are expressly incorporated into this Note.
* * * * *
6
<PAGE>
IN WITNESS WHEREOF, the Payor has duly executed and delivered this Note
as of the date first written above.
GREENFIELD ONLINE, INC.
By: /s/ Rudy Nadilo
------------------------------
Name: Rudy Nadilo
Title: President & CEO
<PAGE>
THIS WARRANT AND THE SECURITIES REPRESENTED BY THIS WARRANT HAVE BEEN
ACQUIRED FOR INVESTMENT PURPOSES ONLY AND HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR UNDER ANY
APPLICABLE STATE SECURITIES LAWS. THIS WARRANT MAY NOT BE SOLD OR OTHERWISE
TRANSFERRED OR PLEDGED, EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OR SUCH APPLICABLE STATE SECURITIES LAWS, OR IF THE
PROPOSED TRANSFER MAY BE EFFECTED WITHOUT REGISTRATION UNDER THE SECURITIES ACT
OR REGISTRATION OR QUALIFICATION UNDER APPLICABLE STATE SECURITIES LAWS.
THIS WARRANT, THE SECURITIES REPRESENTED BY THIS WARRANT AND THE
CAPITAL SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT ARE SUBJECT TO CERTAIN
VOTING AGREEMENTS AND RESTRICTIONS ON TRANSFER AS SET FORTH IN THE SHAREHOLDERS'
AGREEMENT, DATED AS OF MAY 17, 1999, AS AMENDED, AMONG THE ISSUER OF SUCH
SECURITIES (THE "CORPORATION") AND CERTAIN OF THE CORPORATION'S SHAREHOLDERS. A
COPY OF SUCH STOCKHOLDERS AGREEMENT WILL BE FURNISHED WITHOUT CHARGE BY THE
CORPORATION TO THE HOLDER HEREOF UPON WRITTEN REQUEST.
GREENFIELD ONLINE, INC.
CLASS A COMMON STOCK WARRANT
No. AW-2 March 3, 2000
VOID AFTER March 3, 2005
(or earlier upon the occurrence of
certain events described below)
THIS CERTIFIES that, for value received, GREENFIELD HOLDINGS, LLC or
assigns (the "Holder"), shall be entitled to subscribe for and purchase from
GREENFIELD ONLINE, INC., a Delaware corporation (including any successor thereto
(by way of merger, consolidation, sale or otherwise), the "Corporation"), up to
that number of shares of Class A Common Stock, $0.01 par value per share (the
"Warrant Shares"), of the Corporation (the "Class A Common Shares") equal to the
quotient obtained by dividing (x) U.S.$500,000 by (y) the Exercise Price, during
the Exercise Period (as defined in Section 1 hereof), pursuant to the terms and
subject to the conditions hereof. This Warrant is being issued pursuant to the
Note and Warrant Purchase Agreement dated as of the date hereof (as amended from
time to time, the "Purchase Agreement") among the Corporation and Greenfield
Holdings, LLC. Capitalized
<PAGE>
terms used herein but not otherwise defined herein have the meanings ascribed
thereto in the Purchase Agreement.
Section 1. Exercise Period.
This Warrant may be exercised by the Holder at any time or from time to
time after the date hereof and on or prior to March 3, 2005 (such period being
herein referred to as the "Exercise Period").
Section 2. Exercise of Warrant; Warrant Shares.
(a) The rights represented by this Warrant may be exercised, in whole
or in any part (but not as to a fractional Class A Common Share), by (i) the
surrender of this Warrant (properly endorsed) at the office of the Corporation
(or at such other agency or office of the Corporation as it may designate by
notice in writing to the Holder at the address of the Holder appearing on the
books of the Corporation), (ii) delivery to the Corporation of a notice of
election to exercise in the form of Exhibit A attached hereto, and (iii) payment
to the Corporation of the aggregate Exercise Price by (A) cash, wire transfer
funds or check and/or (B) Class A Common Shares or Warrants to purchase Class A
Common Shares (net of the Exercise Price for such shares), valued for such
purposes at the Market Price per share on the date of exercise. As used herein,
"Market Price" at any date of one Class A Common Share shall be (i) the last
reported sales price regular way or, in case no such reported sales took place
on such day, the last reported bid price regular way on the principal national
securities exchange on which Class A Common Shares are listed or admitted to
trading (or if the Class A Common Shares are not at the time listed or admitted
for trading on any such exchange, then such price as shall be equal to the last
reported sale price, or if there is no such sale price, the last reported bid
price, as reported by the National Association of Securities Dealers Automated
Quotations System ("NASDAQ") on such day, or if, on any day in question, the
security shall not be quoted on the NASDAQ, then such price shall be equal to
the last reported bid price on such day as reported by the National Quotation
Bureau, Inc. or any similar reputable quotation and reporting service, if such
quotation is not reported by the National Quotation Bureau, Inc.) or (ii) if the
Corporation's Class A Common Shares are not listed or admitted to trading on a
principal national securities exchange, the value given such share as determined
by the Corporation's Board of Directors; provided, however, that, if the Holder
notifies the Corporation in writing disputing such determination by the
Corporation's Board of Directors within 20 days after such determination, the
Holder and the Corporation shall mutually agree upon and select an investment
bank to determine the value of one Class A Common Share, the investment bank's
determination to be conclusive, absent manifest error, and the costs of such
determination to be borne by the Corporation, except that the Holder shall bear
such costs if the investment bank's determination is less than the Corporation's
Board of Directors' determination by an amount greater than 10% of the
Corporation's Board of Directors' determination.
(b) Each date on which this Warrant is surrendered and on which payment
of the Exercise Price is made in accordance with Section 3(a) above is referred
to herein as an "Exercise Date." Simultaneously with each exercise, the
Corporation shall issue and deliver a certificate or certificates for the
Warrant Shares being purchased pursuant to such exercise, registered in the name
of the Holder or the Holder's designee, to such Holder or designee, as the
2
<PAGE>
case may be. If such exercise shall not have been for the full number of the
Warrant Shares, then the Corporation shall issue and deliver to the Holder a new
Warrant, registered in the name of the Holder, of like tenor to this Warrant,
for the balance of the Warrant Shares that remain after exercise of the Warrant.
(c) The person in whose name any certificate for Class A Common Shares
is issued upon any exercise shall for all purposes be deemed to have become the
holder of record of such shares as of the Exercise Date, except that if the
Exercise Date is a date on which the share transfer books of the Corporation are
closed, such person or entity shall be deemed to have become the holder of
record of such shares at the close of business on the next succeeding date on
which the share transfer books are open. The Corporation shall pay all
documentary, stamp or other transactional taxes attributable to the issuance or
delivery of Class A Common Shares upon exercise of all or any part of this
Warrant; provided, however, that the Corporation shall not be required to pay
any taxes which may be payable in respect of any transfer involved in the
issuance or delivery of any certificate for such shares in a name other than
that of the Holder to the extent such taxes would exceed the taxes otherwise
payable if such certificate had been issued to the Holder.
Section 3. Representations, Warranties and Covenants as to Class A
Common Shares.
The Corporation represents and warrants to the Holder that all Class A
Common Shares, or such other Common Shares that may replace the Corporation's
Class A Common Shares, that may be issued upon the exercise of this Warrant
will, upon issuance, be validly issued, fully paid and nonassessable, with no
personal liability attaching to the ownership thereof, and free from all taxes,
liens and charges with respect to the issue thereof. The Corporation will from
time to time use its best efforts to take all such action as may be required to
assure that the stated or par value per Class A Common Share is at all times no
greater than the then effective Exercise Price. The Corporation shall at all
times have authorized and reserved, free from preemptive rights, a sufficient
number of Class A Common Shares to provide for the exercise of this Warrant. The
Corporation shall not take any action which would cause the number of authorized
but unissued Class A Common Shares to be less than the number of such shares
required to be reserved hereunder for issuance upon exercise of the Warrant. If
any Class A Common Shares reserved for the purpose of issuance upon the exercise
of this Warrant require registration with or approval of any governmental
authority under any federal or state law before such shares may be validly
issued or delivered upon exercise, then the Corporation shall in good faith and
as expeditiously as possible endeavor to secure such registration or approval,
as the case may be.
Section 4. Adjustment of Exercise Price.
(a) If, at any time after the date hereof the Corporation shall issue
any shares of Common Stock, $0.01 par value per share (the "Common Shares"), or
options to purchase or rights to subscribe for Common Shares, or securities by
their terms convertible into or exchangeable for such Common Shares, or options
to purchase or rights to subscribe for such convertible or exchangeable
securities, other than (a) pursuant to an employee stock option plan duly
authorized and approved by the Corporation's board of directors and its
Shareholders, (b) securities offered to the public pursuant to an offering by
the Company of its securities to the
3
<PAGE>
general public pursuant to a registration statement filed under the
Securities Act of 1933, as amended, (c) any common stock or related options
convertible into such shares of common stock issued to employees, consultants,
officers and directors of the Company as an incentive or in a non financing
transaction (d) stock issued upon conversion of preferred stock or other
convertible securities, options and warrants outstanding on the date of this
Warrant, (e) up to 139,860 shares of stock issued upon conversion of the warrant
to be issued to Youthstream Media Networks, Inc. (f) securities issued as direct
consideration for the acquisition of another business entity by or merger or
consolidation of another business entity into the Company, and at a price less
than the Exercise Price per share, then the Exercise Price in effect immediately
prior to each such issuance shall forthwith be adjusted (subject to the
provisions of this paragraph (a)), effective as of the date of such issuance, to
a price equal to the product obtained by multiplying the Exercise Price in
effect immediately prior to the issuance of such Common Shares or other security
by a fraction, the numerator of which is equal to the sum of (x) the number of
Common Shares deemed outstanding on a fully-diluted basis immediately prior to
such issuance (including shares deemed outstanding as provided in subdivision
(iii) below) plus (y) the quotient of the aggregate consideration received by
the Corporation upon such issuance, divided by the Market Price in effect
immediately prior to the issuance of such Common Shares, and the denominator of
which is the total number of Common Shares deemed outstanding on a fully-diluted
basis (including shares deemed outstanding as provided in subdivision (iii)
below) immediately after (and including) such issuance. For the purposes of this
Section 4, notwithstanding the proviso to the definition of the term "Market
Price" in Section 3, a determination of Market Price by agreement between the
Corporation and holders of Warrants representing the right to purchase 60% or
more of the aggregate number of Warrant Shares purchasable upon exercise of all
Warrants issued pursuant to the Purchase Agreement shall be conclusive and
binding on the Holder.
For purposes of any adjustment of the Exercise Price pursuant to this
clause (a), the following provisions shall be applicable:
(i) In the case of the issuance of Common Shares for cash, the
consideration shall be deemed to be the amount of cash paid therefor
after deducting therefrom any discounts, commissions or other expenses
allowed, paid or incurred by the Corporation for any underwriting or
otherwise in connection with the issuance and sale thereof.
(ii) In the case of the issuance of Common Shares for a
consideration in whole or in part other than cash, the consideration
other than cash shall be deemed to be the fair market value thereof as
determined in good faith by the Board, irrespective of any accounting
treatment.
(iii) In the case of the issuance of (x) options to purchase or
rights to subscribe for Common Shares, (y) securities by their terms
convertible into or exchangeable for Common Shares, or (z) options to
purchase or rights to subscribe for such convertible or exchangeable
securities:
(A) the aggregate maximum number of Common Shares deliverable
upon exercise of such options to purchase or rights to subscribe
for Common
4
<PAGE>
Shares shall be deemed to have been issued at the time such
options or rights were issued and for a consideration equal to the
consideration (determined in the manner provided in subdivisions
(i) and (ii) above), if any, received by the Corporation upon the
issuance of such options or rights plus the minimum purchase price
provided in such options or rights for the Common Shares covered
thereby;
(B) the aggregate maximum number of Common Shares deliverable
upon conversion of or in exchange for any such convertible or
exchangeable securities or upon the exercise of options to
purchase or rights to subscribe for such convertible or
exchangeable securities and subsequent conversion or exchange
thereof, shall be deemed to have been issued at the time such
securities were issued or such options or rights were issued and
for a consideration equal to the consideration received by the
Corporation for any such securities and related options or rights
(excluding any cash received on account of accrued interest or
accrued dividends), plus the additional consideration, if any, to
be received by the Corporation upon the conversion or exchange of
such securities or the exercise of any related options or rights
(the consideration in each case to be determined in the manner
provided in subdivisions (i) and (ii) above);
(C) on any change in the number of Common Shares deliverable
upon exercise of any such options or rights or conversions of or
exchange for such convertible or exchangeable securities, other
than a change resulting from the antidilution provisions thereof,
the Exercise Price shall forthwith be readjusted to such Exercise
Price as would have been obtained had the adjustment made upon the
issuance of such options, rights or securities not converted prior
to such change or options or rights related to such securities not
converted prior to such change, been made upon the basis of such
change; and
(D) on the expiration of any such options or rights, the
termination of any such rights to convert or exchange or the
expiration of any options or rights related to such convertible or
exchangeable securities, the Exercise Price shall forthwith be
readjusted to such Exercise Price as would have been obtained had
the adjustment made upon the issuance of such options, rights,
securities or options or rights related to such securities, been
made upon the basis of the issuance of only the number of Common
Shares actually issued upon exercise of such options or rights,
upon the conversion or exchange of such securities or upon the
exercise of the options or rights related to such securities and
subsequent conversion or exchange thereof.
(b) If, at any time after the date hereof, the number of Common Shares
outstanding is increased by a stock dividend payable in Common Shares or by a
subdivision or split-up of Common Shares, then, following the record date fixed
for the determination of holders of Common Shares entitled to receive such
shares dividend, subdivision or split-up, the Exercise Price in effect at such
time shall be decreased such that the aggregate number of Warrant Shares
issuable upon exercise of this Warrant as of such record date shall be increased
in proportion to such increase in outstanding shares.
5
<PAGE>
(c) If, at any time after the date hereof, the number of Common Shares
outstanding is decreased by a combination of the outstanding Common Shares,
then, following the record date for such combination, the Exercise Price in
effect at such time shall be increased such that the aggregate number of Warrant
Shares issuable upon exercise of this Warrant as of such record date shall be
decreased in proportion to such decrease in outstanding shares.
(d) If, at any time after the date hereof, any capital reorganization,
or any reclassification of the capital shares of the Corporation (other than a
change in par value or from par value to no par value or from no par value to
par value or as a result of a shares dividend or subdivision, split-up or
combination of shares) shall be consummated, then this Warrant shall be
exercisable after such reorganization or reclassification into the kind and
number of capital shares or other securities or property of the Corporation to
which the holder of the number of Common Shares (immediately prior to the time
of such reorganization or reclassification) issuable upon exercise of this
Warrant would have been entitled upon such reorganization or reclassification.
The provisions of this paragraph (e) shall similarly apply to successive
reorganizations or reclassifications.
(e) All calculations under this Section 4 shall be made to the nearest
one-thousandth of a cent (U.S.$.001) or to the nearest one-thousandth of a
share, as the case may be.
(f) Immediately upon the adjustment of the Exercise Price, the Company
shall give written notice thereof to the Holder, setting forth in reasonable
detail and certifying the calculation of such adjustment.
Section 5. Liquidating Dividends.
If the Corporation declares or pays a dividend upon the Common Shares
payable otherwise than in cash out of earnings or earned surplus (determined in
accordance with generally accepted accounting principles, consistently applied)
except for a share dividend payable in Common Shares (a "Liquidating Dividend"),
then the Corporation shall pay to the Holder of this Warrant at the time of
payment thereof the Liquidating Dividend which would have been paid to such
Holder on the Common Shares had this Warrant been fully exercised immediately
prior to the date on which a record is taken for such Liquidating Dividend, or,
if no record is taken, the date on which the record holders of Common Shares
entitled to such dividends are to be determined.
Section 6. No Shareholder Rights.
This Warrant shall not entitle the Holder to any voting rights or other
rights as a shareholder of the Corporation.
Section 7. Restrictions on Transfer.
Subject to the terms of the Stockholders' Agreement, this Warrant, the
Warrant Shares and all rights hereunder are transferable, in whole or in part,
at the agency or office of the Corporation referred to in Section 2 hereof, by
the Holder in person or by duly authorized attorney, upon (i) surrender of this
Warrant properly endorsed, and (ii) delivery of a notice of transfer in the form
of Exhibit B hereto. Each transferee and holder of this Warrant, by
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<PAGE>
accepting or holding the same, consents that this Warrant, when endorsed, in
blank, shall be deemed negotiable, and, when so endorsed, the holder hereof
shall be treated by the Corporation and all other persons dealing with this
Warrant as the absolute owner hereof for any purposes and as the person entitled
to exercise the rights represented by this Warrant, or to the transfer hereof on
the books of the Corporation, any notice to the contrary notwithstanding;
provided, however, that until each such transfer is recorded on such books, the
Corporation may treat the registered holder hereof as the owner hereof for all
purposes.
Section 8. Lost, Stolen, Mutilated or Destroyed Warrant.
If this Warrant is lost, stolen, mutilated or destroyed, the
Corporation shall, on such terms as to indemnity or otherwise as it may in its
reasonable discretion impose (which shall, in the case of a mutilated Warrant,
include the surrender thereof), issue a new Warrant of like denomination and
tenor as the Warrant so lost, stolen, mutilated or destroyed. Any such new
Warrant shall constitute an original contractual obligation of the Corporation,
whether or not the allegedly lost, stolen, mutilated or destroyed Warrant shall
be at any time enforceable by anyone.
Section 9. Notices.
The terms and provisions of Section 11 of the Purchase Agreement are
expressly incorporated in this Warrant.
Section 10. Governing Law.
This Warrant shall be governed by and construed in accordance with the
laws of the State of New York (without giving effect to principles of conflicts
of laws).
Section 11. Headings.
The headings of the various sections contained in this Warrant have
been inserted for convenience of reference only and should not be deemed to be a
part of this Warrant.
Section 12. Amendments and Waivers.
No provision of this Warrant may be amended or waived except as
provided in the Purchase Agreement.
* * * *
7
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this Warrant to be
executed by its duly authorized officers as of the date first written above.
GREENFIELD ONLINE, INC.
By: /s/ Rudy Nadilo
------------------------------------
Name: Rudy Nadilo
Title: President + CEO
<PAGE>
EXHIBIT A
THE EXERCISE OF THIS WARRANT MAY BE SUBJECT TO THE REQUIREMENTS
OF THE HART-SCOTT-RODINO ANTITRUST
IMPROVEMENTS ACT OF 1976, AS AMENDED
FORM OF NOTICE OF ELECTION TO EXERCISE
[To be executed only upon exercise
of the Warrant to which this form is attached]
To Greenfield Online, Inc. [or its successor]
The undersigned, the holder of the Warrant to which this form is
attached, hereby irrevocably elects to exercise the right represented by such
Warrant to purchase __________ Class A Common Shares of GREENFIELD ONLINE, INC.
[or its successor], and herewith tenders the aggregate payment of $_________ in
the form of (1) cash, wire transfer funds or check and/or (2) Class A Common
Shares or Warrants to purchase Class A Common Shares (net of the Exercise Price
for such shares) valued for such purposes at the Market Price (as defined in
Section 2) per share on the date of exercise, in full payment of the purchase
price for such shares. The undersigned requests that a certificate for such
shares be issued in the name of __________, whose address is __________, and
that such certificate be delivered to __________, whose address is __________.
If such number of shares is less than all of the shares purchasable
under the current Warrant, the undersigned requests that a new Warrant, of like
tenor as the Warrant to which this form is attached, representing the remaining
balance of the shares purchasable under such current Warrant be registered in
the name of __________, whose address is __________, and that such new Warrant
be delivered to __________, whose address is __________.
Signature:________________________________
(Signature must conform in all respects to the
name of the holder of the Warrant as specified
on the face of the Warrant)
Date:____________________________________
A-1
<PAGE>
EXHIBIT B
THE EXERCISE OF THIS WARRANT MAY BE SUBJECT TO THE REQUIREMENTS
OF THE HART-SCOTT-RODINO ANTITRUST
IMPROVEMENTS ACT OF 1976, AS AMENDED
FORM OF NOTICE OF TRANSFER
[To be executed only upon transfer
of the Warrant to which this form is attached]
For value received, the undersigned hereby sells, assigns and transfers
unto _________________________ all of the rights represented by the Warrant to
which this form is attached to purchase _________________________ Class A Common
Shares of, GREENFIELD ONLINE, INC. (including any successor thereto, the
"Corporation"), to which such Warrant relates, and appoints
__________________________ as its attorney to transfer such right on the books
of the Corporation, with full power of substitution in the premises.
Signature:
-----------------------------------------------
(Signature must conform in all respects to the
name of the holder of the Warrant as specified
on the face of the Warrant)
Address:
-----------------------------------------------
-----------------------------------------------
Date:
----------------------------------------------------
Signed in the presence of:
- -----------------------------
B-1
<PAGE>
Stock purchase, CONSENT AND WAIVER agreement dated as of May
17, 1999 (this "Agreement"), among GREENFIELD ONLINE, INC., a
Connecticut corporation ("Online"), RUDY NADILO, an individual
("Nadilo"), HUGH DAVIS, an individual ("Davis") (and together
with Nadilo, the "Purchasers"), and ANDREW GREENFIELD, an
individual (the "Seller").
Concurrently with the execution of this Agreement, the Seller, Greenfield
Holdings, LLC ("Holdings"), and Online will consummate the transactions
contemplated by the Stock Purchase and Redemption Agreement dated as of May 12,
1999 (as amended, the "Purchase Agreement").
Upon consummation of the transactions contemplated by the Purchase
Agreement, the Seller will be the owner of 2,740 shares of Class A Common Stock
of Online, $0.01 par value per share (the "Class A Common Shares"). Upon the
terms and subject to the conditions of this Agreement, each of the Purchasers
will purchase that number of Class A Common Shares listed on Schedule I hereto
from the Seller, in each case for a cash purchase price listed on Schedule I
hereto for an aggregate purchase price of five hundred thousand eighty-eight
dollars ($500,088) (the "Purchase Price").
Nadilo and Davis hereby agree to be bound by the Shareholders' Agreement of
even date herewith among Online, the Seller and Holdings (as amended, the
"Shareholders' Agreement") as Retained Shareholders (as such term is defined
therein).
NOW, THEREFORE, in consideration of the mutual covenants, representations,
warranties and agreements contained herein, the parties hereto hereby agree as
follows:
1. Consent and Waiver of Rights. Holdings, Greenfield and Online hereby
consent to the Transfer (as defined below) and waive the restrictions under
Section 1 of the Shareholders' Agreement with respect to the transaction
contemplated hereby.
2. Sale and Purchase of Shares. Upon the terms and subject to the
conditions of this Agreement, the Seller shall sell, transfer and convey (the
"Transfer") to each of the Purchasers, and each of the Purchasers shall purchase
and acquire from the Seller for the Purchase Price, that number of Class A
Common Shares listed on Schedule I hereto.
3. Delivery.
(a) The Seller shall deliver to Online for cancellation, against
delivery to the Seller by the Purchasers of the Purchase Price, a stock
certificate representing the aggregate number of Class A Common Shares to be
purchased by the Purchasers (the "Stock Certificate"), with all necessary
documentary or transfer tax stamps affixed (the "Document"), free and clear
of all security interests, liens, pledges, claims, charges, escrows,
encumbrances, options, rights of first refusal, mortgages, indentures,
security agreements or other agreements, arrangements,
<PAGE>
contracts, commitments, understandings or obligations (collectively,
"Liens"), whether written or oral and whether or not relating in any way to
credit or the borrowing of money.
(b) Upon receipt of this executed Agreement, Online shall cause to be
issued certificates to each Purchaser representing the number of Class A
Common Shares to be purchased by such Purchaser, free and clear of all Liens.
4. Payment. Concurrently with the receipt by Online of this executed
Agreement, each of the Purchasers shall deliver to the Seller the portion of
the Purchase Price to be paid by such Purchaser, by a certified or bank check
payable to the Seller or a wire transfer of immediately available funds to an
account designated by the Seller.
5. Representations and Warranties of the Seller. The Seller represents
and warrants to each of the Purchasers as follows:
(a) the Seller has full power and authority to execute and deliver this
Ageement and consummate the transactions contemplated hereby;
(b) this Agreement constitutes a legal, valid and binding obligation of
the Seller, enforceable in accordance with its terms, except that such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the rights of creditors generally
or by general equitable principles;
(c) the execution and delivery by the Seller of this Agreement and the
consummation by the Seller of the transactions contemplated hereby (i) will
not violate any law, statute, rule or regulation, (ii) will not require or
make necessary any consent, approval or other action, or notice to, any
person, except for those that have been obtained or made, and (iii) will not
conflict with, or result in a violation of, any agreement or other document
or instrument to which the Seller is a party or by which he, or any of his
assets or properties, is bound; and
(d) the Seller has good and marketable title to all of the Class A
Common Shares, free and clear of all Liens.
6. Representations and Warranties of Purchasers. Each of the Purchasers,
severally and not jointly, represents and warrants to the Seller as follows:
(a) Such Purchaser has the full power and authority to execute and
deliver this Agreement and consummate the transactions contemplated hereby
(solely or as to itself);
(b) the execution and delivery by such Purchaser of this Agreement and
the consummation by such Purchaser of the transactions contemplated hereby
(i) will not violate any law, statute, rule or regulation, (ii) will not
require or make necessary any consent, approval or other action, or notice
to, any person, except for those that have been obtained or made, and (iii)
will not conflict with, or result in a violation of, any agreement or other
document or instrument to which such Purchaser is a party or by which he, or
any of his assets or properties, is bound; and
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<PAGE>
(c) this Agreement constitutes a legal, valid and binding obligation of
such Purchaser, enforceable in accordance with its terms, except that such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the rights of creditors generally
or by general equitable principles;
(d) this Agreement is made with each of the Purchasers in reliance upon
such Purchaser's representation to the Seller, which by executing this
Agreement each Purchaser hereby severally confirms, that:
(i) he understands that his interest in Online will not be
registered or qualified under any state securities or blue sky
laws and cannot be resold without such registration or
qualification or an exemption therefrom;
(ii) he understands that his Class A Common Shares have not
been registered under the Securities Act of 1933, as amended
(the "Securities Act"), and the Transfer is being made in
reliance on an exemption from registration thereunder for
transactions not involving a public offering, and that such
Class A Common Shares may not be sold, transferred or
otherwise disposed of except as permitted under the Securities
Act and applicable state securities laws pursuant to
registration or exemption therefrom;
(iii) he is acquiring his Class A Common Shares for his own
account for investment purposes only and not with a view to
resale, assignment or other distribution, in whole or in part,
and no other person has or will have a direct or indirect
beneficial interest in such Class A Common Shares;
(iv) he understands that the Class A Common Shares are a
speculative investment and involve a high degree of risk, the
transferability of the Class A Common Shares is substantially
restricted, there will be no public market for such Class A
Common Shares and it may not be possible for such Purchaser to
liquidate his investment in Online;
(v) he is able to bear the substantial economic risks of an
investment in such Class A Common Shares and can afford a
complete loss of such investment;
(vi) he has such knowledge and experience in financial,
investment and business matters so as to enable him, to use
the information made available to him in connection with the
purchase of such Class A Common Shares, to evaluate the merits
and risks of such purchase, and to make an informed investment
decision with respect thereto;
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<PAGE>
(vii) he has carefully considered and has, to the extent he
believes such discussions necessary, discussed with his
professional legal, tax, accounting and financial advisors the
suitability of his purchase of such Class A Common Shares;
(viii) he has had an opportunity to ask questions of, and
receive answers from, Online, or a person or persons acting on
its behalf, concerning the terms and conditions of his
purchase of such Class A Common Shares, and all such questions
have been answered to his full satisfaction;
(ix) he has had the opportunity to review any documents
relating to Online requested by him and to conduct due
diligence, and such due diligence review has been fully
satisfactory to him;
(x) he is not purchasing such Class A Common Shares as a
result of, or subsequent to, any advertisement, article,
notice or other communication published in any newspaper,
magazine or similar medium or broadcast over radio or
television, or any seminar or meeting whose attendees have
been invited by any general solicitation or general
advertising;
(xi) he has shared primary responsibility for the management
of Online's affairs since on or before October 1, 1997 with
the other Purchaser and, on the basis of his shared management
of Online, he has sufficient information and knowledge with
respect to the business and prospects of Online to make an
informed decision in connection with an investment in the
Class A Common Shares; and
(xii) except as contained in this Agreement, he is not relying
upon any representation, warranty or information furnished by
the Seller with respect to Online.
7. Purchase Agreement Indemnity.
(a) If the Seller shall be required to make any indemnification payments
under the Purchase Agreement for any Losses (as defined in the Purchase
Agreement) in an amount in excess of $2,200,000 in the aggregate, the
Purchasers hereunder shall immediately pay to the Seller their respective
Proportionate Percentage (as defined below) of an aggregate amount equal to
33.33% of the amount by which such payments exceed $2,200,000; provided,
however, that the sum of the amount payable by Nadilo shall not exceed
$300,000 in the aggregate and the sum of the amount payable by Davis shall
not exceed $100,000. "Proportionate Percentage" means, in the case of Nadilo,
75%, and in the case of Davis, 25%.
(b) Each of the Purchasers and the Seller acknowledge that other than as
set forth in this Section 7, neither Purchaser has any indemnification,
contribution or similar obligation to
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<PAGE>
the Seller in respect of any transaction contemplated under the Purchase
Agreement (or the Related Documents (as such term is defined therein)). The
Seller and the Purchasers agree that each of the Company and Holdings is a
third party beneficiary of the foregoing acknowledgement.
8. Counterparts. This Agreement may be executed in any number of
counterparts, and each such counterpart shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.
9. Entire Agreement; Interpretation. This Agreement embodies the
complete agreement and understanding among the parties hereto with respect to
the subject matter hereof and thereof and supersedes and preempts any prior
understandings, agreements or representations by or among the parties,
written or oral, which may have related to the subject matter hereof or
thereof in any way. Any terms defined in this Agreement shall apply to the
singular and plural forms of the terms defined. Whenever the context
requires, any pronoun shall include the corresponding masculine, feminine and
neuter forms. The words "include," "includes" and "including" shall be deemed
to be followed by the phrase "without limitation".
10. Governing Law. All questions concerning the construction,
interpretation and validity of this Agreement shall be governed by and
construed and enforced in accordance with the domestic laws of the State of
New York, without giving effect to any choice or conflict of law provision or
rule (whether in the State of New York or any other jurisdiction) that would
cause the application of the laws of any jurisdiction other than the State of
New York. In furtherance of the foregoing, the internal law of the State of
New York will control the interpretation and construction of this Agreement,
even if under such jurisdiction's choice of law or conflict of law analysis,
the substantive law of some other jurisdiction would ordinarily apply.
* * *
5
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Stock Purchase, Consent
and Waiver Agreement to be executed and delivered on the date first above
written.
SELLER:
/s/
---------------------------------
Andrew Greenfield
PURCHASERS:
/s/
---------------------------------
Rudy Nadilo
/s/
---------------------------------
Hugh Davis
GREENFIELD ONLINE, INC.
By: /s/
-----------------------------
Name: Rudy Nadilo
Title: President
Solely for purposes of
Section 1 and Section 7(b):
GREENFIELD HOLDINGS, LLC
By: /s/
-----------------------------
Name: Jeffrey Horing
Title: President
6
<PAGE>
Schedule I
Number of Class A
Common Shares Per Share
Purchaser to be purchased Purchase Price Total Purchase Price
--------- --------------- -------------- --------------------
Rudy Nadilo 2,329 shares $182.51 $425,075
Hugh Davis 411 shares $182.51 $ 75,013
------------ --------
Total 2,740 shares $500,088
============ ========
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<PAGE>
RETAINED SHAREHOLDER JOINDER
By execution of this Retained Shareholder Joinder, the
undersigned agrees to become a party to that certain Shareholders' Agreement
dated as of May 17, 1999, among Greenfield Online, Inc., a Connecticut
corporation, and its shareholders. The undersigned shall have all the rights,
and shall observe all the obligations, applicable to a Retained Shareholder.
Upon the effective date of a Sale of the Company, Mr. Nadilo
shall be entitled to designate as Qualifying Retained Shareholder Shares (in
addition to those Retained Shareholder Shares which as of such date constitute
Qualifying Retained Shareholder Shares) such additional Retained Shareholder
Shares equal to, with respect to any Retained Shareholder Shares acquired on any
Retained Shares Acquisition Date, that number of Qualifying Retained Shareholder
Shares that would result in his total number of Qualifying Retained Shareholder
Shares held (including Retained Shareholder Shares which as of such date
constitute Qualifying Retained Shareholder Shares) being equal to 75% of the
number of Retained Shareholder Shares acquired on such Retained Shares
Acquisition Date. This option shall not be exercisable with respect to any
Retained Shareholder Shares in the event that the effective date of the Sale of
the Company occurs on or after the third anniversary of such Retained Shares
Acquisition Date.
Name: Rudy Nadilo
Address for with copies
Notices: to:
1 Riverview Drive Jonathan A. Flatow
Norwalk, CT 06850 Wake, See, Dimes & Bryniczka
27 Imperial Ave.
Westport, CT 06880
Signature: /s/ Rudy Nadilo
---------------------------
Date: 5/17/99
---------------------------
<PAGE>
RETAINED SHAREHOLDER JOINDER
By execution of this Retained Shareholder Joinder, the
undersigned agrees to become a party to that certain Shareholders' Agreement
dated as of May 17, 1999, among Greenfield Online, Inc., a Connecticut
corporation, and its shareholders. The undersigned shall have all the rights,
and shall observe all the obligations, applicable to a Retained Shareholder.
Upon the effective date of a Sale of the Company, Mr. Davis
shall be entitled to designate as Qualifying Retained Shareholder Shares (in
addition to those Retained Shareholder Shares which as of such date constitute
Qualifying Retained Shareholder Shares) such additional Retained Shareholder
Shares equal to 50% of the Non-Qualifying Retained Shareholder Shares held by
him on such date.
Name: Hugh Davis
Address for with copies
Notices: to:
PO Box 3028 Suzanne B. Albani
Westport, CT 06880 Levett, Rockwood & Sanders
33 Riverside Avenue
Wesport, CT 06881
Signature: /s/ Hugh Davis
---------------------------
Date: 5/17/99
---------------------------
2
<PAGE>
Non-Recourse Promissory Note
$425,075 May 17, 1999
FOR VALUE RECEIVED, Rudy Nadilo (the "Maker"), hereby promises to
pay to GREENFIELD ONLINE, INC. (the "Payee"), the principal amount of Four
Hundred Twenty Five Thousand Seventy Five Dollars ($425,075) on May 17, 2004
(the "Maturity Date"), in such coin or currency of the United States of America
as at the time of payment shall be legal tender therein for the payment of
public and private debts, and to pay interest on the unpaid principal amount
from time to time outstanding hereunder at the rate of 5.3% per annum,
compounded annually based on a year of 360 days. Such interest shall be payable
together with principal, when and as paid, with the final payment of interest to
be payable together with all outstanding principal hereunder on the Maturity
Date. In addition, the Maker promises to pay additional interest at 7.3% per
annum on any overdue principal and (to the extent permitted by law) on any
overdue interest, from the due date thereof until the obligation of the Maker
with respect to the payment thereof shall be discharged.
The Maker may, at his sole option, at any time and from time to time
prepay this Note, without penalty, in whole or in part, together with interest
on the principal amount so prepaid to the date of such prepayment.
The Maker shall make a mandatory prepayment (each, a "Mandatory
Prepayment") in an amount equal to 100% of any and all dividends, distributions
and other payments (including the proceeds of any sale, transfer or other
disposition) paid on or with respect to the Pledged Collateral securing this
Note pursuant to the Pledge Agreement dated as of the date hereof between the
Maker and the Payee (as amended, the "Pledge Agreement"). Each such Mandatory
Prepayment shall be due and payable immediately upon receipt thereof by the
Maker and shall be applied first to interest on this Note accrued and unpaid as
of the date of the Mandatory Prepayment and then to the principal amount of this
Note then outstanding.
The Payee shall be entitled to the rights and security granted by
the Maker to the Payee pursuant to the Pledge Agreement.
Payment of both the principal of and interest on this Note shall be
made by check mailed to such office as the holder of this Note shall designate
in writing to the Maker.
Should the principal of or interest on this Note become due and
payable on other than a business day, the maturity thereof shall be extended to
the next succeeding business day, and interest shall be payable thereon at the
rate per annum herein specified during such extension. The term "business day"
shall mean any day that is not a Saturday, Sunday or legal holiday in the State
of New York.
<PAGE>
In case of the occurrence of any of the following events (each, an
"Event of Default"):
(i) default shall be made in the payment of principal of or
interest on this Note, when and as the same shall become due and
payable, whether at the due date, pursuant to a Mandatory Prepayment
or by acceleration hereof or otherwise;
(ii) the Maker shall (A) apply for or consent to the
appointment of a receiver, trustee or liquidator, (B) admit in
writing his inability to pay his debts as they mature, (C) make a
general assignment for the benefit of creditors, (D) be adjudicated
a bankrupt or insolvent, (E) file a voluntary petition, or have
filed against him a petition, in bankruptcy or petition or answer
seeking a reorganization or an arrangement with his creditors, or
(F) take advantage of any bankruptcy, reorganization, insolvency,
readjustment of debt, dissolution or liquidation law or statute or
file an answer admitting the material allegations of a petition
filed against him in any proceeding under any such law;
(iii) an order, judgment or decree shall be entered, without
the application, approval or consent of the Maker, by any court of
competent jurisdiction, approving a petition seeking reorganization
of the Maker, or appointing a receiver, trustee or liquidator for
the Maker;
(iv) the Maker shall become or be in default under the
provisions of (A) this Note, (B) the Pledge Agreement or the
Employment Agreement dated as of the date hereof, between the Maker
and the Payee, in each case as the same may hereafter be amended and
in effect from time to time, or (C) any other material agreement
between the Maker and the Payee or any of its affiliates or between
the Maker and the holder hereof or any of its affiliates (which
default under such other material agreement is not cured within 10
days from the date of notice hereof to the Maker); or
(v) the Maker shall experience a termination of employment
with the Payee for any reason or shall die;
then, (1) in the case of clauses (i), (iv) and (v) of this Note, the holder of
this Note may, upon written notice to the Maker or his estate or executor,
declare this Note to be forthwith due and payable, whereupon this Note shall
become forthwith due and payable, both as to principal and interest, without
presentment, demand, protest, or other notice of any kind, all of which are
hereby expressly waived, and (2) in the case of clauses (ii) and (iii) of this
Note, this Note shall forthwith become due and payable both as to principal and
interest, automatically without any action on the part of the holder hereof and
without presentment, demand, protest, or other notice of any kind, all of which
are hereby expressly waived.
The Payee hereby acknowledges and agrees that the Payee's sole
recourse against the Maker shall be limited to the Pledged Collateral (as
defined in the Pledge Agreement).
The provisions hereof shall be binding upon and inure to the benefit
of the holder of this Note and its successors and assigns. This Note may not be
assigned or transferred by the Maker.
2
<PAGE>
The Maker agrees to pay all costs of collection, including
reasonable attorneys' fees, incurred by the holder of this Note in collecting or
enforcing this Note, whether in connection with a reorganization, bankruptcy or
other similar proceeding or upon default.
* * * *
3
<PAGE>
This Note shall be governed by the laws of the State of New York
applicable to contracts made and to be performed therein.
/s/
----------------------------------------
Rudy Nadilo
<PAGE>
PLEDGE AGREEMENT dated as of May
17, 1999, by and between RUDY NADILO, an
individual (the "Pledgor") and GREENFIELD
ONLINE, INC, a Connecticut corporation, (the
"Pledgor" or "Issuer").
WHEREAS, pursuant to that certain Non-Recourse Promissory Note dated
the date hereof (as amended, supplemented, restated or otherwise modified from
time to time in accordance with its terms, the "Note"), the Pledgee has agreed,
subject to the terms thereof, to make available to the Pledgor certain financial
accommodations on the terms and conditions set forth in the Note;
WHEREAS, it is a condition precedent to the effectiveness of the
Note and the extension of such financial accommodations under the Note that the
Pledgor execute and deliver this Agreement; and
WHEREAS, the Pledgor owns 2,329 shares of the Class A Common Stock,
par value $0.01 per share (the "Class A Common"), of the Issuer and will derive
substantial direct benefit from the financial accommodations to be made
available pursuant to the Note.
NOW, THEREFORE, in consideration of the mutual agreements herein
contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
Section 1. Pledge.
The Pledgor hereby pledges, hypothecates, assigns, transfers, sets
over and delivers unto the Pledgee, and grants to the Pledgee a security
interest in, all of the Pledgor's right, title and interest in, to and under the
following (collectively, the "Pledged Collateral"): (a) all of the common stock,
shares, equity interest and other securities (whether equity or debt), including
the Class A Common (excluding, in each case, options or warrants for Securities)
(collectively, "Securities") of the Issuer; (b) any additional Securities of the
Issuer as may from time to time be issued to the Pledgor or otherwise acquired
by the Pledgor; (c) any additional Securities of the Issuer as may hereafter at
any time be delivered to the Pledgee by or on behalf of the Pledgor; (d) any
cash or additional Securities or other property at any time and from time to
time receivable or otherwise distributable in respect of, in exchange for, or in
substitution of, any of the property referred to in any of the immediately
preceding clauses (a) through (c); and (e) any and all products and proceeds of
any of the foregoing, together with and all other rights, titles, interests,
powers, privileges and preferences pertaining to said property.
Section 2. Obligations Secured.
This Agreement is made, and the security interest created hereby is
granted to the Pledgee, to secure the prompt performance and payment in full of
the following (collectively, the "Secured Obligations"): (a) all obligations of
the Pledgor under this Agreement; (b) all obligations due and payable under the
Note; and (c) any reasonable costs or expenses incurred by the Pledgee or
Pledgee's counsel in connection with the realization of the security for which
this
<PAGE>
Agreement provides, including, without limitation, any reasonable costs or
expenses of any proceedings to which this Agreement may give rise.
Section 3. Representations and Warranties.
The Pledgor hereby represents and warrants to the Pledgee as
follows:
(a) Title and Liens. The Pledgor is, and will at all times continue
to be, the legal and beneficial owner of the Pledged Collateral and none of the
Pledged Collateral is subject to any lien. No financing statement under the
Uniform Commercial Code of any jurisdiction which names the Pledgor as debtor or
covers any of the Pledged Collateral, or any other notice filed in the public
records indicating the existence of a lien thereon, has been filed and is still
effective in any state or other jurisdiction, other than Uniform Commercial Code
financing statements filed in favor of the Pledgee, and the Pledgor has not
signed any such financing statement or notice or any security agreement
authorizing the filing of any such financing statement or notice, other than
Uniform Commercial Code financing statements filed in favor of the Pledgee.
(b) Taxpayer ID Number.
The Social Security number of the Pledgor is ###-##-####.
(c) Authority, etc. The Pledgor (i) has the power and authority to
pledge the Pledged Collateral in the manner hereby done or contemplated and (ii)
will defend his title or interest thereto or therein against any and all liens
(other than the lien created by this Agreement), however arising, of all
persons.
(d) No Approval. No consent or approval of any governmental
authority or any securities exchange was or is necessary to the validity of the
pledge effected hereby.
Section 4. Covenants.
The Pledgor hereby unconditionally covenants and agrees that the
Pledgor will not create, assume, incur or permit or suffer to exist or to be
created, assumed or incurred, any lien on any of the Pledged Collateral (or any
interest therein), and will not sell, lease, assign, transfer or otherwise
dispose of all or any portion of the Pledged Collateral (or any interest
therein).
Section 5. Additional Shares.
The Pledgor agrees that, until this Agreement has terminated in
accordance with its terms, any certificates, instruments or other documents
evidencing additional Securities of the Issuer at any time issued to the Pledgor
or otherwise acquired by the Pledgor shall be promptly delivered or otherwise
transferred to the Pledgee, such additional Securities being additional Pledged
Collateral and subject to the lien of, and the terms and conditions of, this
Agreement.
2
<PAGE>
Section 6. Registration in Nominee Name, Denominations.
The Pledgee shall have the right (in its sole and absolute
discretion) to hold the Pledged Securities in its own name as pledgee, the name
of its nominee (as Pledgee or as sub-agent) or the name of the applicable
Pledgor, endorsed or assigned in blank or in favor of the Pledgee. The Pledgor
will promptly give to the Pledgee copies of any notices or other communications
received by him with respect to Pledged Securities registered in the name of the
Pledgor. The Pledgee shall at all times have the right to exchange the
certificates representing Pledged Securities for certificates of smaller or
larger numbers of shares for any purpose consistent with this Agreement.
Section 7. Voting Rights; Dividends, etc.
(a) So long as no Event of Default shall have occurred and be
continuing, the Pledgor shall be entitled to exercise any and all voting and/or
consensual rights and powers accruing to an owner of the Pledged Collateral or
any part thereof for any purpose not inconsistent with the terms and conditions
of this Agreement or any agreement giving rise to or otherwise relating to any
of the Secured Obligations; provided, however, that the Pledgor shall not
exercise, or refrain from exercising, any such right or power if any such action
could have a adverse effect on the value of such Pledged Collateral in the sole
judgment of the Pledgee.
The Pledgor shall not be entitled to retain and use any and all cash dividends
paid on the Pledged Collateral, including any and all stock and/or liquidating
dividends, other distributions in property, return of capital or other
distributions made on or in respect of Pledged Securities, whether resulting
from a subdivision, combination or reclassification of outstanding securities of
the Issuer which are pledged hereunder or received in exchange for Pledged
Collateral or any part thereof or as a result of any merger, consolidation,
acquisition or other exchange of assets or on the liquidation, whether voluntary
or involuntary, of the Issuer, or otherwise, such property being additional
Pledged Collateral pledged hereunder and, if received by the Pledgor, shall
forthwith be delivered to the Pledgee to be held as Pledged Collateral subject
to the terms and conditions of this Agreement.
The Pledgee agrees to execute and deliver to the Pledgor, or cause to be
executed and delivered to the Pledgor, as appropriate, at the sole cost and
expense of the Pledgor, all such proxies, powers of attorney, dividend orders
and other instruments as the Pledgor may request for the purpose of enabling the
Pledgor to exercise the voting and/or consensual rights and powers which Pledgor
is entitled to exercise and/or to receive the dividends which Pledgor is
authorized to retain. Without limiting the generality of the foregoing, the
Pledgor hereby grants a proxy (which shall be a proxy coupled with an interest)
to the Pledgee to vote the Pledged Collateral upon the occurrence and
continuation of an Event of Default.
(b) Upon the occurrence and during the continuance of an Event of
Default, all rights of the Pledgor to exercise the voting and/or consensual
rights and powers which Pledgor is entitled to exercise pursuant to subsection
(a) above shall cease, and all such rights thereupon shall become immediately
vested in the Pledgee, which shall have, to the extent permitted by law, the
sole and exclusive right and authority to exercise such voting and/or consensual
rights and powers which the Pledgor shall otherwise be entitled to exercise
pursuant
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<PAGE>
to subsection (a) above. Any and all money and other property paid over to or
received by the Pledgee pursuant to the provisions of this subsection (b) shall
be retained by the Pledgee as additional collateral hereunder and shall be
applied in accordance with the provisions of Section 9. If the Pledgor shall
receive any dividends or other property which he is not entitled to receive
under this Section, the Pledgor shall hold the same in trust for the Pledgee,
without commingling the same with other funds or property of or held by the
Pledgor, and shall promptly deliver the same to the Pledgee upon receipt by the
Pledgor in the identical form received, together with any necessary
endorsements.
Section 8. Remedies upon Event of Default.
(a) In addition to any right or remedy that the Pledgee may have
under the Note, any other loan documents or otherwise under applicable law, if
an Event of Default shall have occurred and be continuing, the Pledgee may
exercise any and all the rights and remedies of a secured party under the
Uniform Commercial Code as in effect in any applicable jurisdiction (the "Code")
and may otherwise sell, assign, transfer, endorse and deliver the whole or, from
time to time, any part of the Pledged Collateral at a public or private sale or
on any securities exchange, for cash, upon credit or for other property, for
immediate or future delivery, and for such price or prices and on such terms as
the Pledgee in its discretion shall deem appropriate. The Pledgee shall be
authorized at any sale (if it deems it advisable to do so) to restrict the
prospective bidders or purchasers to persons who will represent and agree that
they are purchasing the Pledged Collateral for their own account in compliance
with the Securities Act and upon consummation of any such sale the Pledgee shall
have the right to assign, transfer, endorse and deliver to the purchaser or
purchasers thereof the Pledged Collateral so sold. Each purchaser at any sale of
Pledged Collateral shall take and hold the property sold absolutely free from
any claim or right on the part of the Pledgor, and the Pledgor hereby waives (to
the fullest extent permitted by applicable law) all rights of redemption, stay
and/or appraisal which the Pledgor now has or may at any time in the future have
under any applicable law now existing or hereafter enacted. The Pledgor agrees
that, to the extent notice of sale shall be required by applicable law, at least
ten days' prior written notice to the Pledgor of the time and place of any
public sale or the time after which any private sale is to be made shall
constitute reasonable notification, but notice given in any other reasonable
manner or at any other reasonable time shall constitute reasonable notification.
Such notice, in case of public sale, shall state the time and place for such
sale, and, in the case of sale on a securities exchange, shall state the
exchange on which such sale is to be made and the day on which the Pledged
Collateral, or portion thereof, will first be offered for sale at such exchange.
Any such public sale shall be held at such time or times within ordinary
business hours and at such place or places as the Pledgee may fix and shall
state in the notice or publication (if any) of such sale. At any such sale, the
Pledged Collateral, or portion thereof to be sold, may be sold in one lot as an
entirety or in separate parcels, as the Pledgee may determine in its sole and
absolute discretion. The Pledgee shall not be obligated to make any sale of the
Pledged Collateral if it shall determine not to do so regardless of the fact
that notice of sale of the Pledged Collateral may have been given. The Pledgee
may, without notice or publication, adjourn any public or private sale or cause
the same to be adjourned from time to time by announcement at the time and place
fixed for sale, and such sale may, without further notice, be made at the time
and place to which the same was so adjourned. In case the sale of all or any
part of the Pledged Collateral is made on credit or for future delivery, the
Pledged Collateral so sold may be retained by the Pledgee until the sale price
is paid by the
4
<PAGE>
purchaser or purchasers thereof, but the Pledgee shall not incur any liability
to the Pledgor in case any such purchaser or purchasers shall fail to take up
and pay for the Pledged Collateral so sold and, in case of any such failure,
such Pledged Collateral may be sold again upon like notice. At any public sale
made pursuant to this Agreement, the Pledgee, to the extent permitted by
applicable law, may bid for or purchase, free from any right of redemption, stay
and/or appraisal on the part of the Pledgor (all said rights being also hereby
waived and released to the extent permitted by applicable law), any part of or
all the Pledged Collateral offered for sale and may make payment on account
thereof by using any claim then due and payable to the Pledgee from the Pledgor
as a credit against the purchase price, and the Pledgee may, upon compliance
with the terms of sale and to the extent permitted by applicable law, hold,
retain and dispose of such property without further accountability to the
Pledgor therefor. For purposes hereof, a written agreement to purchase all or
any part of the Pledged Collateral shall be treated as a sale thereof; the
Pledgee shall be free to carry out such sale pursuant to such agreement and the
Pledgor shall not be entitled to the return of any Pledged Collateral, subject
thereto, notwithstanding the fact that after the Pledgee shall have entered into
such an agreement the Secured Obligations may have been paid in full as herein
provided. The Pledgor hereby waives any right to require any marshaling of
assets and any similar right.
(b) If an Event of Default shall have occurred and be continuing, in
addition to exercising the power of sale herein conferred upon it, the Pledgee
shall also have the option to proceed by suit or suits at law or in equity to
foreclose this Agreement and sell the Pledged Collateral or any portion thereof
pursuant to judgment or decree of a court or courts having competent
jurisdiction.
(c) The rights and remedies of the Pledgee under this Agreement are
cumulative and not exclusive of any rights or remedies which it would otherwise
have.
Section 9. Application of Proceeds of Sale and Cash.
The proceeds of any sale of the whole or any part of the Pledged
Collateral, together with any other moneys held by the Pledgee under the
provisions of this Agreement, shall be applied by the Pledgee in the following
order:
(a) First: to the payment of all costs and expenses incurred in
connection with such sale or other realization, including reasonable attorneys'
fees incurred if the Pledgee endeavored to collect the Secured Obligations by or
through an attorney at law;
(b) Second: to the payment of the interest due upon any of the
Secured Obligations, in any order which the Pledgee may elect;
(c) Third: to the payment of the principal due upon any of the
Secured Obligations in any order which the Pledgee may elect; and
(d) Fourth: the balance (if any) of such proceeds shall be paid to
the Pledgor or to whomsoever may be legally entitled thereto.
5
<PAGE>
Section 10. Pledgee Appointed Attorney-in-Fact.
The Pledgor hereby constitutes and appoints the Pledgee as the
attorney-in-fact of the Pledgor with full power of substitution either in the
Pledgee's name or in the name of the Pledgor to do any of the following: (a) to
perform any obligation of the Pledgor hereunder in the Pledgor's name or
otherwise; (b) to ask for, demand, sue for, collect, receive, receipt and give
acquittance for any and all moneys due or to become due under and by virtue of
any Pledged Collateral; (c) to prepare, execute, file, record or deliver
notices, assignments, financing statements, continuation statements,
applications for registration or like papers to perfect, preserve or release the
Pledgee's security interest in the Pledged Collateral or any of the documents,
instruments, certificates and agreements described herein; (d) to verify facts
concerning the Pledged Collateral in its own name or a fictitious name; (e) to
endorse checks, drafts, orders and other instruments for the payment of money
payable to the Pledgor, representing any interest or dividend or other
distribution payable in respect of the Pledged Collateral or any part thereof or
on account thereof and to give full discharge for the same; (f) to exercise all
rights, powers and remedies which the Pledgor would have, but for this
Agreement, under the Pledged Collateral; and (g) to carry out the provisions of
this Agreement and to take any action and execute any instrument which the
Pledgee may deem necessary or advisable to accomplish the purposes hereof, and
to do all acts and things and execute all documents in the name of the Pledgor
or otherwise, deemed by the Pledgee as necessary, proper and convenient in
connection with the preservation, perfection or enforcement of its rights
hereunder. Nothing herein contained shall be construed as requiring or
obligating the Pledgee to make any commitment or to make any inquiry as to the
nature or sufficiency of any payment received by it, or to present or file any
claim or notice, or to take any action with respect to the Pledged Collateral or
any part thereof or the moneys due or to become due in respect thereof or any
property covered thereby, and no action taken by the Pledgee or omitted to be
taken with respect to the Pledged Collateral or any part thereof shall give rise
to any defense, counterclaim or offset in favor of the Pledgor or to any claim
or action against the Pledgee. The power of attorney granted herein is
irrevocable and coupled with an interest.
Section 11. Further Assurances.
The Pledgor shall, at his sole cost and expense, take all action
that may be necessary or desirable in the Pledgee's sole discretion, so as at
all times to maintain the validity, perfection, enforceability and priority of
the Pledgee's security interest in the Pledged Collateral, or to enable the
Pledgee to exercise or enforce its rights hereunder, including, without
limitation, (a) delivering to the Pledgee, endorsed or accompanied by such
instruments of assignment as the Pledgee may specify, any and all chattel paper,
instruments, letters of credit and all other advices of guaranty and documents
evidencing or forming a part of the Pledged Collateral and (b) executing and
delivering financing statements, pledges, designations, notices and assignments,
in each case in form and substance satisfactory to the Pledgee, relating to the
creation, validity, perfection, priority or continuation of the security
interest granted hereunder. The Pledgor agrees to take, and authorizes the
Pledgee to take on the Pledgor's behalf, any or all of the following actions
with respect to any Pledged Collateral as the Pledgee shall deem necessary to
perfect the security interest and pledge created hereby or to enable the Pledgee
to enforce its rights and remedies hereunder: (i) to register in the name of the
Pledgee any Pledged Collateral in certificated or uncertificated form; (ii) to
endorse in the name of the Pledgee any Pledged
6
<PAGE>
Collateral issued in certificated form; and (iii) by book entry or otherwise,
identify as belonging to the Pledgee a quantity of securities that constitutes
all or part of the Pledged Collateral registered in the name of the Pledgee.
Notwithstanding the foregoing the Pledgor agrees that Pledged Collateral which
is not in certificated form or is otherwise in book-entry form shall be held for
the account of the Pledgee. The Pledgor hereby authorizes the Pledgee to execute
and file in all necessary and appropriate jurisdictions (as determined by the
Pledgee) one or more financing or continuation statements (or any other document
or instrument referred to in the immediately preceding clause (b)) in the name
of the Pledgor and to sign the Pledgor's name thereto. The Pledgor authorizes
the Pledgee to file any such financing statement, document or instrument without
the signature of the Pledgor to the extent permitted by applicable law. To the
extent permitted by applicable law, a carbon, photographic, xerographic or other
reproduction of this Agreement or any financing statement is sufficient as a
financing statement. Any property comprising part of the Pledged Collateral
required to be delivered to the Pledgee pursuant to this Pledge Agreement shall
be accompanied by proper instruments of assignment duly executed by the Pledgor
and by such other instruments or documents as the Pledgee may reasonably
request. In the event any Pledged Collateral in certificated form becomes
eligible for book-entry treatment, the Pledgor will use its best efforts to
effectuate such book-entry treatment with respect to such Pledged Collateral.
Section 12. Securities Act.
In view of the position of the Pledgor in relation to the Pledged
Collateral, or because of other current or future circumstances, a question may
arise under the Securities Act of 1933, as now or hereafter in effect, or any
similar applicable law (whether foreign or domestic) hereafter enacted analogous
in purpose or effect (such Act and any such similar applicable law as from time
to time in effect being called the "Securities Laws") with respect to any
disposition of the Pledged Collateral permitted hereunder. The Pledgor
understands that compliance with the Securities Laws might very strictly limit
the course of conduct of the Pledgee if the Pledgee were to attempt to dispose
of all or any part of the Pledged Collateral in accordance with the terms
hereof, and might also limit the extent to which or the manner in which any
subsequent transferee of any Pledged Collateral could dispose of the same.
Similarly, there may be other legal restrictions or limitations affecting the
Pledgee in any attempt to dispose of all or part of the Pledged Collateral in
accordance with the terms hereof under applicable "blue sky" or other state
securities laws or similar applicable law analogous in purpose or effect. The
Pledgor recognizes that in light of the foregoing restrictions and limitations
the Pledgee may, with respect to any sale of the Pledged Collateral, limit the
purchasers to those who will agree, among other things, to acquire such Pledged
Collateral for their own account, for investment, and not with a view to the
distribution or resale thereof. The Pledgor acknowledges and agrees that in
light of the foregoing restrictions and limitations, the Pledgee, in its sole
and absolute discretion, may, in accordance with applicable law, (a) proceed to
make such a sale whether or not a registration statement for the purpose of
registering such Pledged Collateral or part thereof shall have been filed under
the Securities Laws and (b) approach and negotiate with a single potential
purchaser to effect such sale. The Pledgor acknowledges and agrees that any such
sale might result in prices and other terms less favorable to the seller than if
such sale were a public sale without such restrictions. In the event of any such
sale, the Pledgee shall incur no responsibility or liability for selling all or
any part of the Pledged Collateral in accordance with the terms hereof at a
price that the Pledgee, in its sole and absolute discretion, may in good faith
deem reasonable under the circumstances,
7
<PAGE>
notwithstanding the possibility that a substantially higher price might have
been realized if the sale were deferred until after registration as aforesaid or
if more than a single purchaser were approached. The provisions of this Section
will apply notwithstanding the existence of public or private market upon which
the quotations or sales prices may exceed substantially the price at which the
Pledgee sells.
Section 13. Non-Recourse Obligations.
The Pledgee hereby acknowledges and agrees that the Pledgee's sole
recourse against the Pledgor hereunder shall be limited to the Pledged
Collateral.
Section 14. Continuing Security Interest.
This Agreement shall create a continuing security interest in the
Pledged Collateral and shall remain in full force and effect until it terminates
in accordance with its terms. The Pledgor and the Pledgee hereby agree that the
security interest created by this Agreement in the Pledged Collateral shall not
terminate and shall continue and remain in full force and effect notwithstanding
the transfer to the Pledgee of a portion of the Pledged Collateral.
Section 15. Security Interest Absolute.
All rights of the Pledgee hereunder, the grant of a security
interest in the Pledged Collateral and all obligations of the Pledgor hereunder,
shall be absolute and unconditional irrespective of (a) any lack of validity or
enforceability of the Note or any other loan document, any agreement with
respect to any of the Secured Obligations or any other agreement or instrument
relating to any of the foregoing, (b) any change in the time, manner or place of
the payment of, or in any other term of, all or any of the Secured Obligations,
or any other amendment or waiver of or any consent to any departure from the
Note, any other loan document, or any other agreement or instrument relating to
any of the foregoing, (c) any exchange, release or nonperfection of any other
collateral, or any release or amendment or waiver of or consent to or departure
from any guaranty, for all or any of the Secured Obligations or (d) any other
circumstance that might otherwise constitute a defense available to, or a
discharge of, the Pledgor in respect of the Secured Obligations or in respect of
this Agreement (other than the indefeasible payment in full of all the Secured
Obligations).
Section 16. No Waiver.
Neither the failure on the part of the Pledgee to exercise, nor the
delay on its part in exercising, any right, power or remedy hereunder, nor any
course of dealing between the Pledgee and the Pledgor, shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power, or
remedy hereunder preclude any other or the further exercise thereof or the
exercise of any other right, power or remedy.
Section 17. Notices.
Notices, requests and other communications required or permitted
hereunder shall be given in accordance with the applicable terms of the Note.
8
<PAGE>
Section 18. Governing Law.
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE PRINCIPLES
OF CONFLICTS OF LAWS.
Section 19. Amendments.
No amendment or waiver of any provision of this Agreement nor
consent to any departure by the Pledgor herefrom shall in any event be effective
unless the same shall be in writing and signed by the parties hereto, and then
such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which given.
Section 20. Binding Agreement Assignment.
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns, except that the
Pledgor shall not be permitted to assign this Agreement or any interest herein
or in the Pledged Collateral, or any part thereof, or any cash or property held
by the Pledgee as collateral under this Agreement.
Section 21. Termination.
Upon payment in full of all of the Secured Obligations, this
Agreement shall terminate. Upon termination of this Agreement in accordance with
its terms, the Pledgee agrees to take such actions as the Pledgor may reasonably
request, and at the sole cost and expense of the Pledgor, (a) to return the
Pledged Collateral to the Pledgor, and (b) to evidence the termination of this
Agreement, including, without limitation, the filing of any releases or any
termination statements under the Uniform Commercial Code.
Section 22. Severability.
In case any provision of this Agreement shall be invalid, illegal or
unenforceable in any jurisdiction, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
Section 23. Headings.
Section headings used herein are for convenience only and are not to
affect the construction of or be taken into consideration in interpreting this
Agreement.
Section 24. Counterparts.
This Agreement may be executed in any number of counterparts, each
of which shall be deemed an original and all of which shall constitute but one
agreement.
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<PAGE>
Section 25. Definitions.
Terms not otherwise defined herein are used herein with the
respective meanings given to them in the Note.
* * * * *
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<PAGE>
IN WITNESS WHEREOF, the Pledgor has executed and delivered this
Pledge Agreement under seal as of this the date first written above.
Pledgor:
/s/
-----------------------------------------
Rudy Nadilo
GREENFIELD ONLINE, INC.
By: /s/
-------------------------------
Name: Rudy Nadilo
Title: President
<PAGE>
==============================================================================
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
BETWEEN
GREENFIELD ONLINE, INC.
AND
RUDY NADILO
MAY 13, 1999 AND AMENDED MARCH 13, 2000
==============================================================================
<PAGE>
AMENDED AND RESTATED EMPLOYMENT
AGREEMENT dated as of March 13, 2000,
between GREENFIELD ONLINE, INC., a
Connecticut corporation (the "Company"), and
RUDY NADILO (the "Executive").
Reference is made to the Stock Purchase and Redemption Agreement
dated as of May 12, 1999 (as the same may be amended from time to time, the
"Purchase Agreement"; capitalized terms used herein but not defined shall have
the meanings set forth in the Purchase Agreement), among the Company, Greenfield
Holdings, LLC, a Delaware limited liability company (the "Investor"), and the
other Persons party thereto.
The Company is engaged in the business (the "Subject Business") of
providing customized and syndicated marketing research services over the
Internet. The Executive is, and prior to the date hereof has been, an officer of
the Company and as such has substantial experience that is valuable to the
Subject Business and the Company.
As an inducement to the Investor to enter into the Purchase
Agreement, the Company desires to employ the Executive, and the Executive
accepted such employment as of May 13, 1999 subject to the terms and conditions
set forth in a certain Employment Agreement of even date.
Executive and Company desire to Amend and Restate the terms of the
May 13, 1999 Employment Agreement as set forth below.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and in the Purchase Agreement and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
Section 1. Employment.
The Company shall employ the Executive, and the Executive accepts
employment with the Company, upon the terms and conditions set forth in this
Agreement for the period beginning on the Effective Date (as defined in Section
14(j)) and ending on the Termination Date determined pursuant to Section 4(a)
(the "Employment Period"). After the initial four-year term has expired, this
Agreement will automatically renew on such expiration date and on the
anniversary date of each subsequent year thereafter for a one-year term. If
either party desires not to renew this Agreement, such party shall provide the
other party with written notice of their intent not to review the Agreement at
least ninety (90) days prior to the expiration of the initial term hereunder or
the next anniversary date, as applicable.
Section 2. Base Salary, Bonus and Benefits.
(a) During the Employment Period, the Executive's base salary shall
be $250,000 per annum or such higher rate as the Compensation Committee of the
Board (excluding the Executive if he should be a member of the Board or the
Compensation Committee at the time of such determination) may designate from
time to time (the "Base Salary"), which salary shall be
<PAGE>
reviewed by the Compensation Committee on an annual basis and payable in such
installments as is customary for other senior executives of the Company. In
addition, during the Employment Period, the Executive shall be entitled to (i)
participate in all employee benefit programs for which other senior executives
of the Company are generally eligible, (ii) be eligible to participate in all
insurance plans available generally to other senior executives of the Company,
(iii) reimbursement from the Company or its designee of up to $1,000 per full
calendar month to be used by the Executive solely for expenditures relating to
the leasing, maintenance and other related costs of an automobile to be used by
the Executive solely in performing his duties under this Agreement, and (iv)
take 4 weeks of paid vacation annually. In the case of any partial month during
the Employment Period, reimbursements, payments and other entitlements pursuant
to this Section 2 shall be made or provided to the Executive on a per diem
basis.
(b) In addition to the Base Salary and benefits set forth in
paragraph (a) above, during the Employment Period the Executive shall be
entitled to receive a bonus, if any, with respect to each full calendar year
occurring during the Employment Period, commencing with the calendar year ending
December 31, 1999, such bonus, if any, to be paid in a lump sum following the
end of the calendar year with respect to which such bonus is payable (such bonus
to be paid at the same time bonuses are to be paid to other senior executives of
the Company). The bonus for any calendar year of the Employment Period shall be
in an amount not to exceed 35% of the Base Salary for such calendar year,
subject to and based upon the achievement by the Company and the Executive of
certain performance targets and/or criteria to be specified by the Board. The
performance targets and/or criteria for 1999 shall be disclosed to the Executive
within 30 days of the Effective Date, and for each succeeding year of this
Agreement shall be disclosed during the first quarter of each such year. The
amount of the bonus, if any, to be paid shall be reviewed by the Compensation
Committee on an annual basis.
(c) The Company shall reimburse the Executive for (i) all reasonable
expenses incurred by him in the course of performing his duties under this
Agreement which are consistent with the Company's policies in effect from time
to time with respect to travel, entertainment and other business expenses,
subject to the Company's requirements with respect to reporting and
documentation of such expenses, (ii) any co-pay and/or deductible amounts paid
by the Executive in connection with the insurance plans in which the Executive
participates pursuant to paragraph (a) above and (iii) the cost of Executive's
long term disability insurance coverage as in effect on the Effective Date, and
any equivalent replacement thereof.
(d) The Company shall deduct from any payments to be made by it to
the Executive under this Agreement any amounts required to be withheld in
respect of any Federal, state or local income or other taxes.
(e) The Company will grant the Executive options (the "Options") to
purchase such number of shares of Class A Common Stock, $.01 par value (the
"Class A Common"), of the Company pursuant to the Company's 1999 Stock Option
Plan (the "Option Plan") as shall be determined by the Board. The Options will
be evidenced by a Stock Option Agreement between the Executive and the Company.
The Option Plan and the Stock Option Agreement will contain all of the terms and
conditions of the Executive's Options.
Section 3. Position and Duties.
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<PAGE>
(a) During the Employment Period, the Executive shall initially
serve as President and Chief Executive Officer of the Company, and shall report
to the Board. The Executive acknowledges and agrees that he owes a fiduciary
duty of loyalty to the Company to discharge his duties and otherwise act in a
manner consistent with the best interests of the Company and its Subsidiaries.
(b) During the Employment Period, the Executive shall devote his
best efforts and full working time, attention and energies to the performance of
his duties and responsibilities under this Agreement (except for vacations to
which he is entitled pursuant to Section 2(a) and except for illness or
incapacity). During the Employment Period, the Executive shall not engage in any
business activity which, in the reasonable judgment of the Board (excluding the
Executive if he should be a member of the Board at the time of such
determination), conflicts with the duties of the Executive hereunder, whether or
not such activity is pursued for gain, profit or other pecuniary advantage.
(c) During the Employment Period, the Company shall not reduce,
diminish or take any action which would in any way materially adversely affect
the Executive's position or duties as set forth herein.
Section 4. Termination.
(a) Termination Date. The Executive's employment under this
Agreement shall terminate upon the earliest to occur (the date of such
occurrence being the "Termination Date") of (i) the fourth anniversary of the
Effective Date, (ii) the effective date of the Executive's resignation (a
"Resignation"), (iii) the Executive's death or Disability (an "Involuntary
Termination"), (iv) the effective date of a termination of the Executive's
employment for Cause by the Board (a "Termination for Cause"), and (v) the
effective date of a termination of the Executive's employment by the Board for
reasons that do not constitute Cause or as a result of the Company's election
not to renew this Agreement pursuant to Section 1 (a "Termination Without
Cause"). The effective date of a Resignation shall be as determined under
Section 4(b); the effective date of an Involuntary Termination shall be the date
of death or, in the event of a Disability, the date specified in a notice
delivered to the Executive by the Company; and the effective date of a
Termination for Cause or a Termination Without Cause shall be the date specified
in a notice delivered to the Executive by the Company of such termination.
(b) Resignation. The Executive shall give the Company and the Board
at least 90 days' prior written notice of a Resignation, with the effective date
of such Resignation specified therein. The Board may, in its discretion,
accelerate the effective date of the Resignation.
Section 5. Effect of Termination; Severance.
(a) In the event of a Termination Without Cause, the Executive or
his beneficiaries or estate shall have the right to receive the following:
(i) the unpaid portion of the Base Salary, computed on a
pro rata basis to the Termination Date;
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<PAGE>
(ii) the unpaid portion of the Base Salary for the
period beginning on the Termination Date and ending on the earlier
of (A) the first anniversary of the Termination Date and (B) the
date on which the Executive obtains subsequent employment (as an
employee, consultant, independent contractor or otherwise), payable
in the same amounts and at the same intervals as the Base Salary was
paid immediately prior to the Termination Date; provided, however,
that in the event of a breach by the Executive of Section 6, 7, 8,
or 9 on or after the Termination Date, the provisions of Section 11
shall apply;
(iii) reimbursement for any expenses for which the
Executive shall not have been previously reimbursed, as provided in
Section 2(c); and
(iv) the portion of any bonus payable in accordance with
Section 2(b) for the calendar year in which such termination occurs,
pro rated through the date of such termination on a per diem basis.
(b) In the event of a Termination for Cause, an Involuntary
Termination or a Resignation, the Executive or his beneficiaries or estate shall
have the right to receive the following:
(i) the unpaid portion of the Base Salary, computed on a
pro rata basis to the Termination Date; and
(ii) reimbursement for any expenses for which the
Executive shall not have been previously reimbursed, as provided in
Section 2(c).
(c) Upon any termination, neither the Executive nor his
beneficiaries or estate shall have any further rights under this Agreement or
any rights arising out of this Agreement other than as provided in Sections 5(a)
and (b) above.
Section 6. Nondisclosure and Nonuse of Confidential Information.
The Executive will not disclose or use at any time, either during
the Employment Period and for a period of five years thereafter, any
Confidential Information of which the Executive is or becomes aware, whether or
not such information is developed by him, except to the extent that such
disclosure or use is directly related to and required by the Executive's
performance of duties assigned to the Executive by the Company.
Section 7. Inventions and Patents.
The Executive agrees that all Work Product belongs to the Company.
The Executive will promptly disclose such Work Product to the Board and perform
all actions reasonably requested by the Board (whether during or after the
Employment Period) to establish and confirm such ownership (including, without
limitation, the execution and delivery of assignments, consents, powers of
attorney and other instruments) and to provide reasonable assistance to the
Company in connection with the prosecution of any applications for patents,
trademarks, trade names, service marks or reissues thereof or in the prosecution
or defense of interferences relating to any Work Product.
-4-
<PAGE>
Section 8. Non-Compete, Non-Solicitation, Non-Disparagement.
The Executive acknowledges and agrees with the Company that, during
the course of the Executive's employment with the Company, the Executive has had
and will continue to have the opportunity to develop relationships with existing
employees, customers and other business associates of the Company and its
Subsidiaries which relationships constitute goodwill of the Company, and the
Company would be irreparably damaged if the Executive were to take actions that
would damage or misappropriate such goodwill. Accordingly, the Executive agrees
as follows:
(a) The Executive acknowledges that the Company currently conducts
the Subject Business throughout the world (the "Territory"). Accordingly, during
the term hereof and until the first anniversary of the Termination Date (the
"Non-Compete Period"), the Executive shall not, directly or indirectly, enter
into, engage in, assist, give or lend funds to or otherwise finance, be employed
by or consult with, or have a financial or other interest in, any business which
competes or could, in the reasonable judgment of the Board, be deemed to be in
competition with, at the time in question, the Company within the Territory,
whether for or by himself or as an independent contractor, agent, stockholder,
partner or joint venturer for any other Person. To the extent that the covenant
provided for in this Section 8(a) may later be deemed by a court to be too broad
to be enforced with respect to its duration or with respect to any particular
activity or geographic area, the court making such determination shall have the
power to reduce the duration or scope of the provision, and to add or delete
specific words or phrases to or from the provision. The provision as modified
shall then be enforced.
(b) Notwithstanding the foregoing, the aggregate ownership by the
Executive of no more than two percent (on a fully-diluted basis) of the
outstanding equity securities of any Person, which securities are traded on a
national or foreign securities exchange, quoted on the NASDAQ stock market or
other automated quotation system, and which Person competes with the Company (or
any part thereof) within the Territory, shall not be deemed to be a violation of
Section 8(a). In the event that any Person in which the Executive has any
financial or other interest directly or indirectly enters into a business during
the Non-Compete Period that competes with the Company within the Territory, the
Executive shall divest all of his interest (other than as permitted to be held
pursuant to the first sentence of this Section 8(b)) in such Person within 15
days after such Person enters into such business that competes with the Company
within the Territory.
(c) The Executive covenants and agrees that, during the period
commencing with the Effective Date and ending on the first anniversary of the
date on which the Executive ceases to be employed by the Company for any reason
whatsoever, the Executive will not, directly or indirectly, either for himself
or for any other Person (A) solicit any employee of the Company or any of its
Subsidiaries to terminate his or her employment with the Company or any of its
Subsidiaries or employ any such individual during his or her employment with the
Company or any of its Subsidiaries and for a period of one year after such
individual terminates his or her employment with the Company or any of its
Subsidiaries, (B) solicit any customer of the Company or any of its Subsidiaries
to purchase or distribute information, products or services of or on behalf of
the Executive or such other Person that are competitive with the information,
products or services provided by the Company or any of its Subsidiaries, or (c)
take any action
-5-
<PAGE>
that may cause injury to the relationships between the Company or any of its
Subsidiaries or any of their employees and any lessor, lessee, vendor, supplier,
customer, distributor, employee, consultant or other business associate of the
Company or any of its Subsidiaries as such relationship relates to the Company's
or any of its Subsidiaries' conduct of their business.
(d) The Executive understands that the foregoing restrictions may
limit his ability to earn a livelihood in a business which is competitive with
the business of the Company and any of its Subsidiaries, but he nevertheless
believes that he has received and will receive sufficient consideration and
other benefits as an employee of the Company and as otherwise provided hereunder
or as described in the recitals hereto to clearly justify such restrictions
which, in any event (given his education, skills and ability), the Executive
does not believe would prevent him from otherwise earning a living.
(e) The foregoing non-compete restrictions shall not apply in the
event that the Executive is forced to terminate his employment with the Company
as a result of a material breach by the Company of any of its obligations to the
Executive under this Agreement, the Shareholders' Agreement between the Company,
the Executive and the other shareholders of the Company, to be entered into in
connection with the Closing under the Purchase Agreement, and Stock Option
Agreements entered into between the Company and the Executive.
Section 9. Delivery of Materials Upon Termination of Employment.
The Executive shall deliver to the Company at the termination of the
Employment Period or at any time the Company may request all memoranda, notes,
plans, records, reports, computer tapes and software and other documents and
data (and copies thereof) relating to the Confidential Information, Work Product
or the Subject Business which he may then possess or have under his control
regardless of the location or form of such material and, if requested by the
Company, will provide the Company with written confirmation that all such
materials have been delivered to the Company.
Section 10. Insurance.
The Company may, for its own benefit, maintain "keyman" life and
disability insurance policies covering the Executive. The Executive will
cooperate with the Company and provide such information or other assistance as
the Company may reasonably request in connection with the Company obtaining and
maintaining such policies.
Section 11. Enforcement.
Because the Executive's services are unique and because the
Executive has access to Confidential Information and Work Product, the parties
hereto agree that money damages would be an inadequate remedy for any breach of
this Agreement. Therefore, in the event of a breach or threatened breach of this
Agreement, the Company or its successors or assigns may, in addition to other
rights and remedies existing in their favor, apply to any court of competent
jurisdiction for specific performance and/or injunctive or other relief in order
to enforce, or prevent any violations of, the provisions hereof (without posting
a bond or other security). In addition to the foregoing, and not in any way in
limitation thereof, or in limitation of any right or remedy otherwise available
to the Company, if the Executive violates any provision of the
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<PAGE>
foregoing Sections 6, 7, 8 or 9, any payments then or thereafter due from the
Company to the Executive pursuant to Section 5(a)(ii) shall be terminated
forthwith and the Company's obligation to pay and the Executive's right to
receive such payments shall terminate and be of no further force or effect, in
each case without limiting or affecting the Executive's obligations under such
Sections 6, 7, 8 and 9 or the Company's other rights and remedies available at
law or equity.
Section 12. Representations.
Each party hereby represents and warrants to the other party that
(a) the execution, delivery and performance of this Agreement by such party does
not and will not conflict with, breach, violate or cause a default under any
agreement, contract or instrument to which such party is a party or any
judgment, order or decree to which such party is subject, and (b) upon the
execution and delivery of this Agreement by such party, this Agreement will be a
valid and binding obligation of such party, enforceable in accordance with its
terms, except as enforcement hereof may be limited by any applicable bankruptcy,
reorganization, insolvency or other laws affecting creditors rights generally or
by general principles of equity. In addition, the Executive represents and
warrants to the Company that the Executive is not a party to or bound by any
employment agreement, consulting agreement, non-compete agreement,
confidentiality agreement or similar agreement with any other Person. The
Company and the Executive hereby terminate all existing employment or consulting
agreements between them, if any, to the extent such agreements may be in effect
after the date hereof.
Section 13. Definitions.
"Board" shall mean the board of directors of the Company.
"Business Day" shall mean any day that is not a Saturday, Sunday, or
a day on which banking institutions in New York are not required to be open.
"Cause" shall mean (i) the Executive's material breach of any of the
terms of this Agreement; (ii) the conviction of a crime involving fraud, theft
or dishonesty by the Executive; (iii) the Executive's willful and continuing
disregard of lawful instructions of the Board or superiors (if any); (iv) the
continued use of alcohol or drugs by the Executive to an extent that, in the
good faith determination of the Board, such use interferes in any manner with
the performance of the Executive's duties and responsibilities; or (v) the
conviction of the Executive for violating any Law constituting a felony
(including the Foreign Corrupt Practices Act of 1977).
"Confidential Information" means information that is not generally
known to the public and that is used, developed or obtained by the Company or
any of its Subsidiaries in connection with the Subject Business, including, but
not limited to, (i) information, observations, procedures and data obtained by
the Executive while employed by the Company (including those obtained prior to
the date of this Agreement) concerning the business or affairs of the Company or
any of its Subsidiaries, (ii) products or services, (iii) costs and pricing
structures, (iv) analyses, (v) drawings, photographs and reports, (vi) computer
software, including operating systems, applications and program listings, (vii)
flow charts, manuals and documentation, (viii) data
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<PAGE>
bases, (ix) accounting and business methods, (x) inventions, devices, new
developments, methods and processes, whether patentable or unpatentable and
whether or not reduced to practice, (xi) customers and customer lists, (xii)
other copyrightable works, (xiii) all production methods, processes, technology
and trade secrets, and (xiv) all similar and related information in whatever
form. Confidential Information will not include any information that has been
published in a form generally available to the public prior to the date the
Executive proposes to disclose or use such information. Confidential Information
will not be deemed to have been published merely because individual portions of
the information have been separately published, but only if all material
features comprising such information have been published in combination.
"Disability" shall mean the physical or mental inability of the
Executive (i) to substantially perform all of his duties under this Agreement
for a period of 90 consecutive days or longer or for any 90 days in any period
of 365 consecutive days, or (ii) that, in the opinion of a physician selected by
the Board (excluding the Executive if the Executive is a member of the Board at
such time) is likely to prevent the Executive from substantially performing all
of his duties under this Agreement for more than 90 days in any period of 365
consecutive days.
"Subsidiary" of the Company means and includes (i) any corporation
more than 50% of whose stock of any class or classes having by the terms thereof
ordinary voting power to elect a majority of the directors of such corporation
(irrespective of whether or not at the time stock of any class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time owned by the Company or indirectly
through Subsidiaries and (ii) any partnership, association, joint venture or
other entity (other than a corporation) in which the Company directly or
indirectly through Subsidiaries, has more than a 50% equity interest at the
time.
"Work Product" shall mean all inventions, innovations, improvements,
technical information, systems, software developments, methods, designs,
analyses, drawings, reports, service marks, trademarks, tradenames, logos and
all similar or related information (whether patentable or unpatentable) which
relates to the Company's or any of its Subsidiaries' actual or anticipated
business, research and development or existing or future products or services
and which are conceived, developed or made by the Executive in connection with
or relating to (whether or not during usual business hours and whether or not
alone or in conjunction with any other Person) the Executive's position and
duties while employed by the Company (including those conceived, developed or
made prior to the date of this Agreement) together with all patent applications,
letters patent, trademark, tradename and service mark applications or
registrations, copyrights and reissues thereof that may be granted for or upon
any of the foregoing.
Section 14. General Provisions.
(a) Severability. It is the desire and intent of the Parties hereto
that the provisions of this Agreement be enforced to the fullest extent
permissible under the laws and public policies applied in each jurisdiction in
which enforcement is sought. Accordingly, if any particular provision of this
Agreement shall be adjudicated by a court of competent jurisdiction to be
invalid, prohibited or unenforceable for any reason, such provision, as to such
jurisdiction, shall be ineffective, without invalidating the remaining
provisions of this Agreement or affecting the
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<PAGE>
validity or enforceability of this Agreement or affecting the validity or
enforceability of such provision in any other jurisdiction. Notwithstanding the
foregoing, if such provision could be more narrowly drawn so as not to be
invalid, prohibited or unenforceable in such jurisdiction, it shall, as to such
jurisdiction, be so narrowly drawn, without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of such
provision in any other jurisdiction.
(b) Notices. All notices, requests, demands, claims and other
communications hereunder shall be in writing and sufficient if (i) delivered
personally, (ii) delivered by certified United States Post Office mail, return
receipt requested, (iii) telecopied or (iv) sent to the recipient by a
nationally-recognized overnight courier service (charges prepaid) and addressed
to the intended recipient as set forth below:
(a) if to the Executive, to:
Rudy Nadilo
c/o Greenfield Online, Inc.
15 River Road
Wilton, Connecticut 06897
Telecopier: (203) 846-5802
with a copy to:
Wake, See, Dimes & Bryncizka
27 Imperial Avenue
P.O. Box 777
Westport, CT 06881
Attention: Jacob P. Bryniczka
Telecopier: (203) 226-1641
(b) if to the Company, to:
Greenfield Online, Inc.
15 River Road
Wilton, Connecticut 06897
Telecopier: (203) 846-5802
with copies to:
Greenfield Holdings, Inc.
c/o InSight Capital Partners III, L.P.
122 East 42nd Street
Suite 2300
New York, New York 10168
Attention: Jeffrey Horing
Telecopier: (212) 681-0972;
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<PAGE>
O'Sullivan Graev & Karabell, LLP
30 Rockefeller Plaza
New York, New York 10112
Attention: Ilan S. Nissan, Esq.
Telecopier: (212) 408-2420; and
Preston Gates & Ellis LLP
701 Fifth Avenue
Suite 5000
Seattle, Washington 98104
Attention: Robert Jaffe, Esq.
Telecopier: (206) 623-7022;
or such other address as the recipient party to whom notice is to be given may
have furnished to the other party in writing in accordance herewith. Any such
communication shall deemed to have been delivered and received (a) in the case
of personal delivery, on the date of such delivery, (b) in the case of delivery
by mail, on the third Business Day following such mailing, (c) if telecopied, on
the date telecopied, and (d) in the case of delivery by nationally-recognized,
overnight courier, on the Business Day following dispatch.
(c) Entire Agreement. This Agreement and the documents expressly
referred to herein embody the complete agreement and understanding among the
parties and supersede and preempt any prior understandings, agreements or
representations by or among the parties, written or oral, which may have related
to the subject matter hereof in any way.
(d) Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
(e) Successors and Assigns. Except as otherwise provided herein,
this Agreement shall bind and inure to the benefit of and be enforceable by the
Executive and the Company and their respective successors, assigns, heirs,
representatives and estate, as the case may be; provided, however, that the
obligations of the Executive under this Agreement shall not be assigned without
the prior written consent of the Company.
(f) Amendment and Waiver. The provisions of this Agreement may be
amended and waived only with the prior written consent of the Company and the
Executive, and no course of conduct or failure or delay in enforcing the
provisions of this Agreement shall affect the validity, binding effect or
enforceability of this Agreement or any provision hereof.
(g) Governing Law. This Agreement shall be governed by and construed
in accordance with the domestic laws of the State of New York without giving
effect to any choice or conflict of law provision or rule that would cause the
application of the laws of any jurisdiction other than the State of New York.
(h) Descriptive Headings; Nouns and Pronouns. Descriptive headings
are for convenience only and shall not control or affect the meaning or
construction of any provision of
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<PAGE>
this Agreement. Whenever the context may require, any pronouns used herein shall
include the corresponding masculine, feminine or neuter forms, and the singular
form of nouns and pronouns shall include the plural and vice-versa.
(i) Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT.
(j) Effectiveness. This Agreement shall be effective as of May 17,
1999.
* * * * *
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement as of the date first written above.
GREENFIELD ONLINE, INC.
By: /s/
----------------------------------------
Name: Jonathan A. Flatow
Title: Secretary
EXECUTIVE
/s/
--------------------------------------------
Rudy Nadilo
<PAGE>
Non-Recourse Promissory Note
$75,013 May 17, 1999
FOR VALUE RECEIVED, Hugh Davis (the "Maker"), hereby promises to pay
to GREENFIELD ONLINE, INC. (the "Payee"), the principal amount of Seventy Five
Thousand Thirteen Dollars ($75,013) on May 17, 2004 (the "Maturity Date"), in
such coin or currency of the United States of America as at the time of payment
shall be legal tender therein for the payment of public and private debts, and
to pay interest on the unpaid principal amount from time to time outstanding
hereunder at the rate of 5.3% per annum, compounded annually based on a year of
360 days. Such interest shall be payable together with principal, when and as
paid, with the final payment of interest to be payable together with all
outstanding principal hereunder on the Maturity Date. In addition, the Maker
promises to pay additional interest at 7.3% per annum on any overdue principal
and (to the extent permitted by law) on any overdue interest, from the due date
thereof until the obligation of the Maker with respect to the payment thereof
shall be discharged.
The Maker may, at his sole option, at any time and from time to time
prepay this Note, without penalty, in whole or in part, together with interest
on the principal amount so prepaid to the date of such prepayment.
The Maker shall make a mandatory prepayment (each, a "Mandatory
Prepayment") in an amount equal to 100% of any and all dividends, distributions
and other payments (including the proceeds of any sale, transfer or other
disposition) paid on or with respect to the Pledged Collateral securing this
Note pursuant to the Pledge Agreement dated as of the date hereof between the
Maker and the Payee (as amended, the "Pledge Agreement"). Each such Mandatory
Prepayment shall be due and payable immediately upon receipt thereof by the
Maker and shall be applied first to interest on this Note accrued and unpaid as
of the date of the Mandatory Prepayment and then to the principal amount of this
Note then outstanding.
The Payee shall be entitled to the rights and security granted by
the Maker to the Payee pursuant to the Pledge Agreement.
Payment of both the principal of and interest on this Note shall be
made by check mailed to such office as the holder of this Note shall designate
in writing to the Maker.
Should the principal of or interest on this Note become due and
payable on other than a business day, the maturity thereof shall be extended to
the next succeeding business day, and interest shall be payable thereon at the
rate per annum herein specified during such extension. The term "business day"
shall mean any day that is not a Saturday, Sunday or legal holiday in the State
of New York.
<PAGE>
In case of the occurrence of any of the following events (each, an
"Event of Default"):
(i) default shall be made in the payment of principal of or
interest on this Note, when and as the same shall become due and
payable, whether at the due date, pursuant to a Mandatory Prepayment or
by acceleration hereof or otherwise;
(ii) the Maker shall (A) apply for or consent to the
appointment of a receiver, trustee or liquidator, (B) admit in writing
his inability to pay his debts as they mature, (C) make a general
assignment for the benefit of creditors, (D) be adjudicated a bankrupt
or insolvent, (E) file a voluntary petition, or have filed against him
a petition, in bankruptcy or petition or answer seeking a
reorganization or an arrangement with his creditors, or (F) take
advantage of any bankruptcy, reorganization, insolvency, readjustment
of debt, dissolution or liquidation law or statute or file an answer
admitting the material allegations of a petition filed against him in
any proceeding under any such law;
(iii) an order, judgment or decree shall be entered, without
the application, approval or consent of the Maker, by any court of
competent jurisdiction, approving a petition seeking reorganization of
the Maker, or appointing a receiver, trustee or liquidator for the
Maker;
(iv) the Maker shall become or be in default under the
provisions of (A) this Note, (B) the Pledge Agreement or the Employment
Agreement dated as of the date hereof, between the Maker and the Payee,
in each case as the same may hereafter be amended and in effect from
time to time, or (C) any other material agreement between the Maker and
the Payee or any of its affiliates or between the Maker and the holder
hereof or any of its affiliates (which default under such other
material agreement is not cured within 10 days from the date of notice
hereof to the Maker); or
(v) the Maker shall experience a termination of employment
with the Payee for any reason or shall die;
then, (1) in the case of clauses (i), (iv) and (v) of this Note, the holder of
this Note may, upon written notice to the Maker or his estate or executor,
declare this Note to be forthwith due and payable, whereupon this Note shall
become forthwith due and payable, both as to principal and interest, without
presentment, demand, protest, or other notice of any kind, all of which are
hereby expressly waived, and (2) in the case of clauses (ii) and (iii) of this
Note, this Note shall forthwith become due and payable both as to principal and
interest, automatically without any action on the part of the holder hereof and
without presentment, demand, protest, or other notice of any kind, all of which
are hereby expressly waived.
The Payee hereby acknowledges and agrees that the Payee's sole
recourse against the Maker shall be limited to the Pledged Collateral (as
defined in the Pledge Agreement).
The provisions hereof shall be binding upon and inure to the benefit
of the holder of this Note and its successors and assigns. This Note may not be
assigned or transferred by the Maker.
2
<PAGE>
The Maker agrees to pay all costs of collection, including
reasonable attorneys' fees, incurred by the holder of this Note in collecting or
enforcing this Note, whether in connection with a reorganization, bankruptcy or
other similar proceeding or upon default.
* * * *
3
<PAGE>
This Note shall be governed by the laws of the State of New York
applicable to contracts made and to be performed therein.
/s/
-----------------------------------
Hugh Davis
4
<PAGE>
PLEDGE AGREEMENT dated as of
May 17, 1999, by and between HUGH DAVIS, an
individual (the "Pledgor") and GREENFIELD
ONLINE, INC, a Connecticut corporation, (the
"Pledgor" or "Issuer").
WHEREAS, pursuant to that certain Non-Recourse Promissory Note
dated the date hereof (as amended, supplemented, restated or otherwise modified
from time to time in accordance with its terms, the "Note"), the Pledgee has
agreed, subject to the terms thereof, to make available to the Pledgor certain
financial accommodations on the terms and conditions set forth in the Note;
WHEREAS, it is a condition precedent to the effectiveness of
the Note and the extension of such financial accommodations under the Note that
the Pledgor execute and deliver this Agreement; and
WHEREAS, the Pledgor owns 411 shares of the Class A Common
Stock, par value $0.01 per share (the "Class A Common"), of the Issuer and will
derive substantial direct benefit from the financial accommodations to be made
available pursuant to the Note.
NOW, THEREFORE, in consideration of the mutual agreements
herein contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
Section 1. Pledge.
The Pledgor hereby pledges, hypothecates, assigns, transfers,
sets over and delivers unto the Pledgee, and grants to the Pledgee a security
interest in, all of the Pledgor's right, title and interest in, to and under the
following (collectively, the "Pledged Collateral"): (a) all of the common stock,
shares, equity interest and other securities (whether equity or debt), including
the Class A Common (excluding, in each case, options or warrants for Securities)
(collectively, "Securities") of the Issuer; (b) any additional Securities of the
Issuer as may from time to time be issued to the Pledgor or otherwise acquired
by the Pledgor; (c) any additional Securities of the Issuer as may hereafter at
any time be delivered to the Pledgee by or on behalf of the Pledgor; (d) any
cash or additional Securities or other property at any time and from time to
time receivable or otherwise distributable in respect of, in exchange for, or in
substitution of, any of the property referred to in any of the immediately
preceding clauses (a) through (c); and (e) any and all products and proceeds of
any of the foregoing, together with and all other rights, titles, interests,
powers, privileges and preferences pertaining to said property.
Section 2. Obligations Secured.
This Agreement is made, and the security interest created
hereby is granted to the Pledgee, to secure the prompt performance and payment
in full of the following (collectively, the "Secured Obligations"): (a) all
obligations of the Pledgor under this Agreement; (b) all obligations due and
payable under the Note; and (c) any reasonable costs or expenses incurred by the
Pledgee or Pledgee's counsel in connection with the realization of the security
for which this
<PAGE>
Agreement provides, including, without limitation, any reasonable costs or
expenses of any proceedings to which this Agreement may give rise.
Section 3. Representations and Warranties.
The Pledgor hereby represents and warrants to the Pledgee as
follows:
(a) Title and Liens. The Pledgor is, and will at all times
continue to be, the legal and beneficial owner of the Pledged Collateral and
none of the Pledged Collateral is subject to any lien. No financing statement
under the Uniform Commercial Code of any jurisdiction which names the Pledgor as
debtor or covers any of the Pledged Collateral, or any other notice filed in the
public records indicating the existence of a lien thereon, has been filed and is
still effective in any state or other jurisdiction, other than Uniform
Commercial Code financing statements filed in favor of the Pledgee, and the
Pledgor has not signed any such financing statement or notice or any security
agreement authorizing the filing of any such financing statement or notice,
other than Uniform Commercial Code financing statements filed in favor of the
Pledgee.
(b) Taxpayer ID Number.
The Social Security number of the Pledgor is ###-##-####.
(c) Authority, etc. The Pledgor (i) has the power and
authority to pledge the Pledged Collateral in the manner hereby done or
contemplated and (ii) will defend his title or interest thereto or therein
against any and all liens (other than the lien created by this Agreement),
however arising, of all persons.
(d) No Approval. No consent or approval of any governmental
authority or any securities exchange was or is necessary to the validity of the
pledge effected hereby.
Section 4. Covenants.
The Pledgor hereby unconditionally covenants and agrees that
the Pledgor will not create, assume, incur or permit or suffer to exist or to be
created, assumed or incurred, any lien on any of the Pledged Collateral (or any
interest therein), and will not sell, lease, assign, transfer or otherwise
dispose of all or any portion of the Pledged Collateral (or any interest
therein).
Section 5. Additional Shares.
The Pledgor agrees that, until this Agreement has terminated
in accordance with its terms, any certificates, instruments or other documents
evidencing additional Securities of the Issuer at any time issued to the Pledgor
or otherwise acquired by the Pledgor shall be promptly delivered or otherwise
transferred to the Pledgee, such additional Securities being additional Pledged
Collateral and subject to the lien of, and the terms and conditions of, this
Agreement.
2
<PAGE>
Section 6. Registration in Nominee Name, Denominations.
The Pledgee shall have the right (in its sole and absolute
discretion) to hold the Pledged Securities in its own name as pledgee, the name
of its nominee (as Pledgee or as sub-agent) or the name of the applicable
Pledgor, endorsed or assigned in blank or in favor of the Pledgee. The Pledgor
will promptly give to the Pledgee copies of any notices or other communications
received by him with respect to Pledged Securities registered in the name of the
Pledgor. The Pledgee shall at all times have the right to exchange the
certificates representing Pledged Securities for certificates of smaller or
larger numbers of shares for any purpose consistent with this Agreement.
Section 7. Voting Rights; Dividends, etc.
(a) So long as no Event of Default shall have occurred and
be continuing, the Pledgor shall be entitled to exercise any and all voting
and/or consensual rights and powers accruing to an owner of the Pledged
Collateral or any part thereof for any purpose not inconsistent with the terms
and conditions of this Agreement or any agreement giving rise to or otherwise
relating to any of the Secured Obligations; provided, however, that the Pledgor
shall not exercise, or refrain from exercising, any such right or power if any
such action could have a adverse effect on the value of such Pledged Collateral
in the sole judgment of the Pledgee.
The Pledgor shall not be entitled to retain and use any and all cash dividends
paid on the Pledged Collateral, including any and all stock and/or liquidating
dividends, other distributions in property, return of capital or other
distributions made on or in respect of Pledged Securities, whether resulting
from a subdivision, combination or reclassification of outstanding securities of
the Issuer which are pledged hereunder or received in exchange for Pledged
Collateral or any part thereof or as a result of any merger, consolidation,
acquisition or other exchange of assets or on the liquidation, whether voluntary
or involuntary, of the Issuer, or otherwise, such property being additional
Pledged Collateral pledged hereunder and, if received by the Pledgor, shall
forthwith be delivered to the Pledgee to be held as Pledged Collateral subject
to the terms and conditions of this Agreement.
The Pledgee agrees to execute and deliver to the Pledgor, or cause to be
executed and delivered to the Pledgor, as appropriate, at the sole cost and
expense of the Pledgor, all such proxies, powers of attorney, dividend orders
and other instruments as the Pledgor may request for the purpose of enabling the
Pledgor to exercise the voting and/or consensual rights and powers which Pledgor
is entitled to exercise and/or to receive the dividends which Pledgor is
authorized to retain. Without limiting the generality of the foregoing, the
Pledgor hereby grants a proxy (which shall be a proxy coupled with an interest)
to the Pledgee to vote the Pledged Collateral upon the occurrence and
continuation of an Event of Default.
(b) Upon the occurrence and during the continuance of an
Event of Default, all rights of the Pledgor to exercise the voting and/or
consensual rights and powers which Pledgor is entitled to exercise pursuant to
subsection (a) above shall cease, and all such rights thereupon shall become
immediately vested in the Pledgee, which shall have, to the extent permitted by
law, the sole and exclusive right and authority to exercise such voting and/or
consensual rights and powers which the Pledgor shall otherwise be entitled to
exercise pursuant
3
<PAGE>
to subsection (a) above. Any and all money and other property paid over to or
received by the Pledgee pursuant to the provisions of this subsection (b) shall
be retained by the Pledgee as additional collateral hereunder and shall be
applied in accordance with the provisions of Section 9. If the Pledgor shall
receive any dividends or other property which he is not entitled to receive
under this Section, the Pledgor shall hold the same in trust for the Pledgee,
without commingling the same with other funds or property of or held by the
Pledgor, and shall promptly deliver the same to the Pledgee upon receipt by the
Pledgor in the identical form received, together with any necessary
endorsements.
Section 8. Remedies upon Event of Default.
(a) In addition to any right or remedy that the Pledgee may have
under the Note, any other loan documents or otherwise under applicable law, if
an Event of Default shall have occurred and be continuing, the Pledgee may
exercise any and all the rights and remedies of a secured party under the
Uniform Commercial Code as in effect in any applicable jurisdiction (the "Code")
and may otherwise sell, assign, transfer, endorse and deliver the whole or, from
time to time, any part of the Pledged Collateral at a public or private sale or
on any securities exchange, for cash, upon credit or for other property, for
immediate or future delivery, and for such price or prices and on such terms as
the Pledgee in its discretion shall deem appropriate. The Pledgee shall be
authorized at any sale (if it deems it advisable to do so) to restrict the
prospective bidders or purchasers to persons who will represent and agree that
they are purchasing the Pledged Collateral for their own account in compliance
with the Securities Act and upon consummation of any such sale the Pledgee shall
have the right to assign, transfer, endorse and deliver to the purchaser or
purchasers thereof the Pledged Collateral so sold. Each purchaser at any sale of
Pledged Collateral shall take and hold the property sold absolutely free from
any claim or right on the part of the Pledgor, and the Pledgor hereby waives (to
the fullest extent permitted by applicable law) all rights of redemption, stay
and/or appraisal which the Pledgor now has or may at any time in the future have
under any applicable law now existing or hereafter enacted. The Pledgor agrees
that, to the extent notice of sale shall be required by applicable law, at least
ten days' prior written notice to the Pledgor of the time and place of any
public sale or the time after which any private sale is to be made shall
constitute reasonable notification, but notice given in any other reasonable
manner or at any other reasonable time shall constitute reasonable notification.
Such notice, in case of public sale, shall state the time and place for such
sale, and, in the case of sale on a securities exchange, shall state the
exchange on which such sale is to be made and the day on which the Pledged
Collateral, or portion thereof, will first be offered for sale at such exchange.
Any such public sale shall be held at such time or times within ordinary
business hours and at such place or places as the Pledgee may fix and shall
state in the notice or publication (if any) of such sale. At any such sale, the
Pledged Collateral, or portion thereof to be sold, may be sold in one lot as an
entirety or in separate parcels, as the Pledgee may determine in its sole and
absolute discretion. The Pledgee shall not be obligated to make any sale of the
Pledged Collateral if it shall determine not to do so regardless of the fact
that notice of sale of the Pledged Collateral may have been given. The Pledgee
may, without notice or publication, adjourn any public or private sale or cause
the same to be adjourned from time to time by announcement at the time and place
fixed for sale, and such sale may, without further notice, be made at the time
and place to which the same was so adjourned. In case the sale of all or any
part of the Pledged Collateral is made on credit or for future delivery, the
Pledged Collateral so sold may be retained by the Pledgee until the sale price
is paid by the
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purchaser or purchasers thereof, but the Pledgee shall not incur any liability
to the Pledgor in case any such purchaser or purchasers shall fail to take up
and pay for the Pledged Collateral so sold and, in case of any such failure,
such Pledged Collateral may be sold again upon like notice. At any public sale
made pursuant to this Agreement, the Pledgee, to the extent permitted by
applicable law, may bid for or purchase, free from any right of redemption, stay
and/or appraisal on the part of the Pledgor (all said rights being also hereby
waived and released to the extent permitted by applicable law), any part of or
all the Pledged Collateral offered for sale and may make payment on account
thereof by using any claim then due and payable to the Pledgee from the Pledgor
as a credit against the purchase price, and the Pledgee may, upon compliance
with the terms of sale and to the extent permitted by applicable law, hold,
retain and dispose of such property without further accountability to the
Pledgor therefor. For purposes hereof, a written agreement to purchase all or
any part of the Pledged Collateral shall be treated as a sale thereof; the
Pledgee shall be free to carry out such sale pursuant to such agreement and the
Pledgor shall not be entitled to the return of any Pledged Collateral, subject
thereto, notwithstanding the fact that after the Pledgee shall have entered into
such an agreement the Secured Obligations may have been paid in full as herein
provided. The Pledgor hereby waives any right to require any marshaling of
assets and any similar right.
(b) If an Event of Default shall have occurred and be
continuing, in addition to exercising the power of sale herein conferred upon
it, the Pledgee shall also have the option to proceed by suit or suits at law or
in equity to foreclose this Agreement and sell the Pledged Collateral or any
portion thereof pursuant to judgment or decree of a court or courts having
competent jurisdiction.
(c) The rights and remedies of the Pledgee under this
Agreement are cumulative and not exclusive of any rights or remedies which it
would otherwise have.
Section 9. Application of Proceeds of Sale and Cash.
The proceeds of any sale of the whole or any part of the
Pledged Collateral, together with any other moneys held by the Pledgee under the
provisions of this Agreement, shall be applied by the Pledgee in the following
order:
(a) First: to the payment of all costs and expenses incurred
in connection with such sale or other realization, including reasonable
attorneys' fees incurred if the Pledgee endeavored to collect the Secured
Obligations by or through an attorney at law;
(b) Second: to the payment of the interest due upon any of
the Secured Obligations, in any order which the Pledgee may elect;
(c) Third: to the payment of the principal due upon any of
the Secured Obligations in any order which the Pledgee may elect; and
(d) Fourth: the balance (if any) of such proceeds shall be
paid to the Pledgor or to whomsoever may be legally entitled thereto.
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Section 10. Pledgee Appointed Attorney-in-Fact.
The Pledgor hereby constitutes and appoints the Pledgee as the
attorney-in-fact of the Pledgor with full power of substitution either in the
Pledgee's name or in the name of the Pledgor to do any of the following: (a) to
perform any obligation of the Pledgor hereunder in the Pledgor's name or
otherwise; (b) to ask for, demand, sue for, collect, receive, receipt and give
acquittance for any and all moneys due or to become due under and by virtue of
any Pledged Collateral; (c) to prepare, execute, file, record or deliver
notices, assignments, financing statements, continuation statements,
applications for registration or like papers to perfect, preserve or release the
Pledgee's security interest in the Pledged Collateral or any of the documents,
instruments, certificates and agreements described herein; (d) to verify facts
concerning the Pledged Collateral in its own name or a fictitious name; (e) to
endorse checks, drafts, orders and other instruments for the payment of money
payable to the Pledgor, representing any interest or dividend or other
distribution payable in respect of the Pledged Collateral or any part thereof or
on account thereof and to give full discharge for the same; (f) to exercise all
rights, powers and remedies which the Pledgor would have, but for this
Agreement, under the Pledged Collateral; and (g) to carry out the provisions of
this Agreement and to take any action and execute any instrument which the
Pledgee may deem necessary or advisable to accomplish the purposes hereof, and
to do all acts and things and execute all documents in the name of the Pledgor
or otherwise, deemed by the Pledgee as necessary, proper and convenient in
connection with the preservation, perfection or enforcement of its rights
hereunder. Nothing herein contained shall be construed as requiring or
obligating the Pledgee to make any commitment or to make any inquiry as to the
nature or sufficiency of any payment received by it, or to present or file any
claim or notice, or to take any action with respect to the Pledged Collateral or
any part thereof or the moneys due or to become due in respect thereof or any
property covered thereby, and no action taken by the Pledgee or omitted to be
taken with respect to the Pledged Collateral or any part thereof shall give rise
to any defense, counterclaim or offset in favor of the Pledgor or to any claim
or action against the Pledgee. The power of attorney granted herein is
irrevocable and coupled with an interest.
Section 11. Further Assurances.
The Pledgor shall, at his sole cost and expense, take all
action that may be necessary or desirable in the Pledgee's sole discretion, so
as at all times to maintain the validity, perfection, enforceability and
priority of the Pledgee's security interest in the Pledged Collateral, or to
enable the Pledgee to exercise or enforce its rights hereunder, including,
without limitation, (a) delivering to the Pledgee, endorsed or accompanied by
such instruments of assignment as the Pledgee may specify, any and all chattel
paper, instruments, letters of credit and all other advices of guaranty and
documents evidencing or forming a part of the Pledged Collateral and (b)
executing and delivering financing statements, pledges, designations, notices
and assignments, in each case in form and substance satisfactory to the Pledgee,
relating to the creation, validity, perfection, priority or continuation of the
security interest granted hereunder. The Pledgor agrees to take, and authorizes
the Pledgee to take on the Pledgor's behalf, any or all of the following actions
with respect to any Pledged Collateral as the Pledgee shall deem necessary to
perfect the security interest and pledge created hereby or to enable the Pledgee
to enforce its rights and remedies hereunder: (i) to register in the name of the
Pledgee any Pledged
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Collateral in certificated or uncertificated form; (ii) to endorse in the name
of the Pledgee any Pledged Collateral issued in certificated form; and (iii) by
book entry or otherwise, identify as belonging to the Pledgee a quantity of
securities that constitutes all or part of the Pledged Collateral registered in
the name of the Pledgee. Notwithstanding the foregoing the Pledgor agrees that
Pledged Collateral which is not in certificated form or is otherwise in
book-entry form shall be held for the account of the Pledgee. The Pledgor hereby
authorizes the Pledgee to execute and file in all necessary and appropriate
jurisdictions (as determined by the Pledgee) one or more financing or
continuation statements (or any other document or instrument referred to in the
immediately preceding clause (b)) in the name of the Pledgor and to sign the
Pledgor's name thereto. The Pledgor authorizes the Pledgee to file any such
financing statement, document or instrument without the signature of the Pledgor
to the extent permitted by applicable law. To the extent permitted by applicable
law, a carbon, photographic, xerographic or other reproduction of this Agreement
or any financing statement is sufficient as a financing statement. Any property
comprising part of the Pledged Collateral required to be delivered to the
Pledgee pursuant to this Pledge Agreement shall be accompanied by proper
instruments of assignment duly executed by the Pledgor and by such other
instruments or documents as the Pledgee may reasonably request. In the event any
Pledged Collateral in certificated form becomes eligible for book-entry
treatment, the Pledgor will use its best efforts to effectuate such book-entry
treatment with respect to such Pledged Collateral.
Section 12. Securities Act.
In view of the position of the Pledgor in relation to the
Pledged Collateral, or because of other current or future circumstances, a
question may arise under the Securities Act of 1933, as now or hereafter in
effect, or any similar applicable law (whether foreign or domestic) hereafter
enacted analogous in purpose or effect (such Act and any such similar applicable
law as from time to time in effect being called the "Securities Laws") with
respect to any disposition of the Pledged Collateral permitted hereunder. The
Pledgor understands that compliance with the Securities Laws might very strictly
limit the course of conduct of the Pledgee if the Pledgee were to attempt to
dispose of all or any part of the Pledged Collateral in accordance with the
terms hereof, and might also limit the extent to which or the manner in which
any subsequent transferee of any Pledged Collateral could dispose of the same.
Similarly, there may be other legal restrictions or limitations affecting the
Pledgee in any attempt to dispose of all or part of the Pledged Collateral in
accordance with the terms hereof under applicable "blue sky" or other state
securities laws or similar applicable law analogous in purpose or effect. The
Pledgor recognizes that in light of the foregoing restrictions and limitations
the Pledgee may, with respect to any sale of the Pledged Collateral, limit the
purchasers to those who will agree, among other things, to acquire such Pledged
Collateral for their own account, for investment, and not with a view to the
distribution or resale thereof. The Pledgor acknowledges and agrees that in
light of the foregoing restrictions and limitations, the Pledgee, in its sole
and absolute discretion, may, in accordance with applicable law, (a) proceed to
make such a sale whether or not a registration statement for the purpose of
registering such Pledged Collateral or part thereof shall have been filed under
the Securities Laws and (b) approach and negotiate with a single potential
purchaser to effect such sale. The Pledgor acknowledges and agrees that any such
sale might result in prices and other terms less favorable to the seller than if
such sale were a public sale without such restrictions. In the event of any such
sale, the Pledgee shall incur no responsibility or liability for selling all or
any part of the Pledged Collateral in accordance with the terms hereof at a
price that the Pledgee, in its sole and absolute discretion, may in good faith
deem reasonable under the circumstances,
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notwithstanding the possibility that a substantially higher price might have
been realized if the sale were deferred until after registration as aforesaid or
if more than a single purchaser were approached. The provisions of this Section
will apply notwithstanding the existence of public or private market upon which
the quotations or sales prices may exceed substantially the price at which the
Pledgee sells.
Section 13. Non-Recourse Obligations.
The Pledgee hereby acknowledges and agrees that the Pledgee's
sole recourse against the Pledgor hereunder shall be limited to the Pledged
Collateral.
Section 14. Continuing Security Interest.
This Agreement shall create a continuing security interest in
the Pledged Collateral and shall remain in full force and effect until it
terminates in accordance with its terms. The Pledgor and the Pledgee hereby
agree that the security interest created by this Agreement in the Pledged
Collateral shall not terminate and shall continue and remain in full force and
effect notwithstanding the transfer to the Pledgee of a portion of the Pledged
Collateral.
Section 15. Security Interest Absolute.
All rights of the Pledgee hereunder, the grant of a security
interest in the Pledged Collateral and all obligations of the Pledgor hereunder,
shall be absolute and unconditional irrespective of (a) any lack of validity or
enforceability of the Note or any other loan document, any agreement with
respect to any of the Secured Obligations or any other agreement or instrument
relating to any of the foregoing, (b) any change in the time, manner or place of
the payment of, or in any other term of, all or any of the Secured Obligations,
or any other amendment or waiver of or any consent to any departure from the
Note, any other loan document, or any other agreement or instrument relating to
any of the foregoing, (c) any exchange, release or nonperfection of any other
collateral, or any release or amendment or waiver of or consent to or departure
from any guaranty, for all or any of the Secured Obligations or (d) any other
circumstance that might otherwise constitute a defense available to, or a
discharge of, the Pledgor in respect of the Secured Obligations or in respect of
this Agreement (other than the indefeasible payment in full of all the Secured
Obligations).
Section 16. No Waiver.
Neither the failure on the part of the Pledgee to exercise,
nor the delay on its part in exercising, any right, power or remedy hereunder,
nor any course of dealing between the Pledgee and the Pledgor, shall operate as
a waiver thereof, nor shall any single or partial exercise of any such right,
power, or remedy hereunder preclude any other or the further exercise thereof or
the exercise of any other right, power or remedy.
Section 17. Notices.
Notices, requests and other communications required or
permitted hereunder shall be given in accordance with the applicable terms of
the Note.
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Section 18. Governing Law.
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE
PRINCIPLES OF CONFLICTS OF LAWS.
Section 19. Amendments.
No amendment or waiver of any provision of this Agreement nor
consent to any departure by the Pledgor herefrom shall in any event be effective
unless the same shall be in writing and signed by the parties hereto, and then
such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which given.
Section 20. Binding Agreement Assignment.
This Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and assigns, except that
the Pledgor shall not be permitted to assign this Agreement or any interest
herein or in the Pledged Collateral, or any part thereof, or any cash or
property held by the Pledgee as collateral under this Agreement.
Section 21. Termination.
Upon payment in full of all of the Secured Obligations, this
Agreement shall terminate. Upon termination of this Agreement in accordance with
its terms, the Pledgee agrees to take such actions as the Pledgor may reasonably
request, and at the sole cost and expense of the Pledgor, (a) to return the
Pledged Collateral to the Pledgor, and (b) to evidence the termination of this
Agreement, including, without limitation, the filing of any releases or any
termination statements under the Uniform Commercial Code.
Section 22. Severability.
In case any provision of this Agreement shall be invalid,
illegal or unenforceable in any jurisdiction, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
Section 23. Headings.
Section headings used herein are for convenience only and are
not to affect the construction of or be taken into consideration in interpreting
this Agreement.
Section 24. Counterparts.
This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original and all of which shall constitute but
one agreement.
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Section 25. Definitions.
Terms not otherwise defined herein are used herein with the
respective meanings given to them in the Note.
* * * * *
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IN WITNESS WHEREOF, the Pledgor has executed and delivered
this Pledge Agreement under seal as of this the date first written above.
Pledgor:
/s/
-----------------------------------------
Hugh Davis
GREENFIELD ONLINE, INC.
By: /s/
-------------------------------
Name: Rudy Nadilo
Title: President + CEO
<PAGE>
Loan and Security Agreement
Borrower: Greenfield Online, Inc.
Address: 15 River Road, Suite 310
Wilton, Connecticut 06897
Date: December 3, 1999
This Loan and Security Agreement is entered into on the above date between
Greyrock Capital, a division of Banc of America Commercial Finance
Corporation (Greyrock), whose address is 10880 Wilshire Blvd. Suite 1850, Los
Angeles, CA 90024 and the borrower named above (Borrower), whose chief
executive office is located at the above address (Borrower's Address). The
Schedule to this Agreement (the Schedule) being signed concurrently is an
integral part of this Agreement. (Definitions of certain terms used in this
Agreement are set forth in Section 8 below.)
1. LOANS.
1.1 1.1 Loans. (a) Revolving Credit Loans. Greyrock will make loans to
Borrower (the Revolving Credit Loans), in amounts determined by
Greyrock in its reasonable discretion, up to the amounts (the
Revolving Credit Limit) shown on the Schedule, provided no Default
or Event of Default has occurred and is continuing.
(b) Term Loan. Greyrock will make a term loan to Borrower (the
Term Loan), in the amount (the Term Loan Limit) shown on the
Schedule, provided no Default or Event of Default has occurred
and is continuing.
(c) If at any time or for any reason the outstanding aggregate
amount of all outstanding Revolving Credit Loans, the Term
Loan and all other Obligations exceeds the amount shown on the
Schedule as the Total Credit Limit (the Total Credit Limit),
Borrower shall immediately pay the amount of the excess to
Greyrock, without notice or demand. The Revolving Credit Loans
and the Term Loan are sometimes collectively referred to
herein as the "Loans."
1.2 Interest. All Loans and all other monetary Obligations shall bear
interest at the rate shown on the Schedule, except where expressly set forth
to the contrary in this Agreement or in another written agreement signed by
Greyrock and Borrower. Interest shall be payable monthly, on the last day of
the month. In the event that Borrower fails to pay interest when due,
interest may, in Greyrock's discretion, be charged to Borrower's loan
account, and the same shall thereafter bear interest at the same rate as the
other Loans.
1.3 Fees. Borrower shall pay Greyrock the fee(s) shown on the Schedule,
which are in addition to all interest and other sums payable to Greyrock and
are not refundable.
1.4 Manner of Payments. All payments by Borrower hereunder (including
principal and interest payments) shall be made in lawful money of the United
States of America, on the date on which such payment shall be due. If a
payment hereunder becomes due and payable on a Saturday, Sunday or legal
holiday, the due date thereof shall be extended to the next succeeding
business day, and interest shall be payable thereon during such extension.
2. SECURITY INTEREST.
2.1 Security Interest. To secure the payment and performance of all of
the Obligations when due, Borrower hereby grants to Greyrock a security
interest in all of Borrower's interest in the following, whether now owned or
hereafter acquired, and wherever located (collectively, the Collateral): All
Receivables, Inventory, Equipment, Investment Property and General
Intangibles, including, without limitation, all of Borrower's Deposit
Accounts, all money, all collateral in which Greyrock is granted a security
interest pursuant to any other present or future agreement, all property now
or at any time in the future in Greyrock's possession, and all proceeds
(including proceeds of any insurance policies, proceeds of proceeds and
claims against third parties), all products of the foregoing, and all books
and records related to any of the foregoing.
<PAGE>
Greyrock Capital Loan and Security Agreement
- --------------------------------------------------------------------------------
3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF BORROWER.
In order to induce Greyrock to enter into this Agreement and to make
Loans, Borrower represents and warrants to Greyrock as follows, and Borrower
covenants that the following representations will continue to be true, and
that Borrower will at all times comply with all of the following covenants:
3.1 Corporate Existence and Authority. Borrower, if a corporation, is
and will continue to be, duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation. Borrower is
and will continue to be qualified and licensed to do business in all
jurisdictions in which any failure to do so would have a material adverse
effect on Borrower. The execution, delivery and performance by Borrower of
this Agreement, and all other documents contemplated hereby (i) have been
duly and validly authorized, (ii) are enforceable against Borrower in
accordance with their terms (except as enforcement may be limited by
equitable principles and by bankruptcy, insolvency, reorganization,
moratorium or similar laws relating to creditors' rights generally), (iii) do
not violate Borrower's articles or certificate of incorporation, or
Borrower's by-laws, or any law or any material agreement or instrument which
is binding upon Borrower or its property, and (iv) do not constitute grounds
for acceleration of any material indebtedness or obligation under any
material agreement or instrument which is binding upon Borrower or its
property.
3.2 Name; Trade Names and Styles. The name of Borrower set forth in the
heading to this Agreement is its correct name. Listed on the Schedule are all
prior names of Borrower and all of Borrower's present and prior trade names.
Borrower shall give Greyrock 10 days prior written notice before changing its
name or doing business under any other name. Borrower has complied, and will
in the future comply, with all laws relating to the conduct of business under
a fictitious business name.
3.3 Place of Business; Location of Collateral. The address set forth in
the heading to this Agreement is Borrower's chief executive office. In
addition, Borrower has places of business and Collateral is located only at
the locations set forth on the Schedule. Borrower will give Greyrock at least
10 days prior written notice before opening any additional place of business,
changing its chief executive office, or moving any of the Collateral to a
location other than Borrower's Address or one of the locations set forth on
the Schedule.
3.4 Title to Collateral; Permitted Liens. Borrower is now, and will at
all times in the future be, the sole owner of all the Collateral,
except for items of Equipment which are leased by Borrower. The
Collateral now is and will remain free and clear of any and all
liens, charges, security interests, encumbrances and adverse
claims, except for Permitted Liens. Greyrock now has, and will
continue to have, a first-priority perfected and enforceable
security interest in all of the Collateral, subject only to the
Permitted Liens, and Borrower will at all times defend Greyrock and
the Collateral against all claims of others (provided that
Permitted Liens shall not be deemed to be a claim for purposes of
this sentence so long as the indebtedness secured by such Permitted
Lien is not in default). So long as any Loan is outstanding which
is a term loan, none of the Collateral now is or will be affixed to
any real property in such a manner, or with such intent, as to
become a fixture unless (i) Greyrock received prior written notice
thereof and (ii) a fixture filing and landlord waiver exists in
favor of Greyrock, in form and substance acceptable to Greyrock,
with respect to such Collateral. Borrower is not and will not
become a lessee under any real property lease pursuant to which the
lessor may obtain any rights in any of the Collateral (unless
Borrower provides Greyrock with a landlord waiver with respect
thereto in form and substance satisfactory to Greyrock, of so
requested by Greyrock) and no such lease now prohibits, restrains,
impairs or will prohibit, restrain or impair Borrower's right to
remove any Collateral from the leased premises. Whenever any
Collateral is located upon premises in which any third party has an
interest (whether as owner, mortgagee, beneficiary under a deed of
trust, lien or otherwise), Borrower shall, whenever requested by
Greyrock, use commercially reasonable efforts to cause such third
party to execute and deliver to Greyrock, in form acceptable to
Greyrock, such waivers and subordinations as Greyrock shall
specify, so as to ensure that Greyrock's rights in the Collateral
are, and will continue to be, superior to the rights of any such
third party. Borrower will keep in full force and effect, and will
comply with all the terms of, any lease of real property where any
of the Collateral now or in the future may be located.
3.5 Maintenance of Collateral. Borrower will maintain the Equipment and
other tangible Collateral in good working condition, ordinary wear
and tear excepted, and Borrower will not use the Collateral for any
unlawful purpose. Borrower will immediately advise Greyrock in
writing of any material loss or damage to the Collateral. Borrower
will maintain the validity of, and otherwise maintain, preserve and
protect its copyrightable software and computer programs, its
material patents, trademarks, other copyrights and other
intellectual property in accordance with prudent business
practices.
3.6 Books and Records. Borrower has maintained and will maintain at
Borrower's Address books and records which are complete and accurate in all
material respects and which comprise an accounting system in accordance with
generally accepted accounting principles.
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Greyrock Capital Loan and Security Agreement
- --------------------------------------------------------------------------------
3.7 Financial Condition, Statements and Reports. All financial
statements now or in the future delivered to Greyrock have been, and will be,
prepared in conformity with generally accepted accounting principles and now
and in the future will fairly reflect the financial condition of Borrower, at
the times and for the periods therein stated. Between the last date covered
by any such statement provided to Greyrock and the date hereof, there has
been no material adverse change in the financial condition or business of
Borrower. Borrower is now and will continue to be solvent.
3.8 Tax Returns and Payments; Pension Contributions. Borrower has timely
filed, and will timely file, all tax returns and reports required by
applicable law, and Borrower has timely paid, and will timely pay, all
applicable taxes, assessments, deposits and contributions now or in the
future owed by Borrower (except where failure to do so would not have a
material adverse effect on Borrower and would not result in a lien on any of
the Collateral, but only so long as Borrower maintains adequate reserves with
respect to such liabilities in accordance with generally accepted accounting
principles). Borrower may, however, defer payment of any contested taxes,
provided that Borrower (i) in good faith contests Borrower's obligation to
pay the taxes by appropriate proceedings promptly and diligently instituted
and conducted, (ii) notifies Greyrock in writing of the commencement of, and
any material development in, the proceedings, and (iii) posts bonds or takes
any other steps required to keep the contested taxes from becoming a lien
upon any of the Collateral. Borrower is unaware of any claims or adjustments
proposed for any of Borrower's prior tax years which could result in
additional taxes becoming due and payable by Borrower. Borrower has paid, and
shall continue to pay all amounts necessary to fund all present and future
pension, profit sharing and deferred compensation plans in accordance with
their terms, and Borrower has not and will not withdraw from participation
in, permit partial or complete termination of, or permit the occurrence of
any other event with respect to, any such plan which could result in any
material liability of Borrower, including any material liability to the
Pension Benefit Guarantee Corporation or any other governmental agency.
Borrower shall, at all times, maintain a separate payroll account which shall
be used exclusively for payment of payroll and payroll taxes and other items
related directly to payroll.
3.9 Compliance with Law. Borrower has complied, and will comply, in all
material respects, with all provisions of all applicable laws and
regulations, including, but not limited to, those relating to Borrower's
ownership of real or personal property, the conduct and licensing of
Borrower's business, and all environmental matters.
3.10 Litigation. Except as disclosed in the Schedule, there is no claim,
suit, litigation, proceeding or investigation pending or (to best of
Borrower's knowledge) threatened by or against or affecting Borrower in any
court or before any governmental agency (or any basis therefor known to
Borrower) which may result, either separately or in the aggregate, in any
material adverse change in the financial condition or business of Borrower,
or in any material impairment in the ability of Borrower to carry on its
business in substantially the same manner as it is now being conducted.
Borrower will promptly inform Greyrock in writing of any claim, proceeding,
litigation or investigation in the future threatened or instituted by or
against Borrower which if determined adversely to the Borrower could result
in (i) a judgement, loss or payment of $100,000 or more or $200,000 in the
aggregate or (ii) a material adverse change in the financial condition or
business of Borrower, or in any material impairment in the ability of
Borrower to carry on its business in substantially the same manner as it is
now being conducted.
3.11 Use of Proceeds. All proceeds of all Loans shall be used solely for
lawful business purposes.
3.12 Year 2000 Compliance. Borrower has (i) initiated a review and
assessment of all areas within its and each of its subsidiaries' business and
operations (including those affected by suppliers and vendors) other than
suppliers such as utilities and other internet infrastructure providers) that
could be adversely affected by the "Year 2000 Problem" (that is, the risk
that computer applications used by Borrower or any of its subsidiaries (or
its suppliers and vendors) may be unable to recognize and perform properly
date-sensitive functions involving certain dates prior to and any date after
December 31, 1999), (ii) developed a plan and timeline for addressing the
Year 2000 Problem on a timely basis, and (iii) to date, implemented that plan
in accordance with that timetable. Borrower reasonably believes that all
computer applications (including those of its suppliers and vendors) other
than suppliers such as utilities and other internet infrastructure providers)
that are material to its or any of its subsidiaries' business and operations
will on a timely basis be able to perform properly date-sensitive functions
for all dates before and after January 1, 2000 (that is, be "Year 2000
compliant"), except to the extent that a failure to do so could not
reasonably be expected to have material adverse effect. Borrower will
promptly notify Greyrock in the event Borrower discovers or determines that
any computer application (including those of its suppliers and vendors) that
is material to its or any of its subsidiaries' business and operations will
not be Year 2000 compliant on a timely basis, except to the extent that such
failure could not reasonably be expected to have a material adverse effect.
4. Receivables.
4.1 Representations Relating to Receivables. Borrower represents and
warrants to Greyrock as follows: Each Receivable with respect to which Loans
are requested by Borrower shall, on the date each Loan is requested and made,
represent an undisputed, bona fide,
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existing, unconditional obligation of the Account Debtor created by the
sale, delivery, and acceptance of goods or the rendition of services, in the
ordinary course of Borrower's business.
4.2 Representations Relating to Documents and Legal Compliance. Borrower
represents and warrants to Greyrock as follows: All statements made and all
unpaid balances appearing in all invoices, instruments and other documents
evidencing the Receivables are and shall be true and correct and all such
invoices, instruments and other documents and all of Borrower's books and
records are and shall be genuine and in all respects what they purport to be,
and all signatories and endorsers have the capacity to contract. All sales
and other transactions underlying or giving rise to each Receivable shall
comply with all applicable laws and governmental rules and regulations. All
signatures and indorsements on all documents, instruments, and agreements
relating to all Receivables are and shall be genuine, and all such documents,
instruments and agreements are and shall be legally enforceable in accordance
with their terms, except, as the enforceability may be limited by (i)
bankruptcy, reorganization, moratorium, insolvency, or other laws of general
application relating to or affecting the enforcement of creditors' rights or
(ii) the exercise of judicial discretion in accordance with general
principles of equity.
4.3 Schedules and Documents relating to Receivables. Borrower shall
deliver to Greyrock transaction reports and loan requests, schedules and
assignments of all Receivables, and schedules of collections, all on
Greyrock's standard forms; provided, however, that Borrower's failure to
execute and deliver the same shall not affect or limit Greyrock's security
interest and other rights in all of Borrower's Receivables, nor shall
Greyrock's failure to advance or lend against a specific Receivable affect or
limit Greyrock's security interest and other rights therein. Together with
each such schedule and assignment, or later if requested by Greyrock,
Borrower shall furnish Greyrock with copies (or, at Greyrock's request,
originals) of all contracts, orders, invoices, and other similar documents,
and all original shipping instructions, delivery receipts, bills of lading,
and other evidence of delivery, for any goods the sale or disposition of
which gave rise to such Receivables, and Borrower warrants the genuineness of
all of the foregoing. Borrower shall also furnish to Greyrock an aged
accounts receivable trial balance in such form and at such intervals as
Greyrock shall request. In addition, Borrower shall deliver to Greyrock the
originals of all instruments, chattel paper, security agreements, guarantees
and other documents and property evidencing or securing any Receivables,
immediately upon receipt thereof and in the same form as received, with all
necessary indorsements.
4.4 Collection of Receivables. Borrower shall have the right to collect
all Receivables, unless and until a Default or an Event of Default has
occurred. Borrower shall hold all payments on, and proceeds of, Receivables
in trust for Greyrock, and Borrower shall deliver all such payments and
proceeds to Greyrock, within one business day after receipt of the same, in
their original form, duly endorsed, to be applied to the Obligations as
follows: (a) first, to interest due on the Revolving Credit Loan, (b) next,
to outstanding principal of the Revolving Credit Loans, (c) if Borrower shall
have failed to otherwise remit, to interest due under the Term Loan, and (d)
if an Event of Default has occurred and is continuing or if the Term Loan is
otherwise due and payable in full, then to the principal of the Term Loan. To
the extent collections are not required to be applied to the Loans in
accordance with the foregoing sentence, any excess collections shall be
returned to Borrower as Borrower shall request.
4.5 Disputes. Borrower shall notify Greyrock promptly of all disputes or
claims in excess of $25,000 relating to Receivables on the regular reports to
Greyrock. Borrower shall not forgive, or settle any Receivable for less than
payment in full, or agree to do any of the foregoing, except that Borrower
may do so, provided that: (i) Borrower does so in good faith, in a
commercially reasonable manner, in the ordinary course of business, and in
arm's length transactions, which are reported to Greyrock on the regular
reports provided to Greyrock; (ii) no Default or Event of Default has
occurred and is continuing; and (iii) taking into account all such
settlements and forgiveness, the total outstanding Loans and other
Obligations will not exceed the Revolving Credit Limit or the Total Credit
Limit.
4.6 Returns. Provided no Event of Default has occurred and is
continuing, if any Account Debtor returns any Inventory to Borrower in the
ordinary course of its business, Borrower shall promptly determine the reason
for such return and promptly issue a credit memorandum to the Account Debtor
in the appropriate amount (sending a copy to Greyrock). In the event any
attempted return occurs after the occurrence of any Event of Default,
Borrower shall (i) not accept any return without Greyrock's prior written
consent, (ii) hold the returned Inventory in trust for Greyrock, (iii)
segregate all returned Inventory from all of Borrower's other property, (iv)
conspicuously label the returned Inventory as Greyrock's property, and (v)
immediately notify Greyrock of the return of any Inventory, specifying the
reason for such return, the location and condition of the returned Inventory,
and on Greyrock's request deliver such returned Inventory to Greyrock.
4.7 Verification. Greyrock may, from time to time, verify directly with
the respective Account Debtors the validity, amount and other matters
relating to the Receivables, by means of mail, telephone or otherwise, either
in the name of Borrower or Greyrock or such other name as Greyrock may
choose, and Greyrock or its designee may, upon the occurrence of and during
the continuance of an Event of Default, notify Account Debtors that it has a
security interest in the Receivables.
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4.8 No Liability. Greyrock shall not under any circumstances be
responsible or liable for any shortage or discrepancy in, damage to, or loss
or destruction of, any goods, the sale or other disposition of which gives
rise to a Receivable, or for any error, act, omission, or delay of any kind
occurring in the settlement, failure to settle, collection or failure to
collect any Receivable, or for settling any Receivable in good faith for less
than the full amount thereof, nor shall Greyrock be deemed to be responsible
for any of Borrower's obligations under any contract or agreement giving rise
to a Receivable. Nothing herein shall, however, relieve Greyrock from
liability for its own gross negligence or willful misconduct.
5. ADDITIONAL DUTIES OF THE BORROWER.
5.1 Insurance. Borrower shall, at all times, insure all of the tangible
personal property Collateral and carry such other business insurance, with
insurers reasonably acceptable to Greyrock, in such form and amounts as
Greyrock may reasonably require, and Borrower shall provide evidence of such
insurance to Greyrock, so that Greyrock is satisfied that such insurance is,
at all times, in full force and effect. All such insurance policies shall
name Greyrock as an additional loss payee, and shall contain a lenders loss
payee endorsement in form reasonably acceptable to Greyrock. Upon receipt of
the proceeds of any such insurance and so long as no Default or Event of
Default has occurred and is continuing, Greyrock shall apply such proceeds in
reduction of the Obligations in the order set forth in Section 4.4 above.
Upon the occurrence and during the continuation of a Default of Event of
Default, all proceeds of insurance may be applied as Greyrock shall determine
in its sole discretion. If any insurance proceeds relating to Equipment are
released to Borrower, Borrower shall utilize such proceeds for the
replacement of the Equipment with respect to which the insurance proceeds
were paid. Greyrock may require reasonable assurance that the insurance
proceeds so released will be so used. If Borrower fails to provide or pay for
any insurance, Greyrock may, but is not obligated to, obtain the same at
Borrower's expense. Borrower shall promptly deliver to Greyrock copies of all
reports made to insurance companies.
5.2 Reports. Borrower, at its expense, shall provide Greyrock with the
written reports set forth in the Schedule, and such other written reports
with respect to Borrower (including budgets, sales projections, operating
plans and other financial documentation), as Greyrock shall from time to time
reasonably specify.
5.3 Access to Collateral, Books and Records. At reasonable times, and on
one business day's notice, Greyrock, or its agents, shall have the right to
inspect the Collateral, and the right to audit and copy Borrower's books and
records. Greyrock shall take reasonable steps to keep confidential all
information obtained in any such inspection or audit, but Greyrock shall have
the right to disclose any such information to its auditors, regulatory
agencies, and attorneys, and pursuant to any subpoena or other legal process.
The foregoing inspections and audits shall be at Borrower's expense and the
charge therefor shall be $600 per person per day (or such higher amount as
shall represent Greyrock's then current standard charge for the same), plus
reasonable out-of-pockets expenses. Borrower shall not be charged more than
$3,000 per audit (plus reasonable out-of-pockets expenses), nor shall audits
be done more frequently than four times per calendar year, provided that the
foregoing limits shall not apply after the occurrence of a Default or Event
of Default, nor shall they restrict Greyrock's right to conduct audits at its
own expense (whether or not a Default or Event of Default has occurred).
Borrower will not enter into any agreement with any accounting firm, service
bureau or third party to store Borrower's books or records at any location
other than Borrower's Address, without first obtaining Greyrock's written
consent, which may be conditioned upon such accounting firm, service bureau
or other third party agreeing to give Greyrock the same rights with respect
to access to books and records and related rights as Greyrock has under this
Agreement.
5.4 Remittance of Proceeds. All proceeds arising from the sale or other
disposition of any Collateral shall be delivered, in kind, by Borrower to
Greyrock in the original form in which received by Borrower not later than
the following business day after receipt by Borrower, to be applied to the
Obligations in the order set forth in Section 4.4; provided that, if no
Default or Event of Default has occurred and is continuing, and if no term
loan is outstanding hereunder, then Borrower shall not be obligated to remit
to Greyrock the proceeds of the sale of Equipment which is sold in the
ordinary course of business, in a good-faith arm's length transaction. Except
for the proceeds of the sale of Equipment as set forth above, Borrower shall
not commingle proceeds of Collateral with any of Borrower's other funds or
property, and shall hold such proceeds separate and apart from such other
funds and property and in an express trust for Greyrock. Nothing in this
Section limits the restrictions on disposition of Collateral set forth
elsewhere in this Agreement.
5.5 Negative Covenants. Except as may be permitted in the Schedule,
Borrower shall not, without Greyrock's prior written consent, do
any of the following: (i) merge or consolidate with another
corporation or entity (except in a transaction in which (A)
Borrower is the surviving corporation and (B) no Default or Event
of Default shall exist either immediately prior to or after giving
effect to the transaction, and except that Borrower may merge into
another corporation for purposes of effecting a reincorporation
into another state after Borrower has notified Lender in writing
that all steps necessary to protect the validity, perfection, and
first priority of Greyrock's security interest in the Collateral,
subject to Permitted Liens, have been taken.); (ii) acquire any
assets, except in the ordinary course of business (except (a) in a
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transaction or a series of transactions not involving the payment
of an aggregate amount in excess of $250,000 in a fiscal year of
Borrower provided that no Default of Event of Default shall exist
either immediately prior to or after given effect to any such
transaction); (iii) enter into any other transaction outside the
ordinary course of business; (iv) sell or transfer any Collateral,
except that, provided no Default or Event of Default has occurred
and is continuing, Borrower may (a) sell finished Inventory in the
ordinary course of Borrower's business, and (b) if no term loan is
outstanding hereunder, sell Equipment in the ordinary course of
business, in good-faith arm's length transactions; and (c) license
or sublicense intellectual property in the ordinary course of
Borrower's business, (v) store any Inventory or other Collateral
with any warehouseman or other third party; (vi) sell any Inventory
on a sale-or-return, guaranteed sale, consignment, or other
contingent basis; (vii) make any loans of any money or other assets
except (A) advances to subsidiaries of the Borrower and customers
or suppliers, in each case, if created, acquired or made in the
ordinary course of business, (B) travel advances in the ordinary
course of business, (C) employee relocation loans in the ordinary
course of business, (D) other employee loans and advances in the
ordinary course of business, (E) loans to employees, officers and
directors for the purpose of purchasing equity securities of the
Borrower, (F) other loans to officers and employees approved by the
Board of Directors of the Borrower and (G) other loans or
extensions of credit not otherwise permitted hereunder, provided
that (x) the aggregate amount of all of the foregoing items set
forth in (A), (B), (D), (E), (F), and (G) shall not exceed $500,000
at any one time outstanding except that any loans made prior to the
date hereof pursuant to item (A) shall not be included in said
$500,000 limit, and (y) no Default or Event of Default shall exist
either immediately prior to or after giving effect to the making of
any of the foregoing advances, loans or other extensions of credit
in clauses (A) through (G); (viii) incur any debts, outside the
ordinary course of business, which would have a material, adverse
effect on Borrower or on the prospect of repayment of the
Obligations provided that Borrower may in any case incur debt in
the form of equipment leases in an amount not to exceed $500,000 in
any fiscal year; (ix) guarantee or otherwise become liable with
respect to the obligations of another party or entity except as
permitted under the preceding clause (viii); (x) pay or declare any
dividends on Borrower's stock (except for dividends payable solely
in stock of Borrower) except that Borrower may (a) pay cash
dividends, so long as such cash dividends together with any
redemptions, retirements, purchases or other acquisitions permitted
under the succeeding clause (xi) do not exceed in the aggregate
$300,000 per year, and (b) make regularly scheduled dividend
payment in respect of Borrower's preferred stock outstanding on the
date hereof; provided that, in each case, no Default or Event of
Default exists or would result from any such payment; (xii) redeem,
retire, purchase or otherwise acquire, directly or indirectly, any
of Borrower's stock except from current or former employees,
directors or consultants of Borrower under the terms of any stock
option or stock purchase plans or agreements; provided that no
Default or Event of Defaults exists or would result from any such
redemption, retirement, purchase or other acquisition; (xiii) make
any change in Borrower's capital structure which would have a
material adverse effect on Borrower or on the prospect of repayment
of the Obligations; or (xiv) dissolve or elect to dissolve; or (xv)
agree to do any of the foregoing.
5.6 Litigation Cooperation. Should any third-party suit or proceeding be
instituted by or against Greyrock with respect to any Collateral or in any
manner relating to Borrower, Borrower shall, without expense to Greyrock,
make available Borrower and its officers, employees and agents, and
Borrower's books and records, without charge, to the extent that Greyrock may
deem them reasonably necessary in order to prosecute or defend any such suit
or proceeding.
5.7 Notification of Changes. Borrower will promptly notify Greyrock in
writing of any change in its officers or directors, the opening of any new
bank account or other deposit account, and any material adverse change in the
business or financial affairs of Borrower.
5.8 Investment Property. Upon the request of Greyrock, Borrower shall
deliver to Greyrock all certificated securities included in Investment
Property, with all necessary indorsements, and obtain such account control
agreements with securities intermediaries and take such other action with
respect to any Investment Property, as Greyrock shall request, in form and
substance satisfactory to Greyrock. Borrower shall have the right to retain
all Investment Property payments and distributions, unless and until a
Default or an Event of Default has occurred. If a Default or an Event of
Default exists, Borrower shall hold all payments on, and proceeds of, and
distributions with respect to, Investment Property in trust for Greyrock, and
Borrower shall deliver all such payments, proceeds and distributions to
Greyrock, immediately upon receipt, in their original form, duly endorsed, to
be applied to the Obligations in such order as Greyrock shall determine. Upon
the request of Greyrock, any such distributions and payments with respect to
any Investment Property held in any securities account shall be held and
retained in such securities account as part of the Collateral.
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5.9 Further Assurances. Borrower agrees, at its expense, on request by
Greyrock, to execute all documents and take all actions, as Greyrock may deem
reasonably necessary or useful in order to perfect and maintain Greyrock's
perfected security interest in the Collateral, and in order to fully
consummate the transactions contemplated by this Agreement.
5.10 Indemnity. Borrower hereby agrees to indemnify Greyrock and hold
Greyrock harmless from and against any and all claims, debts, liabilities,
demands, obligations, actions, causes of action, penalties, costs and
expenses (including attorneys' fees), of every nature, character and
description, which Greyrock may sustain or incur based upon or arising out of
any of the Obligations, any actual or alleged failure to collect and pay over
any withholding or other tax relating to Borrower or its employees, any
relationship or agreement between Greyrock and Borrower, any actual or
alleged failure of Greyrock to comply with any writ of attachment or other
legal process relating to Borrower or any of its property, or any other
matter, cause or thing whatsoever occurred, done, omitted or suffered to be
done by Greyrock relating to Borrower or the Obligations (except any such
amounts sustained or incurred as the result of the gross negligence or
willful misconduct of Greyrock or any of its directors, officers, employees,
agents, attorneys, or any other person affiliated with or representing
Greyrock). Notwithstanding any provision in this Agreement to the contrary,
the indemnity agreement set forth in this Section shall survive any
termination of this Agreement and shall for all purposes continue in full
force and effect.
6. TERM.
6.1 Maturity Date. This Agreement shall continue in effect until the
maturity date set forth on the Schedule (the Maturity Date); provided that
the Maturity Date shall automatically be extended, and this Agreement shall
automatically and continuously renew, for successive additional terms of one
year each, unless one party gives written notice to the other, not less than
sixty days prior to the next Maturity Date, that such party elects to
terminate this Agreement effective on the next Maturity Date.
6.2 Early Termination. This Agreement may be terminated prior to the
Maturity Date as follows: (i) by Borrower, effective three business days after
written notice of termination is given to Greyrock; or (ii) by Greyrock at any
time after the occurrence of an Event of Default, without notice, effective
immediately. In addition to the foregoing, the Term Loan shall be due and
payable in full upon the earliest to occur of (I) November 30, 2000, or (ii) the
occurrence of any Fundamental Change, Change of Control, or Liquidity Event with
respect to Borrower.
6.3 Payment of Obligations. On the Maturity Date or on any earlier
effective date of termination, Borrower shall pay and perform in full all
Obligations, whether evidenced by installment notes or otherwise, and whether
or not all or any part of such Obligations are otherwise then due and
payable. Without limiting the generality of the foregoing, if on the Maturity
Date, or on any earlier effective date of termination, there are any
outstanding letters of credit issued based upon an application, guarantee,
indemnity or similar agreement on the part of Greyrock, then on such date
Borrower shall provide to Greyrock cash collateral in an amount equal to 110%
of the face amount of all such letters of credit plus all interest, fees and
costs due or (in Greyrock's estimation) likely to become due in connection
therewith, to secure all of the Obligations relating to said letters of
credit, pursuant to Greyrock's then standard form cash pledge agreement.
Notwithstanding any termination of this Agreement, all of Greyrock's security
interests in all of the Collateral and all of the terms and provisions of
this Agreement shall continue in full force and effect until all Obligations
have been paid and performed in full; provided that, without limiting the
fact that Loans are subject to the discretion of Greyrock, Greyrock may, in
its sole discretion, refuse to make any further Loans after termination. No
termination shall in any way affect or impair any right or remedy of
Greyrock, nor shall any such termination relieve Borrower of any Obligation
to Greyrock, until all of the Obligations have been paid and performed in
full. Upon payment and performance in full of all the Obligations and
termination of this Agreement, Greyrock shall promptly deliver to Borrower
termination statements, requests for reconveyances and such other documents
as may be reasonably required to terminate Greyrock's security interests.
7. EVENTS OF DEFAULT AND REMEDIES.
7.1 Events of Default. The occurrence of any of the following events
shall constitute an Event of Default under this Agreement, and Borrower shall
give Greyrock immediate written notice thereof: (a) Any warranty,
representation, statement, report or certificate made or delivered to
Greyrock by Borrower or any of Borrower's officers, employees or agents, now
or in the future, shall be untrue or misleading in a material respect when
made or delivered or when deemed made or delivered; or (b) Borrower shall
fail to pay any Loan or any interest thereon or any other monetary Obligation
within three (3) days of the due date; or (c) the total Loans and other
Obligations outstanding at any time shall exceed the Total Credit Limit and
Borrower shall fail to pay any such excess within one (1) day of written
demand; or (d) Borrower shall fail to perform any non-monetary Obligation
which by its nature cannot be cured; or (e) Borrower shall fail to perform
any other non-monetary Obligation, which failure is not cured within 5
business days after the date performance is due; or (f) any levy, assessment,
attachment, seizure, lien or encumbrance (other than a Permitted Lien) is
made on all or any part of the Collateral which is not cured within 10 days
after the occurrence of the same; or (g) any default or event of default
occurs under any obligation secured by a Permitted Lien, which is not cured
within any applicable cure period or waived in writing by the holder of the
Permitted Lien; or (h) Borrower breaches any material
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contract or obligation, which has or may reasonably be expected to have
a material adverse effect on Borrower's business or financial condition; or
(i) dissolution, termination of existence, insolvency or business failure of
Borrower or any Guarantor; or appointment of a receiver, trustee or
custodian, for all or any part of the property of, assignment for the benefit
of creditors by, or the commencement of any proceeding by Borrower or any
Guarantor under any reorganization, bankruptcy, insolvency, arrangement,
readjustment of debt, dissolution or liquidation law or statute of any
jurisdiction, now or in the future in effect; or (j) the commencement of any
proceeding against Borrower or any Guarantor under any reorganization,
bankruptcy, insolvency, arrangement, readjustment of debt, dissolution or
liquidation law or statute of any jurisdiction, now or in the future in
effect, which is not cured by the dismissal thereof within 45 days after the
date commenced; or (k) revocation or termination of, or limitation or denial
of liability upon, any guaranty of the Obligations or any attempt to do any
of the foregoing; or (l) revocation or termination of, or limitation or
denial of liability upon, any pledge of any certificate of deposit,
securities or other property or asset pledged by any third party to secure
any or all of the Obligations, or any attempt to do any of the foregoing, or
commencement of proceedings by or against any such third party under any
bankruptcy or insolvency law; or (m) Borrower makes any payment on account of
any indebtedness or obligation which has been subordinated to the Obligations
other than as permitted in the applicable subordination agreement, or if any
Person who has subordinated such indebtedness or obligations terminates or in
any way limits or terminates its subordination agreement; or (n) there shall
be a change in the record or beneficial ownership of an aggregate of more
than 20% of the outstanding shares of stock of Borrower, in one or more
transactions, compared to the ownership of outstanding shares of stock of
Borrower in effect on the date hereof, without the prior written consent of
Greyrock; or (o) Borrower shall generally not pay its debts as they become
due, or Borrower shall conceal, remove or transfer any part of its property,
with intent to hinder, delay or defraud its creditors, or make or suffer any
transfer of any of its property which may be fraudulent under any bankruptcy,
fraudulent conveyance or similar law; or (p) there shall be a material
adverse change in Borrower's business or financial condition. Greyrock may
cease making any Loans hereunder during any of the above cure periods, and
thereafter if an Event of Default has occurred.
7.2 Remedies. Upon the occurrence and during the continuance of any
Event of Default, and at any time thereafter, Greyrock, at its option, and
without notice or demand of any kind (all of which are hereby expressly
waived by Borrower), may do any one or more of the following: (a) Cease
making Loans or otherwise extending credit to Borrower under this Agreement
or any other document or agreement; (b) Accelerate and declare all or any
part of the Obligations to be immediately due, payable, and performable,
notwithstanding any deferred or installment payments allowed by any
instrument evidencing or relating to any Obligation; (c) Take possession of
any or all of the Collateral wherever it may be found, and for that purpose
Borrower hereby authorizes Greyrock without judicial process to enter onto
any of Borrower's premises without interference to search for, take
possession of, keep, store, or remove any of the Collateral, and remain on
the premises or cause a custodian to remain on the premises in exclusive
control thereof, without charge for so long as Greyrock deems it reasonably
necessary in order to complete the enforcement of its rights under this
Agreement or any other agreement; provided, however, that should Greyrock
seek to take possession of any of the Collateral by Court process, Borrower
hereby irrevocably waives: (i) any bond and any surety or security relating
thereto required by any statute, court rule or otherwise as an incident to
such possession; (ii) any demand for possession prior to the commencement of
any suit or action to recover possession thereof; and (iii) any requirement
that Greyrock retain possession of, and not dispose of, any such Collateral
until after trial or final judgment; (d) Require Borrower to assemble any or
all of the Collateral and make it available to Greyrock at places designated
by Greyrock which are reasonably convenient to Greyrock and Borrower, and to
remove the Collateral to such locations as Greyrock may deem advisable; (e)
Complete the processing, manufacturing or repair of any Collateral prior to a
disposition thereof and, for such purpose and for the purpose of removal,
Greyrock shall have the right to use Borrower's premises, vehicles, hoists,
lifts, cranes, equipment and all other property without charge; (f) Collect,
receive, dispose of and realize upon any Investment Property, including
withdrawal of any and all funds from any securities accounts; (g) Sell, lease
or otherwise dispose of any of the Collateral, in its condition at the time
Greyrock obtains possession of it or after further manufacturing, processing
or repair, at one or more public and/or private sales, in lots or in bulk,
for cash, exchange or other property, or on credit, and to adjourn any such
sale from time to time without notice other than oral announcement at the
time scheduled for sale. Greyrock shall have the right to conduct such
disposition on Borrower's premises without charge, for such time or times as
Greyrock deems reasonable, or on Greyrock's premises, or elsewhere and the
Collateral need not be located at the place of disposition. Greyrock may
directly or through any affiliated company purchase or lease any Collateral
at any such public disposition, and if permissible under applicable law, at
any private disposition. Any sale or other disposition of Collateral shall
not relieve Borrower of any liability Borrower may have if any Collateral is
defective as to title or physical condition or otherwise at the time of sale;
(h) Demand payment of, and collect any Receivables and General Intangibles
comprising Collateral and, in connection therewith, Borrower irrevocably
authorizes Greyrock to endorse or sign Borrower's name on all collections,
receipts, instruments and other documents, to take possession of and open
mail addressed to Borrower and
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remove therefrom payments made with respect to any item of the Collateral or
proceeds thereof, and, in Greyrock's reasonable discretion, to grant
extensions of time to pay, compromise claims and settle Receivables, General
Intangibles and the like for less than face value; and (i) Demand and receive
possession of any of Borrower's federal and state income tax returns and the
books and records utilized in the preparation thereof or referring thereto.
Borrower recognizes that Greyrock may be unable to make a public sale of any
or all of the Investment Property, by reasons of prohibitions contained in
applicable securities laws or otherwise, and expressly agrees that a private
sale to a restricted group of purchasers for investment and not with a view
to any distribution thereof shall be considered a commercially reasonable
sale. All reasonable attorneys' fees, expenses, costs, liabilities and
obligations incurred by Greyrock with respect to the foregoing shall be added
to and become part of the Obligations, shall be due on demand, and shall bear
interest at a rate equal to the highest interest rate applicable to any of
the Obligations.
7.3 Standards for Determining Commercial Reasonableness. Borrower and
Greyrock agree that a sale or other disposition (collectively, sale) of any
Collateral which complies with the following standards will conclusively be
deemed to be commercially reasonable: (i) Notice of the sale is given to
Borrower at least seven days prior to the sale, and, in the case of a public
sale, notice of the sale is published at least seven days before the sale in
a newspaper of general circulation in the county where the sale is to be
conducted; (ii) Notice of the sale describes the collateral in general,
non-specific terms; (iii) The sale is conducted at a place designated by
Greyrock, with or without the Collateral being present; (iv) The sale
commences at any time between 8:00 a.m. and 6:00 p.m; (v) Payment of the
purchase price in cash or by cashier's check or wire transfer is required;
(vi) With respect to any sale of any of the Collateral, Greyrock may (but is
not obligated to) direct any prospective purchaser to ascertain directly from
Borrower any and all information concerning the same. Greyrock shall be free
to employ other methods of noticing and selling the Collateral, in its
discretion, if they are commercially reasonable.
7.4 Power of Attorney. Upon the occurrence and during the continuance of
any Event of Default, without limiting Greyrock's other rights and remedies,
Borrower grants to Greyrock an irrevocable power of attorney coupled with an
interest, authorizing and permitting Greyrock (acting through any of its
employees, attorneys or agents) at any time, at its option, but without
obligation, with or without notice to Borrower, and at Borrower's expense, to
do any or all of the following, in Borrower's name or otherwise, but Greyrock
agrees to exercise the following powers in a commercially reasonable manner:
(a) Execute on behalf of Borrower any documents that Greyrock may, in its
sole discretion, deem advisable in order to perfect and maintain Greyrock's
security interest in the Collateral, or in order to exercise a right of
Borrower or Greyrock, or in order to fully consummate all the transactions
contemplated under this Agreement, and all other present and future
agreements; (b) Execute on behalf of Borrower any document exercising,
transferring or assigning any option to purchase, sell or otherwise dispose
of or to lease (as lessor or lessee) any real or personal property which is
part of Greyrock's Collateral or in which Greyrock has an interest; (c)
Execute on behalf of Borrower, any invoices relating to any Receivable, any
draft against any Account Debtor and any notice to any Account Debtor, any
proof of claim in bankruptcy, any Notice of Lien, claim of mechanic's,
materialman's or other lien, or assignment or satisfaction of mechanic's,
materialman's or other lien; (d) Take control in any manner of any cash or
non-cash items of payment or proceeds of Collateral; endorse the name of
Borrower upon any instruments, or documents, evidence of payment or
Collateral that may come into Greyrock's possession; (e) Endorse all checks
and other forms of remittances received by Greyrock; (f) Pay, contest or
settle any lien, charge, encumbrance, security interest and adverse claim in
or to any of the Collateral, or any judgment based thereon, or otherwise take
any action to terminate or discharge the same; (g) Grant extensions of time
to pay, compromise claims and settle Receivables and General Intangibles for
less than face value and execute all releases and other documents in
connection therewith; (h) Pay any sums required on account of Borrower's
taxes or to secure the release of any liens therefor, or both; (i) Settle and
adjust, and give releases of, any insurance claim that relates to any of the
Collateral and obtain payment therefor; (j) Instruct any third party having
custody or control of any books or records belonging to, or relating to,
Borrower to give Greyrock the same rights of access and other rights with
respect thereto as Greyrock has under this Agreement; (k) Execute and deliver
to any securities intermediary or other Person any entitlement order, account
control agreement or other notice, document or instrument with respect to any
Investment Property, and (l) Take any action or pay any sum required of
Borrower pursuant to this Agreement and any other present or future
agreements. Any and all reasonable sums paid and any and all reasonable
costs, expenses, liabilities, obligations and reasonable attorneys' fees
incurred by Greyrock with respect to the foregoing shall be added to and
become part of the Obligations, shall be payable on demand, and shall bear
interest at a rate equal to the highest interest rate applicable to any of
the Obligations. In no event shall Greyrock's rights under the foregoing
power of attorney or any of Greyrock's other rights under this Agreement be
deemed to indicate that Greyrock is in control of the business, management or
properties of Borrower.
7.5 Application of Proceeds. All proceeds realized as the result of any
sale or other disposition of the Collateral shall be applied by Greyrock
first to the reasonable costs, expenses, liabilities, obligations and
attorneys' fees incurred by Greyrock in the exercise of its rights under this
Agreement, second to the interest due upon any of the
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Greyrock Capital Loan and Security Agreement
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Obligations, and third to the principal of the Obligations, in such
order as Greyrock shall determine in its sole discretion. Any surplus shall
be paid to Borrower or other persons legally entitled thereto; Borrower shall
remain liable to Greyrock for any deficiency. If Greyrock, in its sole
discretion, directly or indirectly enters into a deferred payment or other
credit transaction with any purchaser at any sale of Collateral, Greyrock
shall have the option, exercisable at any time, in its sole discretion, of
either reducing the Obligations by the principal amount of purchase price or
deferring the reduction of the Obligations until the actual receipt by
Greyrock of the cash therefor.
7.6 Remedies Cumulative. In addition to the rights and remedies set
forth in this Agreement, Greyrock shall have all the other rights and
remedies accorded a secured party under the California Uniform Commercial
Code and under all other applicable laws, and under any other instrument or
agreement now or in the future entered into between Greyrock and Borrower,
and all of such rights and remedies are cumulative and none is exclusive.
Exercise or partial exercise by Greyrock of one or more of its rights or
remedies shall not be deemed an election, nor bar Greyrock from subsequent
exercise or partial exercise of any other rights or remedies. The failure or
delay of Greyrock to exercise any rights or remedies shall not operate as a
waiver thereof, but all rights and remedies shall continue in full force and
effect until all of the Obligations have been fully paid and performed.
8. Definitions. As used in this Agreement, the following terms have the
following meanings:
Account Debtor means the obligor on a Receivable.
Affiliate means, with respect to any Person, a relative, partner,
shareholder, director, officer, or employee of such Person, or any parent or
subsidiary of such Person, or any Person controlling, controlled by or under
common control with such Person.
Agreement and this Agreement means this Loan and Security Agreement and
all modifications and amendments thereto, extensions thereof, and
replacements therefor.
Business Day means a day on which Greyrock is open for business.
Change of Control shall be deemed to have occurred at such time as a
"person" or "group" (within the meaning of Sections 13(d) and 14(d)(2) of the
Securities Exchange Act of 1934) becomes the "beneficial owner" (as defined
in Rule 13d-3 under the Securities Exchange Act of 1934), directly or
indirectly, of more than 20% of the total voting power of all classes of
stock then outstanding of Borrower normally entitled to vote in the election
of directors.
Code means the Uniform Commercial Code as adopted and in effect in the
State of California from time to time.
Collateral has the meaning set forth in Section 2.1 above.
Default means any event which with notice or passage of time or both,
would constitute an Event of Default.
Deposit Account has the meaning set forth in Section 9105 of the Code.
Eligible Receivables means unconditional Receivables arising in the
ordinary course of Borrower's business from the completed sale of goods or
rendition of services, which Greyrock, in its sole judgment, shall deem
eligible for borrowing, based on such considerations as Greyrock may from
time to time deem appropriate.
Equipment means all of Borrower's present and hereafter acquired
machinery, molds, machine tools, motors, furniture, equipment, furnishings,
fixtures, trade fixtures, motor vehicles, tools, parts, dyes, jigs, goods and
other tangible personal property (other than Inventory) of every kind and
description used in Borrower's operations or owned by Borrower and any
interest in any of the foregoing, and all attachments, accessories,
accessions, replacements, substitutions, additions or improvements to any of
the foregoing, wherever located.
Event of Default means any of the events set forth in Section 7.1 of
this Agreement.
Fundamental Change means any acquisition, merger, consolidation,
reorganization, or recapitalization, or reclassification of a Person's
capital stock, or liquidation, winding up, or dissolution of such Person, or
conveyance, sale, assignment, lease, transfer, or otherwise disposition of,
in one transaction or a series of transactions, all or any substantial part
of such Person's business, property, or assets, whether now owned or
hereafter acquired, or the acquisition by purchase or otherwise of all or
substantially all of the properties, assets, stock, or other evidence of
beneficial ownership of any other Person.
General Intangibles means all general intangibles of Borrower, whether
now owned or hereafter created or acquired by Borrower, including, without
limitation, all choses in action, causes of action, corporate or other
business records, Deposit Accounts, inventions, designs, drawings,
blueprints, patents, patent applications, trademarks and the goodwill of the
business symbolized thereby, names, trade names, trade secrets, goodwill,
copyrights, registrations, licenses, franchises, customer lists, security and
other deposits, rights in all litigation presently or hereafter pending for
any cause or claim (whether in contract, tort or otherwise), and all
judgments now or hereafter arising therefrom, all claims of Borrower against
Greyrock, rights to purchase or sell real or personal property, rights as a
licensor or licensee of any kind, royalties, telephone numbers, proprietary
information, purchase orders, and all insurance policies and claims
(including life insurance, key man insurance, credit insurance, liability
insurance, property insurance and other insurance), tax refunds and claims,
computer programs, discs, tapes and tape files, claims under
10
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Greyrock Capital Loan and Security Agreement
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guaranties, security interests or other security held by or granted to
Borrower, all rights to indemnification and all other intangible property of
every kind and nature (other than Receivables).
Guarantor means any Person who has guaranteed any of the Obligations.
Inventory means all of Borrower's now owned and hereafter acquired
goods, merchandise or other personal property, wherever located, to be
furnished under any contract of service or held for sale or lease (including
all raw materials, work in process, finished goods and goods in transit), and
all materials and supplies of every kind, nature and description which are or
might be used or consumed in Borrower's business or used in connection with
the manufacture, packing, shipping, advertising, selling or finishing of such
goods, merchandise or other personal property, and all warehouse receipts,
documents of title and other documents representing any of the foregoing.
Investment Property means any and all investment property of Borrower,
including all securities, whether certificated or uncertificated, security
entitlements, securities accounts, commodity contracts and commodity
accounts, and all financial assets held in any securities account or
otherwise, wherever located, and whether now existing or hereafter acquired
or arising.
LIBOR Rate means (i) the one-month London Interbank Offered Rate for
deposits in U.S. dollars, as shown each day in The Wall Street Journal
(Eastern Edition) under the caption "Money Rates - London Interbank Offered
Rates (LIBOR)"; or (ii) if the Wall Street Journal does not publish such
rate, the offered one-month rate for deposits in U.S. dollars which appears
on the Reuters Screen LIBO Page as of 10:00 a.m., New York time, each day,
provided that if at least two rates appear on the Reuters Screen LIBO Page on
any day, the "LIBOR Rate" for such day shall be the arithmetic mean of such
rates; or (iii) if the Wall Street Journal does not publish such rate on a
particular day and no such rate appears on the Reuters Screen LIBO Page on
such day, the rate per annum at which deposits in U.S. dollars are offered to
the principal London office of The Chase Manhattan Bank, in the London
interbank market at approximately 11:00 A.M., London time, on such day in an
amount approximately equal to the outstanding principal amount of the Loans,
for a period of one month, in each of the foregoing cases as determined in
good faith by Greyrock, which determination shall be conclusive absent
manifest error.
Liquidity Event means any offering of a debt or equity security by
Borrower, or any capital contribution or additional paid in capital is
received by Borrower.
Obligations means all present and future Loans, advances, debts,
liabilities, obligations, guaranties, covenants, duties and indebtedness at
any time owing by Borrower to Greyrock, whether evidenced by this Agreement
or any note or other instrument or document, whether arising from an
extension of credit, opening of a letter of credit, banker's acceptance,
loan, guaranty, indemnification or otherwise, whether direct or indirect
(including, without limitation, those acquired by assignment and any
participation by Greyrock in Borrower's debts owing to others), absolute or
contingent, due or to become due, including, without limitation, all
interest, charges, expenses, fees, attorney's fees, expert witness fees,
audit fees, letter of credit fees, loan fees, termination fees, minimum
interest charges and any other sums chargeable to Borrower under this
Agreement or under any other present or future instrument or agreement
between Borrower and Greyrock.
Permitted Liens means the following: (i) purchase money security
interests in specific items of Equipment; (ii) leases of specific items of
Equipment; (iii) liens for taxes or other governmental fees not yet payable
or contested in good faith by Borrower provided such taxes and fees will not
affect the priority of Greyrock's security interest in the Collateral and
provided that Borrower has adequate reserves to pay the contested amounts;
(iv) additional security interests and liens which are subordinate to the
security interest in favor of Greyrock and are consented to in writing by
Greyrock (which consent shall not be unreasonably withheld); (v) security
interests being terminated substantially concurrently with this Agreement;
(vi) liens of materialmen, mechanics, warehousemen, carriers, or other
similar liens arising in the ordinary course of business and securing
obligations which are not delinquent except that any such liens related to
delinquent obligations shall be permitted to the extent the obligations are
contested in good faith by Borrower, do not affect the perfection or priority
of Greyrock's security interest in the Collateral and provided that Borrower
has adequate reserves to pay the contested amount; (vii) liens incurred in
connection with the extension, renewal or refinancing of the indebtedness
secured by liens of the type described above in clauses (i) or (ii) above,
provided that any extension, renewal or replacement lien is limited to the
property encumbered by the existing lien and the principal amount of the
indebtedness being extended, renewed or refinanced does not increase; and
(viii) Liens in favor of customs and revenue authorities which secure payment
of customs duties in connection with the importation of goods. Greyrock will
have the right to require, as a condition to its consent under subparagraph
(iv) above, that the holder of the additional security interest or lien sign
an intercreditor agreement on Greyrock's then standard form, acknowledge that
the security interest is subordinate to the security interest in favor of
Greyrock, and agree not to take any action to enforce its subordinate
security interest so long as any Obligations remain outstanding, and that
Borrower agree that any uncured default in any obligation secured by the
subordinate security interest shall also constitute an Event of Default under
this Agreement; and (ix) any judgment, attachment or similar lien, unless the
judgment it secures is not fully covered by insurance and has not been
discharged; (x) licenses or sublicenses granted to others not interfering in
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Greyrock Capital Loan and Security Agreement
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any material respect to the business of Borrower; and (xi) liens existing on
the date of this Agreement which have been disclosed to Greyrock in writing.
Person means any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated organization, association, corporation,
limited liability company, government, or any agency or political division
thereof, or any other entity.
Receivables means all of Borrower's now owned and hereafter acquired
accounts (whether or not earned by performance), letters of credit, contract
rights, chattel paper, instruments, documents and all other forms of
obligations at any time owing to Borrower, all guaranties and other security
therefor, all merchandise returned to or repossessed by Borrower, and all
rights of stoppage in transit and all other rights or remedies of an unpaid
vendor, lienor or secured party.
Other Terms. All accounting terms used in this Agreement, unless
otherwise indicated, shall have the meanings given to such terms in
accordance with generally accepted accounting principles, consistently
applied. All other terms contained in this Agreement, unless otherwise
indicated, shall have the meanings provided by the Code, to the extent such
terms are defined therein.
9. GENERAL PROVISIONS.
9.1 Interest Computation. In computing interest on the Obligations, all
checks, wire transfers and other items of payment received by Greyrock
(including proceeds of Receivables and payment of the Obligations in full)
shall be deemed applied by Greyrock on account of the Obligations three
Business Days after receipt by Greyrock of immediately available funds.
Greyrock shall not, however, be required to credit Borrower's account for the
amount of any item of payment which is unsatisfactory to Greyrock in its
reasonable discretion, and Greyrock may charge Borrower's Loan account for
the amount of any item of payment which is returned to Greyrock unpaid.
9.2 Application of Payments. So long as no Default or Event of Default
has occurred and is continuing, all payments with respect to the Obligations
shall be applied in the order set forth in Section 4.4 above. Upon the
occurrence and during the continuation of a Default or Event of Default, all
payments received by Greyrock may be applied by Greyrock, and reversed and
re-applied, to the Obligations, in such order and manner as Greyrock shall
determine in its sole discretion.
9.3 Charges to Account. Greyrock may, in its discretion, require that
Borrower pay monetary Obligations in cash to Greyrock, or charge them to
Borrower's Loan account, in which event they will bear interest at the same
rate applicable to the Loans.
9.4 Monthly Accountings. Greyrock shall provide Borrower monthly with an
account of advances, charges, expenses and payments made pursuant to this
Agreement. Such account shall be deemed correct, accurate and binding on
Borrower and an account stated (except for reverses and reapplications of
payments made and corrections of errors discovered by Greyrock), unless
Borrower notifies Greyrock in writing to the contrary within sixty days after
each account is rendered, describing the nature of any alleged errors or
admissions.
9.5 Notices. All notices to be given under this Agreement shall be in
writing and shall be given either personally or by reputable private delivery
service or by regular first-class mail, or certified mail return receipt
requested, addressed to Greyrock or Borrower at the addresses shown in the
heading to this Agreement, or at any other address designated in writing by
one party to the other party. All notices shall be deemed to have been given
upon delivery in the case of notices personally delivered, or at the
expiration of one business day following delivery to the private delivery
service, or three business days following the deposit thereof in the United
States mail, with postage prepaid.
9.6 Severability. Should any provision of this Agreement be held by any
court of competent jurisdiction to be void or unenforceable, such defect
shall not affect the remainder of this Agreement, which shall continue in
full force and effect.
9.7 Integration. This Agreement and such other written agreements,
documents and instruments as may be executed in connection herewith are the
final, entire and complete agreement between Borrower and Greyrock and
supersede all prior and contemporaneous negotiations and oral representations
and agreements, all of which are merged and integrated in this Agreement.
There are no oral understandings, representations or agreements between the
parties which are not set forth in this Agreement or in other written
agreements signed by the parties in connection herewith.
9.8 Waivers. The failure of Greyrock at any time or times to require
Borrower to strictly comply with any of the provisions of this Agreement or
any other present or future agreement between Borrower and Greyrock shall not
waive or diminish any right of Greyrock later to demand and receive strict
compliance therewith. Any waiver of any default shall not waive or affect any
other default, whether prior or subsequent, and whether or not similar. None
of the provisions of this Agreement or any other agreement now or in the
future executed by Borrower and delivered to Greyrock shall be deemed to have
been waived by any act or knowledge of Greyrock or its agents or employees,
but only by a specific written waiver signed by an authorized officer of
Greyrock and delivered to Borrower. Borrower waives demand, protest, notice
of protest and notice of default or dishonor, notice of payment and
nonpayment, release, compromise, settlement, extension or renewal of any
commercial paper, instrument, account, General Intangible, document or
guaranty at any time held by Greyrock on which Borrower is or may in any way
be liable, and notice of any action taken by Greyrock, unless expressly
required by this Agreement.
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Greyrock Capital Loan and Security Agreement
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9.9 Amendment. The terms and provisions of this Agreement may not be
waived or amended, except in a writing executed by Borrower and a duly
authorized officer of Greyrock.
9.10 Time of Essence. Time is of the essence in the performance by
Borrower of each and every obligation under this Agreement.
9.11 Attorneys Fees and Costs. Borrower shall reimburse Greyrock for all
reasonable attorneys' fees and all filing, recording, search, title
insurance, appraisal, audit, and other reasonable costs incurred by Greyrock,
pursuant to, or in connection with, or relating to this Agreement (whether or
not a lawsuit is filed), including, but not limited to, any reasonable
attorneys' fees and costs Greyrock incurs in order to do the following:
prepare and negotiate this Agreement and the documents relating to this
Agreement; obtain legal advice in connection with this Agreement or Borrower;
enforce, or seek to enforce, any of its rights; prosecute actions against, or
defend actions by, Account Debtors; commence, intervene in, or defend any
action or proceeding; initiate any complaint to be relieved of the automatic
stay in bankruptcy; file or prosecute any probate claim, bankruptcy claim,
third-party claim, or other claim; examine, audit, copy, and inspect any of
the Collateral or any of Borrower's books and records; protect, obtain
possession of, lease, dispose of, or otherwise enforce Greyrock's security
interest in, the Collateral; and otherwise represent Greyrock in any
litigation relating to Borrower. If either Greyrock or Borrower files any
lawsuit against the other predicated on a breach of this Agreement, the
prevailing party in such action shall be entitled to recover its reasonable
costs and attorneys' fees, including (but not limited to) reasonable
attorneys' fees and costs incurred in the enforcement of, execution upon or
defense of any order, decree, award or judgment. All attorneys' fees and
costs to which Greyrock may be entitled pursuant to this Paragraph shall
immediately become part of Borrower's Obligations, shall be due on demand,
and shall bear interest at a rate equal to the highest interest rate
applicable to any of the Obligations.
9.12 Benefit of Agreement. The provisions of this Agreement shall be
binding upon and inure to the benefit of the respective successors, assigns,
heirs, beneficiaries and representatives of Borrower and Greyrock; provided,
however, that Borrower may not assign or transfer any of its rights under
this Agreement without the prior written consent of Greyrock, and any
prohibited assignment shall be void. No consent by Greyrock to any assignment
shall release Borrower from its liability for the Obligations.
9.13 Joint and Several Liability. If Borrower consists of more than one
Person, their liability shall be joint and several, and the compromise of any
claim with, or the release of, any Borrower shall not constitute a compromise
with, or a release of, any other Borrower.
9.14 Limitation of Actions. Any claim or cause of action by Borrower
against Greyrock, its directors, officers, employees, agents, accountants or
attorneys, based upon, arising from, or relating to this Loan Agreement, or
any other present or future document or agreement, or any other transaction
contemplated hereby or thereby or relating hereto or thereto, or any other
matter, cause or thing whatsoever, occurred, done, omitted or suffered to be
done by Greyrock, its directors, officers, employees, agents, accountants or
attorneys, shall be barred unless asserted by Borrower by the commencement of
an action or proceeding in a court of competent jurisdiction by the filing of
a complaint within one year after the first act, occurrence or omission upon
which such claim or cause of action, or any part thereof, is based, and the
service of a summons and complaint on an officer of Greyrock, or on any other
person authorized to accept service on behalf of Greyrock, within thirty (30)
days thereafter. Borrower agrees that such one-year period is a reasonable
and sufficient time for Borrower to investigate and act upon any such claim
or cause of action. The one-year period provided herein shall not be waived,
tolled, or extended except by the written consent of Greyrock in its sole
discretion. This provision shall survive any termination of this Loan
Agreement or any other present or future agreement.
9.15 Paragraph Headings; Construction. Paragraph headings are only used
in this Agreement for convenience. Borrower and Greyrock acknowledge that the
headings may not describe completely the subject matter of the applicable
paragraph, and the headings shall not be used in any manner to construe,
limit, define or interpret any term or provision of this Agreement. The term
"including", whenever used in this Agreement, shall mean "including (but not
limited to)". This Agreement has been fully reviewed and negotiated between
the parties and no uncertainty or ambiguity in any term or provision of this
Agreement shall be construed strictly against Greyrock or Borrower under any
rule of construction or otherwise.
9.16 Governing Law; Jurisdiction; Venue. This Agreement and all acts and
transactions hereunder and all rights and obligations of Greyrock and
Borrower shall be governed by the laws of the State of California. As a
material part of the consideration to Greyrock to enter into this Agreement,
Borrower (i) agrees that all actions and proceedings relating directly or
indirectly to this Agreement shall, at Greyrock's option, be litigated in
courts located within California, and that the exclusive venue therefor shall
be Los Angeles County; (ii) consents to the jurisdiction and venue of any
such court and consents to service of process in any such action or
proceeding by personal delivery or any other method permitted by law; and
(iii) waives any and all rights Borrower may have to object to the
jurisdiction of any such court, or to transfer or change the venue of any
such action or proceeding.
9.17 Mutual Waiver of Jury Trial. BORROWER AND GREYROCK EACH HEREBY
WAIVE THE RIGHT TO TRIAL BY JURY IN ANY ACTION OR
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Greyrock Capital Loan and Security Agreement
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PROCEEDING BASED UPON, ARISING OUT OF, OR IN ANY WAY RELATING TO, THIS
AGREEMENT OR ANY OTHER PRESENT OR FUTURE INSTRUMENT OR AGREEMENT BETWEEN
GREYROCK AND BORROWER, OR ANY CONDUCT, ACTS OR OMISSIONS OF GREYROCK OR
BORROWER OR ANY OF THEIR DIRECTORS, OFFICERS, EMPLOYEES, AGENTS, ATTORNEYS OR
ANY OTHER PERSONS AFFILIATED WITH GREYROCK OR BORROWER, IN ALL OF THE
FOREGOING CASES, WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE.
Borrower:
GREENFIELD ONLINE, INC.
By /s/
----------------------------------
President or Vice President
By /s/
----------------------------------
Secretary or Ass't Secretary
Greyrock:
GREYROCK CAPITAL,
a division of Banc of America Commercial
Finance Corporation
By /s/ Stephanie Weil
----------------------------------
Title Vice President
-------------------------------
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Schedule to
Loan and Security Agreement
Borrower: Greenfield Online, Inc.
Address: 15 River Road
Wilton, Connecticut 06897
Date: December 3, 1999
This Schedule is an integral part of the Loan and Security Agreement between
Greyrock Capital, a division of Banc of America Commercial Finance
Corporation (Greyrock) and the above-borrower (Borrower) of even date.
================================================================================
1. CREDIT LIMIT
(Section 1.1): Total Credit Limit: $6,000,000
Revolving Credit Limit: An amount not to exceed the
lesser of (1) or (2) below:
(1) $2,000,000 at any one time outstanding; or
(2) an amount equal to 85% of the amount of Borrower's
Eligible Receivables (as defined in Section 8
above).
Term Loan Limit: $4,000,000
================================================================================
2. INTEREST.
Interest Rate (Section 1.2):
The interest rate in effect throughout each
calendar month during the term of this Agreement
shall be the highest LIBOR Rate in effect during
such month, plus 5% per annum, provided that the
interest rate in effect in each month shall not
be less than 8% per annum. Interest shall be
calculated on the basis of a 360-day year for the
actual number of days elapsed. LIBOR Rate has the
meaning set forth in Section 8 above.
<PAGE>
Greyrock Capital Schedule to Loan and Security Agreement
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================================================================================
3. FEES (Section 1.3/Section 6.2):
Loan Fee: $60,000.00, payable concurrently herewith.
NSF Check Charge: $15.00 per item.
Wire Transfers: $15.00 per transfer.
================================================================================
4. MATURITY DATE
(Section 6.1): November 30, 2000, subject to automatic renewal
as provided in Section 6.1 above, and early
termination as provided in Section 6.2 above.
Notwithstanding any renewal, the Term Loan is due
and payable in full on November 30, 2000 (if not
due earlier as provided in Section 6.2 above).
================================================================================
5. REPORTING.
(Section 5.2): Borrower shall provide Greyrock with the following:
1. Annual financial statements, as soon as
available, and in any event within 90 days
following the end of Borrower's fiscal year,
certified by independent certified public
accountants acceptable to Greyrock.
2. Quarterly unaudited financial statements, as soon
as available, and in any event within 30 days
after the end of each fiscal quarter of Borrower.
3. Monthly unaudited financial statements, as soon
as available, and in any event within 30 days
after the end of each month.
4. Monthly Receivable agings, aged by invoice date,
within 10 days after the end of each month.
5. Monthly accounts payable agings, aged by invoice
date, and outstanding or held check registers
within 10 days after the end of each month.
================================================================================
6. BORROWER INFORMATION:
Prior Names of
Borrower
(Section 3.2): Greenfield Online Research Center, Inc.
Prior Trade
Names of Borrower
(Section 3.2): None
-2-
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Greyrock Capital Schedule to Loan and Security Agreement
- --------------------------------------------------------------------------------
Existing Trade
Names of Borrower
(Section 3.2): None
Other Locations and
Addresses (Section 3.3):
116 New Montgomery Street, Suite 220,
San Francisco, CA 94105
3060 Williams Drive, Fairfax, VA 22031
109 N. Elm Street, Prospect Heights, IL 60070
15 River Road, Suite 310, Wilton, CT 06897
5489 Oakcrest Drive, Imperial, MO 63052
3029 128th Avenue, Bellevue, WA 98005
Material Adverse
Litigation (Section 3.10): None
By Complaint dated August 6, 1999 and Amended on
September 23, 1999, and filed in the U.S.
District Court for the Western district of New
York, Harris Interactive, Inc., filed a 5 count
complaint against Greenfield Online, Inc. The
Amended Complaint seeks to have Greenfield
Online, Inc.'s Service Mark "Research Revolution"
cancelled and seeks a declaratory judgment that
Harris Interactive is not infringing the mark
(Count One), seeks monetary damages for alleged
defamatory statements made by an officer of
Greenfield Online concerning Harris Interactive's
business practices (Count Two), seeks monetary
damages for allegedly disparaging remarks made by
a Greenfield Online Officer concerning Harris
Interactive's business practices (Count Three),
seeks monetary damages for Greenfield Online's
allegedly intentional interference with
contractual relationships (Count Four) and seeks
monetary damages for Greenfield Online's
allegedly unfair competition. The Company has
answered the Amended Complaint and has filed
defenses and intends to prosecute its defense
vigorously.
On or about December 30, 1998, Cybergold notified
Greenfield Online that it believed that
Greenfield Online had violated its patent number
5,749,210, issued to Cybergold for negatively
induced solicitations, claiming that this patent
covered paying people to participate in surveys
online. Although a license agreement was proposed
by Cybergold, Greenfield Online took the position
that it did not infringe this patent, and took no
further action with respect to Cybergold. Since
March of 1999 there has been no contact between
Cybergold and Greenfield Online.
-3-
<PAGE>
Greyrock Capital Schedule to Loan and Security Agreement
- --------------------------------------------------------------------------------
================================================================================
7. OTHER COVENANTS:
Borrower shall at all times comply with all of
the following additional covenants:
(1) Patent and Trademark Security Agreement. Borrower
shall concurrently execute and deliver to
Greyrock a Patent and Trademark Security
Agreement, on Greyrock's standard form, whereby
Borrower shall grant to Greyrock a security
interest in all of its trademarks, patents, and
such rights and interests capable of being
protected as trademarks or patents, as additional
collateral for the Obligations. Such Patent and
Trademark Security Agreement shall ontinue in
full force and effect throughout the term of this
Loan Agreement and so long as any portion of the
Obligations remains outstanding
(2) Security Agreement in Copyrighted Works. Borrower
shall concurrently execute and deliver to
Greyrock a Security Agreement in Copyrighted
Works, on Greyrock's standard form, whereby
Borrower shall grant to Greyrock a security
interest in all of its copyrights and such rights
and interests capable of being protected as
copyrights, as additional collateral for the
Obligations. Such Security Agreement in
Copyrighted Works shall ontinue in full force and
effect throughout the term of this Loan Agreement
and so long as any portion of the Obligations
remains outstanding
(3) Warrants. Borrower shall concurrently execute and
deliver to Greyrock a Warrant for the purchase up
to $600,000 of Borrower's stock, based on a
valuation of the Borrower of $100,000,000, for a
five-year period ending on the fifth anniversary
of this Agreement, together with an Antidilution
Agreement and Registration Rights Agreement
relating thereto, all in form and substance
satisfactory to Greyrock.
Borrower: Greyrock:
GREENFIELD ONLINE, INC. GREYROCK CAPITAL,
a division of Banc of America
Commercial Finance Corporation
By /s/ Rudy Nadilo
---------------------------------
President or Vice President
By /s/ Jonathan Flatow By /s/ Stephanie Weil
--------------------------------- -----------------------------
Secretary or Ass't Secretary Title Vice President
-4-
<PAGE>
- --------------------------------------------------------------------------------
Certified Resolution and Incumbency Certificate
Borrower: Greenfield Online, Inc., a corporation organized
under the laws of the State of Connecticut
Date: December 3, 1999
I, the undersigned, Secretary or Assistant Secretary of the
above-named borrower, a corporation organized under the laws of the state set
forth above, do hereby certify that the following is a full, true and correct
copy of resolutions duly and regularly adopted by the Board of Directors of
said corporation as required by law, and by the by-laws of said corporation,
and that said resolutions are still in full force and effect and have not
been in any way modified, repealed, rescinded, amended or revoked.
RESOLVED, that this corporation borrow from GREYROCK CAPITAL, a Division
of Banc of America Commercial Finance Corporation (Greyrock), from time
to time, such sum or sums of money as, in the judgment of the officer or
officers hereinafter authorized hereby, this corporation may require.
RESOLVED FURTHER, that any officer of this corporation be, and he or she
is hereby authorized, directed and empowered, in the name of this
corporation, to execute and deliver to Greyrock, and Greyrock is
requested to accept, the loan agreements, security agreements, notes,
financing statements, and other documents and instruments providing for
such loans and evidencing and/or securing such loans, with interest
thereon, and said authorized officers are authorized from time to time
to execute renewals, extensions and/or amendments of said loan
agreements, security agreements, and other documents and instruments.
RESOLVED FURTHER, that said authorized officers be and they are hereby
authorized, directed and empowered, as security for any and all
indebtedness of this corporation to Greyrock, whether arising pursuant
to this resolution or otherwise, to grant, transfer, pledge, mortgage,
assign, or otherwise hypothecate to Greyrock, or deed in trust for its
benefit, any property of any and every kind, belonging to this
corporation, including, but not limited to, any and all real property,
accounts, inventory, equipment, general intangibles, instruments,
documents, chattel paper, notes, money, deposit accounts, furniture,
fixtures, goods, and other property of every kind, and to execute and
deliver to Greyrock any and all grants, transfers, trust receipts, loan
or credit agreements, pledge agreements, mortgages, deeds of trust,
financing statements, security agreements and other hypothecation
agreements, which said instruments and the note or notes and other
instruments referred to in the preceding paragraph may contain such
provisions, covenants, recitals and agreements as Greyrock may require
and said authorized officers may approve, and the execution thereof by
said authorized officers shall be conclusive evidence of such approval;
and that Greyrock may conclusively rely upon a certified copy of these
resolutions and a certificate of the Secretary or Ass't Secretary of
this corporation as to the officers of this corporation and their
offices and signatures, and continue to conclusively rely on such
certified copy of these resolutions and said certificate for all past,
present and future transactions until written notice of any change
hereto or thereto is given to Greyrock by this corporation by certified
mail, return receipt requested.
The undersigned further hereby certifies that the following persons are
the duly elected and acting officers of the corporation named above as
borrower and that the following are their actual signatures:
- --------------------------------------------------------------------------------
NAMES OFFICE(S) SIGNATURES
- --------------------------------------------------------------------------------
Rudy L. Nadilo President and
Chief Executive Officer /s/
- --------------------------------------------------------------------------------
Ronald J. Bergami Treasurer /s/
- --------------------------------------------------------------------------------
Allison Friday Assistant Secretary /s/
- --------------------------------------------------------------------------------
Jonathan A. Flatow Secretary /s/
- --------------------------------------------------------------------------------
-1-
<PAGE>
Greyrock Capital Secured Promissory Note
- --------------------------------------------------------------------------------
IN WITNESS WHEREOF, I have hereunto set my hand as such Secretary or
Assistant Secretary on the date set forth above.
/s/ Jonathan Flatow
---------------------------------
Secretary or Assistant Secretary
-2-
<PAGE>
[FORM of Opinion of Borrower's Counsel]
December 3, 1999
Greyrock Capital
10880 Wilshire Blvd. Suite 1850
Los Angeles, CA 90024
Re: Greenfield Online, Inc.
Ladies and Gentlemen:
This opinion is being delivered in connection with that certain Loan
And Security Agreement, dated as of December 3, 1999 (the Loan Agreement)
between Greenfield Online, Inc. (the Company), on the one hand, and Greyrock
Capital (Greyrock), on the other hand. (Initially capitalized terms used in
this opinion have the meanings given them in the Loan Agreement.
We have acted as counsel to the Company in connection with the
following:
The Loan Agreement;
Secured Promissory Note, of even date herewith, in the original
principal amount of $4,000,000.00 executed by the Company to the order of
Greyrock (the Note);
The financing statements executed by the Company (collectively, the
Financing Statements); and
[list other loan documents].
The Loan Agreement, the Note, the Financing Statements, and the
documents and agreements relating thereto or delivered in connection
therewith are referred to herein collectively as the Loan Documents.
In our capacity as such counsel, we have been furnished with and
have examined originals or copies, certified or otherwise identified to our
satisfaction as being true copies, of such records, agreements, instruments,
and documents as, in our judgment, are necessary or relevant as the basis for
the opinions expressed below.
We have obtained and relied upon such certificates and assurances
from public offices as we have deemed necessary. We have investigated such
questions of law and fact for the purpose of rendering this opinion as we
have deemed necessary. We have assumed the authenticity and completeness of
all documents furnished to us as originals, the genuineness of all
signatures, the legal capacity of natural persons, the conformity to
originals of all documents furnished to us as certified or photostatic
copies, the validity of all applicable statutes, ordinances, rules and
regulations, the proper indexing and accuracy of all records and documents
which are public records, and we have relied upon such documents as to all
matters of fact covered thereby.
<PAGE>
Certain of the opinions rendered herein are qualified by the
discussion following the numbered paragraphs.
On the basis of the foregoing, and in reliance thereon, we are of
the opinion that:
1. The Company is a corporation duly organized, validly existing,
and in good standing under the laws of the State of Connecticut and has all
requisite corporate power and authority to enter into and perform under the
Loan Documents, to the extent it is a party thereto, to own and operate its
properties and assets, and to carry on its business as it is currently being
conducted and as it is contemplated to be conducted pursuant to the terms of
the Loan Documents.
2. The Company is duly qualified to own and operate its properties
and assets and to carry on its businesses as they are currently being
conducted and as they are contemplated to be conducted pursuant to the terms
of the Loan Documents, and is in good standing in each jurisdiction where the
conduct of its businesses or the ownership or operation of its properties and
assets makes such qualification necessary.
3. The Loan Documents, to the extent the Company is a party thereto,
have been duly authorized by all necessary corporate action on the part of
the Company, under the laws of its state of incorporation, and have been duly
executed and delivered by the Company.
4. The Loan Documents, to the extent the Company is a party thereto,
constitute the legal, valid, and binding obligations of the Company,
enforceable against the Company in accordance with their respective terms
except, as the enforceability may be limited by (A) bankruptcy,
reorganization, moratorium, insolvency, or other laws of general application
relating to or affecting the enforcement of creditors' rights or (B) the
exercise of judicial discretion in accordance with general principles of
equity.
5. The execution, delivery, and performance of the Loan Documents by the
Company, to the extent it is a party thereto, the compliance with the terms
and conditions thereof, and the consummation of the transactions contemplated
thereby, do not and will not conflict with, result in a breach of, or
constitute a default under (i) any statute, rule, or regulation applicable to
the Company; (ii) the certificate or articles of incorporation or bylaws of
the Company; or (iii) to the best of our knowledge, after reasonable inquiry,
any agreement or instrument to which the Company is a party or by which it or
its assets are bound, or any order, judgment, or decree which is binding on
the Company.
7. There are no stamp, recording, or similar taxes required to be
paid in connection with the execution, delivery, recording, or enforcement of
the Financing Statements in the States of Connecticut, California, Virginia,
Illinois, Missouri, and Washington.
8. No governmental consents, approvals, authorizations,
registrations, declarations, or filings are required by the Company in
connection with the extensions of credit under the Loan Documents or the
consummation of the transactions contemplated by the Loan Documents, except
for filings required for the perfection of Greyrock's liens and security
interests.
9. To the best of our knowledge, after due inquiry, there are no
actions, suits, proceedings, or investigations pending or threatened against
the Company, which if adversely determined against the Company would have a
material adverse effect on the Company, except as disclosed on the Schedule
to the Loan Agreement.
<PAGE>
This opinion is limited to the laws and legal matters arising under the
laws of the State of Connecticut and applicable federal laws of the United
States of America. This Opinion may be relied upon solely by you in
connection with your participation in the transactions contemplated by the
Loan Documents. This opinion may not be relied upon by any other party or for
any other purpose without our express prior written consent
Very truly yours,
<PAGE>
SECURED PROMISSORY NOTE
$4,000,000.00 Los Angeles, California
December 3, 1999
FOR VALUE RECEIVED, the undersigned (Borrower) promises to pay to the order
of Greyrock Capital, a division of Banc of America Commercial Finance
Corporation (Greyrock), at 10880 Wilshire Blvd. Suite 1850, Los Angeles, CA
90024, or at such other address as the holder of this Note shall direct, the
principal sum of $4,000,000.00 upon the earliest of the following dates (the
Maturity Date): (i) November 30, 2000, (ii) the date the Loan and Security
Agreement between Borrower and Greyrock dated December 3, 1999 (the Loan
Agreement) terminates by its terms or is terminated by either party in
accordance with its terms, or (iii) upon the occurrence of any Fundamental
Change, Change of Control, or Liquidity Event (as provided in Section 6.2 of the
Loan Agreement). On the Maturity Date the entire remaining unpaid principal
balance of this Note, plus any and all accrued and unpaid interest, shall be due
and payable.
This Note shall bear interest on the unpaid principal balance hereof from
time to time outstanding at a rate equal to the following: The interest rate in
effect throughout each calendar month during the term of this Note shall be the
highest LIBOR Rate in effect during such month, plus 5% per annum, provided that
the interest rate in effect in each month shall not be less than 8% per annum.
Interest shall be calculated on the basis of a 360-day year for the actual
number of days elapsed. LIBOR Rate has the meaning set forth in the Loan
Agreement.
Accrued interest on this Note shall be payable monthly, in addition to the
principal payments provided above, commencing on December 31, 1999, and
continuing on the last day of each succeeding month. Any accrued interest not
paid when due shall bear interest at the same rate as the principal hereunder.
Principal of and interest on this Note shall be payable in lawful money of
the United States of America. If a payment hereunder becomes due and payable on
a Saturday, Sunday or legal holiday, the due date thereof shall be extended to
the next succeeding business day, and interest shall be payable thereon during
such extension.
In the event any payment of principal or interest on this Note is not paid
in full within three (3) days of when due, or if any other default or event of
default occurs hereunder, under the Loan Agreement or under any other present or
future instrument, document, or agreement between Borrower and Greyrock
(collectively, Events of Default), Greyrock may, at its option, at any time,
after the expiration of applicable cure periods contained in the Loan Agreement
or other agreements between Greyrock and Borrower, declare the entire unpaid
principal balance of this Note plus all accrued interest to be immediately due
and payable, without notice or demand. Without limiting the foregoing, and
without limiting Greyrock's other rights and remedies, in the event any
installment of principal or interest is not paid in full on, or within five days
after, the date due, Borrower agrees that it would be impracticable or extremely
difficult to fix the actual damages resulting therefrom to Greyrock, and
therefore Borrower agrees immediately to pay to Greyrock an amount equal to 5%
of the installment (or portion thereof) not paid, as liquidated
<PAGE>
damages, to compensate Greyrock for the internal administrative expenses in
administering the default. The acceptance of any installment of principal or
interest by Greyrock after the time when it becomes due, as herein specified,
shall not be held to establish a custom, or to waive any rights of Greyrock to
enforce payment when due of any further installments or any other rights, nor
shall any failure or delay to exercise any rights be held to waive the same.
All payments hereunder are to be applied first to costs and fees referred
to hereunder, second to the payment of accrued interest and the remaining
balance to the payment of principal. Any principal prepayment hereunder shall be
applied against principal payments in the inverse order of maturity. Greyrock
shall have the continuing and exclusive right to apply or reverse and reapply
any and all payments hereunder.
Borrower agrees to pay all costs and expenses (including without limitation
attorney's fees) incurred by Greyrock in connection with or related to this
Note, or its enforcement, whether or not suit be brought. Borrower hereby waives
presentment, demand for payment, notice of dishonor, notice of nonpayment,
protest, notice of protest, and any and all other notices and demands in
connection with the delivery, acceptance, performance, default, or enforcement
of this Note, and Borrower hereby waives the benefits of any statute of
limitations with respect to any action to enforce, or otherwise related to, this
Note.
This Note is secured by the collateral described in the Loan Agreement and
all other present and future security agreements between Borrower and Greyrock.
Nothing herein shall be deemed to limit any of the terms or provisions of the
Loan Agreement or any other present or future document, instrument or agreement,
between Borrower and Greyrock, and all of Greyrock's rights and remedies
hereunder and thereunder are cumulative.
In the event any one or more of the provisions of this Note shall for any
reason be held to be invalid, illegal or unenforceable, the same shall not
affect any other provision of this Note and the remaining provisions of this
Note shall remain in full force and effect.
No waiver or modification of any of the terms or provisions of this Note
shall be valid or binding unless set forth in a writing signed by a duly
authorized officer of Greyrock, and then only to the extent therein specifically
set forth. If more than one person executes this Note, their obligations
hereunder shall be joint and several.
GREYROCK AND BORROWER EACH HEREBY WAIVE THE RIGHT TO TRIAL BY JURY IN ANY ACTION
OR PROCEEDING BASED UPON, ARISING OUT OF, OR IN ANY WAY RELATING TO: (i) THIS
NOTE; OR (ii) ANY OTHER PRESENT OR FUTURE INSTRUMENT OR AGREEMENT BETWEEN
GREYROCK AND BORROWER; OR (iii) ANY CONDUCT, ACTS OR OMISSIONS OF GREYROCK OR
BORROWER OR ANY OF THEIR DIRECTORS, OFFICERS, EMPLOYEES, AGENTS, ATTORNEYS OR
ANY OTHER PERSONS AFFILIATED WITH GREYROCK OR BORROWER; IN EACH OF THE FOREGOING
CASES, WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE.
<PAGE>
This Note is payable in, and shall be governed by the laws of, the State of
California.
GREENFIELD ONLINE, INC.,
By /s/ Rudy Nadilo
---------------
President
By /s/ Jonathan Flatow
-------------------
Secretary
<PAGE>
PATENT AND TRADEMARK SECURITY AGREEMENT
This PATENT AND TRADEMARK SECURITY AGREEMENT ("Agreement"), dated as of December
3, 1999, is entered into between GREENFIELD ONLINE, INC., a Connecticut
corporation ("Grantor"), which has a mailing address at 15 River Road, Suite
310, Wilton, Connecticut 06897, and GREYROCK CAPITAL, a division of Banc of
America Commercial Finance Corporation ("Greyrock"), which has a mailing address
at 10880 Wilshire Blvd., Suite 1850, Los Angeles, CA 90024.
RECITALS
A. Grantor and Greyrock are, contemporaneously herewith, entering into that
certain Loan and Security Agreement ("Loan Agreement") and other instruments,
documents and agreements contemplated thereby or related thereto (collectively,
together with the Loan Agreement, the "Loan Documents"); and
B. Grantor is the owner of certain intellectual property, identified below,
in which Grantor is granting a security interest to Greyrock.
NOW THEREFORE, in consideration of the mutual promises, covenants,
conditions, representations, and warranties hereinafter set forth and for other
good and valuable consideration, the parties hereto mutually agree as follows:
1. DEFINITIONS AND CONSTRUCTION.
1.1 Definitions. The following terms, as used in this Agreement, have the
following meanings:
"Code" means the California Uniform Commercial Code, as amended and
supplemented from time to time, and any successor statute.
"Collateral" means all of the following, whether now owned or
hereafter acquired:
(i) Each of the trademarks and rights and interest which are
capable of being protected as trademarks (including trademarks,
service marks, designs, logos, indicia, tradenames, corporate names,
company names, business names, fictitious business names, trade
styles, and other source or business identifiers, and applications
pertaining thereto), which are presently, or in the future may be,
owned, created, acquired, or used (whether pursuant to a license or
otherwise) by Grantor, in whole or in part, and all trademark rights
with respect thereto throughout the world, including all proceeds
thereof (including license royalties and proceeds of infringement
suits), and rights to renew and extend such trademarks and trademark
rights;
(ii) Each of the patents and patent applications which are
presently, or in the future may be, owned, issued, acquired, or used
(whether pursuant to a license or otherwise) by Grantor, in whole or
in part, and all patent rights with respect thereto throughout the
world, including all proceeds thereof (including license royalties and
1
<PAGE>
proceeds of infringement suits), foreign filing rights, and rights to
extend such patents and patent rights;
(iii) All of Grantor's right to the trademarks and trademark
registrations listed on Exhibit A attached hereto, as the same may be
updated hereafter from time to time;
(iv) All of Grantor's right, title, and interest, in and to the
patents and patent applications listed on Exhibit B attached hereto,
as the same may be updated hereafter from time to time;
(v) All of Grantor's right, title and interest to register
trademark claims under any state or federal trademark law or
regulation of any foreign country and to apply for, renew, and extend
the trademark registrations and trademark rights, the right (without
obligation) to sue or bring opposition or cancellation proceedings in
the name of Grantor or in the name of Greyrock for past, present, and
future infringements of the trademarks, registrations, or trademark
rights and all rights (but not obligations) corresponding thereto in
the United States and any foreign country;
(vi) All of Grantor's right, title, and interest in all
patentable inventions, and to file applications for patent under
federal patent law or regulation of any foreign country, and to
request reexamination and/or reissue of the patents, the right
(without obligation) to sue or bring interference proceedings in the
name of Grantor or in the name of Greyrock for past, present, and
future infringements of the patents, and all rights (but not
obligations) corresponding thereto in the United States and any
foreign country;
(vii) the entire goodwill of or associated with the businesses
now or hereafter conducted by Grantor connected with and symbolized by
any of the aforementioned properties and assets;
(viii) All general intangibles relating to the foregoing and all
other intangible intellectual or other similar property of the Grantor
of any kind or nature, associated with or arising out of any of the
aforementioned properties and assets and not otherwise described
above; and
(ix) All products and proceeds of any and all of the foregoing
(including, without limitation, license royalties and proceeds of
infringement suits) and, to the extent not otherwise included, all
payments under insurance, or any indemnity, warranty, or guaranty
payable by reason of loss or damage to or otherwise with respect to
the Collateral.
"Obligations" means all obligations, liabilities, and indebtedness of
Grantor to Greyrock, whether direct, indirect, liquidated, or contingent,
and whether arising under this Agreement, the Loan Agreement, any other of
the Loan Documents, or otherwise, including all costs and expenses
described in Section 9.8 hereof.
1.2 Construction. Unless the context of this Agreement clearly requires
otherwise, references to the plural include the singular, references to the
singular include the plural, and the term "including" is not limiting. The words
"hereof," "herein," "hereby," "hereunder," and other
2
<PAGE>
similar terms refer to this Agreement as a whole and not to any particular
provision of this Agreement. Any initially capitalized terms used but not
defined herein shall have the meaning set forth in the Loan Agreement. Any
reference herein to any of the Loan Documents includes any and all alterations,
amendments, extensions, modifications, renewals, or supplements thereto or
thereof, as applicable. Neither this Agreement nor any uncertainty or ambiguity
herein shall be construed or resolved against Greyrock or Grantor, whether under
any rule of construction or otherwise. On the contrary, this Agreement has been
reviewed by Grantor, Greyrock, and their respective counsel, and shall be
construed and interpreted according to the ordinary meaning of the words used so
as to fairly accomplish the purposes and intentions of Greyrock and Grantor.
Headings have been set forth herein for convenience only, and shall not be used
in the construction of this Agreement.
2. GRANT OF SECURITY INTEREST.
To secure the complete and timely payment and performance of all
Obligations, and without limiting any other security interest Grantor has
granted to Greyrock, Grantor hereby grants, assigns, and conveys to Greyrock a
security interest in Grantor's entire right, title, and interest in and to the
Collateral.
3. REPRESENTATIONS, WARRANTIES AND COVENANTS.
Grantor hereby represents, warrants, and covenants that:
3.1 Trademarks; Patents. A true and complete schedule setting forth all
federal and state trademark registrations owned or controlled by Grantor or
licensed to Grantor, together with a summary description and full information in
respect of the filing or issuance thereof and expiration dates is set forth on
Exhibit A; and a true and complete schedule setting forth all patent and patent
applications owned or controlled by Grantor or licensed to Grantor, together
with a summary description and full information in respect of the filing or
issuance thereof and expiration dates is set forth on Exhibit B.
3.2 Validity; Enforceability. Each of the patents and trademarks is valid
and enforceable, and, except for those listed on Schedule 3.2, Grantor is not
presently aware of any past, present, or prospective claim by any third party
that any of the patents or trademarks are invalid or unenforceable, or that the
use of any patents or trademarks violates the rights of any third person, or of
any basis for any such claims.
3.3 Title. Grantor is the sole and exclusive owner of the entire and
unencumbered right, title, and interest in and to each of the patents, patent
applications, trademarks, and trademark registrations, free and clear of any
liens, charges, and encumbrances, including pledges, assignments, licenses, shop
rights, and covenants by Grantor not to sue third persons. Notwithstanding the
foregoing, Grantor represents to Greyrock that it is in the process of assigning
its trademark application for "GREENFIELD ONLINE", #75-649,707, to Greenfield
Consulting Group, Inc. Grantor will receive a license back from Greenfield
Consulting Group granting Grantor an exclusive, perpetual, worldwide royalty
free, fully paid license to use the mark. Greyrock hereby consents to such
assignment and license.
3.4 Notice. Grantor has used and will continue to use proper statutory
notice in connection with its use of each of the patents and trademarks.
3
<PAGE>
3.5 Quality. Grantor has used and will continue to use consistent standards
of high quality (which may be consistent with Grantor's past practices) in the
manufacture, sale, and delivery of products and services sold or delivered under
or in connection with the trademarks, including, to the extent applicable, in
the operation and maintenance of its merchandising operations, and will continue
to maintain the validity of the trademarks.
3.6 Perfection of Security Interest. Except for the filing of financing
statements in the appropriate governmental offices and filings with the United
States Patent and Trademark Office necessary to perfect the security interests
created hereunder, no authorization, approval, or other action by, and no notice
to or filing with, any governmental authority or regulatory body is required
either for the grant by Grantor of the security interest hereunder or for the
execution, delivery, or performance of this Agreement by Grantor or for the
perfection of or the exercise by Greyrock of its rights hereunder to the
Collateral in the United States.
4. AFTER-ACQUIRED PATENT OR TRADEMARK RIGHTS.
If Grantor shall obtain rights to any new trademarks, any new patentable
inventions or become entitled to the benefit of any patent application or patent
for any reissue, division, or continuation, of any patent, the provisions of
this Agreement shall automatically apply thereto. Grantor shall give prompt
notice in writing to Greyrock with respect to any such new trademarks or
patents, or renewal or extension of any trademark registration. Grantor shall
bear any expenses incurred in connection with future patent applications or
trademark registrations. Without limiting Grantor's obligation under this
Section 4, Grantor authorizes Greyrock to modify this Agreement by amending
Exhibits A or B to include any such new patent or trademark rights.
Notwithstanding the foregoing, no failure to so modify this Agreement or amend
Exhibits A or B shall in any way affect, invalidate or detract from Greyrock's
continuing security interest in all Collateral, whether or not listed on Exhibit
A or B.
5. LITIGATION AND PROCEEDINGS.
Grantor shall commence and diligently prosecute in its own name, as the
real party in interest, for its own benefit, and its own expense, such suits,
administrative proceedings, or other action for infringement or other damages as
are in its reasonable business judgment necessary to protect the Collateral.
Grantor shall provide to Greyrock any information with respect thereto requested
by Greyrock. Greyrock shall provide at Grantor's expense all necessary
cooperation in connection with any such suits, proceedings, or action,
including, without limitation, joining as a necessary party. Following Grantor's
becoming aware thereof, Grantor shall notify Greyrock of the institution of, or
any adverse determination in, any proceeding in the United States Patent and
Trademark Office, or any United States, state, or foreign court regarding
Grantor's claim of ownership in any of the patents or trademarks, its right to
apply for the same, or its right to keep and maintain such patent or trademark
rights.
6. POWER OF ATTORNEY.
Grantor hereby appoints Greyrock as Grantor's true and lawful attorney,
with full power of substitution, to do any or all of the following, in the name,
place and stead of Grantor: (a) file this Agreement (or an abstract hereof) or
any other document describing Greyrock's interest in
4
<PAGE>
the Collateral with the United States Patent and Trademark Office; (b) execute
any modification of this Agreement pursuant to Section 4 of this Agreement; (c)
take any action and execute any instrument which Greyrock may deem necessary or
advisable to accomplish the purposes of this Agreement; and (d) following an
Event of Default (as defined in the Loan Agreement), (i) endorse Grantor's name
on all applications, documents, papers and instruments necessary for Greyrock to
use or maintain the Collateral; (ii) ask, demand, collect, sue for, recover,
impound, receive, and give acquittance and receipts for money due or to become
due under or in respect of any of the Collateral; (iii) file any claims or take
any action or institute any proceedings that Greyrock may deem necessary or
desirable for the collection of any of the Collateral or otherwise enforce
Greyrock's rights with respect to any of the Collateral, and (iv) assign,
pledge, convey, or otherwise transfer title in or dispose of the Collateral to
any person.
7. RIGHT TO INSPECT.
Grantor grants to Greyrock and its employees and agents the right to visit
Grantor's plants and facilities which manufacture, inspect, or store products
sold under any of the patents or trademarks, and to inspect the products and
quality control records relating thereto at reasonable times during regular
business hours.
5
<PAGE>
8. SPECIFIC REMEDIES.
Upon the occurrence of any Event of Default (as defined in the Loan
Agreement), Greyrock shall have, in addition to, other rights given by law or in
this Agreement, the Loan Agreement, or in any other Loan Document, all of the
rights and remedies with respect to the Collateral of a secured party under the
Code, including the following:
8.1 Notification. Greyrock may notify licensees to make royalty payments on
license agreements directly to Greyrock;
8.2 Sale. Greyrock may sell or assign the Collateral and associated
goodwill at public or private sale for such amounts, and at such time or times
as Greyrock deems advisable. Any requirement of reasonable notice of any
disposition of the Collateral shall be satisfied if such notice is sent to
Grantor five (5) days prior to such disposition. Grantor shall be credited with
the net proceeds of such sale only when they are actually received by Greyrock,
and Grantor shall continue to be liable for any deficiency remaining after the
Collateral is sold or collected. If the sale is to be a public sale, Greyrock
shall also give notice of the time and place by publishing a notice one time at
least five (5) days before the date of the sale in a newspaper of general
circulation in the county in which the sale is to be held. To the maximum extent
permitted by applicable law, Greyrock may be the purchaser of any or all of the
Collateral and associated goodwill at any public sale and shall be entitled, for
the purpose of bidding and making settlement or payment of the purchase price
for all or any portion of the Collateral sold at any public sale, to use and
apply all or any part of the Obligations as a credit on account of the purchase
price of any collateral payable by Greyrock at such sale.
9. GENERAL PROVISIONS.
9.1 Effectiveness. This Agreement shall be binding and deemed effective
when executed by Grantor and Greyrock.
9.2 Notices. Except to the extent otherwise provided herein, all notices,
demands, and requests that either party is required or elects to give to the
other shall be in writing and shall be governed by the notice provisions of the
Loan Agreement.
9.3 No Waiver. No course of dealing between Grantor and Greyrock, nor any
failure to exercise nor any delay in exercising, on the part of Greyrock, any
right, power, or privilege under this Agreement or under the Loan Agreement or
any other agreement, shall operate as a waiver. No single or partial exercise of
any right, power, or privilege under this Agreement or under the Loan Agreement
or any other agreement by Greyrock shall preclude any other or further exercise
of such right, power, or privilege or the exercise of any other right, power, or
privilege by Greyrock.
9.4 Rights Are Cumulative. All of Greyrock's rights and remedies with
respect to the Collateral whether established by this Agreement, the Loan
Agreement, or any other documents or agreements, or by law shall be cumulative
and may be exercised concurrently or in any order.
9.5 Successors. The benefits and burdens of this Agreement shall inure to
the benefit of and be binding upon the respective successors and permitted
assigns of the parties; provided
6
<PAGE>
that Grantor may not transfer any of the Collateral or any rights hereunder,
without the prior written consent of Greyrock, except as specifically permitted
hereby.
9.6 Severability. The provisions of this Agreement are severable. If any
provision of this Agreement is held invalid or unenforceable in whole or in part
in any jurisdiction, then such invalidity or unenforceability shall affect only
such provision, or part thereof, in such jurisdiction, and shall not in any
manner affect such provision or part thereof in any other jurisdiction, or any
other provision of this Agreement in any jurisdiction.
9.7 Entire Agreement. This Agreement is subject to modification only by a
writing signed by the parties, except as provided in Section 4 of this
Agreement. To the extent that any provision of this Agreement conflicts with any
provision of the Loan Agreement, the provision giving Greyrock greater rights or
remedies shall govern, it being understood that the purpose of this Agreement is
to add to, and not detract from, the rights granted to Greyrock under the Loan
Agreement. This Agreement, the Loan Agreement, and the documents relating
thereto comprise the entire agreement of the parties with respect to the matters
addressed in this Agreement.
9.8 Fees and Expenses. Grantor shall pay to Greyrock on demand all costs
and expenses that Greyrock pays or incurs in connection with the negotiation,
preparation, consummation, administration, enforcement, and termination of this
Agreement, including: (a) reasonable attorneys' and paralegals' fees and
disbursements of counsel to Greyrock; (b) costs and expenses (including
reasonable attorneys' and paralegals' fees and disbursements) for any amendment,
supplement, waiver, consent, or subsequent closing in connection with this
Agreement and the transactions contemplated hereby; (c) costs and expenses of
lien and title searches; (d) taxes, fees, and other charges for filing this
Agreement at the United States Patent and Trademark Office, or for filing
financing statements, and continuations, and other actions to perfect, protect,
and continue the security interest created hereunder; (e) sums paid or incurred
to pay any amount or take any action required of Grantor under this Agreement
that Grantor fails to pay or take; (f) costs and expenses of preserving and
protecting the Collateral; and (g) costs and expenses (including reasonable
attorneys' and paralegals' fees and disbursements) paid or incurred to enforce
the security interest created hereunder, sell or otherwise realize upon the
Collateral, and otherwise enforce the provisions of this Agreement, or to defend
any claims made or threatened against the Greyrock arising out of the
transactions contemplated hereby (including preparations for the consultations
concerning any such matters). The foregoing shall not be construed to limit any
other provisions of this Agreement or the Loan Documents regarding costs and
expenses to be paid by Grantor. The parties agree that reasonable attorneys' and
paralegals' fees and costs incurred in enforcing any judgment are recoverable as
a separate item in addition to fees and costs incurred in obtaining the judgment
and that the recovery of such attorneys' and paralegals' fees and costs is
intended to survive any judgment, and is not to be deemed merged into any
judgment.
9.9 Indemnity. Grantor shall protect, defend, indemnify, and hold harmless
Greyrock and Greyrock's assigns from all liabilities, losses, and costs
(including without limitation reasonable attorneys' fees) incurred or imposed on
Greyrock relating to the matters in this Agreement.
9.10 Further Assurances. At Greyrock's request, Grantor shall execute and
deliver to Greyrock any further instruments or documentation, and perform any
acts, that may be reasonably necessary or appropriate to implement this
Agreement, the Loan Agreement or any
7
<PAGE>
other agreement, and the documents relating thereto, including without
limitation any instrument or documentation reasonably necessary or appropriate
to create, maintain, perfect, or effectuate Greyrock's security interests in the
Collateral.
9.11 Release. At such time as Grantor shall completely satisfy all of the
Obligations and the Loan Agreement shall be terminated, Greyrock shall execute
and deliver to Grantor all assignments and other instruments as may be
reasonably necessary or proper to terminate Greyrock's security interest in the
Collateral, subject to any disposition of the Collateral which may have been
made by Greyrock pursuant to this Agreement. For the purpose of this Agreement,
the Obligations shall be deemed to continue if Grantor enters into any
bankruptcy or similar proceeding at a time when any amount paid to Greyrock
could be ordered to be repaid as a preference or pursuant to a similar theory,
and shall continue until it is finally determined that no such repayment can be
ordered.
9.12 Governing Law. The validity and interpretation of this Agreement and
the rights and obligations of the parties shall be governed by the laws of the
State of California, excluding its conflict of law rules to the extent such
rules would apply the law of another jurisdiction, and the United States. The
parties agree that all actions or proceedings arising in connection with this
Agreement shall be tried and litigated only in the state and federal courts
located in the County of Los Angeles, State of California or, at the sole option
of Greyrock, in any other court in which Greyrock shall initiate legal or
equitable proceedings and which has subject matter jurisdiction over the matter
in controversy. each of Grantor and Greyrock waives, to the extent permitted
under applicable law, any right they may have to assert the doctrine of forum
non conveniens or to object to venue to the extent any proceeding is brought in
accordance with this Section.
9.13 Waiver of Right to Jury Trial. GREYROCK AND GRANTOR EACH HEREBY WAIVE
THE RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, ARISING OUT
OF, OR IN ANY WAY RELATING TO: (I) THIS AGREEMENT; OR (II) ANY OTHER PRESENT OR
FUTURE INSTRUMENT OR AGREEMENT BETWEEN GREYROCK AND GRANTOR; OR (III) ANY
CONDUCT, ACTS OR OMISSIONS OF GREYROCK OR GRANTOR OR ANY OF THEIR DIRECTORS,
OFFICERS, EMPLOYEES, AGENTS, ATTORNEYS OR ANY OTHER PERSONS AFFILIATED WITH
GREYROCK OR GRANTOR; IN EACH OF THE FOREGOING CASES, WHETHER SOUNDING IN
CONTRACT OR TORT OR OTHERWISE.
IN WITNESS WHEREOF, the parties have executed this Agreement on the date
first written above.
GREYROCK CAPITAL, a Division of Banc GREENFIELD ONLINE, INC.
of America Commercial Finance Corporation
By /s/ Stephanie Weil By /s/
-------------------- ------------------------------------
Title Vice President Title Rudy Nadilo, President and CEO
8
<PAGE>
STATE OF CONNECTICUT )
) Wilton
COUNTY OF FAIRFIELD )
On December 3, 1999 , before me, Jonathan A. Flatow, Commissioner of the
Superior Court, personally appeared Rudy Nadilo, personally known to me (or
proved to me on the basis of satisfactory evidence) to be the person whose name
is subscribed to the within instrument and acknowledged to me that he/she
executed the same in his/her authorized capacity, and that by his/her signature
on the instrument the person, or the entity on behalf of which the person acted,
executed the instrument.
WITNESS my hand and official seal.
Signature /s/
----------------------------------
Commissioner of the Superior Court
9
<PAGE>
Exhibit "A"
REGISTERED TRADEMARKS
Exhibit "A"
REGISTERED AND PENDING TRADEMARKS
GREENFIELD ONLINE, INC.
U.S TRADEMARK/SERVICE MARK STATUS REPORT - March 2, 2000
<TABLE>
<CAPTION>
===========================================================================================================================
Trademark / Service T & T Type of Serial Amendment to Review by Publication Notice of
Mark Search Trademark Number Allege Use Trademark Date Allowance/
Application Examiner/ Opposition
Approved for
Publication
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
FIELDSOURCE --- ITU filed 75-255,969 Approved for 9/29/98 Allowance
3/12/97 Publication issued
12/22/98
- ---------------------------------------------------------------------------------------------------------------------------
RESEARCH REVOLUTION --- ITU filed 75-415,639 Approved for 12/8/98 Allowance
1/9/98 Publication issued 3/2/99
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
========================================================================================================
Request for Statement Registration Section 8 Use Section 15 Aff. Section 9 Renewal
Extension of Time of Use Certificate Aff. (5-6 (Incontestability) (10 yr.)
to File Statement yrs.) (5 yrs.) (6 mos. from
of Use (R) expiration)
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
First Extension SOU Accepted Registered - Must filess. 8/15 Affidavit Must filess. 9
Granted Principal between 6/15/04-6/15/05 Renewal between
Register 12/15/08-6/15/09-
MUST FILE SOU OR 6/15/99 DOCKETED
SECOND EXTENSION #2,254,105 DOCKETED
BY 12/22/99
DOCKETED
- --------------------------------------------------------------------------------------------------------
First Extension SOU and Registered - Must filess. 8/15 Affidavit Must filess. 9
Granted Extension Principal between 8/3/04-8/3/05 Renewal between
filed 4/9/99 Register 2/3/09-8/3/09
MUST FILE SOU OR 8/3/99 DOCKETED
EXTENSION BY #2,267,753 DOCKETED
3/2/00
DOCKETED
- --------------------------------------------------------------------------------------------------------
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
===========================================================================================================================
Trademark / Service T & T Type of Serial Amendment to Review by Publication Notice of
Mark Search Trademark Number Allege Use Trademark Date Allowance/
Application Examiner/ Opposition
Approved for
Publication
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
DIGITAL VOTER Y ITU filed 75-591,529 Office
10/30/98 Action
No. 1 issued
4/13/99
MUST FILE
RESPONSE BY
10/13/99
DOCKETED
Response filed
10/8/99
- ---------------------------------------------------------------------------------------------------------------------------
DIGITAL CONSUMER N USE filed 75-665,715
3/22/99
- ---------------------------------------------------------------------------------------------------------------------------
DIGITAL OPINION Y Search
review
pending
- ---------------------------------------------------------------------------------------------------------------------------
FOCUSCHAT((TM)) --- ITU filed 75-415,643 Approved for 12/15/98 Notice of
1/9/98 Publication Opposition
filed by
Information
Builders,
Inc. 2/17/99
MUST FILE
ANSWER BY
3/27/99
Answer filed
3/18/99
- ---------------------------------------------------------------------------------------------------------------------------
FOCUSCHAT(SM) --- USE filed 75-686,274
4/14/99
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
========================================================================================================
Request for Statement Registration Section 8 Use Section 15 Aff. Section 9 Renewal
Extension of Time of Use Certificate Aff. (5-6 (Incontestability) (10 yr.)
to File Statement yrs.) (5 yrs.) (6 mos. from
of Use (R) expiration)
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
Notice of Abandonment issued 7/1/99
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
===========================================================================================================================
Trademark / Service T & T Type of Serial Amendment to Review by Publication Notice of
Mark Search Trademark Number Allege Use Trademark Date Allowance/
Application Examiner/ Opposition
Approved for
Publication
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
GREENFIELD ONLINE --- USE filed 75-694,707
4/30/99
- ---------------------------------------------------------------------------------------------------------------------------
GO SHOP Y ITU filed 75-767,511
8//4/99
- ---------------------------------------------------------------------------------------------------------------------------
INTERACTIVE INSIGHTS Y ITU filed 75-541,778 Non-Final
8/24/98 Office Action
issued 5/14/99
MUST RESPOND BY
11/14/99
DOCKETED
- ---------------------------------------------------------------------------------------------------------------------------
INTERCONNECT Y ITU filed 75-657,504
3/10/99
- ---------------------------------------------------------------------------------------------------------------------------
MINDSTORM ((TM)) --- ITU filed 75-521,238 Examiner's
7/17/98 Amendment
issued 4/9/99
- ---------------------------------------------------------------------------------------------------------------------------
MINDSTORM (SM) --- ITU filed 75-682,551 Examiner's
7/17/98 Amendment 4/9/99
- ---------------------------------------------------------------------------------------------------------------------------
NETTAP --- ITU filed 75-415,642 Approved for 12/15/98 Allowance
1/9/98 Publication issued 3/9/99
- ---------------------------------------------------------------------------------------------------------------------------
NETCATCH --- ITU filed 75-415,641 Approved for 12/8/98 Allowance
1/9/98 Publication issued 3/2/99
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
========================================================================================================
Request for Statement Registration Section 8 Use Section 15 Aff. Section 9 Renewal
Extension of Time of Use Certificate Aff. (5-6 (Incontestability) (10 yr.)
to File Statement yrs.) (5 yrs.) (6 mos. from
of Use (R) expiration)
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
Must file SOU or SOU and
Extension by Extension
9/9/99 filed
8/26/99
DOCKETED
- --------------------------------------------------------------------------------------------------------
Must file SOU or Express Abandonment filed 4/8/99
Extension by
9/2/99
DOCKETED
- --------------------------------------------------------------------------------------------------------
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
===========================================================================================================================
Trademark / Service T & T Type of Serial Amendment to Review by Publication Notice of
Mark Search Trademark Number Allege Use Trademark Date Allowance/
Application Examiner/ Opposition
Approved for
Publication
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
NETREACH --- ITU filed 75-415,640 Approved for 12/8/98 Allowance
1/9/98 Publication issued 3/2/99
- ---------------------------------------------------------------------------------------------------------------------------
QUICKTAKE Y ITU filed 75-727,729
6/14/99
- ---------------------------------------------------------------------------------------------------------------------------
QUICKTAKE.COM --- ITU filed 75-786,075
8/26/99
- ---------------------------------------------------------------------------------------------------------------------------
QUICKTAKE IT! --- ITU filed 75-786,076
8/26/99
- ---------------------------------------------------------------------------------------------------------------------------
LOGO (QuickTake) --- ITU filed 75-809,109
9/24/99
- ---------------------------------------------------------------------------------------------------------------------------
THE ONLINE THINK Y ITU filed 75-661,511
TANK 3/16/99
- ---------------------------------------------------------------------------------------------------------------------------
TRADESHOW TRACKER Y ITU filed 75-568,365
10/9/98
- ---------------------------------------------------------------------------------------------------------------------------
VETS & PETS Y ITU filed 75-618,700
SYNDICATED SERVICES 1/11/99
- ---------------------------------------------------------------------------------------------------------------------------
KNOW TODAY WHAT Y ITU filed
YOUR CUSTOMERS NEED 11/19/99
TOMORRROW
- ---------------------------------------------------------------------------------------------------------------------------
HOW SOON DO YOU Y ITU filed
NEED TO KNOW? 11/19/99
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
========================================================================================================
Request for Statement Registration Section 8 Use Section 15 Aff. Section 9 Renewal
Extension of Time of Use Certificate Aff. (5-6 (Incontestability) (10 yr.)
to File Statement yrs.) (5 yrs.) (6 mos. from
of Use (R) expiration)
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Must file SOU or SOU Registered Must file 8/15 Affidavit between Must file 8/9
Extension by accepted Principal 11/9/04 - 11/9/05 Renewal between
9/2/99 10/1/99 Register 5/9/09 - 11/9/09
11/9/09 DOCKETED
DOCKETED #2,291,510 DOCKETED
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
</TABLE>
PENDING TRADEMARKS
13
<PAGE>
Exhibit "B"
PATENTS
[NONE]
PATENT APPLICATIONS
<TABLE>
<CAPTION>
Description Filing Date Serial No. Name of Inventor
- ----------- ----------- ---------- ----------------
<S> <C> <C> <C>
</TABLE>
Docket Name:
GRNFLD-001XX
Title:
SYSTEM AND METHOD FOR CONDUCTING FOCUS GROUPS USING REMOTELY LOCATED
PARTICIPANTS OVER A COMPUTER NETWORK
<TABLE>
<CAPTION>
Filing Date: Serial Number: Status: Patent No: Issue Date:
- ---------------- -------------- ------- ---------- -----------
<S> <C> <C> <C> <C>
January 22, 1999 09/236,143 pending ** **
- --------------------------------------------------------------------------------------------------
</TABLE>
Docket Name:
GRNFLD-002XX
Title:
System and Method for Conducting Interactive Market Research Inquiries Utilizing
Remotely Located Participants Interconnected Over a Computer Network
<TABLE>
<CAPTION>
Filing Date: Serial Number: Status: Patent No: Issue Date:
- ---------------- -------------- ------- ---------- -----------
<S> <C> <C> <C> <C>
May 18, 1999 09/314,085 pending ** **
- --------------------------------------------------------------------------------------------------
</TABLE>
14
<PAGE>
SCHEDULE 3.2
By Complaint dated August 6, 1999 and Amended on September 23, 1999, and filed
in the U.S. District Court for the Western District of New York, Harris
Interactive, Inc., filed a 5 count complaint against Greenfield Online, Inc. The
Amended Complaint seeks to have Greenfield Online, Inc's Service Mark "Research
Revolution"#2,267,753 cancelled and seeks a declaratory judgment that Harris
Interactive is not infringing the mark (Count One), seeks monetary damages for
alleged defamatory statements made by an officer of Greenfield Online concerning
Harris Interactive's business practices (Count Two), seeks monetary damages for
allegedly disparaging remarks made by a Greenfield Online Officer concerning
Harris Interactive's business practices (Count Three), seeks monetary damages
for Greenfield Online's allegely intention interference with contractual
relationships (Count Four) and seeks monetary damages for Greenfield Online's
allegedly unfair competition. The Company has answered the Amended Complaint and
has filed defenses and intends to proscute its defense vigorously.
15
<PAGE>
SECURITY AGREEMENT IN COPYRIGHTED WORKS
This Security Agreement In Copyrighted Works (this "Agreement") is made at
Los Angeles, California as of December 3, 1999, is entered into between
GREENFIELD ONLINE, INC., a Connecticut corporation ("Grantor"), which has a
mailing address at 15 River Road, Suite 310, Wilton, Connecticut 06897, and
GREYROCK CAPITAL, a Division of Banc of America Commercial Finance Corporation
("Greyrock"), which has a mailing address at 10880 Wilshire Blvd., Suite 1850,
Los Angeles, CA 90024.
RECITALS
A. Greyrock is providing financing to Grantor pursuant to the Loan and
Security Agreement of even date herewith between Greyrock and Grantor (as
amended from time to time, the "Loan Agreement"). Pursuant to the Loan
Agreement, Grantor has granted to Greyrock a security interest in all of
Grantor's present and future assets, including without limitation all of
Grantor's present and future general intangibles, and including without
limitation the "Copyrights" (as defined below), to secure all of its present and
future indebtedness, liabilities, guaranties and other obligations to Greyrock.
B. To supplement Greyrock's rights in the Copyrights, Grantor is executing
and delivering this Agreement.
NOW, THEREFORE, for valuable consideration, Grantor agrees as follows:
1. Assignment. To secure the complete and timely payment and performance of
all "Obligations" (as defined in the Loan Agreement), and without limiting any
other security interest Grantor has granted to Greyrock, Grantor hereby
hypothecates to Greyrock and grants, assigns, and conveys to Greyrock a security
interest in Grantor's entire right, title, and interest in and to all of the
following, now owned and hereafter acquired (collectively, the "Collateral"):
(a) Registered Copyrights and Applications for Copyright Registrations.
All of Grantor's present and future United States and foreign registered
copyrights and copyright registrations, including, without limitation, the
registered copyrights listed in Schedule A to this Agreement (and including all
of the exclusive rights afforded a copyright registrant in the United States
under 17 U.S.C. ss.106 and any exclusive rights which may in the future arise by
act of Congress or otherwise) and all of Grantor's present and future
applications for copyright registrations (including applications for copyright
registrations of derivative works and compilations) (collectively, the
"Registered Copyrights"), and any and all royalties, payments, and other amounts
payable to Grantor in connection with the Registered Copyrights, together with
all renewals and extensions of the Registered Copyrights, the right to recover
for all past, present, and future infringements of the Registered Copyrights,
and all computer programs, computer databases, computer program flow diagrams,
source codes, object codes and all tangible property embodying or incorporating
the Registered Copyrights, and all other rights of every kind whatsoever
accruing thereunder or pertaining thereto.
(b) Unregistered Copyrights. All of Grantor's present and future
copyrights which are not registered in the United States Copyright Office (the
"Unregistered Copyrights"), whether now owned or hereafter acquired, including
without limitation the Unregistered Copyrights listed in Schedule B to this
Agreement, and any and all royalties, payments, and other amounts payable to
Grantor in connection with the Unregistered Copyrights, together with all
renewals and extensions of the Unregistered Copyrights, the right to recover for
all past, present,
-1-
<PAGE>
and future infringements of the Unregistered Copyrights, and all computer
programs, computer databases, computer program flow diagrams, source codes,
object codes and all tangible property embodying or incorporating the
Unregistered Copyrights, and all other rights of every kind whatsoever accruing
thereunder or pertaining thereto. The Registered Copyrights and the Unregistered
Copyrights collectively are referred to herein as the "Copyrights."
(c) Licenses. All of Grantor's right, title and interest in and to any
and all present and future license agreements with respect to the Copyrights,
including without limitation the license agreements listed in Schedule C to this
Agreement (the "Licenses").
(d) Accounts Receivable. All present and future accounts, accounts
receivable and other rights to payment arising from, in connection with or
relating to the Copyrights.
(e) Proceeds. All cash and non-cash proceeds of any and all of the
foregoing.
2. Representations. Grantor represents and warrants that:
(a) Each of the Copyrights is valid and enforceable (except to the
extent that the Unregistered Copyrights must be registered to be enforced);
(b) Except for the security interest granted hereby and the
non-exclusive licenses granted to Grantor's licensees with respect to the
Copyrights in the ordinary course of business of Grantor, Grantor is (and upon
creation of all future Copyrights, will be) the sole and exclusive owner of the
entire and unencumbered right, title, and interest in and to each of the
Copyrights and other Collateral, free and clear of any liens, charges, or
encumbrances;
(c) There is no pending claim that the use of any of the Copyrights does
or may infringe upon or violate the rights of any third person nor does Grantor
have knowledge of any pending or threatened infringement of any of the
Copyrights by any third person.
(d) Listed on Schedules A and B are all copyrights owned by Grantor, in
which Grantor has an interest, or which are used in Grantor's business.
(e) Listed on Schedule C are all Licenses to which Grantor is a party.
(f) Each employee, agent and/or independent contractor who has
participated in the creation of the property constituting the Collateral has
either executed an assignment of his or her rights of authorship to Grantor or
is an employee of Grantor acting within the scope of his or her employment and
was such an employee at the time of said creation.
(g) All of Grantor's present and future software, computer programs and
other material and substantial works of authorship subject to United States
copyright protection, the sale, licensing or other disposition of which results
in royalties receivable, license fees receivable, accounts receivable or other
sums owing to Grantor (collectively, "Receivables"), have been, or shall be
within 90 days after the first funding of a Loan under the Loan Agreement,
registered with the United States Copyright Office, and Grantor shall provide to
Greyrock copies of all such registrations promptly upon the receipt of the same.
3. Covenants. Until all of the Obligations have been satisfied in full and
the Loan Agreement has terminated:
-2-
<PAGE>
(a) Grantor shall not grant a security interest in any of the Copyrights
or other Collateral to any other person and shall not enter into any agreement
or take any action that is inconsistent with Grantor's obligations hereunder or
Grantor's other Obligations or would impair Greyrock's rights, under this
Agreement or otherwise, without Greyrock's prior written consent.
(b) Grantor shall ensure that each use of the Copyrights described in
Section 1 of this Agreement carries a complete and accurate copyright notice.
(c) Grantor shall use its best efforts to preserve and defend Grantor's
rights in the Copyrights unless Grantor, with the concurrence of Greyrock,
reasonably determines that a Copyright is not worth preserving or defending.
(d) Grantor shall undertake all reasonable measures to cause its
employees, agents and independent contractors to assign to Grantor all rights of
authorship to any copyrighted material in which Grantor has or may subsequently
acquire any right or interest.
4. License Rights. Grantor may license or sublicense the Copyrights only in
the ordinary course of business and only on a non-exclusive basis, and only to
the extent of Grantor's rights and subject to Greyrock's security interest and
Grantor's obligations under this Agreement.
5. Greyrock May Supplement. Grantor authorizes Greyrock to modify this
Agreement by amending Schedule A or B to include any future copyrights to be
included in the Copyrights. Grantor shall from time to time update the lists of
Registered Copyrights and Unregistered Copyrights on Schedules A and B and lists
of License Agreements on Schedule C as Grantor obtains or acquires copyrights or
grants or obtains licenses in the future. Notwithstanding the foregoing, no
failure to so modify this Agreement or amend Schedules A or B or C shall in any
way affect, invalidate or detract from Greyrock's continuing security interest
in all Copyrights, whether or not listed on Schedule A or B and all license
agreements whether or not listed on Schedule C.
6. Default. Upon an Event of Default (as defined in the Loan Agreement)
Greyrock shall have, in addition to all of its other rights and remedies under
the Loan Agreement, all rights and remedies of a secured party under the Uniform
Commercial Code (as enacted in any jurisdiction in which the Copyrights or other
Collateral are located or deemed to be located) or other applicable law. Upon
occurrence of an Event of Default, Grantor shall, upon request of Greyrock, give
written notice to all parties to the Licenses that all payments thereunder shall
be made to Greyrock, and Greyrock may itself give such notice.
7. Fees and Expenses. On demand by Greyrock, without limiting any of the
terms of the Loan Agreement, Grantor shall pay all reasonable fees, costs, and
expenses (including without limitation reasonable attorneys' fees and legal
expenses) incurred by Greyrock in connection with (a) preparing this Agreement
and all other documents relating to this Agreement, (b) consummating this
transaction, (c) filing or recording any documents (including all taxes in
connection therewith) in public offices; and (d) paying or discharging any
taxes, counsel fees, maintenance fees, encumbrances, or other amounts in
connection with protecting, maintaining, or preserving the Copyrights or
defending or prosecuting any actions or proceedings arising out of or related to
the Copyrights.
8. Greyrock's Rights. In the event that Grantor fails to use its best
efforts to preserve and defend Grantor's rights in the Copyrights (except as
permitted by paragraph 3(c) hereof) within a reasonable period of time after
learning of the existence of any actual or threatened
-3-
<PAGE>
infringement thereof, upon twenty (20) days prior written notice to Grantor,
Greyrock shall have the right, but shall in no way be obligated to, bring suit
or take any other action, in its own name or in Grantor's name, to enforce or
preserve Greyrock's or Grantor's rights in the Copyrights. Grantor shall at the
request of Greyrock and at Grantor's expense do any lawful acts and execute any
documents requested by Greyrock to assist with such enforcement. In the event
Grantor has not taken action to enforce or preserve Greyrock's and Grantor's
rights in the Copyrights and Greyrock thereupon takes such action, Grantor, upon
demand, shall promptly reimburse and indemnify Greyrock for all costs and
expenses incurred in the exercise of Greyrock's or Grantor's rights under this
Section 8.
9. No Waiver. No course of dealing between Grantor and Greyrock, nor any
failure to exercise nor any delay in exercising, on the part of Greyrock, any
right, power, or privilege under this Agreement or under the Loan Agreement or
any other agreement, shall operate as a waiver. No single or partial exercise of
any right, power, or privilege under this Agreement or under the Loan Agreement
or any other agreement by Greyrock shall preclude any other or further exercise
of such right, power, or privilege or the exercise of any other right, power, or
privilege by Greyrock.
10. Rights Are Cumulative. All of Greyrock's rights and remedies with
respect to the Copyrights and other Collateral whether established by this
Agreement, the Loan Agreement, or any other documents or agreements, or by law
shall be cumulative and may be exercised concurrently or in any order.
11. Copyright Office. At the request of Greyrock, Grantor shall execute any
further documents necessary or appropriate to create and perfect Greyrock's
security interest in the Copyrights, including without limitation any documents
for filing with the United States Copyright Office and/or any applicable state
office. Greyrock may record this Agreement, an abstract thereof, or any other
document describing Greyrock's interest in the Copyrights with the United States
Copyright Office, at the expense of Grantor.
12. Indemnity. Grantor shall protect, defend, indemnify, and hold harmless
Greyrock and Greyrock's assigns from all liabilities, losses, and costs
(including without limitation reasonable attorneys' fees) incurred or imposed on
Greyrock relating to the matters in this Agreement, including, without
limitation, in connection with Greyrock's defense of any infringement action
brought by a third party against Greyrock.
13. Severability. The provisions of this Agreement are severable. If any
provision of this Agreement is held invalid or unenforceable in whole or in part
in any jurisdiction, then such invalidity or unenforceability shall affect only
such provision, or part thereof, in such jurisdiction, and shall not in any
manner affect such provision or part thereof in any other jurisdiction, or any
other provision of this Agreement in any jurisdiction.
14. Amendments; Entire Agreement. This Agreement is subject to modification
only by a writing signed by the parties, except as provided in Section 5 of this
Agreement. To the extent that any provision of this Agreement conflicts with any
provision of the Loan Agreement, the provision giving Greyrock greater rights or
remedies shall govern, it being understood that the purpose of this Agreement is
to add to, and not detract from, the rights granted to Greyrock under the Loan
Agreement. This Agreement, the Loan Agreement, and the documents relating
thereto comprise the entire agreement of the parties with respect to the matters
addressed in this Agreement.
-4-
<PAGE>
15. Further Assurances. At Greyrock's request, Grantor shall execute and
deliver to Greyrock any further instruments or documentation, and perform any
acts, that may be reasonably necessary or appropriate to implement this
Agreement, the Loan Agreement or any other agreement, and the documents relating
thereto, including without limitation any instrument or documentation reasonably
necessary or appropriate to create, maintain, perfect, or effectuate Greyrock's
security interests in the Copyrights or other Collateral.
16. Release. At such time as Grantor shall completely satisfy all of the
Obligations and the Loan Agreement shall be terminated, Greyrock shall execute
and deliver to Grantor all assignments and other instruments as may be
reasonably necessary or proper to terminate Greyrock's security interest in the
Copyrights, subject to any disposition of the Copyrights which may have been
made by Greyrock pursuant to this Agreement. For the purpose of this Agreement,
the Obligations shall be deemed to continue if Grantor enters into any
bankruptcy or similar proceeding at a time when any amount paid to Greyrock
could be ordered to be repaid as a preference or pursuant to a similar theory,
and shall continue until it is finally determined that no such repayment can be
ordered.
17. True and Lawful Attorney. Grantor hereby appoints Greyrock as Grantor's
true and lawful attorney, with full power of substitution, to do any or all of
the following, in the name, place and stead of Grantor: (a) execute an abstract
of this Agreement or any other document describing Greyrock's interest in the
Copyrights, for filing with the United States Copyright Office; (b) execute any
modification of this Agreement pursuant to Section 5 of this Agreement; and (c)
following an Event of Default (as defined in the Loan Agreement) execute any
assignments, notices or transfer documents for purposes of transferring title or
right to receive any of the Copyrights or other Collateral to any person,
including without limitation Greyrock.
18. Successors. The benefits and burdens of this Agreement shall inure to
the benefit of and be binding upon the respective successors and permitted
assigns of the parties; provided that Grantor may not transfer any of the
Collateral or any rights hereunder, without the prior written consent of
Greyrock, except as specifically permitted hereby.
19. Governing Law. The validity and interpretation of this Agreement and
the rights and obligations of the parties shall be governed by the laws of the
State of California, excluding its conflict of law rules to the extent such
rules would apply the law of another jurisdiction, and the United States.
20. Waiver of Right to Jury Trial. Greyrock and Grantor each hereby waive
the right to trial by jury in any action or proceeding based upon, arising out
of, or in any way relating to: (i) this Agreement; or (ii) any other present or
future instrument or agreement between Greyrock and Grantor; or (iii) any
conduct, acts or omissions of Greyrock or Grantor or any of their directors,
officers, employees, agents, attorneys or any other persons affiliated with
Greyrock or Grantor; in each of the foregoing cases, whether sounding in
contract or tort or otherwise.
-5-
<PAGE>
WITNESS the execution hereof as of the date first written above.
Grantor:
GREENFIELD ONLINE, INC.
By: /s/
---------------------------------------
Name (please print):
Rudy Nadilo
Title:
Chairman of the Board, President, & CEO
Accepted.
Greyrock:
GREYROCK CAPITAL,
a Division of Banc of America Commercial Finance Corporation
By: /s/
-------------------------
Name (please print):
Stephanie Weil
- -----------------------------
Title: Vice President
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<PAGE>
STATE OF Connecticut )
) ss. Wilton
COUNTY OF Fairfield )
On December 3, 1999, before me, Suzanne Lee, Notary Public, personally appeared
Rudy Nadilo, personally known to me (or proved to me on the basis of
satisfactory evidence) to be the person whose name is subscribed to the within
instrument and acknowledged to me that he/she executed the same in his/her
authorized capacity, and that by his/her signature on the instrument the person,
or the entity on behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
Signature Suzanne Lee [SEAL]
SUZANNE LEE
NOTARY PUBLIC
My commission expires Mar. 31, 2000
-7-
<PAGE>
Schedule A
to
Security Agreement in Copyrighted Works
GREENFIELD ONLINE, INC.
Registered Copyrights
[NONE]
-8-
<PAGE>
Schedule B
to
Security Agreement in Copyrighted Works
GREENFIELD ONLINE, INC.
Unregistered Copyrights
(Where No Copyright Application Is Pending)
Copyright Description
SURVEY WIZARD - Online survey creation tool.
NETTAP - Greenfield Online panel database.
FOCUSCHAT - Patent pending online focus group tool.
MINDSTORM - Patent pending online qualitative research tool
EXPORT 99 - Data export tool.
QUICKTAKE - Automated self-serve survey tool.
IQUESTION - single question site content tool.
GREENFIELDONLINE.COM - website designed and customized to conduct online market
research.
MAIL99 - Mass mail merging program.
MailTracker - Email tracking program.
OLAP REPORTING TOOL - Online data reporting tool.
-9-
<PAGE>
Schedule C
to
Security Agreement in Copyrighted Works
GREENFIELD ONLINE, INC.
License Agreements
[NONE]
-10-
<PAGE>
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED]
Registration Rights Agreement
Issuer: Greenfield Online, Inc.
Address: 15 River Road, Suite 310
Wilton, Connecticut 06897
Date: December 3, 1999
THIS REGISTRATION RIGHTS AGREEMENT is entered into as of the above date by and
between GREYROCK CAPITAL, a Division of Banc of America Commercial Finance
Corporation ("Purchaser"), whose address is 10880 Wilshire Blvd. Suite 1850, Los
Angeles, CA 90024 and the above Company, whose address is set forth above.
RECITALS
A. Concurrently with the execution of this Agreement, the Purchaser is
purchasing from the Company a Warrant to Purchase Stock (the "Warrant") pursuant
to which Purchaser has the right to acquire from the Company the Shares (as
defined in the Warrant).
B. By this Agreement, the Purchaser and the Company desire to set forth the
registration rights of the Shares all as provided herein.
NOW, THEREFORE, in consideration of the mutual promises, covenants and
conditions hereinafter set forth, the parties hereto mutually agree as follows:
1. Registration Rights. The Company covenants and agrees as follows:
1.1 Definitions. For purposes of this Section 1:
(a) The term "register," "registered," and "registration" refer to a
registration effected by preparing and filing a registration statement or
similar document in compliance with the Securities Act of 1933, as amended (the
"Securities Act"), and the declaration or ordering of effectiveness of such
registration statement or document;
(b) The term "Registrable Securities" means (i) those shares of Class A
Common Stock of the Company issuable or issued to Purchaser pursuant to the
Warrant and (ii) any Common Stock of the Company issued as (or issuable upon the
conversion or exercise of any warrant, right or other security which is issued
as) a dividend or other distribution with respect to, or in exchange for or in
replacement of, any stock referred to in (i).
(c) The terms "Holder" or "Holders" means the Purchaser or qualifying
transferees under subsection 1.8 hereof who hold Registrable Securities.
(d) The term "SEC" means the Securities and Exchange Commission.
1.2 Company Registration.
(a) Registration. If at any time or from time to time, the Company shall
determine to register any of its securities, for its own account or the account
of any of its shareholders, other than a registration on Form S-8 relating
solely to employee stock option or purchase plans or any successor to such form,
which does not include substantially the same information as would be required
to be included in a registration statement covering the sale of Registrable
Securities, the Company will:
(i) promptly give to each Holder written notice thereof (which shall
include a list of the jurisdictions in which the Company intends to attempt to
qualify such securities under the applicable blue sky or other state securities
laws); and
(ii) include in such registration (and compliance), and in any underwriting
involved therein, all the Registrable Securities specified in a written request
or requests, made within 30 days after receipt of such written notice from the
Company, by any Holder or Holders, except as set forth in subsection 1.2(b)
below.
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Greyrock Capital Registration Rights Agreement
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(b) Underwriting. If the registration of which the Company gives notice is
for a registered public offering involving an underwriting, the Company shall so
advise the Holders as a part of the written notice given pursuant to subsection
1.2(a)(i). In such event the right of any Holder to registration pursuant to
this subsection 1.2 shall be conditioned upon such Holder's participation in
such underwriting and the inclusion of such Holder's Registrable Securities in
the underwriting to the extent provided herein. All Holders proposing to
distribute their securities through such underwriting shall (together with the
Company and the other shareholders distributing their securities through such
underwriting) enter into an underwriting agreement in customary form with the
underwriter or underwriters selected for such underwriting by the Company.
Notwithstanding any other provision of this Section 1 to the contrary, if the
underwriter or the Company determines that marketing factors require a
limitation of the number of securities to be underwritten, the underwriter may
exclude some or all of the Registrable Securities from such registration and
underwriting. In the event the number of Registrable Securities to be registered
is limited in accordance with the provisions of this Section 1.2(b), the Company
shall so advise all Holders (except those Holders who have indicated to the
Company their decision not to distribute any of their Registrable Securities
through such underwriting), and the number of shares of the Registrable
Securities that may be included in the registration and underwriting shall be
allocated among such Holders, if available, in proportion, as nearly as
practicable, to the respective amount of the Registrable Securities owned by
such Holders at the time of filing of the registration statement. No Registrable
Securities excluded from the underwriting by reason of the underwriter's
marketing limitation shall be included in such registration.
1.3 Expenses of Registration. All expenses incurred in connection with any
registration, qualification or compliance pursuant to this Section 1 including
without limitation, all registration, filing and qualification fees, printing
expenses, fees and disbursements of counsel for the Company and expenses of any
special audits incidental to or required by such registration, shall be borne by
the Company except the Company shall not be required to pay underwriters' fees,
discounts or commissions relating to Registrable Securities. All expenses of any
registered offering not otherwise borne by the Company shall be borne pro rata
among the Holders participating in the offering and the Company.
1.4 Registration Procedures. In the case of each registration,
qualification or compliance effected by the Company pursuant to this
Registration Rights Agreement, the Company will keep each Holder participating
therein advised in writing as to the initiation of each registration,
qualification and compliance and as to the completion thereof. Except as
otherwise provided in subsection 1.3, at its expense the Company will:
(a) Prepare and file with the SEC a registration statement with respect to
such Registrable Securities and use its best efforts to cause such registration
statement to become effective, and, upon the request of the Holders of a
majority of the Registrable Securities registered thereunder, keep such
registration statement effective for up to 120 days.
(b) Prepare and file with the SEC such amendments and supplements to such
registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by such
registration statement.
(c) Furnish to the Holders such numbers of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Securities Act, and such other documents as they may reasonably request in order
to facilitate the disposition of Registrable Securities owned by them.
(d) Use its best efforts to register and qualify the securities covered by
such registration statement under such other securities or Blue Sky laws of such
jurisdictions as shall be reasonably requested by the Holders, provided that the
Company shall not be required in connection therewith or as a condition thereto
to qualify to do business or to file a general consent to service of process in
any such states or jurisdictions.
(e) In the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and customary
form, with the managing underwriter of such offering. Each Holder participating
in such underwriting shall also enter into and perform its obligations under
such an agreement.
(f) Notify each Holder of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act or the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing.
1.5 Indemnification.
(a) The Company will indemnify each Holder of Registrable Securities and
each of its officers, directors and partners, and each person controlling such
Holder, with respect to which such registration, qualification or compliance has
been effected pursuant to this Rights Agreement, and each underwriter, if any,
and each person who controls any underwriter of the Registrable Securities held
by or issuable to such Holder, against all claims, losses, expenses, damages and
liabilities (or actions in respect thereto) arising out of or based on any
untrue statement (or alleged untrue statement) of a material fact
2
<PAGE>
Greyrock Capital Registration Rights Agreement
- --------------------------------------------------------------------------------
contained in any prospectus, offering circular or other document (including any
related registration statement, notification or the like) incident to any such
registration, qualification or compliance, or based on any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statement therein not misleading, or any violation or
alleged violation by the Company of the Securities Act, the Securities Exchange
Act of 1934, as amended ("Exchange Act"), or any state securities law applicable
to the Company or any rule or regulation promulgated under the Securities Act,
the Exchange Act or any such state law and relating to action or inaction
required of the Company in connection with any such registration, qualification
of compliance, and will reimburse each such Holder, each of its officers,
directors and partners, and each person controlling such Holder, each such
underwriter and each person who controls any such underwriter, within a
reasonable amount of time after incurred for any reasonable legal and any other
expenses incurred in connection with investigating, defending or settling any
such claim, loss, damage, liability or action; provided, however, that the
indemnity agreement contained in this subsection 1.5(a) shall not apply to
amounts paid in settlement of any such claim, loss, damage, liability, or action
if such settlement is effected without the consent of the Company (which consent
shall not be unreasonably withheld); and provided further, that the Company will
not be liable in any such case to the extent that any such claim, loss, damage
or liability arises out of or is based on any untrue statement or omission based
upon written information furnished to the Company by an instrument duly executed
by such Holder or underwriter specifically for use therein.
(b) Each Holder will, if Registrable Securities held by or issuable to such
Holder are included in the securities as to which such registration,
qualification or compliance is being effected, indemnify the Company, each of
its directors and officers, each underwriter, if any, of the Company's
securities covered by such a registration statement, each person who controls
the Company within the meaning of the Securities Act, and each other such
Holder, each of its officers, directors and partners and each person controlling
such Holder, against all claims, losses, expenses, damages and liabilities (or
actions in respect thereof) arising out of or based on any untrue statement (or
alleged untrue statement) of a material fact contained in any such registration
statement, prospectus, offering circular or other document, or any omission (or
alleged omission) to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, and will reimburse
the Company, such Holders, such directors, officers, partners, persons or
underwriters for any reasonable legal or any other expenses incurred in
connection with investigating, defending or settling any such claim, loss,
damage, liability or action, in each case to the extent, but only to the extent,
that such untrue statement (or alleged untrue statement) or omission (or alleged
omission) is made in such registration statement, prospectus, offering circular
or other document in reliance upon and in conformity with written information
furnished to the Company by an instrument duly executed by such Holder
specifically for use therein; provided, however, that the indemnity agreement
contained in this subsection 1.5(b) shall not apply to amounts paid in
settlement of any such claim, loss, damage, liability or action if such
settlement is effected without the consent of the Holder (which consent shall
not be unreasonably withheld); and provided further, that the total amount for
which any Holder shall be liable under this subsection 1.5(b) shall not in any
event exceed the aggregate proceeds received by such Holder from the sale of
Registrable Securities held by such Holder in such registration.
(c) Each party entitled to indemnification under this subsection 1.5 (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom; provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not be unreasonably
withheld), and the Indemnified Party may participate in such defense at such
party's expense; and provided further, that the failure of any Indemnified Party
to give notice as provided herein shall not relieve the Indemnifying Party of
its obligations hereunder, unless such failure resulted in prejudice to the
Indemnifying Party; and provided further, that an Indemnified Party (together
with all other Indemnified Parties which may be represented without conflict by
one counsel) shall have the right to retain one separate counsel, with the fees
and expenses to be paid by the Indemnifying Party, if representation of such
Indemnified Party by the counsel retained by the Indemnifying Party would be
inappropriate due to actual or potential differing interests between such
Indemnified Party and any other party represented by such counsel in such
proceeding. No Indemnifying Party, in the defense of any such claim or
litigation, shall, except with the consent of each Indemnified Party, consent to
entry of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation.
1.6 Information by Holder. Any Holder or Holders of Registrable Securities
included in any registration shall promptly furnish to the Company such
information regarding such Holder or Holders and the distribution proposed by
such Holder or Holders as the Company may request in writing and as shall be
required in connection with any registration, qualification or compliance
referred to herein.
1.7 Rule 144 Reporting. With a view to making available to Holders the
benefits of certain rules and
3
<PAGE>
Greyrock Capital Registration Rights Agreement
- --------------------------------------------------------------------------------
regulations of the SEC which may permit the sale of the Registrable Securities
to the public without registration, the Company agrees at all times to:
(a) make and keep public information available, as those terms are
understood and defined in SEC Rule 144;
(b) file with the SEC in a timely manner all reports and other documents
required of the Company under the Securities Act and the Exchange Act (at any
time after it has become subject to such reporting requirements); and
(c) so long as a Holder owns any Registrable Securities, to furnish to such
Holder forthwith upon request a written statement by the Company as to its
compliance with the reporting requirements of said Rule 144 and of the
Securities Act and the Exchange Act, a copy of the most recent annual or
quarterly report of the Company, and such other reports and documents so filed
by the Company as the Holder may reasonably request in complying with any rule
or regulation of the SEC allowing the Holder to sell any such securities without
registration.
1.8 Transfer of Registration Rights. Holders' rights to cause the Company
to register their securities and keep information available, granted to them by
the Company under subsections 1.2 and 1.7 may be assigned to a transferee or
assignee of a Holder's Registrable Securities not sold to the public, provided,
that the Company is given written notice by such Holder at the time of or within
a reasonable time after said transfer, stating the name and address of said
transferee or assignee and identifying the securities with respect to which such
registration rights are being assigned. The Company may prohibit the transfer of
any Holders' rights under this subsection 1.8 to any proposed transferee or
assignee who the Company reasonably believes is a competitor of the Company.
1.9 Stand Still Agreement. Holder hereby agrees that for a period of up to
one hundred eighty (180) days following the effective date of a registration
statement of the Company covering Common Stock (or other securities) to be sold
on its behalf in an underwritten public offering, it shall not, to the extent
requested by the Company or any underwriter, sell or otherwise transfer or
dispose of (other than to transferees who agree to be similarly bound) any
securities of the Company held by Holder at any time during such period except
securities included in such registration. To enforce the foregoing covenant, the
Company may impose stop-transfer instructions with respect to the securities
held by Holder (and the shares or securities of every other person subject to
the foregoing restriction) until the end of such period.
1.10 Termination of Registration Rights. All rights provided for in this
Section 1 will expire on the third anniversary of the Company's initial public
offering. In addition, the rights provided for in this Section 1 shall terminate
as to any Holder once such Holder is free to sell all of its Registrable
Securities to the public pursuant to Rule 144(k).
2. General.
2.1 Waivers and Amendments. With the written consent of the record or
beneficial holders of at least a majority of the Registrable Securities, the
obligations of the Company and the rights of the Holders of the Registrable
Securities under this agreement may be waived (either generally or in a
particular instance, either retroactively or prospectively, and either for a
specified period of time or indefinitely), and with the same consent the
Company, when authorized by resolution of its Board of Directors, may enter into
a supplementary agreement for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Agreement;
provided, however, that no such modification, amendment or waiver shall reduce
the aforesaid percentage of Registrable Securities. Upon the effectuation of
each such waiver, consent, agreement of amendment or modification, the Company
shall promptly give written notice thereof to the record holders of the
Registrable Securities who have not previously consented thereto in writing.
This Agreement or any provision hereof may be changed, waived, discharged or
terminated only by a statement in writing signed by the party against which
enforcement of the change, waiver, discharge or termination is sought, except to
the extent provided in this subsection 2.1.
2.2 Governing Law. This Agreement shall be governed in all respects by the
laws of the State of New York.
2.3 Successors and Assigns. Except as otherwise expressly provided herein,
the provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators of the parties hereto.
2.4 Entire Agreement. Except as set forth below, this Agreement and the
other documents delivered pursuant hereto constitute the full and entire
understanding and agreement between the parties with regard to the subjects
hereof and thereof.
2.5 Notices. etc. All notices and other communications required or
permitted hereunder shall be in writing and shall be mailed by first class mail,
postage prepaid, certified or registered mail, return receipt requested,
addressed (a) if to Holder, at such Holder's address as set forth in the heading
to this Agreement, or at such other address as such Holder shall have furnished
to the Company in writing, or (b) if to the Company, at the Company's address
set forth in the heading to this Agreement, or at such other address as the
Company shall have furnished to the Holder in writing.
2.6 Severability. In case any provision of this Agreement shall be invalid,
illegal, or unenforceable, the validity, legality and enforceability of the
remaining provisions of this Agreement or any provision of the other Agreements
shall not in any way be affected or impaired thereby.
2.7 Titles and Subtitles. The titles of the sections and subsections of
this Agreement are for convenience of
4
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Greyrock Capital Registration Rights Agreement
- --------------------------------------------------------------------------------
reference only and are not to be considered in construing this Agreement.
2.8 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
3. Notwithstanding anything to the contrary, this Agreement and the rights
of Purchase (and any assignee or transferee) is fully subordinate to, and shall
not adversely affect, any shareholder rights under the Registration Rights
Agreement, dated as of May 17, 1999, among the Company and the other parties
thereto (as amended from time to time, the "Senior Registration Agreement"). The
Purchaser hereby waives any and all rights hereunder to the extent such rights
in any way adversely affect or interfere in any manner with the rights of the
shareholder under the Senior Registration Agreement. The Shareholders under the
Senior Registration Agreement shall be third party beneficiaries of this Section
entitle to enforce their rights hereunder.
5
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Greyrock Capital Registration Rights Agreement
- --------------------------------------------------------------------------------
Company:
GREENFIELD ONLINE, INC.
By /s/
------------------------------
Rudy Nadilo, President and CEO
By /s/
------------------------------
Jonathan A. Flatow, Secretary
Purchaser:
GREYROCK CAPITAL
/s/
---------------------------------
By: Stephanie Weil
Title: Vice President
6
<PAGE>
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED]
Antidilution Agreement
Issuer: GREENFIELD ONLINE, INC.
Address: 15 River Road, Suite 310
Wilton, Connecticut 06897
Date: December 3, 1999
THIS AGREEMENT is entered into as of the above date by and between GREYROCK
CAPITAL, a Division of Banc of America Commercial Finance Corporation
("Purchaser"), whose address is 10880 Wilshire Blvd. Suite 1850, Los Angeles, CA
90024, and the above Company, whose address is set forth above.
RECITALS
A. Concurrently with the execution of this Antidilution Agreement, the
Purchaser is purchasing from the Company a Warrant to Purchase Class A Common
Stock (the "Warrant") pursuant to which Purchaser has the right to acquire from
the Company the Shares (as defined in the Warrant).
B. By this Antidilution Agreement, the Purchaser and the Company desire to
set forth the adjustment in the number of Shares issuable upon exercise of the
Warrant as a result of a Diluting Issuance.
C. Capitalized terms used herein shall have the same meaning as set forth
in the Warrant.
NOW, THEREFORE, in consideration of the mutual promises, covenants and
conditions hereinafter set forth, the parties hereto mutually agree as follows:
1. Definitions. As used in this Antidilution Agreement, the following terms
have the following respective meanings:
(a) "Option" means any right, option, or warrant to subscribe for,
purchase, or otherwise acquire common stock or Convertible Securities issued by
the Company after the date of the Warrant.
(b) "Convertible Securities" means any evidences of indebtedness, shares of
stock, or other securities directly or indirectly convertible into or
exchangeable for common stock issued by the Company after the date of the
Warrant.
(c) "Issue" means to grant, issue, sell, assume, or fix a record date for
determining persons entitled to receive, any security (including Options),
whichever of the foregoing is the first to occur.
(d) "Additional Common Shares" means all common stock (including reissued
shares) issued (or deemed to be issued pursuant to Section 2) after the date of
the Warrant. Additional Common Shares does not include, however, (a) any common
stock issued in a transaction described in Sections 2.1 and 2.2 of the Warrant;
(b) securities offered to the public pursuant to an offering by the Company of
its securities to the general public pursuant to a registration statement filed
under the Securities Act of 1933, as amended, (c) any common stock or related
options convertible into such shares of common stock issued to employees,
consultants, officers and directors of the Company as an incentive or in a non
financing transaction (d) stock issued pursuant to any rights or agreement,
including, without limitation, upon conversion of preferred stock or other
convertible securities, options and warrants, provided that the initial sale or
grant by the Company of such rights or agreements shall constitute Additional
Common Shares, (e) securities issued as direct consideration for the acquisition
of another business entity by or merger or consolidation of another business
entity into the Company, and (f) securities issued pursuant to or in connection
with a consolidation or merger of the Company with or into any other corporation
or corporations or other corporate reorganization immediately after which the
shareholders of the Company hold less than fifty percent (50%) of the voting
power of the surviving corporation, or a sale or a series of sales or related
1
<PAGE>
Greyrock Capital Antidilutive Agreement
- --------------------------------------------------------------------------------
transactions after which all or substantially all of the assets of the Company
are sold.
2. Deemed Issuance of Additional Common Shares. The shares of common stock
ultimately Issuable upon exercise of an Option (including the shares of common
stock ultimately Issuable upon conversion or exercise of a Convertible Security
Issuable pursuant to an Option) are deemed to be Issued when the Option is
Issued. The shares of common stock ultimately Issuable upon conversion or
exercise of a Convertible Security (other than a Convertible Security Issued
pursuant to an Option) shall be deemed Issued upon Issuance of the Convertible
Security. The maximum amount of common stock Issuable is determined without
regard to any future adjustments permitted under the instrument creating the
Options or Convertible Securities.
3. Adjustment of Warrant Price for Diluting Issuances.
3.1 Weighted Average Adjustment. If the Company Issues Additional Common
Shares after the date of the Warrant and the consideration per Additional Common
Share (determined pursuant to Section 9) is less than the Warrant Price in
effect immediately before such Issue, the Warrant Price in effect immediately
before such Issue shall be reduced, concurrently with such Issue, to a price
(calculated to the nearest hundredth of a cent) determined by multiplying the
Warrant Price by a fraction:
(a) the numerator of which is the amount of common stock outstanding
immediately before such Issue plus the amount of common stock that the aggregate
consideration received by the Company for the Additional Common Shares would
purchase at the Warrant Price in effect immediately before such Issue, and
(b) the denominator of which is the amount of common stock outstanding
immediately before such Issue plus the number of such Additional Common Shares.
3.2 Adjustment of Number of Shares. Upon each adjustment of the Warrant
Price, the number of Shares issuable upon exercise of the Warrant shall be
increased to equal the quotient obtained by dividing (a) the product resulting
from multiplying (i) the number of Shares issuable upon exercise of the Warrant
and (ii) the Warrant Price, in each case as in effect immediately before such
adjustment, by (b) the adjusted Warrant Price.
3.3 Securities Deemed Outstanding. For the purpose of this Section 3, all
securities issuable upon exercise of any outstanding Convertible Securities or
Options, warrants, or other rights to acquire securities of the Company shall be
deemed to be outstanding.
4. No Adjustment for Issuances Following Deemed Issuances. No adjustment to
the Warrant Price shall be made upon the exercise of Options or conversion of
Convertible Securities.
5. Adjustment Following Changes in Terms of Options or Convertible
Securities. If the consideration payable to, or the amount of common stock
Issuable by, the Company increases or decreases, respectively, pursuant to the
terms of any outstanding Options or Convertible Securities, the Warrant Price
shall be recomputed to reflect such increase or decrease. The recomputation
shall be made as of the time of the Issuance of the Options or Convertible
Securities. Any changes in the Warrant Price that occurred after such Issuance
because other Additional Common Shares were Issued or deemed Issued shall also
be recomputed.
6. Recomputation Upon Expiration of Options or Convertible Securities. The
Warrant Price computed upon the original Issue of any Options or Convertible
Securities, and any subsequent adjustments based thereon, shall be recomputed
when any Options or rights of conversion under Convertible Securities expire
without having been exercised. In the case of Convertible Securities or Options
for common stock, the Warrant Price shall be recomputed as if the only
Additional Common Shares Issued were the shares of common stock actually Issued
upon the exercise of such securities, if any, and as if the only consideration
received therefor was the consideration actually received upon the Issue,
exercise or conversion of the Options or Convertible Securities. In the case of
Options for Convertible Securities, the Warrant Price shall be recomputed as if
the only Convertible Securities Issued were the Convertible Securities actually
Issued upon the exercise thereof, if any, and as if the only consideration
received therefor was the consideration actually received by the Company
(determined pursuant to Section 9), if any, upon the Issue of the Options for
the Convertible Securities.
7. Limit on Readjustments. No readjustment of the Warrant Price pursuant to
Sections 5 or 6 shall increase the Warrant Price more than the amount of any
decrease made in respect of the Issue of any Options or Convertible Securities.
8. 30 Day Options. In the case of any Options that expire by their terms
not more than 30 days after the date of Issue thereof, no adjustment of the
Warrant Price shall be made until the expiration or exercise of all such
Options.
9. Computation of Consideration. The consideration received by the Company
for the Issue of any Additional Common Shares shall be computed as follows:
(a) Cash shall be valued at the amount of cash received by the Corporation,
excluding amounts paid or payable for accrued interest or accrued dividends.
(b) Property. Property other than cash shall be computed at the fair market
value thereof at the time of the Issue as determined in good faith by the Board
of Directors of the Company.
2
<PAGE>
Greyrock Capital Antidilutive Agreement
- --------------------------------------------------------------------------------
(c) Mixed Consideration. The consideration for Additional Common Shares
Issued together with other property of the Company for consideration that covers
both shall be determined in good faith by the Board of Directors.
(d) Options and Convertible Securities. The consideration per Additional
Common Share for Options and Convertible Securities shall be determined by
dividing:
(i) the total amount, if any, received or receivable by the Company for the
Issue of the Options or Convertible Securities, plus the minimum amount of
additional consideration (as set forth in the instruments relating thereto,
without regard to any provision contained therein for a subsequent adjustment of
such consideration) payable to the Company upon exercise of the Options or
conversion of the Convertible Securities, by
(ii) the maximum amount of common stock (as set forth in the instruments
relating thereto, without regard to any provision contained therein for a
subsequent adjustment of such number) ultimately Issuable upon the exercise of
such Options or the conversion of such Convertible Securities.
10. General.
10.1 Governing Law. This Antidilution Agreement shall be governed in all
respects by the laws of the State of New York.
10.2 Successors and Assigns. Except as otherwise expressly provided herein,
the provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators of the parties hereto.
10.3 Entire Agreement. Except as set forth below, this Antidilution
Agreement and the other documents delivered pursuant hereto constitute the full
and entire understanding and agreement between the parties with regard to the
subjects hereof and thereof.
10.4 Notices. etc. All notices and other communications required or
permitted hereunder shall be in writing and shall be mailed by first class mail,
postage prepaid, certified or registered mail, return receipt requested,
addressed (a) if to Purchaser at Purchaser's address as set forth in the heading
to this Agreement, or at such other address as Purchaser shall have furnished to
the Company in writing, or (b) if to the Company, at the Company's address set
forth in the heading to this Agreement, or at such other address as the Company
shall have furnished to the Purchaser in writing.
10.5 Severability. In case any provision of this Antidilution Agreement
shall be invalid, illegal, or unenforceable, the validity, legality and
enforceability of the remaining provisions of this Antidilution Agreement shall
not in any way be affected or impaired thereby.
10.6 Titles and Subtitles. The titles of the sections and subsections of
this Agreement are for convenience of reference only and are not to be
considered in construing this Antidilution Agreement.
10.7 Counterparts. This Antidilution Agreement may be executed in any
number of counterparts, each of which shall be an original, but all of which
together shall constitute one instrument.
3
<PAGE>
Greyrock Capital Antidulition Agreement
- --------------------------------------------------------------------------------
Company:
GREENFIELD ONLINE, INC.
By /s/
-------------------------------
Rudy Nadilo, President and CEO
By /s/
-------------------------------
Jonathan A. Flatow, Secretary
Purchaser:
GREYROCK CAPITAL
/s/
--------------------------------
By: Stephanie Weil
Title: Vice President
<PAGE>
THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED, OR
OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT
OR AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE CORPORATION AND ITS
COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.
- --------------------------------------------------------------------------------
WARRANT TO PURCHASE STOCK
Warrant to Purchase 83,904 Issue Date: December 3, 1999
Shares of the Class A Common Expiration Date: December 3, 2004
Stock of Greenfield Online, Inc. Initial Exercise Price: $7.15 per share
THIS WARRANT CERTIFIES THAT, for the agreed upon value of $1.00 and for other
good and valuable consideration, GREYROCK CAPITAL, a Division of Banc of America
Commercial Finance Corporation ("Holder") is entitled to purchase the number of
fully paid and non-assessable shares of the Class A common stock (the "Shares")
of Greenfield Online, Inc., a Connecticut corporation (the "Company") at the
initial exercise price per Share (the "Warrant Price") all as set forth above
and as adjusted pursuant to Article 2 of this Warrant, subject to the provisions
and upon the terms and conditions set forth in this Warrant.
ARTICLE 1. EXERCISE.
1.1 Method of Exercise. Holder may exercise this Warrant by delivering a
duly executed Notice of Exercise in substantially the form attached as Appendix
1 to the principal office of the Company. Unless Holder is exercising the
conversion right set forth in Section 1.2, Holder shall also deliver to the
Company a check for the aggregate Warrant Price for the Shares being purchased.
1.2 Conversion Right. In lieu of exercising this Warrant as specified in
Section 1.1, Holder may from time to time convert this Warrant, in whole or in
part, into a number of Shares determined by dividing (a) the aggregate fair
market value of the Shares or other securities otherwise issuable upon exercise
of this Warrant minus the aggregate Warrant Price of such Shares by (b) the fair
market value of one Share. The fair market value of the Shares shall be
determined pursuant Section 1.4.
1.3 Fair Market Value. If the Shares are traded in a public market, the
fair market value of the Shares shall be the closing price of the Shares (or the
closing price of the Company's stock into which the Shares are convertible)
reported for the business day immediately before Holder delivers its Notice of
Exercise to the Company. If the Shares are not traded in a public market, the
Board of Directors of the Company shall determine fair market value in its
reasonable good faith judgment. The foregoing notwithstanding, if Holder advises
the Board of Directors in writing that Holder disagrees with such determination,
then the Company and Holder shall promptly agree upon a reputable investment
banking firm to undertake such valuation. If the valuation of such investment
banking firm is greater than 110% of the amount determined by the Board of
Directors, then all fees and expenses of such investment banking firm shall be
paid by the Company. In all other circumstances, such fees and expenses shall be
paid by Holder.
1.4 Delivery of Certificate and New Warrant. Promptly after Holder
exercises or converts this Warrant, the Company shall deliver to Holder
certificates for the Shares acquired and, if this Warrant has not been fully
exercised or converted and has not expired, a new Warrant representing the
Shares not so acquired.
1.5 Replacement of Warrants. On receipt of evidence reasonably satisfactory
to the Company of the loss, theft, destruction or mutilation of this Warrant
and, in the case of loss, theft or destruction, on delivery of an indemnity
agreement reasonably satisfactory in form and amount to the Company or, in the
case of mutilation, on surrender and cancellation of this Warrant, the Company
at its expense shall execute and deliver, in lieu of this Warrant, a new warrant
of like tenor.
1.6 Repurchase on Sale, Merger or Consolidation of the Company.
1.6.1. "Acquisition". For the purpose of this Warrant, "Acquisition" means
any sale, license, or other disposition of all or substantially all of the
assets of the Company, or any reorganization, consolidation, or merger of the
Company where the holders of the Company's securities before the transaction
beneficially own less than 50% of the outstanding voting securities of the
surviving entity after the transaction.
1.6.2. Assumption of Warrant. If upon the closing of any Acquisition the
successor entity assumes the obligations of this Warrant, then this Warrant
shall be exercisable for the same securities, cash, and property as would be
payable for the Shares issuable upon exercise of the unexercised portion of this
Warrant as if such Shares were outstanding on the record date for the
Acquisition
1
<PAGE>
THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED, OR
OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT
OR AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE CORPORATION AND ITS
COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.
- --------------------------------------------------------------------------------
and subsequent closing. The Warrant Price shall be adjusted accordingly.
1.6.3. Nonassumption. If upon the closing of any Acquisition the successor
entity does not assume the obligations of this Warrant and Holder has not
otherwise exercised this Warrant in full, then the unexercised portion of this
Warrant shall be deemed to have been automatically converted pursuant to Section
1.2 and thereafter Holder shall participate in the acquisition on the same terms
as other holders of the same class of securities of the Company.
ARTICLE 2. ADJUSTMENTS TO THE SHARES.
2.1 Stock Dividends, Splits, Etc. If the Company declares or pays a
dividend on its common stock (or the Shares if the Shares are securities other
than common stock) payable in common stock, or other securities, subdivides the
outstanding common stock into a greater amount of common stock, or, if the
Shares are securities other than common stock, subdivides the Shares in a
transaction that increases the amount of common stock into which the Shares are
convertible, then upon exercise of this Warrant, for each Share acquired, Holder
shall receive, without cost to Holder, the total number and kind of securities
to which Holder would have been entitled had Holder owned the Shares of record
as of the date the dividend or subdivision occurred.
2.2 Reclassification, Exchange or Substitution. Upon any reclassification,
exchange, substitution, or other event that results in a change of the number
and/or class of the securities issuable upon exercise or conversion of this
Warrant, Holder shall be entitled to receive, upon exercise or conversion of
this Warrant, the number and kind of securities and property that Holder would
have received for the Shares if this Warrant had been exercised immediately
before such reclassification, exchange, substitution, or other event. Such an
event shall include any automatic conversion of the outstanding or issuable
securities of the Company of the same class or series as the Shares to common
stock pursuant to the terms of the Company's Articles of Incorporation upon the
closing of a registered public offering of the Company's common stock. The
Company or its successor shall promptly issue to Holder a new Warrant for such
new securities or other property. The new Warrant shall provide for adjustments
which shall be as nearly equivalent as may be practicable to the adjustments
provided for in this Article 2 including, without limitation, adjustments to the
Warrant Price and to the number of securities or property issuable upon exercise
of the new Warrant. The provisions of this Section 2.2 shall similarly apply to
successive reclassifications, exchanges, substitutions, or other events.
2.3 Adjustments for Combinations, Etc. If the outstanding Shares are
combined or consolidated, by reclassification or otherwise, into a lesser number
of shares, the Warrant Price shall be proportionately increased.
2.4 Adjustments for Diluting Issuances. The Warrant Price and the number of
Shares issuable upon exercise of this Warrant or, if the Shares are Preferred
Stock, the number of shares of common stock issuable upon conversion of the
Shares, shall be subject to adjustment, from time to time in the manner set
forth on Exhibit A.
2.5 No Impairment. The Company shall not, by amendment of its Articles of
Incorporation or through a reorganization, transfer of assets, consolidation,
merger, dissolution, issue, or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms to be
observed or performed under this Warrant by the Company, but shall at all times
in good faith assist in carrying out of all the provisions of this Article 2 and
in taking all such action as may be necessary or appropriate to protect Holder's
rights under this Article against impairment. If the Company takes any action
affecting the Shares or its common stock other than as described above that
adversely affects Holder's rights under this Warrant, the Warrant Price shall be
adjusted downward and the number of Shares issuable upon exercise of this
Warrant shall be adjusted upward in such a manner that the aggregate Warrant
Price of this Warrant is unchanged.
2.6 Fractional Shares. No fractional Shares shall be issuable upon exercise
or conversion of the Warrant and the number of Shares to be issued shall be
rounded down to the nearest whole Share. If a fractional share interest arises
upon any exercise or conversion of the Warrant, the Company shall eliminate such
fractional share interest by paying Holder amount computed by multiplying the
fractional interest by the fair market value of a full Share.
2.7 Certificate as to Adjustments. Upon each adjustment of the Warrant
Price, the Company at its expense shall promptly compute such adjustment, and
furnish Holder with a certificate of its Chief Financial Officer setting forth
such adjustment and the facts upon which such adjustment is based. The Company
shall, upon written request, furnish Holder a certificate setting forth the
Warrant Price in effect upon the date thereof and the series of adjustments
leading to such Warrant Price.
ARTICLE 3. REPRESENTATIONS AND COVENANTS OF THE COMPANY.
3.1 Representations and Warranties. The Company hereby represents and
warrants to the Holder as follows:
(a) Shares which may be issued upon the exercise of the purchase right
represented by this Warrant, and all securities, if any, issuable upon
conversion of the Shares, shall, upon issuance, be duly authorized, validly
issued, fully paid and non-assessable, and free of any liens and encumbrances
except for restrictions on transfer provided
2
<PAGE>
THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED, OR
OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT
OR AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE CORPORATION AND ITS
COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.
- --------------------------------------------------------------------------------
for herein or under applicable federal and state securities laws.
(b) The capitalization of the Company at December 3, 1999, was as set forth
on Schedule 3.1(b) attached hereto, and on the issue date hereof the Shares
shall represent no less than 0.6% of the Company's common stock on a fully
diluted basis.
3.2 Notice of Certain Events. If the Company proposes at any time (a) to
declare any dividend or distribution upon its common stock, whether in cash,
property, stock, or other securities and whether or not a regular cash dividend;
(b) to offer for subscription pro rata to the holders of any class or series of
its stock any additional shares of stock of any class or series or other rights;
(c) to effect any reclassification or recapitalization of common stock; (d) to
merge or consolidate with or into any other corporation, or sell, lease,
license, or convey all or substantially all of its assets, or to liquidate,
dissolve or wind up; or (e) offer holders of registration rights the opportunity
to participate in an underwritten public offering of the company's securities
for cash, then, in connection with each such event, the Company shall give
Holder (1) at least 10 days prior written notice of the date on which a record
will be taken for such dividend, distribution, or subscription rights (and
specifying the date on which the holders of common stock will be entitled
thereto) or for determining rights to vote, if any, in respect of the matters
referred to in (c) and (d) above; (2) in the case of the matters referred to in
(c) and (d) above at least 10 days prior written notice of the date when the
same will take place (and specifying the date on which the holders of common
stock will be entitled to exchange their common stock for securities or other
property deliverable upon the occurrence of such event); and (3) in the case of
the matter referred to in (e) above, the same notice as is given to the holders
of such registration rights.
3.3 Information Rights. So long as the Holder holds this Warrant and/or any
of the Shares, the Company shall deliver to the Holder (a) promptly after
mailing, copies of all notices or other written communications to the
shareholders of the Company, (b) within ninety (90) days after the end of each
fiscal year of the Company, the annual audited financial statements of the
Company certified by independent public accountants of recognized standing or 10
days after the Company's receipt of the same from the independent CPAs,
whichever is later, and (c) within forty-five (45) days after the end of each of
the first three quarters of each fiscal year, the Company's quarterly, unaudited
financial statements.
3.4 Registration Under Securities Act of 1933, as amended. The Company
agrees that the Shares or, if the Shares are convertible into common stock of
the Company, such common stock, shall be subject to the registration rights set
forth on Exhibit B, if attached.
ARTICLE 4. MISCELLANEOUS.
4.1 Term: Notice of Expiration. This Warrant is exercisable, in whole or in
part, at any time and from time to time on or before the Expiration Date set
forth above. The Company shall give Holder written notice of Holder's right to
exercise this Warrant in the form attached as Appendix 2 not more than 90 days
and not less than 30 days before the Expiration Date. If the notice is not so
given, the Expiration Date shall automatically be extended until 30 days after
the date the Company delivers the notice to Holder.
4.2 Legends. This Warrant and the Shares (and the securities issuable,
directly or indirectly, upon conversion of the Shares, if any) shall be
imprinted with a legend in substantially the following form:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHOUT AN
EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE CORPORATION AND ITS COUNSEL THAT SUCH
REGISTRATION IS NOT REQUIRED.
4.3 Compliance with Securities Laws on Transfer. This Warrant and the
Shares issuable upon exercise of this Warrant (and the securities issuable,
directly or indirectly, upon conversion of the Shares, if any) may not be
transferred or assigned in whole or in part without compliance with applicable
federal and state securities laws by the transferor and the transferee
(including, without limitation, the delivery of investment representation
letters and legal opinions reasonably satisfactory to the Company, if reasonably
requested by the Company). In any event, no transfer of the Holder's rights
under this Warrant shall be authorized unless the transferee shall be assuming a
proportionate share of Holder's rights, duties and obligations under a certain
Loan and Security Agreement between the Company and Holder dated December 3,
1999.
4.4 Transfer Procedure. Subject to the provisions of Section 4.2 and 4.3,
Holder may transfer all or part of this Warrant or the Shares issuable upon
exercise of this Warrant (or the securities issuable, directly or indirectly,
upon conversion of the Shares, if any) by giving the Company notice of the
portion of the Warrant being transferred setting forth the name, address and
taxpayer identification number of the transferee and surrendering this Warrant
to the Company for reissuance to the transferee(s) (and Holder if applicable).
Unless the Company is filing financial information with the SEC pursuant to the
Securities Exchange Act of 1934, the Company shall have the right to refuse to
transfer any portion of this Warrant to any person who directly competes with
the Company or any affiliate of any person who competes directly with the
Company or to any person
3
<PAGE>
THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED, OR
OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT
OR AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE CORPORATION AND ITS
COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.
- --------------------------------------------------------------------------------
who owns 5% or more of the stock of any person who competes directly with the
Company.
4.5 Notices. All notices and other communications from the Company to the
Holder, or vice versa, shall be deemed delivered and effective when given
personally or mailed by first-class registered or certified mail, postage
prepaid, at such address as may have been furnished to the Company or the
Holder, as the case may be, in writing by the Company or such holder from time
to time.
4.6 Waiver. This Warrant and any term hereof may be changed, waived,
discharged or terminated only by an instrument in writing signed by the party
against which enforcement of such change, waiver, discharge or termination is
sought.
4.7 Attorneys Fees. In the event of any dispute between the parties
concerning the terms and provisions of this Warrant, the party prevailing in
such dispute shall be entitled to collect from the other party all costs
incurred in such dispute, including reasonable attorneys' fees.
4.8 Governing Law. This Warrant shall be governed by and construed in
accordance with the laws of the State of New York, without giving effect to its
principles regarding conflicts of law.
4
<PAGE>
GREENFIELD ONLINE, INC.
By /s/
------------------------------
Rudy Nadilo, President and CEO
By /s/
------------------------------
Jonathan A. Flatow, Secretary
<PAGE>
Warrant to Purchase Stock
- --------------------------------------------------------------------------------
APPENDIX 1
NOTICE OF EXERCISE
1. The undersigned hereby elects to purchase ____________ shares of the
Common Stock of Greenfield Online, Inc. pursuant to the terms of the attached
Warrant, and tenders herewith payment of the purchase price of such shares in
full.
1. The undersigned hereby elects to convert the attached Warrant into
Shares/cash [strike one] in the manner specified in the Warrant. This conversion
is exercised with respect to _______ of the Shares covered by the Warrant.
[Strike paragraph that does not apply.]
2. Please issue a certificate or certificates representing said shares in
the name of the undersigned or in such other name as is specified below:
-----------------------------------------------------------
(Name)
------------------------------------------------------------
(Address)
3. The undersigned represents it is acquiring the shares solely for its own
account and not as a nominee for any other party and not with a view toward the
resale or distribution thereof except in compliance with applicable securities
laws.
- -------------------------------------
(Signature)
- -------------------------------------
(Date)
APPENDIX 2
NOTICE THAT WARRANT IS ABOUT TO EXPIRE
-------------, --
(Name of Holder)
(Address of Holder)
Attn: Chief Financial Officer
Dear ____________:
This is to advise you that the Warrant issued to you described below will
expire on ________________, 19__.
Issuer:
Issue Date:
Class of Security Issuable:
Exercise Price per Share:
Number of Shares Issuable:
Procedure for Exercise:
Please contact [name of contact person at (phone number)] with any
questions you may have concerning exercise of the Warrant. This is your only
notice of pending expiration.
(Name of Issuer)
By
-------------------------------
Its
------------------------------
<PAGE>
Warrant to Purchase Stock
- --------------------------------------------------------------------------------
EXHIBIT A
ANTI-DILUTION PROVISIONS
Per Anti-Dilution Agreement of even date.
EXHIBIT B
REGISTRATION RIGHTS
Per Registration Rights Agreement of even date.
<PAGE>
AGREEMENT
This is an Agreement ("Agreement") between CommonPlaces LLC ("CP") and
Greenfield Online, Inc. ("Greenfield") known together as "the parties" to this
Agreement.
WHEREAS, Pulsefinder ("PF"), a joint effort between CP and Greenfield, is
an internet site that features non-scientific online public opinion polls of
interest to college students in order to build a database populated by students
from which market research can be conducted and sold to clients interested in
the college market;
WHEREAS, CP has one or more internet sites from which to recruit opt-in
Pulsefinder participants;
WHEREAS, Greenfield performs the design and execution of online qualitative
and quantitative market research and the sale of such research to clients;
WHEREAS, CP desires to have a relationship with Greenfield whose expertise
is the design and execution and sale of online qualitative and quantitative
market research and Greenfield desires to have a relationship with CPs who have
unique reach and presence in the college market;
WHEREAS, the parties desire to enter into an agreement whereby CP shall
recruit opt-in panel participants to the PulseFinder Database and Greenfield
shall perform and sell market research services to third parties;
NOW, THEREFORE, in consideration of the above circumstances and of the
mutual promises and conditions contained herein, the parties agree as follows:
1. Term. Unless terminated as permitted herein, this Agreement shall be
effective as of the 20th day of January 1998 and shall continue for three (3)
years. The Agreement shall automatically renew for successive two (2) year
periods unless either party within ninety (90) days of the expiration of the
then current term, gives the other party written notice of its intention not to
renew.
2. CP Internet Sites. CP shall provide one or more sites on the world wide
web portion of the Internet (the "CP Internet Sites") offering Internet hub
service for select audiences and in particular, college students and shall be
responsible for recruiting opt-in participants to joint the PF Database.
Recruiting will consist of but not be limited to the following:
a. Registration offer to participate in PF Database shall be in the form
of an opt-in box to be manually checked by the user if the user desires to
become a participant.
b. At CP's discretion, message and/or solicitation via e-mail/newsletter
shall be in the form of a reminder to participate appearing on user's personal
calendar and/or a button
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on pages of mybytes.com promoting participation in PF Database. The parties
shall meet to establish targets for recruitment efforts.
3. Pulsefinder Overview. Pulsefinder is the name of a market research
service and an internet site(s) owned by CP that targets college students
allowing them to participate in non-scientific polls and to opt-in via
registration into the PulseFinder Database ("PF Database") from which market
research can be conducted and the results sold to clients interested in this
market. The PF Database will be part of CP's database of users tagged with a
Pulsefinder opt-in participation flag.
4. Greenfield Service. Greenfield shall be responsible for the design and
execution of on-line market research using the opt-in participants in the PF
Database and the sale of such research to clients (the "Service"). The Service
shall consist of two components: a core group of non-changing questions (the
"Syndicated Research") and research done on demand for third parties which
features highly specific questions (the "Custom Research"). Greenfield shall
establish the rates to be charged for the Syndicated Research and shall notify
CP of such rates. All rates are subject to change at Greenfield's discretion
only. If CP sells any of the Services, it must use Greenfield's Syndicated
Research Rates then in effect or obtain Greenfield's prior written approval with
respect to rates for Custom Research.
5. Revenue. Revenue is generated by (1) the sales of the Service conducted
periodically (i.e., quarterly or monthly) to clients by Greenfield interested in
market research services and (2) through CP's media sponsorship and is payable
to the parties as follows:
a. Syndicated Research. Revenue generated from selling Syndicated
Research will first be applied toward the payment of each party's Expenses (as
defined in Section 6); any remaining revenue will be divided equally between the
parties.
b. Custom Research Revenue. CP will be paid a flat fee of ten percent
(10%) of gross revenue received by Greenfield for any Custom Research projects
utilizing the PF Database ("Custom Research Revenue") for a client sold the
Customer Research services by Greenfield. CP will be paid a flat fee of fifteen
percent (15%) of gross revenue received by Greenfield for any Custom Research
projects utilizing the PF Database ("Custom Research Revenue") for a client sold
the Custom Research services by CP.
c. CP Sales Revenue. Greenfield shall invoice and use all reasonable
commercial efforts to collect all amounts due for sales of Syndicated and Custom
Research sold by CP. On a quarterly basis Greenfield will provide CP with a
statement of revenues collected and outstanding. CP will render all appropriate
assistance in collecting these revenues.
6. Expenses. The Expenses of each party to be recognized for payment
pursuant to Section 5 (a) and (b) will be limited to direct third-party vendor
expenses as they relate to the development and maintenance of the Pulsefinder
internet site. And which shall be paid back to each party on a pro-rata basis
based on each party's expenses. Neither party will charge the other for any
internal overhead or staffing costs. No party shall incur Expenses without
informing the other party, and each party will keep a record of Expenses and
review once a
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quarter. CP will submit the Expenses eligible for payment under this Agreement
within 10 days of the end of each calendar quarter.
7. Payments. Payments pursuant to this Agreement shall be made within
thirty (30) days of the end of each calendar quarter in which such revenue is
received by the party owing such payment in accordance with Section 5. All
payments shall be made in U.S. dollars. Each party shall be responsible for any
income and other taxes required under applicable laws arising out of monies
received by each of them pursuant to this Agreement and Greenfield shall be
responsible for the collection, accounting and payment of sales taxes in
connection with the sale of any Services. Each party shall submit with each
payment made pursuant to this Section a detailed report of the calculation of
each such payment.
8. Records and Audit. Each party shall keep and maintain true and complete
records relating to Expenses payable pursuant to this Agreement and payments due
pursuant to this Agreement in sufficient detail to enable the amounts payable to
either party to be accurately determined. Such books and records shall be made
available upon reasonable notice, at reasonable times during regular business
hours, for inspection by each party, or its designated representative. The
parties shall maintain such books and records for at least one (1) year after
the expiration or termination of this Agreement. Each party shall bear its own
expenses in conducting an audit unless the other party has underpaid by more
than five percent (5%) of the total amount due for the period of the audit, in
which case the party being audited shall bear the reasonable cost of the audit.
9. Joint Marketing. The parties agree to work together and to use
reasonable commercial efforts to market Pulsefinder's service as set forth in
this Agreement. When offering Internet market research services to a client CP
shall refer such client to Greenfield to perform market research services on an
exclusive basis. Revenues received from client for market research services
shall be remitted to the parties as set forth in Section 7.
10. Additional Business. It is envisioned that as the PF Database grows
Greenfield and CP may create additional research products beyond those outlined
by this Agreement (e.g., Syndicated Research and household panel cells within
Pulsefinder). Depending on the type of research products the additional business
encompasses, revenue will be allocated using the formula for either the
Syndicated Revenue or Custom Revenue in either case to be mutually agreed upon
by the parties.
11. The Joint Service. CP shall publicize the Pulsefinder site through its
media, sign up students through on campus events to the PF Database, secure
prizes from marketers for PF Database registrants, and implement winner
selection and prize fulfillment. CP shall also be able to market Pulsefinder
research to its clients in accordance with the provisions of Section 5. CP shall
forward client leads to Greenfield and assist in the creation of research as
required. Greenfield's primary responsibility shall be the design and execution
of market research and the sale of such research to clients. Greenfield shall
advise CP in the development of Pulsefinder as requested from time to time by
CP.
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12. User Information. All user information is CP's confidential information
and the property of CP. Greenfield and Pulsefinder shall not use (including but
not limited to collect, gather, compile, retain, store, sell, lease, disclose,
publish) any information about or relating to users except in the normal and
proper course of performing pursuant to this Agreement, or with CP's express
prior written consent. Greenfield and Pulsefinder shall not use user information
for marketing, advertising, promotion or selling purposes except as expressly
permitted by this Agreement or with CP's express prior written consent.
Greenfield and Pulsefinder shall turn over all user information it gathers to
CP. Greenfield and Pulsefinder may retain such user information as may be
necessary to perform its obligations pursuant to this Agreement and for user
customer service purposes and official record keeping (such as sales tax
records).
13. Exclusivity.
a. During the term of this Agreement, Greenfield shall not engage the
services of another provider of one or more sites on the Internet offering
services similar to those provided by the CP Internet Sites as of the date of
this Agreement. Should Greenfield desire to work with Internet sites offering
services similar to those provided by CP Greenfield shall obtain prior written
approval of CP.
b. During the term of this Agreement, Greenfield shall have exclusive
access, marketing and sales rights to the PF Database (and any expansions
thereof as contemplated by Section 10) for the purpose of performing Syndicated
and Custom Market Research.
14. Limitations on Service. The parties shall not place or cause to be
placed on or in connection with the Pulsefinder internet site or database
anything which is obscene, threatening, malicious, or which infringes on or
violates any applicable law or regulation or any proprietary, contract, moral,
privacy or other third party right, or which otherwise exposes itself and/or the
other party to civil or criminal liability. A breach of this provision by either
party shall be a material breach of this Agreement.
15. Compliance with Laws. The parties shall comply with all applicable
laws, rules and regulations, including any Internet regulations or policies and
applicable export laws, of the United States in connection with their
performance pursuant to this Agreement.
16. Proprietary Rights.
a. As between Greenfield and CP, the Internet market research service
analysis shall remain the sole and exclusive property of Greenfield and/or its
suppliers, including, without limitation, all copyrights, trademarks, patents,
trade secrets, and any other proprietary rights. Nothing in this Agreement shall
be construed to grant CP any ownership right in, or license to, Greenfield's
Internet market research service analysis.
b. As between Greenfield and CP, CP's Internet sites, user data and the
content and services featured therein and thereon shall remain the sole and
exclusive property of CP and/or its suppliers, including, without limitation,
all copyrights, trademarks, patents, trade secrets, and any other proprietary
rights. Nothing in this Agreement shall be construed to grant
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Greenfield any ownership right in, or license to, CP's Internet sites and the
content and service featured therein and thereon.
17. Trademark Usage.
a. Greenfield Marks. Greenfield hereby grants to CP during the term of
this Agreement a worldwide, nonexclusive, nontransferable non-assignable right
to use Greenfield's trademarks as specified in this Agreement in connection with
the Service featured on CP's Internet sites. All such use of Greenfield's
trademarks shall inure to the benefit of Greenfield. Nothing in this Agreement
shall create any further right, title or interest for CP in Greenfield's
trademarks or in any of Greenfield's other names, trademarks, service marks,
design marks, symbols and/or other indicia of origin and no use of such will be
made by CP for any purpose without the prior written approval of Greenfield. CP
shall use Greenfield's trademarks in accordance with such reasonable guidelines
as Greenfield may provide to CP from time to time. CP agrees to cooperate with
Greenfield in facilitating the monitoring and control of the use of Greenfield's
trademarks, and to supply Greenfield with samples of use upon written request.
All uses of Greenfield's trademarks shall be subject to Greenfield's prior
written approval. CP shall not modify any of Greenfield's trademarks without
Greenfield's prior written approval. CP shall not use any name or mark
substantially similar to a Greenfield name or mark as such to cause confusion in
the mind of a reasonable person as part of any domain name without prior written
approval of Greenfield. This shall not apply to any name or marks commercially
used by CP prior to the execution date of this Agreement.
b. CP Marks. CP shall be the sole owner of the Pulsefinder
trademark(s). CP hereby grants to Greenfield during the term of this Agreement a
worldwide, nonexclusive, nontransferable non-assignable right to use CP's and
the Pulsefinder trademarks as specified in this Agreement in connection with the
Service featured on CP's Internet sites (together "CP Trademarks"). All such use
of the CP Trademarks shall inure to the benefit of CP. Nothing in this Agreement
shall create any further right, title or interest for Greenfield in CP's
Trademarks or in any of CP's other names, trademarks, service marks, design
marks, symbols and/or other indicia or origin and no use of such will be made by
Greenfield for any purpose without the prior written approval of CP. Greenfield
shall use CP's Trademarks in accordance with such reasonable guidelines as CP
may provide to Greenfield from time to time. Greenfield agrees to cooperate with
CP in facilitating the monitoring and control of the use of CP's Trademarks and
to supply CP with samples of use upon written request. All uses of CP's
Trademarks shall be subject to CP's prior written approval. Greenfield shall not
use any name or mark substantially similar to a CP name or mark as such to cause
confusion in the mind of a reasonable person as part of any domain name without
prior written approval of CP. This shall not apply to any name or marks
commercially used by Greenfield prior to the execution date of this Agreement.
c. The parties shall, upon the expiration or termination of this
Agreement, cease and desist from all use of all other party's marks.
18. Ownership of Pulsefinder Database Records. CP shall be the sole owner
of all records related to Pulsefinder participants. Any members of the PF
Database who also join Greenfield's database will not be considered exclusive
property of Pulsefinder. Greenfield
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agrees it shall not knowingly solicit members of the PF Database for
participation in Greenfield's proprietary database without the prior approval
from CP. CP will make best efforts to continue the relationship with Pulsefinder
participants beyond the college time period. Together Greenfield and CP will
work to develop additional research projects to field to the "beyond college" PF
participants. CP agrees that Greenfield will have the exclusive rights to
conduct all market research on this "beyond college" PF database. In the event
that this Agreement is terminated pursuant to Sections 35, 36 or 37 Greenfield
shall immediately deliver to CP the computer records containing all current and
historical PF Database records, including all current and prior students. Once
such records have been delivered to CP and CP has confirmed the contents of such
records, Greenfield shall purge the records from their hardware and software
systems.
19. Availability of CP's Internet Sites. CP's Internet sites provided in
connection with a joint service shall be accessible to registered users of such
sites via the WWW portion of the Intern twenty-four (24) hours a day, seven (7)
days a week, except for scheduled maintenance and/or required repairs, and
except for any loss or interruption due to causes beyond the control of CP or
which are not reasonably foreseeable by CP, including, but not limited to,
interruption or failure of telecommunication or digital transmission links and
Internet slow-downs or failures.
20. Availability of Pulsefinder's Internet Access Service. Pulsefinder's
Internet access service provided in connection with a joint service shall be
accessible to registered users of such service via the WWW portion of the
Internet twenty-four (24) hours a day, seven (7) days a week, except for
scheduled maintenance and/or required repairs, and except for any loss or
interruption due to causes beyond the control of Pulsefinder or which are not
reasonably foreseeable by Pulsefinder, including, but not limited to,
interruption or failure of telecommunication or digital transmission links and
Internet slow-downs or failures.
21. Confidentiality. In connection with performing pursuant to this
Agreement, the parties acknowledge that they may disclose and/or receive
confidential information proprietary to the other party.
a. "Confidential information" includes, but is not limited to, all
information proprietary to CP or to Greenfield, whether or not reduced to
writing or other tangible medium of expression, and whether or not patented,
patentable, capable of trade secret protection, or protected as an unpublished
or published work under the United States Copyright Act of 1976 as amended.
Confidential information also includes information relating to the intellectual
property and business practices of CP or Greenfield. Confidential Information
also includes comparable information that CP or Greenfield may receive or has
received from others they do business with.
b. "Intellectual Property" includes information relating to research
and development, inventions, discoveries, developments, improvements, methods
and processes, know-how, drawings, blueprints, specifications, product briefs,
algorithms, computer programs and software, compositions, works, concepts,
designs, ideas, prototypes, models, samples, screens, molds, patents,
copyrights, trademarks, trade names, trade secrets, formulate, writings, notes,
and patent, trademark, and copyright applications.
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c. "Business practices" includes information relating to intellectual
property, business plans, financial information, products, services,
manufacturing processes and methods, costs, sources of supply, advertising and
marketing plans, customer lists, sales, profits, pricing methods, personnel, and
business relationships.
d. This Agreement and the terms thereof shall be confidential
information.
e. Confidential information does not include information which (i) was
already known to the other party, (ii) becomes generally available to the public
other than through a breach of this Agreement, (iii) is furnished to the other
party by a third party who is lawfully in possession of such information and who
lawfully conveys that information, or (iv) is subsequently developed by the
receiving party independently of the information received from the disclosing
party of (v) is required to be disclosed pursuant to judicial or administrative
process or order.
22. Treatment and Protection of Confidential Information. The parties agree
to take reasonable steps to protect the other's confidential information. The
parties agree not to: (a) use, except as required by the normal and proper
course of performing under this Agreement, (b) disclose, (c) copy, or (d) allow
access to, the other's confidential information without express prior written
consent or as may be required by law or by action of a competent government
authority subject to the party compelled to disclose good faith efforts to meet
such requirement subject to a confidentiality agreement or protective order.
These restrictions will continue to apply as long as the confidential nature of
the information is maintained and shall survive the expiration or termination of
this Agreement for a period of three (3) years.
23. No Guarantees. There are no guarantees whatsoever made by either party
as to the results of its efforts in connection with marketing the services of
each other or in connection with the services each will provide for joint
service. There are no warranties, promises or statements made by either party
except as specifically stated herein with respect to any matter. Neither party
has made any affirmation of fact or promise relating to the services or duties
that have become any basis of this Agreement other than as stated herein, and
the parties acknowledge that they have relied on no warranties, promise or
statements other than those expressly set forth in this Agreement. The parties
acknowledge that any estimates, projections, or forecasts provided to it by or
on behalf of the other party are only estimates and are not representations that
such estimates will be realized.
24. No Recruitment. During the term of this Agreement and for a period of
one year after the completion and/or termination of this Agreement, CP and
Greenfield shall not without the express written permission of the other party:
(a) hire or assist anyone else in hiring any employee of the other party; (b)
seek to persuade any employee of the other party to discontinue employment or to
become engaged or employed in any business which is (directly or indirectly) in
competition with the other party; or (c) seek to persuade any independent
contractor to discontinue a relationship with the other party.
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25. Publicity. Except in the course of performing pursuant to this
Agreement, the parties will not publicize this Agreement, the terms hereof or
the efforts to be or made in connection with performing pursuant to this
Agreement without the express prior written permission of the other party.
26. WARRANTY DISCLAIMER. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT,
THE PARTIES MAKE NO WARRANTIES HEREUNDER AND EXPRESSLY DISCLAIM ALL OTHER
WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, WARRANTIES OF
NON-INFRINGEMENT, MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
27. LIABILITY LIMITATION. EXCEPT AS SET FORTH WITH RESPECT TO THE
INDEMNIFICATION SECTION BELOW, THE PARTIES SHALL HAVE NO LIABILITY TO EACH OTHER
FOR UNAUTHORIZED ACCESS TO, OR ALTERATION, THEFT OR DESTRUCTION OF, THE SERVICE
AND/OR ANY INTERNET SITE OR AREA FEATURING THE SERVICE, OR OTHERWISE FOR
CONSEQUENTIAL, EXEMPLARY, SPECIAL, INCIDENTAL, OR PUNITIVE DAMAGES EVEN IF
ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
28. Indemnification.
a. By Greenfield. With respect to claims or actions against one or both
parties by third parties insofar as such claim, demand or action is attributable
to the acts or omissions of Greenfield or a breach by Greenfield of a
representation and/or warranty made in this Agreement, Greenfield shall (i)
indemnify CP against any liability, cost, loss, or expense of any kind; and (ii)
hold harmless CP and save it from any liability, cost, loss, or expense of any
kind. CP shall have the right to select and control legal counsel for the
defense of any such claim, demand or action; however, Greenfield must approve
any settlement of any such claim, demand or action to the extent that such
settlement imposes any restrictions on or requires Greenfield to contribute
financially to such settlement.
b. By CP. With respect to claims or actions against one or both parties
by third parties insofar as such claim, demand or action is attributable to the
acts or omissions of CP or a breach by CP of a representation and/or warranty
made in this Agreement, CP shall (i) indemnify Greenfield against any liability,
cost, loss, or expense of any kind; and (ii) hold harmless Greenfield and save
it from any liability, cost, loss, or expense of any kind. Greenfield shall have
the right to select and control legal counsel for the defense of any such claim,
demand or action and for any negotiations relating to any such claim, demand or
action; however, CP must approve any settlement of any such claim, demand or
action to the extent that such settlement imposes any restrictions on or
requires CP to contribute financially to such settlement.
29. Dispute Resolution. If any dispute arises under this Agreement, the
parties shall make a good faith effort to resolve the dispute before taking any
action. The parties shall meet to discuss the dispute no later than thirty (30)
days after either party gives written notice to the other party that such a
dispute exists. Such meeting may be held telephonically if travel is impractical
for either party. At such meeting, Greenfield and an officer of CP who has
authority
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to resolve the dispute shall be in attendance. No action, suit, arbitration or
other proceeding may be commenced before the parties have met pursuant to this
provision unless immediate injunctive relief is being sought, in which case the
noted meeting shall take place at the earliest opportunity after such immediate
injunctive relief is sought.
30. Waiver of Jury Trial. The parties hereby agree to waive their
respective rights to a jury trial of any claim or cause of action related to or
arising out of this Agreement. The scope of the waiver is intended to be all
encompassing of any and all disputes that may be filed in any court and that
relate to the subject matter herein, including without limitation, contract
claims, tort claims, breach of duty claims, and all other common law and
statutory claims. The parties each acknowledge that the waiver is a material
inducement for each party to enter into a business relationship, that each party
has already relied on the waiver in entering into this Agreement and that each
will continue to rely on the waiver in their related future dealings. Each party
further warrants and represents that each has had the opportunity to have legal
counsel review the waiver. The waiver is irrevocable, meaning that it may not be
modified either orally or in writing, and the waiver shall apply to any
subsequent amendments, renewals, supplements or modifications to this Agreement.
In the event of litigation, this Agreement may be filed as written consent to a
trial by court.
31. Prevailing Party. If any legal action or other proceeding is brought
for a breach of this Agreement or any of the warranties herein, the prevailing
party shall be entitled to recover its reasonable attorneys' fees and other
costs incurred in bringing such action or proceeding, in addition to any other
relief to which such party may be entitled.
32. Independent Contractor. The parties, CP and Greenfield, are and have
been contracted with each other as independent contractors. Neither party
undertakes by this Agreement, or otherwise, to perform any of the obligations of
the other. In no way is one party to be construed as an agent, or acting as an
agent of the other in any respect.
33. Prior Obligations. CP and Greenfield represent and warrant that
entering into and performing under this Agreement does not conflict with any
prior obligations to third parties.
34. Taxes. Each party shall be responsible for any income and other taxes
required under applicable laws arising out of the monies received by each of
them pursuant to this Agreement.
35. Termination in the Event of a Material Breach. In addition to the
specific termination provisions of this Agreement, either party may terminate
this Agreement at any time in the event of a material breach of the terms herein
by the other party, if such party shall fail to cure such material breach within
fifteen (15) days of written notice of such breach.
36. Termination Due to Insolvency. If either party: (a) commences or
becomes the subject of any case or proceeding under the bankruptcy, insolvency
or equivalent laws of any country in the Territory; (b) has appointed for it or
for any substantial part of its property a court-appointed receiver, liquidator,
assignee, trustee, custodian, sequestrator or other similar official; (c) makes
an assignment for the benefit of its creditors; (d) defaults on any secured
obligation;
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(e) fails generally to pay its debts as they become due; or (f) takes corporate
action in furtherance of any of the foregoing (collectively, herein referred to
as "Events of Insolvency"), then, in each case, the party experiencing such an
Event of Insolvency shall immediately give notice of such event to the other
party. Whether or not such notice is given, the other party shall have the
right, to the fullest extent permitted under applicable law, following the
occurrence of any Event of Insolvency and without prejudice to any other rights
it may have, at any time thereafter to terminate this Agreement, effective
immediately upon giving notice to party experiencing such an Event of
Insolvency.
37. Termination upon Change of Business. If either party, either in a
single transaction or in a series of related transactions, and either directly
or indirectly: (a) sells, or otherwise disposes of, all or substantially all of
its business or assets; or (b) transfers effective voting or other business
control of itself (a "triggering transaction"), then the other party shall have
the right, without prejudice to any other rights it may have, to terminate this
Agreement, effective immediately upon giving notice to the other party, provided
that such notice is given not later than sixty (60) days following the date of
the triggering transaction. A public offering by either or both parties and/or
the merger of CP and Network Event Theater, Inc. shall not be considered a
triggering transaction pursuant to this Section.
38. Termination in the Event of a Material Breach. In addition to the
specific termination provisions of this Agreement, either party may terminate
this Agreement at any time in the event of a material breach of the terms herein
by the other party, if such party shall fail to cure such material breach within
fifteen (15) days of notice of such breach.
39. Waiver of Breach. A breach of any provision of this Agreement may only
be waived in writing and the waiver of such breach shall not operate or be
construed as a waiver of any subsequent breach.
40. Severability. If any provision of this Agreement should, for any
reason, be held invalid or unenforceable in any respect, the remainder of this
Agreement shall be enforced to the full extent permitted by law. A court of
competent jurisdiction is hereby empowered to modify the invalid or
unenforceable provision to make it valid and enforceable.
41. Performance Excused. The parties shall be excused from delays in
performing or from any failure to perform hereunder to the extent that such
delay or failure result from causes such as war or natural disaster or strike
which are beyond the reasonable control of the party, provided that, in order to
be excused from delay or failure to perform, the party must act diligently to
remedy such delay or failure. In the event such delay continues for five (5)
consecutive days, either party shall have the right to terminate this Agreement.
42. Separation. In the event that this Agreement is terminated, Greenfield
shall immediately deliver to CP computer records containing all current and
historical PF Database records for all Pulsefinder participants. These computer
records shall include all current and historical database records, but
Greenfield will have the right to purchase the names of graduates for a price
equal the market rate for recruiting a qualified respondent at that time to
Greenfield's greater research database. Therefore Greenfield must create and
maintain its database in such a
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manner as to facilitate the transfer of records to CP and the purging of records
as described above.
43. Assignment and Transfer. The parties shall not assign or transfer this
Agreement without the express prior written consent of the other.
44. Bind and Benefit. This Agreement shall bind and benefit the successors
and assigns of the parties.
45. Notice and Delivery. Under this Agreement, if one party is required to
deliver or submit something to the other, or give notice, such delivery and such
notice shall be receivable on business days only by next day courier (such as
Federal Express, DHL, UPS or the like) addressed as set forth below or as may
otherwise be agreed to in writing. Notice shall be deemed given upon receipt.
For CP: Counsel For Greenfield: President
CommonPlaces LLC Greenfield Online, Inc.
810 Memorial Drive 15 River Road
Cambridge, MA 02139 Wilton, CT
with a copy to:
Jonathan A. Flatow, Esq.
Wake, See, Diems & Bryniczka
27 Imperial Ave.
Westport, CT 06880
46. Entire Agreement. This Agreement contains the entire agreement between
the parties as to the subject hereof. This Agreement supersedes all prior oral
and written agreements between the parties as to the subject hereof. This
Agreement may not be modified or amended except by writing signed by an officer
of CP and an officer of Greenfield.
47. Headings. Headings in this Agreement are for the purpose of convenience
only. They are not intended to be a material part of the Agreement, and in the
event of any conflict between the heading and the text, the text shall govern.
48. Governing Law. This Agreement shall be governed by and interpreted in
accordance with the laws of the Commonwealth of Massachusetts, United States of
America without reference to its principles of conflicts of law. The parties
consent to the federal and state courts of the Commonwealth of Massachusetts
having jurisdiction over them.
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IN WITNESS WHEREOF, Greenfield and CP have caused duplicate originals of
this Agreement to be executed on the date(s) set forth below:
COMMONPLACES LLC Greenfield Online, Inc.
/s/ /s/
- ----------------------------------- --------------------------------
Benjamin Bassi printed name: Rudy Nadilo
President & Chief Executive Officer title: President & CEO
Date: Date: 1/28/00
----------------------------- --------------------------
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LEASE
between
WILTON EXECUTIVE CAMPUS ASSOCIATES as Landlord
and
GREENFIELD ONLINE, INC., as Tenant
Address
15 RIVER ROAD
WILTON, CT
Date
October 20, 1999
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LEASE
TABLE OF CONTENTS
ARTICLE 1. GRANT.............................................................1
ARTICLE 2. TERM..............................................................1
ARTICLE 3. RENT AND SECURITY.................................................2
ARTICLE 4. ADDITIONAL RENT FOR ESCALATIONS ..................................3
ARTICLE 5. SERVICES AND UTILITIES............................................7
ARTICLE 6. CONDUCT OF BUSINESS BY TENANT.....................................8
ARTICLE 7. ALTERATIONS, IMPROVEMENTS AND SIGNAGE............................10
ARTICLE 8. INSURANCE........................................................11
ARTICLE 9. CASUALTY.........................................................13
ARTICLE 10. CONDEMNATION.....................................................14
ARTICLE 11. ASSIGNMENT AND SUBLETTING........................................15
ARTICLE 12. DEFAULTS AND REMEDIES............................................17
ARTICLE 13. NONDISTURBANCE AND RIGHTS OF MORTGAGE HOLDERS....................20
ARTICLE 14. NOTICES..........................................................21
ARTICLE 15. MISCELLANEOUS....................................................21
LIST OF EXHIBITS
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Attached to and Made a Part of this Lease
Exhibit A Premises
Exhibit B Legal Description
Exhibit C Rules and Regulations
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LEASE
This Lease is made and entered into as of this 20th day of October,
1999, by and between WILTON EXECUTIVE CAMPUS ASSOCIATES, a Connecticut general
partnership, with its principal place of business at 1300 Post Road East,
Westport, Connecticut (the "Landlord") and GREENFIELD ONLINE, INC., a
Connecticut Corporation with its principal place of business at 274 Riverside
Avenue, Westport, Connecticut (the "Tenant").
ARTICLE 1. GRANT
1.01 Premises. Landlord, for and in consideration of the rents herein
reserved and of the covenants and agreements herein contained on the part of
Tenant to be performed, hereby leases to Tenant and Tenant accepts from
Landlord, certain space shown on Exhibit A attached hereto and made a part
hereof, containing approximately 20,058 rentable square feet consisting of the
following: 3,960 S.F. on the Top Level, East Wing, 6,491 S.F. on Top Level,
North Wing, 6,524 S.F. on the Main Level, North Wing, and 3,083 S.F. on the
Lower Level, West Wing (hereinafter referred to as the "Premises"), located at
15 River Road, Wilton, Connecticut, (the "Building"). The Premises, Building,
the "Common Areas" (defined below) and the land upon which the same are located,
which is legally described in Exhibit B (the "Site"), together with all other
improvements thereon and thereunder are collectively referred to as the
"Project". Tenant agrees to lease the Demised Premises from Landlord in its "as
is" condition and no alterations to the Premises are to be performed by
Landlord.
1.02 Common Areas. Landlord hereby grants to Tenant during the term of
this Lease, a license to use, in common with the others entitled to such use,
the Common Areas as they from time to time exist, subject to the rights, powers
and privileges herein reserved to Landlord. The term "Common Areas" as used
herein will include all areas and facilities outside the Premises that are
provided and designated by Landlord for general use and convenience of Tenant
and other tenants. Common Areas include but are not limited to the hallways,
lobbies, stairways, elevators, pedestrian sidewalks, landscaped areas, loading
areas, roadways, parking areas, rights of way, walking and jogging paths, if
any.
1.03 Parking. Tenant shall be entitled to use the parking facilities at
the Building in common with other Building tenants, but such right shall be
limited to approximately four (4) non-exclusive tenant parking spaces for each
1,000 rentable square feet of Premises, rounded to the nearest whole digit.
Tenant agrees not to overburden the parking facilities and agrees to cooperate
with Landlord and other tenants in the use of parking facilities. Landlord
reserves the right, at any time, to designate parking spaces in the Common Areas
for the handicapped and visitors to the Building and all tenants.
ARTICLE 2. TERM
2.01 Lease Term.
The Premises are leased for a term to commence on October 20, 1999 (the
"Commencement Date"), and shall expire on November 14, 2000 (the "Expiration
Date"). If the Lease shall not commence on the first day of a calendar month,
the Rent and electricity charge for the period between the Commencement Date and
the first day of the following month shall be apportioned at the annual rate
provided herein (based on a 365 day annual period).
(a) The term "Lease Year" shall refer to a period beginning on the date
hereof and ending on the Expiration Date.
2.02 Holdover Tenancy. Tenant acknowledges that if it fails to deliver
possession of the Premises to Landlord upon the expiration or sooner termination
of this Lease, Landlord shall incur substantial economic loss. In the event that
Tenant shall hold the Premises, or any part thereof, after the expiration of the
Lease Term without the prior written consent of the Landlord, such holding shall
constitute and be construed as a tenancy at will only and for the first six (6)
months of such holding over carry a daily rental equal to 125% of the daily
Annual Base Rent payable during the last month, and for all periods after said
six (6) months a daily rental equal to 150% of the daily Annual Base Rent
payable during the last month of the Lease Term, plus 100% of the daily rate of
Additional Rent and other sums due under this Lease during the last month of the
Lease Term. In addition to such increased rental payment and any other
liabilities to Landlord accruing therefrom, Tenant shall indemnify and hold
Landlord harmless from loss or liability resulting from such failure, including,
without limiting the generality of the foregoing, both direct and consequential
liabilities and damages of Landlord arising from claims made by any succeeding
tenant arising due to such failure. Nothing contained herein shall be construed
as Landlord's consent for Tenant's holdover.
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ARTICLE 3. RENT AND SECURITY
3.01 Annual Base Rent. Beginning with the Commencement Date and
continuing throughout the Term, Tenant shall pay to or upon the order of
Landlord an annual rental (the "Annual Base Rent") as set forth below which
shall be payable in consecutive monthly installments on or before the first day
of each calendar month in advance in the monthly amount set forth below:
<TABLE>
<CAPTION>
Annual Annual Base Rent per
Period Base Rent Rentable Square Foot Monthly Base Rent
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<S> <C> <C> <C>
October 20, 1999 - $421,218.00 $21.00 $35,101.50
November 14, 2000
</TABLE>
All payments of Rent shall be made without demand, deduction,
counterclaim, set-off, discount or abatement in lawful money of the United
States of America. If the Commencement Date should occur on a day other than the
first day of a calendar month, or the Expiration Date should occur on a day
other than the last day of a calendar month, then the monthly installment of
Annual Base Rent for such fractional month shall be prorated upon a daily basis
based upon a thirty (30) day month.
3.02 Additional Rent. Tenant shall pay to Landlord all charges and
other amounts required under this Lease and the same shall constitute additional
rent hereunder (herein called "Additional Rent"), including, without limitation,
any sums due resulting from the provisions of Article 5 hereof. All such amounts
and charges shall be payable to Landlord at the place where the Annual Base Rent
is payable. Landlord shall have the same remedies for a default in the payment
of Additional Rent as for a default in the payment of Annual Base Rent. The term
"Rent" as used in this Lease shall mean the Annual Base Rent and the Additional
Rent.
3.03 Place of Payment. The Annual Base Rent and all other sums payable
to Landlord under this Lease shall be paid to Landlord at P.O. Box 703,
Westport, Connecticut 06881, or at such other place as Landlord shall designate
in writing to Tenant from time to time.
3.04 Terms of Payment. Tenant shall pay to Landlord all Annual Base
Rent as provided in Section 4.01 above and Tenant shall pay all Additional Rent
payable under Articles 5 and 6 on the terms provided therein. Except as provided
in this Article 4 and as may otherwise be expressly provided by the terms of
this Lease, Tenant shall pay to Landlord, within fifteen (15) days after
delivery by Landlord to Tenant of bills or statements therefor: (a) sums equal
to all expenditures made and monetary obligations incurred by Landlord under
this Lease for Tenant's account including, without limitation, expenditures made
and obligations incurred in connection with the remedying by Landlord any of
Tenant's defaults pursuant to the provisions of this Lease; (b) sums equal to
all expenditures made and monetary obligations incurred by Landlord, including,
without limitation, expenditures and obligations incurred for reasonable counsel
fees, in collecting or attempting to collect the Rent or any other sum of money
accruing under this Lease or in enforcing or attempting to enforce any rights of
Landlord under this Lease or pursuant to law; and (c) all other sums of money
accruing from Tenant to Landlord under the provisions of this Lease.
3.05 Late Charges. If Tenant shall fail to pay any Annual Base Rent or
Additional Rent within ten (10) days after the date same is due and payable,
Tenant shall pay to Landlord (a) an administrative fee equal to five percent
(5%) of the amount due to cover Landlord's additional administrative costs and
cost of funds resulting from Tenant's failure, and (b) interest on the amount
due from its due date until paid at the lesser of 12% per annum or the maximum
legal rate that Landlord may charge Tenant; provided that, on the first (1st)
occasion only during each Lease Year, no such charges or interest shall be
payable with respect to any delinquent payment if such payment is received by
Landlord within five (5) days following written notice of such failure. Such
charges shall be paid to Landlord together with such unpaid amounts. Such late
payment charge shall not diminish or impair any other remedies available to
Landlord.
3.06 Free Rent Period. The Tenant is hereby granted the privilege of
occupying the premises subject to all of the terms, covenants and conditions of
this lease, including, but not limited to the payment of any utilities and to
the payment of any Additional Rent payable pursuant to this Lease but otherwise
free of the payment of the monthly installment of Annual Base Rent during the
period beginning with the tender of possession of the Premises by the Landlord
to the Tenant and ending on November 19, 1999.
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3.07 Security Deposit.
(a) For the faithful performance of all terms, covenants and
conditions of this Lease, Tenant shall pay to and deposit with Landlord, a
security deposit in the amount of Seventy Five Thousand Dollars and 00/100
($75,000.00) (the "Security Deposit") payable upon the execution of this Lease.
(b) Tenant agrees that Landlord may, without waiving any
of Landlord's other rights and remedies under this
Lease upon the occurrence of any of the Events of
Default described in Article 12 hereof, apply the
Security Deposit (i) to remedy any failure by Tenant
to repair or maintain the Premises or to perform any
other terms, covenants or conditions contained
herein, or (ii) to compensate Landlord for damages
incurred, or to reimburse Landlord as provided
herein, in connection with any such Event of Default.
Should Landlord use any portion of the Security
Deposit to cure any Event of Default by Tenant
hereunder, Tenant shall forthwith replenish the
Security Deposit to the original amount. Landlord
shall not be required to keep the Security Deposit
separate from its general funds, and Tenant shall not
be entitled to interest on any such deposit.
(c) In the event of a sale or leasing of the Building,
Landlord shall have the right to transfer the balance
of the Security Deposit to the new owner or to
tenant. Landlord shall thereupon be released by
Tenant from all liability for the return of the
Security Deposit; and Tenant agrees to look to the
new landlord. If any mortgagee, including Landlord's
Mortgagee (defined in Section 13.01(a) below) should
succeed to Landlord's interests hereunder, such
mortgagee should only be liable to Tenant for any
security deposited by Tenant hereunder to the extent
such security was actually transferred to such
mortgagee, unless the Security Deposit is depleted
according to Section 3.07(c), and the Leases as
defined herein are released from Escrow, no failure
of Landlord to transfer the Security Deposit to
Wilton, LLC shall affect Tenant, and Wilton, LLC
shall be deemed to have received the Security Deposit
for credit to Tenant's account.
ARTICLE 4. ADDITIONAL RENT FOR ESCALATIONS IN REAL ESTATE TAXES
AND OPERATING EXPENSES
4.01 Definitions. Annual Base Rent does not anticipate any increase in
the amount of taxes on the Building, or in the cost of the operation and
maintenance thereof. In order that the rent payable hereunder shall reflect any
such increases, Tenant agrees to pay as Additional Rent, an amount calculated as
hereinafter set forth. For purposes of this Article 5, the following definitions
shall apply:
"Tax Year": means the fiscal year of the Town of Wilton (July
1 - June 30) or other applicable governmental authority for real estate tax
purposes or such other twelve (12) month period as may be duly adopted in place
thereof.
"Base Taxes": shall mean the amount of taxes attributable to
the Project on the basis of rentable square feet for the period July 1, 1999
through June 30, 2000.
"Taxes": All taxes, assessments and charges of every kind and
nature levied, assessed or imposed at any time by any governmental authority
upon or against the Project or any improvements, fixtures and equipment of
Landlord used in the operation thereof whether such taxes and assessments are
general or special, ordinary or extraordinary, foreseen or unforeseen in respect
of each Tax Year following wholly or partially within the Term. Taxes shall
include, without limitation, all general real property taxes and general and
special assessments, charges, fees or assessments for all governmental services
or purported benefits to the Project, service payments in lieu of taxes, all
business privilege taxes, and any tax, fee or excise on the act of entering into
this Lease or any other lease of space in the Building, or on the use or
occupancy of the Building or any part thereof, or on the rent payable under any
lease or in connection with the business of renting space under any lease or in
connection with the business of
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renting space in the Building, that are now or hereafter levied or assessed
against Landlord by the United States of America, the State of Connecticut, or
any political subdivision, public corporation, district or other political or
public entity, including legal fees, experts' and other witnesses' fees, costs
and disbursements incurred in connection with proceedings to contest, determine
or reduce Taxes. In the event that the Town of Wilton levies real property taxes
on the Project based on an assessment of the Project's value in a manner that
differentiates between rentable square footage at the Project used for retail
purposes as opposed to rentable square footage used for office purposes, Tenant
shall be responsible only for Additional Rent payments based on the increases in
real estate taxes levied on the rentable square footage devoted to office uses
multiplied by the Tenant's proportionate share of the rentable square footage at
the Project devoted to office use. Taxes shall also include any other tax, fee
or other excise, however described, that may be levied or assessed as a
substitute for, or as an addition to, in whole or in part, any other Taxes
(including, without limitation, any municipal income tax) and any license fees,
tax measured or imposed upon rents, or other tax or charge upon Landlord's
business of leasing the Building, whether or not now customary or in the
contemplation of the parties on the date of this Lease.
Taxes shall not include: (i) franchise, transfer, gift excise,
capital stock, estate, succession and inheritance taxes, and federal and state
income taxes measured by the net income of Landlord from all sources, unless due
to a change in the method of taxation such tax is levied or assessed against
Landlord as a substitute for, or as an addition to, in whole or in part, any
other Tax that would constitute a Tax; or (ii) penalties or interest for late
payment of Taxes.
"Base Expense Year": shall mean the calendar year 2000.
"Expense Year": shall mean the first and full calendar year
following the Base Expense Year and each calendar year thereafter.
"Base Expenses": shall mean the Operating Expenses for the
[Base Expense Year] equitably adjusted to the amount such Operating Expenses
would have been if ninety-five percent (95%) of the rentable area in the
Building had been occupied during the [Base Expense Year] if there is less than
ninety-five percent (95%) occupancy in the Base Expense Year. Only those
component expenses that are affected by variation in occupancy levels shall be
"grossed-up". For purposes of determining Tenant's Proportionate Share of
increases in the Operating Expenses, the Base Expenses shall be deemed to have
been incurred by Landlord during the Base Expense Year.
"Expense Increases": attributable to an Expense Year, shall
mean the excess, if any, of the Operating Expenses incurred during such Expense
Year equitably adjusted, if less than ninety-five percent (95%) occupancy, to
the amount such Operating Expenses would have been if ninety-five percent (95%)
of the rentable area in the Building had been occupied during the Expense Year
over the Base Expenses. Only those component expenses that are affected by
variation in occupancy levels shall be "grossed-up".
"Operating Expenses": all costs and expenses (and taxes, if
any, thereon) paid or incurred on behalf of Landlord (whether directly or
through independent contractors) in connection with the ownership, management,
operation, maintenance and repair of the Building and Common Areas and the
Building's equitable share of any facilities or amenities benefiting the
Building or Site (including any sales or other taxes thereon) during the Term as
a first-class building, including, without limitation:
(a) Charges of independent contractors for expenses otherwise
includable in Operating Expenses, including, without limitation, charges for
scavenger services, window washing and other cleaning and janitorial services,
snow and ice removal services, exterior and interior landscaping, pest
extermination services and services for the maintenance and repair of the
parking facilities, roadways and light poles;
(b) All heating, ventilating, air conditioning, plumbing,
electrical, mechanical, sewer, fire detection, life safety and security systems,
telecommunications facilities, elevators and escalators, tenant directories,
emergency generator, sprinkler systems, and other equipment used in common by,
or for the benefit of, occupants of the Building; and Utility Expenses
(excluding electricity supplied to the Premises and billed to Tenant pursuant to
Section 5.04 and electricity used by other tenants of the Building within their
leased space and billed directly to such tenants);
(c) The premiums for fire, extended coverage, loss of rents,
boiler, machinery, sprinkler, public liability, property damage, earthquake,
flood, and all other insurance relative to the Building and the operation and
maintenance thereof (inclusive of the Building's fitness center and cafeteria)
plus the cost of the deductible payments made by Landlord in connection
therewith;
(d) All supplies, tools, materials, equipment and maintenance
and service contracts in connection therewith; telephone, stationery, office
supplies and other office costs of administration;
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consulting fees, legal fees and accounting fees and other expenses of
maintaining and auditing Project accounting records and preparing Landlord's
Statements;
(e) Replacing, repairing, and/or adding any equipment, device,
improvement in order to reduce (or avoid an increase in) operation or
maintenance expenses with respect to the Project, or to comply with laws or
governmental orders or the requirements of Landlord's insurers, and any repairs
or removals necessitated thereby, amortized over their useful life as determined
in the reasonable judgment of Landlord's accountant (including interest at the
rate of 12% per annum or such higher rate as may have been paid by Landlord on
funds borrowed for the purpose of constructing such improvements);
(f) Salaries, wages, compensation, out-of-pocket expenses,
union benefits and labor costs (including the amount of any taxes, social
security taxes, unemployment insurance contributions, insurance, retirement,
medical, workers' compensation and other employee benefits) of janitors,
janitresses, engineers and other employees of Landlord, and any on-site
employees (below the executive level) of Landlord's property management agent;
(g) Fees for management services whether rendered by Landlord
(or affiliate) or a third-party property manager which shall be limited to an
amount no greater than 4% of the gross rents of the Building;
Operating Expenses shall not include: (a) utility expenses
that are separately metered for any individual tenant in the Building; (b) any
expense for which Landlord is reimbursed by a specific tenant by reason of a
special agreement or requirement of the occupancy of the Building by such
tenant; (c) expenses for services provided by Landlord for the exclusive benefit
of a given tenant or tenants for which Landlord is directly reimbursed by such
tenant or tenants; (d) all costs, fees and disbursements relating to activities
for the solicitation, negotiation and execution of leases for space in the
Building (including but not limited to attorneys' fees therefor); (e) the costs
of alterations to, or the decorating or the redecorating of, space in the
Building leased to other tenants; (f) except as stated in subparagraph (g) of
the definition of Operating Expenses, the costs associated with the operation of
the business of the ownership or entity which constitutes "Landlord", including
costs of selling, syndicating, financing or mortgaging any of Landlord's
interest in the Project; (g) depreciation, interest and principal payments on
mortgages and other debt costs, if any; (h) repairs or other work required due
to fire or other casualty to the extent of insurance proceeds received by
Landlord; and (i) capital expenses for items that are not included in the
definition of "Operating Expenses.
"Tenant's Proportionate Share": On the Commencement Date, the
Tenant's Proportionate Share is 18.2%. "Landlord's Statement": Shall mean an
instrument containing a computation of any Additional Rent due pursuant to the
provisions of this Article 5.
"Utility Expenses": All expenses paid or incurred on behalf of
Landlord for utility or utility services for the Project, including, but not
limited to, water, sewer, electric, gas, steam, fuel oil and chilled water,
together with any taxes on said costs.
4.02 Payment of Taxes. Tenant shall pay, as Additional Rent, Tenant's
Proportionate Share of all Taxes payable by Landlord in respect of any Tax Year
falling wholly or partially within the Term, to the extent that Taxes for any
such period shall exceed the Base Taxes (which payment shall be adjusted by
proration with respect to any partial Tax Year. Landlord shall submit to Tenant
a copy of the bill for Taxes payable by Landlord together with Landlord's
Statement and Tenant shall pay the Additional Rent set forth on such Landlord's
Statement (less the amount of estimated payments paid by Tenant on account
thereof) as set forth herein. Notwithstanding the foregoing, Tenant shall not be
required to pay, as Additional Rent, any taxes over the Base Taxes, until
December 1, 2000. Landlord, at its option, may require Tenant to make monthly
payments on account of Tenant's Proportionate Share of Taxes in excess of the
Base Taxes. The monthly payments shall be one-twelfth (1/12th) of the amount of
Tenant's Proportionate Share of Taxes in excess of the Base Taxes and shall be
payable on or before the first day of each month during the Term, in advance, in
an amount estimated by Landlord and billed by Landlord to Tenant; provided that
Landlord shall have the right initially to determine such monthly estimates and
to revise such estimates from time to time. With reasonable promptness after
Landlord has received the tax bills for any Tax Year, Landlord shall furnish
Tenant with Landlord's Statement with respect thereto. If the actual amount of
Tenant's Proportionate Share of Taxes exceeds the estimated amount of Tenant's
Proportionate Share of Taxes paid by Tenant for any Tax Year, then Tenant shall
pay to Landlord as Additional Rent the difference between the amount of
estimated Tenant's Proportionate Share of Taxes paid by Tenant and the actual
amount of Tenant's Proportionate Share of Taxes. This Additional Rent payment
shall be due and payable within thirty (30) days after delivery of Landlord's
Statement. If the total amount of estimated payments made by Tenant in respect
of Tenant's Proportionate Share of Taxes paid by Tenant for any Tax Year shall
exceed the actual amount of Tenant's Proportionate Share of Taxes for such Tax
Year, then such excess amount shall be credited against the monthly installments
of Additional Rent due and payable from Tenant to Landlord hereunder with
respect to Taxes, until such amount shall have been refunded in full to Tenant.
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4.03 Payment of Operating Expenses. Tenant shall pay to Landlord on
account of Tenant's Proportionate Share of Expense Increase and as Additional
Rent, a sum equal to one-twelfth (1/12) of the amount of Tenant's Proportionate
Share of Expense Increases for each Expense Year on or before the first day of
each month of such Expense Year, in advance, in an amount estimated by Landlord
and billed by Landlord to Tenant; provided that Landlord shall have the right
initially to determine such monthly estimates and to revise such estimates from
time to time. After the expiration of the Base Expense Year and each Expense
Year, Landlord shall prepare and furnish Tenant with Landlord's Statement
showing the Base Expenses or the Operating Expenses incurred during such Expense
Year. Within thirty (30) days after receipt of Landlord's Statement for any
Expense Year setting forth Tenant's Proportionate Share of any Expense Increase
attributable to such Expense Year, Tenant shall pay Tenant's Proportionate Share
of such Expense Increase (less the amount of estimated payments paid by Tenant
on account thereof) to Landlord as Additional Rent. If the actual amount of
Tenant's Proportionate Share of the Expense Increase for such Expense Year
exceeds the estimated amount of Tenant's Proportionate Share of Expense
Increases paid by Tenant for such Expense Year, then Tenant shall pay to
Landlord the difference between the estimated amount of Tenant's Proportionate
Share of Expense Increases paid by Tenant and the actual amount of Tenant's
Proportionate Share of Expense Increases. This Additional Rent payment shall be
due and payable within thirty (30) days following delivery of Landlord's
Statement. If the total amount of estimated payments made by Tenant in respect
of Tenant's Proportionate Share of Expense Increases for such Expense Year shall
exceed the actual amount of Tenant's Proportionate Share of Expense Increases
for such Expense Year, then such excess amount shall be credited against the
monthly installments of Additional Rent due and payable from Tenant to Landlord
hereunder with respect to Expense Increases until such amount shall have been
refunded in full to Tenant. Notwithstanding anything to the contrary herein, in
no event shall the aggregate credits allowable to Tenant, in any Expense Year
pursuant to this Article 5 exceed the aggregate of the Additional Rent payments
payable by Tenant pursuant to this Article 5; provided, however, any excess
payments made by Tenant during the Term that have not been so applied and are
outstanding at the end of the Term shall be paid to Tenant promptly following
Landlord's final accounting for the final Expense Year.
4.04 Payment of Electric Expense. In addition to Base Rent and any
Additional Rent, Tenant shall pay Landlord the sum of $3,343.00 per month for
electricity ("Electric Expense") on the first day of each month, which payment
shall continue throughout the term of the Lease.
4.05 Landlord's Statements and Tenant's Inspection Rights.
(a) Landlord's Statements shall be rendered to Tenant, but
Landlord's failure to render Landlord's Statement with respect to the Base
Expense Year, any Expense Year or any Tax Year or Landlord's delay in rendering
said Statement beyond a date specified herein shall not prejudice Landlord's
right to render a Landlord's Statement with respect to that or any subsequent
Expense Year or Tax Year. The obligations of Landlord and Tenant under the
provisions of this Article with respect to any Additional Rent incurred during
the Term shall survive the expiration or any sooner termination of the Term. If
Landlord fails to give Tenant a statement of projected Operating Expenses prior
to the commencement of any Expense Year, Tenant shall continue to pay Operating
Expenses in accordance with the previous statement, until Tenant receives a new
statement from Landlord.
(b) During the thirty (30) day period after receipt of any
Landlord's Statement (the "Review Period"), Tenant may inspect and audit
Landlord's records relevant to the cost and expense items reflected in such
Landlord's Statement at a reasonable time mutually agreeable to Landlord and
Tenant during Landlord's usual business hours. In the absence of recklessness or
fraud, each Landlord's Statement shall be conclusive and binding upon Tenant
unless within thirty (30) days after receipt of such Landlord's Statement Tenant
shall notify Landlord that it disputes the correctness of Landlord's Statement,
specifying the respects in which Landlord's Statement is claimed to be
incorrect. If, after such inspection, Tenant disputes the amount of its
Proportionate Share of Operating Expenses or Taxes, Tenant shall be entitled to
retain an independent company or certified public accountant reasonably
acceptable to Landlord to review Landlord's records to determine the proper
amount of such Additional Rent. If such audit or review reveals that Landlord
has overcharged Tenant, then within thirty (30) days after the results of such
audit are made available to Landlord, Landlord shall reimburse Tenant the amount
of such overcharge. If the audit reveals that Tenant was undercharged, then
within thirty (30) days after the results of the audit are made available to
Tenant, Tenant shall reimburse Landlord the amount of such undercharge. If
Landlord desires to contest such audit results, Landlord may do so by submitting
the results of the audit to arbitration pursuant to Section 13.06 of the Lease
within thirty (30) days of receipt of the results of the audit, and the
arbitration shall be final and binding upon Landlord and Tenant. Tenant agrees
to pay the cost of such audit. Pending the determination of such dispute as
hereinafter provided, Tenant shall pay Additional Rent in accordance with the
applicable Landlord's Statement, and such payment shall be without prejudice to
Tenant's position. All inspections and audits of Landlord's books and records
and any arbitration shall be subject to a confidentiality agreement reasonably
acceptable to Landlord.
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4.06 Additional Rent Adjustments. If the Term shall expire on a date
other than December 31st, any Additional Rent for the Lease Year in which the
expiration date shall occur shall be apportioned (based upon the immediately
preceding 12 month period) in that percentage which the number of days in the
period from January 1st of such Lease Year to such date of expiration, both
inclusive, shall bear to the total number of days in the calendar year in which
such expiration occurs.
ARTICLE 5. SERVICES AND UTILITIES
5.01 Services. Landlord shall provide the following services to the
Building and Premises (subject to Tenant's reimbursement and payment obligations
therefor in accordance with the operation of Article 5 hereof):
(a) Janitor services for the Common Areas excluding Saturdays,
Sundays and union and state and federal government holidays (the "Holidays").
(b) Heat and air-conditioning as required to maintain
comfortable temperature throughout the Premises (excluding specialized
temperature and humidity control for computers, printers and other equipment)
daily from 8:00 a.m. to 7:00 p.m. Monday through Friday and Saturdays from 8:00
a.m. to 12:00 noon ("Normal Business Hours").
(c) Hot and cold running water for cleaning, landscaping,
grounds maintenance, fire protection, drinking, lavatory and toilet purposes
drawn through fixtures installed by Landlord or by Tenant with Landlord's
written consent. If Tenant's water use increases beyond customary office user
levels, Landlord shall have the right to install a water meter at Tenant's
expense and to charge Tenant as Additional Rent for its water consumption in the
Premises in accordance with readings from such meter.
(d) Electric current only, in amounts required for normal
lighting by building standard lighting overhead fixtures and for Tenant's normal
business operations, including without limitation, personal computers, copiers,
facsimiles and other ordinary business, subject, however, to Landlord's approval
of Tenant's final electrical plan for the Premises (but specifically excluding
electric current surge protection).
(e) Window washing of all windows in the Premises both inside
and out, weather permitting at intervals established by Landlord.
(f) Maintenance of the Common Areas so that they are clean and
free from accumulations of snow, debris, filth, rubbish and garbage.
(g) Access by Tenant to the Premises and use of designated
elevator service 24 hours per day, seven (7) days per week, 52 weeks per year,
subject to the operation of Landlord's computerized access system at the
Building's entrances and to Landlord's Rules and Regulations. Overtime HVAC and
other services shall be available as provided in Section 5.02 hereof, if
applicable.
5.02 Additional Services. Landlord shall impose reasonable charges and
may establish reasonable rules and regulations for the following: (a) the use of
any heating, air-conditioning, ventilation, electric current or other utility
services or equipment by Tenant at any time other than during the hours set
forth in Section 5.01(b) above ("Overtime HVAC"); (b) the usage of any
additional or unusual janitorial services required because of any non-building
standard improvements in the Premises, the carelessness of Tenant, the nature of
Tenant's business (including the operation of Tenant's business other than
during the hours set forth in Section 5.01(b); and (c) the removal of any refuse
and rubbish left outside the Building or in the Common Areas. The expense
charged by Landlord to Tenant for any Overtime HVAC shall be based on Landlord's
actual cost for such utility services as charged to Landlord by the utility
companies providing such services over and above the cost to Landlord for the
usual Building temperature maintained by Landlord after Normal Business Hours.
This amount shall constitute Additional Rent and shall be payable in accordance
with Section 4.04.
5.03 Excessive Current. Tenant shall comply with the conditions of
occupancy and connected electrical load reasonably established by Landlord for
the Building and Tenant shall not use utilities or other services in excess of
the services described above in Section 5.01 or in a manner which exceeds or
interferes with any Building systems or Landlord's ability to provide services
to other tenants in the Building. To avoid possible adverse effects upon the
Building's electrical and mechanical systems, Tenant shall not, without
Landlord's prior consent in each instance (which shall not be unreasonably
withheld), connect air conditioning equipment, computers, (excluding personal
computers and printers and office copiers and facsimile machines), major
appliances (excluding coffee makers, microwave ovens and other similar food
preparation appliances) or heavy duty equipment ("High Usage Equipment") to the
Building's electrical system. Landlord may survey Tenant's use of services from
time to time. Tenant shall pay Landlord all costs arising out of any excess use
or other connection of High Usage Equipment, including the cost of all repairs
and alterations to the Building's mechanical and electrical systems
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(including the installation of meters) and the cost of additional electricity
made available to Tenant, if any. Such costs shall constitute Additional Rent
and Tenant shall pay such costs pursuant to Section 3.04.
5.04 Maintenance of Common Areas. The manner in which the Common Areas
are maintained and operated and the expenditures therefor shall be at the sole
discretion of Landlord and in accordance with the standards of comparable first
class office buildings in Fairfield County. Landlord reserves the right from
time to time to (a) make changes in the shape, size, location and appearance of
the land and improvements which constitute the Common Areas, provided that
Landlord shall not materially impair the Tenant's ability to operate its
business, or reduce the parking available to the Tenant as of the Commencement
Date, except temporary impairments required by said changes; (b) make such
improvements, alterations and repairs to the Common Areas as may be required by
governmental authorities or by utility companies servicing the Building; (c)
construct, maintain and operate lighting and other facilities on all said areas
and improvements; and (d) to add or remove improvements and facilities to or
from the Common Areas. The use of the Common Areas shall be subject to such
reasonable regulations and changes therein as Landlord shall make from time to
time, including (but not by way of limitation) the right to close from time to
time, if necessary, all or any portion of the Common Areas to such extent as may
be legally sufficient, in the opinion of Landlord's counsel, to prevent a
dedication thereof or the accrual of rights of any person or of the public
therein; provided, however, Landlord shall do so at such times and in such
manner as shall minimize any disruption to Tenant to the extent reasonably
possible.
5.05 Access to Premises. Landlord shall have the right to enter the
Premises without abatement of Rent at all reasonable times upon twenty-four (24)
hours prior notice to Tenant (except in emergencies when no notice shall be
required), (i) to supply any service to be provided by Landlord to Tenant
hereunder, (ii) to show the Premises to Landlord's Mortgagee and to prospective
purchasers, mortgagees and tenants, and (iii) to inspect, alter, improve or
repair the Premises and any portion of the Building. For each of the purposes
stated above in this Section 5.05, Landlord shall at all times have and retain a
key with which to unlock all of the doors in, upon and about the Premises,
excluding Tenant's vaults and safes, or special security areas (designated in
advance), and Landlord shall have the right to use any and all means that
Landlord may deem necessary or proper to open said doors in an emergency, in
order to obtain entry to any portion of the Premises. Landlord and its agents
and representatives shall have the right to enter upon the Premises for any and
all of the purposes set forth in this Article and may exercise any and all of
the foregoing rights without being deemed guilty of a forcible or unlawful entry
into, or a detainer of, the Premises, or an eviction, actual or constructive of
Tenant from the Premises, or any portion thereof, if reasonably necessary to
comply with any governmental statute, ordinance or building, fire or other code.
5.06 Interruption of Services. There shall be no abatement of Rent and
Landlord shall not be liable in any respect whatsoever for the inadequacy,
stoppage, interruption, or discontinuance of any utility or service due to riot,
strike, labor dispute, government request or direction, breakdown, accident,
repair, or other cause. The foregoing notwithstanding, in the event of any
interruption or stoppage of any essential utility service which Landlord is
required to provide, if such interruption or stoppage is for more than five (5)
consecutive days or more than ten (10) total days in any calendar year and is of
a nature which materially interferes with the Tenant's use of the Premises for
the conduct of its business, is not rendered necessary by the negligence or
misconduct of Tenant or any Tenant Parties, and is within Landlord's reasonable
control, then the Rent shall be abated at the rate of one (1) day for each day
of interruption and stoppage after the fifth (5th) consecutive day or tenth
(10th) day after notice by Tenant to Landlord of such interruption or stoppage
until such service is restored.
ARTICLE 6. CONDUCT OF BUSINESS BY TENANT
6.01 Permitted Use. The Premises shall be used and occupied for general
office purposes and ancillary uses related thereto, including the conduct of
"Focus Groups". Tenant shall not use or occupy, or permit the use or occupancy
of, the Premises or any part thereof for any use other than the sole use
specifically set forth above or in any illegal manner, or in any manner that, in
Landlord's judgment, would adversely affect or interfere with any services
required to be furnished by Landlord to Tenant or to any other tenant or
occupant of the Building, or with the proper and economical rendition of any
such service, or with the use and enjoyment of any part of the Building by any
other tenant or occupant. Tenant agrees that it will not exceed the maximum
floor bearing capacity for the Premises.
6.02 Compliance with Laws.
(a) Tenant, at Tenant's expense, shall comply promptly with
the laws, ordinances, rules, regulations and orders of all governmental
authorities in effect from time to time during the Term that shall impose any
duty on Tenant with respect to the Premises or the use, occupancy and operation
thereof, including, without limitation, the Americans with Disabilities Act
("ADA"), and all
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applicable zoning, fire and health codes. Tenant will obtain and maintain in
full force and effect any and all licenses and permits necessary for its use.
Tenant shall make any Alterations in or to the Premises in order to comply with
the foregoing, which are necessitated or occasioned, in whole or in part by the
use or occupancy or manner of use, occupancy or operation of the Premises by
Tenant or any of its officers, employees, agents, contractors, invitees,
licensees or subtenants (the "Tenant Parties").
(b) Landlord shall comply with all laws, ordinances, rules,
regulations and orders of all governmental authorities in effect from time to
time during the Term that shall impose any duty on Landlord with respect to the
Common Areas of the Building, and excluding any matters that arise from the acts
or omissions of Tenant or other tenants of the Building or that are Tenant's
responsibility under this Lease or the responsibility of other tenants of the
Building. The Leasehold Improvements designed and constructed by Landlord will
conform upon completion to all applicable legal requirements, including, without
limitation, the requirements of Title III of the ADA. Notwithstanding anything
to the contrary contained herein, Tenant shall be responsible for legal
compliance, including the requirements of the ADA, with respect to (i) any and
all requirements on account of Tenant's use of or operations in the Premises,
and (ii) all Alterations designed or constructed by Tenant or its contractors or
agents.
6.03 Landlord's Rules and Regulations. Tenant shall faithfully observe
and comply with the rules and regulations attached to this Lease as Exhibit C,
and all reasonable modifications thereof and additions thereto from time to time
put into effect by Landlord (the "Rules and Regulations"). Tenant shall not use
or permit the use of the Premises in any manner that will tend to create waste
or a nuisance, or which shall tend to unreasonably disturb other tenants of the
Building. Landlord shall not be responsible to Tenant for the nonperformance of
any of the Rules and Regulations by any other tenants or occupants on the
Building. Landlord shall use reasonable efforts to enforce the Rules and
Regulations in a fair and non-discriminatory manner. In the event of an express
and direct conflict between the terms, covenants, agreements and conditions of
this Lease and the terms, covenants, agreements and conditions of such rules and
regulations, as modified and amended from time to time by Landlord, this Lease
shall control.
6.04 No Liens. Tenant shall keep the Premises and Project free from any
liens or encumbrances arising out of any work performed, material furnished or
obligations incurred by or for Tenant or any person or entity claiming through
or under Tenant. Prior to Tenant performing any construction or other work on or
about the Premises for which a lien could be filed against the Premises or the
Project, Tenant shall obtain satisfactory lien waiver agreements with each
contractor who is to perform such work or furnish any material. Any claim to, or
lien upon, the Premises or the Building arising from any act or omission of
Tenant shall accrue only against the leasehold estate of Tenant and shall be
subject and subordinate to the paramount title and rights of Landlord in and to
the Premises and the Project. If any mechanics' or other lien shall be filed
against the Premises or the Project purporting to be for labor or material
furnished or to be furnished at the request of the Tenant, then Tenant shall at
its expense cause such lien to be discharged of record by payment, bond or
otherwise, within thirty (30) days after the filing thereof, or shall within
thirty (30) days after filing commence an action in the Superior Court to have
the lien discharged and diligently prosecute said action.
6.05 Hazardous Substances.
(a) Tenant shall not generate, store (except for small
quantities of substances ordinarily stored and used in connection with general
office use if stored, used and disposed of, in accordance with all laws relating
thereto), dispose of or release, or permit the storage, use, disposal or release
of, any "Hazardous Substances" (as hereinafter defined), in, above, on or under
the Premises or the Project. Tenant shall remove, clean-up and remedy any
Hazardous Substance on the Premises or in accordance with applicable law,
provided that the presence of such Hazardous Substance resulted from the action
or inaction of Tenant, or any Tenant Parties and Tenant shall be obligated to
continue to pay Rent hereunder until such removal, clean-up or remedy is
completed in accordance with applicable laws, whether or not the Term shall
terminate or expire.
(b) Tenant shall not take or permit any action that would
cause the Premises or Project to become an "establishment" (as defined in the
Connecticut Transfer Act, C.G.S. ss. 22a-134). Tenant hereby grants Landlord the
right to inspect the Premises on not less than twenty-four (24) hours notice to
Tenant (except in the event of an emergency in which case Landlord will use
reasonable efforts commensurate with the nature of the emergency condition to
give Tenant prior notice) throughout the Term, to determine that Tenant is in
compliance with applicable laws and Tenant agrees to provide Landlord with all
information necessary to ascertain that Tenant is in compliance with applicable
laws. Tenant shall cooperate with Landlord in satisfying any legal requirements
imposed upon Landlord relating to Tenant's operations, and, upon Landlord's
written request, shall furnish complete information to Landlord with regard to
its operations. In connection with any transfer of the Premises or Project,
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Tenant shall comply with the Connecticut Transfer Act and any other applicable
laws relative to its operations.
(c) "Hazardous Substances" shall mean any petroleum, petroleum
products, fuel oil, waste oil, explosives, reactive materials, ignitable
materials, corrosive materials, hazardous chemicals, hazardous wastes, hazardous
substances, extremely hazardous substances, toxic substances, toxic chemicals,
radioactive materials, medical waste, pollutants, herbicides, fungicides,
rodenticides, insecticides, contaminant, or pesticides and including, but not
limited to any other element, compound, mixture, solution or substance which may
pose a present or potential hazard to human health or the environment. Tenant
shall comply with all laws applicable to the generation, storage, use, disposal
or release of Hazardous Substances, including but not limited to, obtaining and
maintaining any permits from, or making any filings or registrations with, by
any governmental authority as required under any applicable law.
(d) Tenant shall indemnify, defend with counsel reasonably
acceptable to Landlord, and hold Landlord fully harmless and any mortgagee of
the Project, from and against any and all liability, loss, suits, claims,
actions, causes of action, remediation orders, proceedings, demands, costs,
penalties, damages, fines and expenses, including, without limitation,
attorneys' fees, consultants' fees, laboratory fees and clean-up costs, and the
costs and expenses of investigating and defending any claims or proceedings,
resulting from, or attributable to, (i) the presence of any Hazardous Substance
on the Premises or the Project arising from the action, inaction or negligence
of Tenant, its officers, employees, contractors, agents, subtenants or invitees,
or arising out the generation, storage, treatment, handling, transportation,
disposal or release by Tenant of any Hazardous Substance at or near the Premises
or the Project, and (ii) any violation(s) by Tenant of any applicable law
regarding Hazardous Substances, and (iii) default of any of its agreements under
Section 6.05 of this Lease.
6.06 Tenant's Failure to Maintain. If Landlord gives Tenant written
notice of the necessity of any repairs or replacements required to be made under
Section 7.01(a) and Tenant fails to commence diligently to cure the same within
thirty (30) days thereafter (except that no notice will be required in case of
any emergency repair or replacement necessary to prevent substantial damage or
deterioration), Landlord, at its option and in addition to any other remedies,
may proceed to make such repairs or replacements and the expenses incurred by
Landlord in connection therewith plus 10% thereof for Landlord's supervision,
shall be due and payable from Tenant in accordance with Section 3.04 hereof, as
Additional Rent; provided, that Landlord's making any such repairs or
replacements shall not be deemed a waiver of Tenant's default in failing to make
the same.
6.07 Surrender. Upon the expiration or sooner termination of the Term,
Tenant will quietly and peacefully surrender to Landlord the Premises in as good
condition as when Tenant took possession, ordinary wear and tear excepted, and
otherwise as is required in Article 7. In addition, at such time Tenant shall
remove all Hazardous Substances stored, or disposed of, or generated by Tenant
in its use or operation of the Premises and all equipment and materials
contaminated or affected by such Hazardous Substances in conformity with the
Hazardous Substance laws. Tenant shall surrender the Premises to Landlord at the
end of the Term hereof, without notice of any kind, and Tenant waives all right
to any such notice as may be provided under any laws now or hereafter in effect
in Connecticut.
ARTICLE 7. ALTERATIONS, IMPROVEMENTS AND SIGNAGE
7.01 Landlord's Obligations. Landlord will maintain all structural
components of the Building, including, without limitation, the roof, foundation,
exterior and load-bearing walls (including exterior windows and doors), the
structural floor slabs and all other structural elements of the Premises, as
well as the Common Areas of the Building, in good repair, reasonable wear and
use, casualty and condemnation excepted. Maintenance and repair expenses caused
by Tenant's willful misconduct or negligent acts or omissions shall be paid
directly to Landlord by Tenant in accordance with Section 3.04, and shall not
constitute an Operating Expense. Landlord shall not be liable for and there
shall be no abatement of Rent with respect to any injury to or interference with
Tenant's business arising from any repairs, maintenance, alteration or
improvement in or to any portion of the Project, including the Premises, or in
or to the fixtures, appurtenances and equipment therein.
(a) Tenant's Obligations. Tenant shall take good care of the
Premises, and at Tenant's cost and expense, shall make all repairs and
replacements necessary to preserve the Premises in good working order and in a
clean, safe and sanitary condition, and will suffer no waste. Interior cleaning
of the Premises shall be contracted and paid for by Tenant. Tenant shall
maintain, at its own expense, in good order, condition and repair to Landlord's
reasonable satisfaction, all plumbing facilities and electrical fixtures and
devices (including replacement of all lamps, starters and ballasts) located
within the Premises. Tenant shall repair, at its cost, all deteriorations or
damages to the Project occasioned by its negligent acts or omissions or willful
misconduct. If Tenant does not make such repairs to the Building within thirty
(30) days following notice from Landlord, Landlord may, but need not, make such
repairs, and Tenant shall pay the cost thereof as provided in Section 7.06
hereof. All repairs and replacements
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made by or on behalf of Tenant shall be made and performed in accordance with
the "Construction Standards" (as defined in Section 7.03).
7.02 Tenant's Alterations.
(a) Tenant shall not make or permit any improvements,
installations, alterations or additions ("Alterations") in or to the Premises,
the Building or the Project; provided, however, Tenant may, with Landlord's
advance written consent, which consent shall not be unreasonably withheld, make
Alterations to the Premises that do not involve or affect either structural
portions of the Premises or the Building or any of the Building's HVAC,
mechanical, electrical, plumbing or other systems or equipment (the "Building
Systems"). At the expiration of the Term, Landlord may require the removal of
any or all of said Alterations and the restoration of the Premises and the
Project to their prior condition, at Tenant's expense.
(b) All Alterations permitted by Landlord and made by or on
behalf of Tenant shall be made and performed: (a) at Tenant's cost and expense
and at such time and in such manner as Landlord may designate, (b) by
contractors or mechanics approved by Landlord, who shall carry liability
insurance of a type and in such amounts as Landlord shall reasonably require,
naming Landlord and Tenant as additional insureds, (c) in a good and workmanlike
manner, (d) so that same shall be at least equal in quality, value, and utility
to the original work or installation, (e) in accordance with the Rules and
Regulations for the Building adopted by Landlord from time to time and in
accordance with all applicable Laws, and (f) pursuant to plans, drawings and
specifications ("Tenant's Plans") which have been reviewed and approved by
Landlord prior to the commencement of the repairs or replacements and approved
by, and filed with, all applicable governmental authorities, and subject to all
other terms and conditions of this Lease, including, but not limited to, Section
7.05 (collectively the "Construction Standards"). All Alterations made by Tenant
shall become, upon installation, the property of Landlord and remain upon and be
surrendered with the Premises at the expiration of the Lease term, unless
Landlord requires their removal pursuant to Section 7.02(a). Landlord agrees not
to unreasonably withhold any approvals requested under this Section 7.02(b).
(c) Tenant's Communications Systems. Tenant shall be
responsible for the design, installation and construction of Tenant's data,
telephone and video systems and wiring and payment of all cost and expense
related thereto.
7.03 Tenant's Property. Any trade fixtures, furnishings, equipment and
personal property placed in the Premises that are removable without damage to
the Building or the Premises, whether the property of Tenant or leased by
Tenant, are herein sometimes called "Tenant's Property". Any of Tenant's
Property remaining on the Premises at the expiration of the Term shall be
removed by Tenant at Tenant's cost and expense, and Tenant shall, at its cost
and expense, repair any damage to the Premises or the Building caused by such
removal. Any of Tenant's Property not removed from the Premises prior to the
Expiration Date shall, at Landlord's option, become the property of Landlord or
Landlord may remove such Tenant's Property, and Tenant shall pay to Landlord,
Landlord's cost of removal and of any repairs in connection therewith in
accordance with Section 3.04(b) hereof.
7.04 Ownership and Removal. All appurtenances, additions, fixtures and
improvements attached to or installed in or upon the Premises, whether placed
there by Tenant or by Landlord, shall be Landlord's property and shall remain
upon the Premises at the termination of this Lease by lapse of time or otherwise
without compensation or allowance or credit to Tenant. Landlord may require, in
its discretion, the removal by Tenant of any Tenant's Property or Alterations
which have been attached to or installed in the Premises (excluding the initial
Leasehold Improvements) unless Landlord consents to a written request from
Tenant at the time of its approval of the Tenant's Plans that an installation
need not be so removed. On or before the Expiration Date, or the sooner date of
termination of this Lease, Tenant shall pay to Landlord the cost of repairs of
any damage to the Premises or Building and losses caused by the removal of such
property.
7.05 Signage. Landlord shall provide building standard signage
identifying Tenant by name on the Building multi-tenant signage in the main
Building lobby directory and will also provide building standard entry signage
at the main entry to the Premises. Tenant has no right to any Tenant signage,
monuments, graphics or advertising on the exterior of the Premises or any other
location in or at the Project. Subject to zoning regulations, Tenant shall have
the right to Tenant Specific signage on the exterior of the Building, subject to
Landlord's prior approval, which will not be unreasonably withheld. Landlord
shall have the absolute and exclusive right to approve the content, design, size
and location of any and all proposed Tenant signage and monuments proposed to be
erected and/or maintained at the Premises or Project.
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ARTICLE 8. INSURANCE
8.01 Tenant's Insurance. Tenant, at its own expense, shall provide and
keep in force with companies acceptable to Landlord during the Term: (a)
comprehensive general liability insurance insuring against liability for bodily
injury and property damage, including contractual liability, in the amount of
$6,000,000 maximum combined single limit; (b) "Special Form" property insurance,
including standard fire and extended coverage insurance, in amounts necessary to
provide replacement cost coverage, for Tenant's Property, trade fixtures,
machinery, equipment, furniture, furnishings and any Alterations in which Tenant
has an insurable property interest, including, without limitation, vandalism and
malicious mischief and sprinkler leakage coverage, and "all risk" Builder's Risk
insurance, completed value, non-reporting form at any time that Tenant has
commenced construction of any leasehold improvements or any Alterations, and at
any time any other construction activities are underway at the Premises; (c)
plate glass insurance for the Premises; (d) Workers' Compensation Insurance in
statutory limits as required by applicable law; and (e) any other insurance
reasonably required by Landlord.
8.02 Delivery of Policies. The aforesaid insurance shall be provided by
companies and in form, substance and amounts (where not above stated)
satisfactory to Landlord and to Landlord's Mortgagee by companies rated A-/VII
or better by A.M. Best Company. Such insurance shall name Landlord as an
additional insured, shall specifically include the liability assumed hereunder
by Tenant (provided that the amount of such insurance shall not be construed to
limit the liability of Tenant hereunder), and shall provide that it is primary
insurance, and not excess over or contributory with any other valid, existing
and applicable insurance in force for or on behalf of Landlord, and shall
provide that Landlord shall receive thirty (30) days' written notice from the
insurer prior to any cancellation or change of coverage. With respect to
Tenant's comprehensive general liability insurance, Landlord shall be named as
an additional insured with respect to its liability relative to this Lease and
the Building. Tenant shall deliver policies of such insurance or certificates
thereof to Landlord on or before the Commencement Date, and thereafter at least
thirty (30) days before the expiration dates of expiring policies; and, in the
event Tenant shall fail to procure such insurance, or to deliver such policies
or certificates, Landlord may, at its option, procure same for the account of
Tenant, and the cost thereof shall be paid to Landlord as Additional Rent within
five (5) days after delivery to Tenant of bills therefor. Tenant's compliance
with the provisions of this Article 8 shall in no way limit Tenant's liability
under any of the other provisions of this Lease.
8.03 Increased Insurance Risk. Tenant shall not do or permit anything
to be done, or keep or permit anything to be kept in the Premises, which would:
(a) be in violation of any governmental law, regulation or requirement, (b)
invalidate or be in conflict with the provision of any fire or other insurance
policies covering the Building or any property located therein, (c) result in a
refusal by fire insurance companies of good standing to insure the Building or
any such property in amounts required by Landlord's Mortgagee (as hereinafter
defined) or reasonably satisfactory to Landlord, (d) subject Landlord to any
liability or responsibility for injury to any person or property by reason of
any business operation being conducted in the Premises, or (e) cause any
increase in the fire insurance rates applicable to the Project or property
located therein at the beginning of the Term or at any time thereafter. Tenant,
at Tenant's expense, shall comply with all rules, orders, regulations or
requirements of the American Insurance Association (formerly the National Board
of Fire Underwriters) and with any similar body that shall hereafter perform the
function of such Association. In the event that any use of the Premises by
Tenant increases such cost of insurance, Landlord shall give Tenant written
notice of such increase and a reasonable opportunity to cure its use to prevent
such increase; provided, however, if Tenant fails to do so, Tenant shall pay
such increased cost to Landlord in accordance with Section 3.04 hereof.
Acceptance of such payment shall not be construed as consent by Landlord to
Tenant's such use or limit Landlord's remedies under this Lease.
8.04 Cross-Indemnification.
(a) Tenant agrees to protect, indemnify and save harmless
Landlord, from and against any and all loss, cost, liability, damage and expense
including, without limitation, claims, demands, penalties, causes of action,
costs and expenses and attorneys' fees imposed upon and incurred by or asserted
against Landlord from any cause in, on, or about the Premises, including,
without limitation, those relating to the following: (i) Tenant's default in its
observance or performance of any of the terms, covenants or conditions of this
Lease, (ii) the use or occupancy or manner of use or occupancy of the Premises
by Tenant or of any Tenant Parties, (iii) any acts, omissions or negligence of
Tenant or any Tenant Parties, in, on or about the Premises or the Project,
either prior to, during, or after the expiration of, the Term including, without
limitation, any acts, omissions or negligence in the making or performing of any
Alterations in or to the Premises, or (iv) for personal injury, including
without limitation, bodily injury, death or property damage, occasioned by any
use, occupancy, condition, occurrence, omission or negligence referred to in the
preceding clauses. In case any action, suit or proceeding is brought against
Landlord by reason of any such occurrence, Tenant will, at Tenant's expense,
resist and defend such action, suit or proceeding or cause the same to be
resisted or defended by counsel reasonably approved by Landlord.
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(b) Landlord agrees to protect, indemnify and save harmless
Tenant from and against any and all loss, cost, liability, damage and expense
including, without limitation, claims, demands, penalties, causes of action,
costs and expenses and attorneys' fees imposed upon and incurred by or asserted
against Tenant that result from the conduct of Landlord or its employees, agents
or contractors (the "Landlord Parties") at the Common Areas, including, without
limitation, those relating to the following: (a) for personal injury, death or
property damage arising from the negligence or willful misconduct of Landlord or
any Landlord Parties, or (b) Landlord's default in its observance or performance
of any of the terms, covenants or conditions of this Lease. In case any action,
suit or proceeding is brought against Tenant by reason of any such occurrence,
Landlord will, at Landlord's expense, resist and defend such action, suit or
proceeding or cause the same to be resisted or defended by counsel reasonably
approved by Tenant.
8.05 Limitation on Landlord's Liability. Landlord shall not be
responsible or liable to Tenant for any loss or damage to Tenant, or its
business (including any loss of income therefrom) or its property occasioned by
or through the acts or omissions of persons occupying adjoining premises or any
part of the premises adjacent to or connected with the Premises or any part of
the Project, or for any loss or damage resulting to Tenant, or its business
(including any loss of income therefrom), or its property from smoke, fire,
electricity, steam, gas, vapor, water or rain, or other airborne contaminants,
or from the breakage, leakage, obstruction or other defects of pipes, wires,
appliances, plumbing, heating, air-conditioning or lighting fixtures, or from
any other cause, whether the said damage or injury results from conditions
arising from or upon Premises or upon other portions of the Project, or from
other sources or places, including theft, except to the extent that any such
damage or loss is occasioned by the intentional negligent act or omission of the
Landlord or the Landlord Constituent Parties.
8.06 Waiver of Claims.
(a) Landlord and Tenant hereby agree and hereby waive any and
all rights of recovery against each other for loss or damage occurring to the
Premises or the Project or any of Landlord's or Tenant's Property contained
therein regardless of the cause of such loss or damage to the extent that the
loss or damage is covered by the injured party's insurance or the insurance the
injured party is required to carry under this Lease, whichever is greater
(without regard to any deductible provision in any policy). This waiver does not
apply to claims caused by a party's willful misconduct. This waiver also applies
to each party's directors, officers, employees, shareholders, and agents.
(b) Each party will assure that its insurance permits waiver
of liability and contains a waiver of subrogation. Each party shall secure an
appropriate clause in, or an endorsement to, each insurance policy obtained by
or required to be obtained by Landlord or Tenant, as the case may be, under this
Lease, pursuant to which the insurance company: (i) waives any right of
subrogation against Landlord or Tenant as the same may be applicable, or (ii)
permits Landlord or Tenant, prior to any loss to agree to waive any claim it
might have against the other without invalidating the coverage under the
insurance policy. If, at any time, the insurance carrier of either party refuses
to write (and no other insurance carrier licensed in Connecticut will write)
insurance policies which consent to or permit such release of liability, then
such party shall notify the other party and upon the giving of such notice, this
Section shall be void and of no effect.
8.07 Landlord's Insurance. Landlord shall maintain and keep in effect
during the entire Term the following insurance coverage (together with such
other coverages as Landlord may reasonably elect to carry for the benefit of the
Project):
(a) Standard Commercial General Liability Insurance with a
Broad Form Comprehensive General Liability endorsement. The limits of liability
of such insurance shall be an amount not less than $6,000,000 per occurrence,
bodily injury including death, and $6,000,000 per occurrence, property damage
liability or $6,000,000 combined single limit for bodily injury and property
damage liability;
(b) "Special Form" fire and extended coverage insurance on the
Project insuring the guaranteed replacement value thereof, excluding Tenant's
Property and Tenant's Alterations. The insurance shall include, but not be
limited to, fire and extended coverage perils and shall be placed with companies
licensed to sell insurance in Connecticut.
ARTICLE 9. CASUALTY
9.01 Damage or Destruction. Tenant shall give prompt notice to Landlord
of any damage by fire or other casualty to the Premises or any portion thereof.
In the event that the Premises, or any part thereof, or access thereto, shall be
so damaged or destroyed by fire or other insured casualty (a "Casualty") that
the Tenant shall not have reasonably convenient access to the Premises or any
portion of the Premises shall thereby be otherwise rendered unfit for use and
occupancy by the Tenant for the purposes set forth in Section 6.01, and if in
the judgment of the Landlord the damage or destruction may
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be repaired within one hundred and eighty (180) days with available insurance
proceeds, then the Landlord shall so notify the Tenant within sixty (60) days
after the occurrence of the damage or destruction (the "Notice Period") and
shall repair such damage or destruction (except damage or destruction to
Tenant's Property or Tenant's Alterations) with reasonable diligence. In the
event that the Landlord shall not complete such repairs within one hundred and
eighty (180) days after the elapse of the Notice Period, then the Tenant shall
have the right to terminate the term of this lease by giving written notice of
such termination to the Landlord within twenty (20) days after the end of such
one hundred and eighty (180) day period; provided, however, that in the event
that the completion of repairs shall be delayed by causes beyond the Landlord's
control, including those events described in Section 15.11 hereof, the time for
completion shall be extended by the period of such delay. If in the judgment of
the Landlord the Premises, or means of access thereto, cannot be repaired within
one hundred and eighty twenty (180) days after the elapse of the Notice Period
with available insurance proceeds and the Landlord does not deliver the Tenant
notice of its decision to repair such damage within sixty (60) days after the
occurrence of the Casualty, then either party shall have the right to terminate
the term of this Lease by giving written notice of such termination to the other
party within the period of sixty (60) to seventy-five (75) days after the
occurrence of the Casualty.
9.02 Abatement of Rent. Annual Base Rent and Additional Rent shall not
be abated or suspended if, following any Casualty, Tenant shall continue to have
reasonably convenient access to the Premises and the Premises are not rendered
unfit for use and occupancy. If Tenant shall not have reasonably convenient
access to the Premises or any portion of the Premises shall be otherwise
rendered unfit for use and occupancy by the Tenant for the purposes set forth in
Section 6.01 by reason of such Casualty, then Rent shall be equitably suspended
or abated relative to the portion of the Premises that cannot be used by Tenant
for any of its business operations, effective as of the date of the Casualty
until Landlord has (i) substantially completed the repair of the Premises and
the means of access thereto, and (ii) has delivered notice thereof to Tenant. If
such damage or destruction was caused by the negligence or willful act or
omission of the Tenant or any of its officers, employees, contractors, agents or
invitees, then there shall be no abatement of Rent; an election by Landlord to
carry rental loss insurance shall not affect the provisions of this Article 10.
9.03 Events of Termination. In addition to the foregoing termination
rights provided in Section 9.01 hereof, in the event of a Casualty, the
following termination rights shall apply:
(a) If more than 25% of the gross rentable area of the
Premises shall be wholly or substantially damaged or destroyed by Casualty at
any time during the last six (6) months of the Term, either Landlord or Tenant
may terminate this Lease by delivery of written notice of such termination to
the other party within thirty (30) days after the occurrence of such damage.
(b) Notwithstanding the provisions of this Article 9, if,
prior to or during the Term the Building shall be so damaged by Casualty that,
in Landlord's reasonable estimate, the cost to repair the damage will be more
than 25% of the replacement value of the Building immediately prior to the
occurrence of the Casualty (whether or not the Premises shall have been damaged
or rendered untenantable), then, in any of such events, Landlord, at Landlord's
option, and with the written consent of Landlord's Mortgagee, may give to
Tenant, within ninety (90) days after such Casualty, a thirty (30) days' notice
of the termination of this Lease and, in the event such notice is given, this
Lease and the term shall terminate upon the expiration of such thirty (30) days
with the same effect as if such date were the Expiration Date; and the Rent
shall be apportioned as of such date and any prepaid portion of Rent for any
period after such date shall be refunded by Landlord to Tenant within thirty
(30) days following the Expiration Date.
9.04 Insurance Proceeds Upon Termination. If this Lease is terminated
pursuant to any right granted or reserved to Landlord under this Section, all
insurance proceeds payable with respect to the damage giving rise to such right
of termination shall be paid to Landlord, and Tenant shall have no claim
therefor. No damages, compensation or claim shall be payable by the Landlord to
Tenant, or any other person, by reason of inconvenience, loss of business or
annoyance arising from any damage or destruction, or any repair thereof, as is
referred to in this Article 9.
9.05 Scope of Landlord's Repairs. In the event Landlord elects or shall
be obligated to repair or restore any damage or destruction as aforesaid, the
scope of work shall be limited to the original Leasehold Improvements that were
constructed by Landlord at its expense, and Landlord shall have no obligation to
restore or replace Tenant's Property or Tenant's Alterations.
ARTICLE 10. CONDEMNATION
10.01 Entire Condemnation. In the event that the whole of the Premises
shall be taken under the power of eminent domain, this Lease and the term and
estate hereby granted shall automatically terminate as of the earlier of the
date of the vesting of title or the date of dispossession of Tenant as a result
of such taking.
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10.02 Partial Condemnation.
(a) In the event that only a part of the Premises shall be
taken by Condemnation and Tenant shall have reasonable, convenient access to and
from the Premises, the Term shall expire as to that portion of the Premises
condemned effective as of the date of the vesting of title in the condemning
authority, and this Lease shall continue in full force and effect as to the part
of the Premises not so taken.
(b) In the event that a part of the Project shall be subject
to Condemnation (whether or not the Premises are affected), Landlord may, at its
option, terminate this Lease as of the date of such vesting of title, by
notifying Tenant in writing of such termination within ninety (90) days
following the date on which Landlord shall have received notice of the vesting
of title in the condemning authority if in Landlord's reasonable opinion: (i) a
substantial alteration or reconstruction of the Project (or any portion thereof)
shall be necessary or appropriate, or (ii) the portion of the Project so
condemned has the effect of rendering the remainder of the Project uneconomic to
maintain.
(c) In the event that this Lease is not terminated in
accordance with subsection (b) hereof, Landlord shall, upon receipt of the award
in condemnation, make all necessary repairs or alterations to the Building in
which the Premises are located so as to constitute the remaining Premises a
complete architectural unit to the extent feasible, but Landlord shall not be
required to spend for such work an amount in excess of the amount received by
Landlord as damages for the part of the Premises so taken. "Amount received by
Landlord" shall mean that part of the award in condemnation, which is free and
clear to Landlord of any collection by mortgagees and after payment of all
costs, involved in collection, including but not limited to attorney's fees.
Tenant, at is own cost and expense shall, restore all exterior signs, trade
fixtures, equipment, furniture, furnishings and other installations of
personalty of Tenant which are not taken to as near its former condition as the
circumstances will permit. In the event of a partial taking, all provisions of
this Lease shall remain in full force and effect.
10.03 Temporary Taking. If there is a taking of the Premises for
temporary use arising out of a temporary emergency or other temporary situation,
this Lease shall continue in full force and effect, and Tenant shall continue to
comply with Tenant's obligations under this Lease, except to the extent
compliance shall be rendered impossible or impracticable by reason of the
taking, and Tenant shall be entitled to the award for its interest.
10.04 Condemnation Awards. Except as provided in the preceding Section
10.03, Landlord shall be entitled to the entire award in any condemnation
proceeding or other proceeding for taking for public or quasi-public use,
including, without limitation, any award made for the value of the leasehold
estate created by this Lease. No award for any partial or entire taking shall be
apportioned, and Tenant hereby assigns to Landlord any award that may be made in
such condemnation or other taking, together with any and all rights of Tenant
now or hereafter arising in or to same or any part thereof; provided, however,
that nothing contained herein shall be deemed to give Landlord any interest in
or to require Tenant to assign to Landlord any award made to Tenant specifically
for its relocation expenses or the taking of Tenant's Property provided that
such award does not diminish or reduce the amount of the award payable to
Landlord.
10.05 Proration. In the event of a partial condemnation or other taking
that does not result in a termination of this Lease as to the entire Premises,
then the Annual Base Rent and Tenant's Proportionate Share shall be adjusted in
proportion to that portion of the Premises taken by such condemnation or other
taking and Tenant's Proportionate Share.
ARTICLE 11. ASSIGNMENT AND SUBLETTING
11.01 Assignment and Subletting. Tenant shall not, without the prior
written consent of the Landlord, which consent shall not be unreasonably
withheld, assign, mortgage, encumber or otherwise transfer this Lease or any
interest herein directly or indirectly, by operation of law or otherwise, or
sublet the Premises or any part thereof, or permit the use or occupancy of the
Premises by any party other than Tenant (any such action, a "Transfer"). If at
any time or from time to time during the Term, when no Event of Default has
occurred and is continuing, Tenant desires to effect a Transfer, Tenant shall
deliver to Landlord written notice ("Transfer Notice") setting forth the terms
of the proposed Transfer and the identity of the proposed assignee, sublessee or
other transferee (each a "Transferee"). Tenant shall also deliver to Landlord
with the Transfer Notice an acceptable assumption agreement for Tenant's
obligations under this Lease together with all relevant information requested by
Landlord concerning the proposed Transferee to assist Landlord in making an
informed judgment regarding the financial responsibility, creditworthiness,
reputation, and business experience of the Transferee. Tenant shall reimburse
Landlord promptly for all reasonable out-of-pocket expenses incurred by Landlord
including reasonable attorneys' fees in connection with the review of Tenant's
request for Landlord's approval of any Transfer. The provisions of this Section
11.01 shall apply to a transfer (by one or more Transfers) of fifty percent
(50%) or more of the interest in the stock or partnership or membership
interests or other evidences of equity
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interests of Tenant as if such Transfer were an assignment of this Lease;
provided that if equity interests in Tenant at any time are or become traded on
a public stock exchange, the transfer of equity interests in Tenant on a public
stock exchange shall not be deemed an assignment within the meaning of this
Section.
11.02 Landlord's Options. Landlord shall have the option, exercisable
by written notice delivered to Tenant within thirty (30) days after Landlord's
receipt of a Transfer Notice accompanied by the other information described in
Section 11.01, to: (a) permit Tenant to Transfer the Premises; or (b) disapprove
the Tenant's Transfer of the Premises and to continue the Lease in full force
and effect as to the entire Premises; or (c) if the Tenant proposes to sublease
more than fifty (50%) percent of the rentable square footage, terminate the
Lease as to the portion of the Premises affected by the Transfer as of the date
set forth in Landlord's notice of exercise of such option, which date shall not
be less than thirty (30) days nor more than ninety (90) days following the
giving of such notice. If Landlord exercises its option to terminate this Lease
(or in the case of a partial sublet to release Tenant with respect to a portion
of the Premises), Tenant shall surrender possession of such Premises on the date
set forth in Landlord's notice, and thereafter neither Landlord nor Tenant shall
have any further liability with respect thereto. If this Lease shall be
terminated as to a portion of the Premises only, Rent and Tenant's parking
allocation shall be readjusted proportionately according to the ratio that the
number of square feet and the portion of the space surrendered compares to the
floor area of Tenant's Premises during the Term of the proposed sublet. The
provisions of this section shall not apply to a sublease or assignment of all or
any portion of the Premises to an entity affiliated with and under the common
control of Tenant ("Affiliated Entity").
11.03 Additional Conditions.
(a) Tenant shall not offer to make, or enter into negotiations
with respect to any Transfer to: (i) any tenant of the Building or Project or
any entity owned by, or under the common control of, whether directly or
indirectly, a tenant in the Building or Project unless there is no competing
space then available for leases therein; or (ii) any party with whom Landlord
(or its affiliate) is then negotiating with respect to other space in the
Building or Project unless there is no competing space then available for leases
therein; or (iii) any party which would be of such type, character, or condition
as to be inappropriate as a tenant for the Building. It shall not be
unreasonable for Landlord to disapprove any proposed assignment, sublet or
transfer to any of the foregoing entities.
(b) If Landlord approves of the proposed Transfer pursuant to
Section 12.01 above, Tenant may enter into the proposed Transfer with such
proposed Transferee subject to the following further conditions: (i) the
Transfer shall be on the same terms set forth in the Transfer Notice, and (ii)
no Transfer shall be valid and no Transferee shall take possession of the
Premises until an executed counterpart of the assignment, sublease or other
instrument effecting the Transfer (in the form approved by Landlord) has been
delivered to Landlord pursuant to which the Transferee shall expressly assume
all of Tenant's obligations under this Lease; and (iii) Tenant shall provide
Landlord with a written ratification agreement from each guarantor of this Lease
in form and substance satisfactory to Landlord.
11.04 No Release. No Transfer shall be effective unless approved in
writing by Landlord. Landlord's consent to a Transfer shall not release Tenant
of Tenant's obligations under this Lease and this Lease and all of the
obligations of Tenant under this Lease shall continue in full force and effect
as the obligations of a principal (and not as the obligations of a guarantor or
surety). From and after any Transfer, the Lease obligations of the Transferee
and of the original Tenant named in this Lease shall be joint and several. No
acceptance of Rent by Landlord from or recognition in any way of the occupancy
of the Premises by a Transferee shall be deemed a consent to such Transfer, or a
release of Tenant from direct and primary liability for the further performance
of Tenant's covenants hereunder. The consent by Landlord to a particular
Transfer shall not relieve Tenant from the requirement of obtaining the consent
of Landlord to any further Transfer. Each violation of any of the covenants,
agreements, terms or conditions of this Lease, whether by act or omission, by
any of Tenant's permitted Transferees, shall constitute a violation thereof by
Tenant. In the event of default by any Transferee of Tenant or any successor of
Tenant in the performance of any of the terms hereof, Landlord may proceed
directly against Tenant without the necessity of exhausting remedies against
such Transferee or successor.
11.05 Transfer Profit. Fifty percent (50%) of any rent and other
economic consideration received by Tenant as a result of such Transfer to an
entity other than an Affiliated Entity in which case the Tenant shall keep all
excess rent which exceeds, in the aggregate, (a) the total of the remaining rent
which Tenant is obligated to pay Landlord under this Lease (prorated to reflect
obligations allocable to any portion of the Premises subleased) plus (b) any
reasonable tenant fit-up costs, brokerage commissions and attorneys' fees
actually paid by Tenant in connection with such Transfer (specifically excluding
moving or relocation costs paid to the Transferee), shall be paid to Landlord on
a monthly basis within ten (10) days after receipt thereof as Additional Rent
under this Lease, without affecting or reducing any other obligations of Tenant
hereunder. Each such payment shall be sent with a detailed statement. Landlord
shall have the right to audit Tenant's books and records to verify the accuracy
of the detailed statement.
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ARTICLE 12. DEFAULTS AND REMEDIES
12.01 Events of Default. The occurrence of any one or more of the
following events shall constitute an event of default (each an "Event of
Default") hereunder:
(a) Nonpayment of Annual Base Rent or Additional Rent. Failure
by Tenant to pay any installment of Annual Base Rent or Additional Rent due and
payable hereunder, upon the date when said payment is due; provided, however, on
two (2) occasions only during any Lease Year, Landlord shall permit Tenant a
5-day grace period from the date when said payment is due to cure such failure.
(b) Certain Obligations. Failure by Tenant to perform, observe
or comply with any obligation, agreement or covenant contained in Sections 6.05
("Hazardous Substances"), 7.02 ("Alterations"), Section 8.01 ("Tenant's
Insurance") and Article 11.01 ("Assignment and Subletting") of this Lease or
failure by Tenant to perform observe or comply with any obligation, agreement or
covenant contained in a certain Lease dated October 20, 1999 for approximately
3083 rentable square feet at the Project by and between Wilton Executive Campus
Associates, as Landlord_and Tenant and a certain Lease dated_October 20, 1999
for approximately 30,500 rentable square feet at the Project by and between
Wilton LLC and Tenant (collectively, the "Leases").
(c) Other Obligations. Failure by Tenant to perform any
obligation, agreement or covenant under this Lease other than those matters
specified in subparagraph (a) or (b) of this Section 12.01, such failure
continuing for thirty (30) days after written notice by Landlord to Tenant of
such failure; provided, however, that if the nature of Tenant's obligation is
such that more than thirty (30) days are required for performance, then Tenant
shall not be in default if Tenant commences performance within such thirty (30)
day period and thereafter diligently and continuously prosecutes the same to
completion within sixty (60) days following the date of Landlord's written
notice with respect to such failure.
(d) Abandonment. Abandonment of the Premises by Tenant for a
continuous period in excess of twenty (20) business days.
(e) Assignment; Receivership; Attachment. (i) The making by
Tenant of any arrangement or assignment for the benefit of creditors; (ii) 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,
where possession is not restored to Tenant within thirty (30) days; or (iii) 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 such seizure is not discharged within thirty (30) days.
(f) Bankruptcy. The admission by Tenant or Tenant's guarantor
(if any) in writing of its inability to pay its debts as they become due, the
filing by Tenant or Tenant's guarantor (if any) of a petition in bankruptcy
seeking any reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any present or future statute, law or
regulation, the filing by Tenant or Tenant's guarantor (if any) of an answer
admitting or failing timely to contest a material allegation of a petition filed
against Tenant or Tenant's guarantor (if any) in any such proceeding or, if
within forty-five (45) days after the commencement of any proceeding against
Tenant or Tenant's guarantor (if any) seeking any involuntary reorganization, or
arrangement, composition, readjustment, liquidation, dissolution or similar
relief under any present or future statute, law or regulation by any of Tenant's
creditors or such guarantor's creditors, such proceeding shall not have been
dismissed.
12.02 Remedies. Upon the occurrence of any Events of Default by Tenant
which is not cured by Tenant within the grace periods specified in Section 12.01
hereof, if any, Landlord shall have the following rights and remedies, in
addition to all other rights or remedies available to Landlord in law or equity:
(a) Landlord may give written notice to Tenant specifying such
Event of Default or Events of Default and stating that this Lease and the Term
hereby demised shall expire and terminate on the date specified in such notice,
and upon the date specified in such notice, this Lease and the Term hereby
demised, and all rights of Tenant under this Lease shall expire and terminate.
Upon any termination of this Lease, Tenant shall quit and peaceably surrender
the Premises, and all portions thereof, to Landlord. Following any such
termination, Landlord may, without further notice, enter the Premises, and any
portions thereof, and take possession thereof by, summary proceeding, ejectment
or otherwise, and may dispossess Tenant and remove Tenant and all other persons
and property from the Premises and Landlord shall have the right to receive all
rental and other income of and from the same.
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(b) At Landlord's election, without terminating this Lease,
Landlord may, without re-entry, recover possession of the Premises in the manner
prescribed by any statute relating to summary process, and any demand for the
Rent, re-entry for condition broken, and any and all notices to quit, or other
formalities of any nature, to which Tenant may be entitled, are hereby
specifically waived. Landlord may relet the Premises for the account of Tenant.
No such termination of Tenant's right to possess the Premises under this Section
12.02(b) shall relieve Tenant of its liabilities and obligations under this
Lease (as if such right of possession had not been so terminated or expired),
and such liabilities and obligations shall survive any such termination of
Tenant's possessory interest. In the event of any such termination of this Lease
or Tenant's right of possession, whether or not the Premises, or any portion
thereof, shall have been relet, Tenant shall pay the Landlord a sum equal to the
Rent and any other charges required to be paid by Tenant up to the time of such
termination of such right of possession and thereafter Tenant, until the end of
the Term, shall be liable to Landlord for and shall pay to Landlord: (i) the
equivalent of the amount of the Rent payable under this Lease, less (ii) the net
proceeds of any reletting effected pursuant to the provisions hereof after
deducting all of Landlord's "Reletting Expenses" (as defined in Section 12.02).
Tenant shall pay such amounts in accordance with the terms of this Section
12.02(b) as set forth in a written statement thereof from Landlord to Tenant
(hereinafter, the "Deficiency") to Landlord in monthly installments on the days
on which the Annual Base Rent is payable under this Lease, and Landlord shall be
entitled to recover from Tenant each monthly installment of the Deficiency as
the same shall arise. Tenant shall also pay to Landlord upon demand the costs
incurred by Landlord in curing Tenant's defaults existing at or prior to the
date of such termination and the cost of recovering possession of the Premises.
Tenant agrees that Landlord may file suit to recover any sums that become due
under the terms of this Section from time to time, and all reasonable costs and
expenses of Landlord, including attorneys' fees and costs incurred in connection
with such suits shall be payable by Tenant on demand.
(c) At any time after an Event of Default and termination of
the Lease by Landlord, whether or not Landlord shall have collected any monthly
Deficiency as set forth in Section 12.02(b), Landlord shall be entitled to
recover from Tenant, and Tenant shall pay to Landlord, on demand, as and for
final damages for Tenant's default and in lieu of any subsequent Deficiency (but
without limitation of the provisions of subsection (f) hereof):
(i) all Rent and other sums due and payable by Tenant
on the date of termination; plus
(ii) the costs of curing Tenant's defaults existing
at or prior to the date of termination; plus
(iii) the cost of recovering possession of the
Premises and the Reletting Expenses; plus
(iv) an amount equal to the difference between the
then present worth of the aggregate of the Rent and any other
charges to be paid by Tenant hereunder for the then unexpired
term of this Lease (assuming this Lease had not been so
terminated), and the then present worth of the then aggregate
fair market rent of the Premises for the same period (taking
into account rentals received by Landlord under a replacement
Lease of the Premises). In the computation of present worth, a
discount at the then market discount rate as reasonably
determined by Landlord shall be employed.
(d) In connection with any reletting of the Premises following
an Event of Default, Landlord shall be entitled to grant such rental and
economic concessions and other incentives as may be customary for similar space
in eastern Fairfield County.
(e) Any and all property belonging to Tenant or to which
Tenant is or may be entitled which may be removed from the Premises by Landlord
pursuant to the authority of this Lease or applicable law, may be handled,
removed or stored in a commercial warehouse or otherwise by Landlord at Tenant's
risk and expense and Landlord shall in no event be responsible for the value,
preservation or safekeeping thereof. Tenant shall pay to Landlord, upon demand,
any and all expenses incurred in such removal and all storage charges for such
property so long as the same shall be in Landlord's possession or under
Landlord's control.
(f) Landlord shall have the right of injunction, in the event
of a breach or threatened breach by Tenant of any of the agreements, conditions,
covenants or terms hereof, to restrain the same and the right to invoke any
remedy allowed by law or in equity, whether or not other remedies, indemnity or
reimbursements are herein provided. The rights and remedies given to Landlord in
this Lease are distinct, separate and cumulative remedies; and no one of them,
whether or not exercised by Landlord, shall be deemed exclusive of any of the
others.
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(g) For purposes of this Section 12.02, "Reletting
Alterations" shall mean all repairs made by Landlord in or to the Premises to
the extent deemed reasonably necessary by Landlord to prepare the Premises for
the re-leasing following an Event of Default; and "Reletting Expenses" shall
mean the reasonable expenses paid or incurred by Landlord in connection with any
re-leasing of the Premises following an Event of Default, including, without
limitation, marketing expenses, brokerage commissions, management fees,
attorneys' fees, the costs of Reletting Alterations, operating expenses and rent
and other economic concessions provided to the new tenant.
12.03 Landlord's Right to Cure Defaults. If the Tenant shall default in
the observance or performance of any condition or covenant on Tenant's part to
be observed or performed under or by virtue of any of the provisions of this
Lease, and such default continues beyond any applicable notice and cure period
or Landlord reasonably determines that an emergency exists, the Landlord,
without being under any obligation to do so and without thereby waiving such
default, may remedy such default for the account and at the expense of the
Tenant. If the Landlord makes any expenditures or incurs any obligations for the
payment of money in connection therewith, including but not limited to
reasonable attorney's fees in instituting, prosecuting or defending any action
or proceeding, such sums paid or obligation incurred and costs, shall be paid
upon demand to the Landlord by the Tenant as Additional Rent pursuant to Section
3.04 hereof and if not so paid with interest from its due date until paid at the
lesser of eighteen (18%) percent per annum or the maximum legal rate that
Landlord may charge Tenant.
12.04 No Accord and Satisfaction. Landlord may collect and receive any
rent due from Tenant, and the payment thereof shall not constitute a waiver of
or affect any notice or demand given, suit instituted or judgment obtained by
Landlord, or be held to waive, affect, change, modify or alter the rights or
remedies that Landlord has against Tenant in equity, at law, or by virtue of
this Lease. No receipt or acceptance by Landlord from Tenant of less than the
monthly rent herein stipulated shall be deemed to be other than a partial
payment on account for any due and unpaid stipulated rent; no endorsement or
statement on any check or any letter or other writing accompanying any check or
payment of rent to Landlord shall be deemed an accord and satisfaction, and
Landlord may accept and negotiate such check or payment without prejudice to
Landlord's rights to (i) recover the remaining balance of such unpaid rent, or
(ii) pursue any other remedy provided in this Lease.
12.05 Arbitration. Any dispute arising out of or relating to Article 5
of this Lease (with respect to the issues expressly stated therein) shall be
submitted to and determined in binding arbitration under the Commercial
Arbitration Rules of the American Arbitration Association. The arbitration shall
be conducted before and by a single arbitrator selected by the parties. If the
parties have not selected an arbitrator within 30 days of written demand for
arbitration, the arbitrator shall be selected by the American Arbitration
Association pursuant to the then current rules of that Association on
application by either party. The arbitrator shall have authority to fashion such
just, equitable and legal relief as he, in his sole discretion, may determine.
The parties agree that the arbitration hearing shall be held within thirty (30)
business days following notification to the parties of the appointment of such
arbitration, and that the arbitration proceedings shall be concluded within
thirty (30) business days following the first scheduled arbitration hearing.
Each party shall bear all its own expenses of arbitration and shall bear equally
the costs and expenses of the arbitrator. All arbitration proceedings shall be
conducted in the City of Stamford, State of Connecticut. Landlord and Tenant
further agree that they will faithfully observe this agreement and rules, and
that they will abide by and perform any award rendered by the arbitrator and
that a judgment of the court having jurisdiction may be entered upon the award.
The duty to arbitrate shall survive the cancellation or termination of this
Lease. Landlord and Tenant further agree that in addition to the discovery
rights available to them under the Commercial Arbitration Rules they shall have
all rights of discovery available to litigants pursuant to the Connecticut Rules
of Court then appertaining.
12.06 Waivers. TENANT HEREBY REPRESENTS, COVENANTS AND AGREES THAT IT
IS ENGAGED PRIMARILY IN COMMERCIAL PURSUITS, AND THAT THE LEASE IS A "COMMERCIAL
TRANSACTION" WITHIN THE MEANING OF SECTION 52-278a(a) OF THE CONNECTICUT GENERAL
STATUTES (REV. 1958), AS AMENDED. TENANT HEREBY WAIVES ALL RIGHTS TO NOTICE,
PRIOR JUDICIAL HEARING OR COURT ORDER UNDER SECTION 52-278a ET SEQ. OF THE
CONNECTICUT GENERAL STATUTES (REV. 1958) AS AMENDED OR UNDER ANY OTHER STATE OR
FEDERAL LAW WITH RESPECT TO ANY PREJUDGMENT REMEDIES THE LANDLORD MAY EMPLOY TO
ENFORCE ITS RIGHTS AND REMEDIES HEREUNDER.
12.07 Claims in Bankruptcy. Nothing herein shall limit or prejudice the
right of Landlord to prove for and obtain in proceedings for bankruptcy or
insolvency by reason of any such termination, an amount equal to the maximum
allowed by any statute or rule of law in effect at the time when, and governing
the proceedings in which, the damages are to be proved, whether or not the
amount be greater, equal to or less than the amount of the loss or damage
referred to above. Without limiting any of the provisions of this Article 12, if
pursuant to the Bankruptcy Code, as the same may be amended, Tenant is permitted
to assign this Lease in disregard of the restrictions contained in Article 11,
Tenant agrees that adequate assurance of future performance by the assignee
permitted under the Bankruptcy Code shall
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mean the deposit of cash security with Landlord in any amount equal to all Rent
payable under this Lease for the calendar year preceding the year in which such
assignment is intended to become effective, which deposit shall be held by
Landlord, without interest, for the balance of the term as security for the full
and faithful performance of all of the obligations under this Lease on the part
of Tenant yet to be performed. If Tenant receives or is to receive any valuable
consideration for such an assignment of this Lease, such consideration, after
deducting therefrom (a) the brokerage commissions, if any, and other expenses
reasonably designated by the assignee as paid for the purchase of Tenant's
property in the Premises, shall be and become the sole exclusive property of
Landlord and shall be paid over to Landlord directly by such assignee. In
addition, adequate assurance shall mean that any such assignee of this Lease
shall have a net worth indicating said assignee's reasonable ability to pay the
Rent, and abide by the terms of this Lease for the remaining portion thereof
applying commercially reasonable standards.
ARTICLE 13. NONDISTURBANCE AND RIGHTS OF MORTGAGE HOLDERS
13.01 Subordination.
(a) Subject to the provisions of this Section 13.01, without
the necessity of any additional document being executed by Tenant for the
purpose of effecting a subordination, Tenant agrees that this Lease and Tenant's
tenancy hereunder are and shall be automatically subject and subordinate at all
times to (a) the lien (and the terms and conditions) of any mortgage that may
now exist or hereafter be executed in any amount for which the Building, or
Landlord's interest or estate in any of said items is specified as security; and
(b) renewals, modifications, consolidations, replacements, and extensions of any
of the foregoing.
(b) In the event that any such first mortgage is foreclosed or
a conveyance in lieu of foreclosure is made for any reason, Tenant shall, at the
option of Landlord's Mortgagee or the grantee or purchaser in foreclosure,
notwithstanding any subordination of any such lien to this Lease, attorn to and
become the Tenant of the successor in interest to Landlord at the option of such
successor in interest. Tenant covenants and agrees to execute and deliver,
within ten (10) days following delivery of request by Landlord, Landlord's
Mortgagee, or by Landlord's successor in interest and in the form requested by
Landlord, Landlord's Mortgagee, or by Landlord's successor in interest, any
additional documents evidencing the priority or subordination of this Lease with
respect to the lien of any such first mortgage, which additional documents shall
be satisfactory to Landlord, Landlord's Mortgagee, and Landlord's successors in
interest.
(c) If Landlord's Mortgagee shall succeed to the interest of
Landlord under this Lease, Landlord's Mortgagee shall assume and perform
Landlord's obligations under this Lease only while it is the fee owner of the
Building and shall not be (i) liable for any breach, act or omission of any
prior landlord, including Landlord; (ii) subject to offsets, claims or defenses
which Tenant might have against prior landlords; (iii) bound by the payment of
Annual Base Rent or Additional Rent or other payment in lieu of rent which
Tenant may have paid to any prior landlord for more than thirty (30) days in
advance of its due date; (iv) bound by any assignment, surrender, termination,
waiver, lease amendment or modification of or affecting this Lease made without
its consent; or (v) bound by any of the construction obligations of Landlord
under this Lease.
13.02 Notices. If Tenant is given written notice of the identity and
address of Landlord's Mortgagee, then Tenant shall give to such Landlord's
Mortgagee written notice of any default by Landlord under the terms of this
Lease by registered or certified mail, and such Landlord's Mortgagee shall be
given the opportunity to cure Landlord's default within the thirty (30) days
following such written notice; provided, however, that said thirty (30) day
period shall be extended so long as within said thirty (30) day period such
party has commenced to cure the default and such party is proceeding with due
diligence (including the exercise of its remedies against Landlord if necessary
to obtain possession of the Premises) to effect such cure.
13.03 Estoppel Certificates. Tenant shall at any time, and from time to
time, upon not less than five (5) days prior written notice from Landlord
execute, acknowledge and deliver to Landlord, to any prospective purchaser, or
Landlord's Mortgagee, a written certificate of Tenant in form and substance
reasonably satisfactory to Landlord, or Landlord's Mortgagee stating, in part:
(a) whether Tenant has accepted the Premises and the commencement date and
termination date of this Lease; (b) that this Lease is unmodified and in full
force and effect (or if there have been modifications, that the same is in full
force and effect as modified and stating the modifications), and has not been
assigned; (c) that there are not, to Tenant's best knowledge, any uncured
defaults on the part of the Landlord or Tenant hereunder, or specifying any
defaults that may exist; (d) whether or not there are then existing any defenses
against the enforcement of any of the obligations of Tenant under this Lease
(and, if so, specifying same); (e) whether Tenant has received all required
contributions from Landlord on account of Tenant's improvements; (f) the dates,
if any, to which the Annual Base Rent and Additional Rent and other charges
under this Lease have been paid and the amounts of said Annual Base Rent and
Additional Rent, and that no Annual Base Rent, Additional Rent, or security
deposit has been paid in advance of its due date, and
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(g) any other information that may reasonably be required by any of such
persons. It is intended that any such certificate of Tenant delivered pursuant
to this Section 13.03 may be relied upon by Landlord and any prospective
purchaser or Landlord's Mortgagee of any part of the Building.
13.04 Quiet Enjoyment. Upon Tenant paying the Annual Base Rent and
Additional Rent and performing all of Tenant's obligations under this Lease,
Tenant may peacefully and quietly enjoy the Premises during the Term as against
all persons or entities lawfully claiming by or through Landlord; subject,
however, to the provisions of this Lease and to the rights of Landlord's
Mortgagee.
ARTICLE 14. NOTICES
14.01 Manner of Notice.
(a) All notices, demands and other communications ("notices")
permitted or required to be given under this Lease shall be in writing and sent
by personal service, telecopy transmission (if a copy thereof is also sent on
the same day by a nationally recognized overnight courier service), certified
mail (postage prepaid) return receipt requested or by a nationally recognized
overnight courier service, (a) to Tenant (i) at 274 Riverside Avenue, Westport,
Connecticut 06880, if sent prior to Tenant's taking possession of the Premises,
or (ii) at the Building if sent subsequent to Tenant's taking possession of the
Premises, or (iii) at any place where Tenant or any agent or employee of Tenant
may be found if sent subsequent to Tenant's vacating, abandoning or surrendering
the Premises, and (b) to Landlord at P.O. Box 703, Westport, Connecticut 06881
or (c) to such other address as either Landlord or Tenant may designate as its
new address for such purpose by notice given to the other in accordance with the
provisions of this Section 14.01.
(b) Notices shall be deemed to have been given (i) when hand
delivered (provided that delivery shall be evidenced by a receipt executed by or
on behalf of the addressee if delivered by personal service) if personal service
is used, (ii) on the date of transmission if sent before 4:00 p.m. (Hartford
time) on a business day when telecopy transmission is used, (iii) the sooner of
the date of receipt or the date that is three (3) days after the date of mailing
thereof if sent by postage pre-paid registered or certified mail, return receipt
requested, and (iv) one (1) day after being sent by Federal Express or other
reputable overnight courier service (with delivery evidenced by written receipt)
if overnight courier service is used.
ARTICLE 15. MISCELLANEOUS
15.01 Brokers. Landlord and Tenant warrant to each other that they have
had no dealings with any broker, agent or finder in connection with this Lease
except Reliance Property Group and Cushman & Wakefield of CT. Landlord agrees to
pay the commissions due to such brokerage companies pursuant to separate
agreements. Both parties hereto agree to protect, indemnify and hold harmless
the other from and against any final judgment related to commissions and charges
claimed by any other broker, agent or finder not identified above with respect
to this Lease or the negotiation thereof that is made by reason of any action or
agreement by such party.
15.02 Attorney's Fees. If on account of any default by Tenant in
Tenant's obligations under the terms of this Lease, it becomes necessary or
appropriate for Landlord to employ attorneys or other persons to enforce any of
Landlord's rights or remedies hereunder, Tenant shall pay upon demand as
Additional Rent hereunder all reasonable fees of such attorneys and other
persons and all other costs of any kind so incurred.
15.03 Site Development. Landlord reserves the right to design, develop
and operate an additional building and related improvements adjacent to the
Building. Landlord reserves the right to enter into agreements necessary for
shared parking and other shared amenities. Landlord shall use all reasonable
efforts to avoid disturbing or impairing Tenant's right to quite possession by
virtue of any site development reserved hereunder.
15.04 No Merger. There shall be no merger of this Lease or of the
leasehold estate hereby created with the fee estate in the Premises or any part
thereof by reason of the fact that the same person may acquire or hold, directly
or indirectly, this Lease or the leasehold estate hereby created or any interest
in this Lease or in such leasehold estate as well as the fee estate in the
leasehold Premises or any interest in such fee estate.
15.05 Easements. Landlord reserves the right, from time to time, to
grant easements and rights, make dedications, agree to restrictions and record
maps affecting the Project as Landlord may deem necessary or desirable, so long
as such easements, rights, dedications, restrictions, and maps do not
21
<PAGE>
unreasonably interfere with the use of the Premises by Tenant; and this Lease
shall be subordinate to such instruments.
15.06 Severability. If any provision of this Lease or the application
thereof to any person or circumstance shall, to any extent, be invalid or
unenforceable, the remainder of this Lease, or the application of such provision
to persons or circumstances other than those as to which it is invalid or
unenforceable, shall not be affected thereby, and each provision of this Lease
shall be valid and enforceable to the full extent permitted by law. No remedy or
election hereunder shall be deemed exclusive, but shall wherever possible, be
cumulative with all other remedies at law or in equity. Neither this Lease nor
any term or provision hereof may be changed, waived, discharged or terminated
orally, and no breach thereof shall be waived, altered or modified, except by a
written instrument signed by the party against which the enforcement of the
change, waiver, discharge or termination is sought. Any right to change, waive,
discharge, alter or modify, or terminate this Lease shall be subject to the
prior express written consent of Landlord's Mortgagee.
15.07 No Waiver. No waiver of any provision hereof shall be deemed a
waiver of any other provision hereof or of any subsequent breach of the same or
any other provision. No waiver of any breach shall affect or alter this Lease,
but each and every term, covenant and condition of this Lease shall continue in
full force and effect with respect to any other then existing or subsequent
breach thereof. No reference to any specific right or remedy shall preclude the
exercise of any other right or remedy permitted hereunder or that may be
available at law or in equity. No failure by Landlord to insist upon the strict
performance of any agreement, term, covenant or condition hereof, or to exercise
any right or remedy consequent upon a breach thereof, and no acceptance of full
or partial rent during the continuance of any such breach, shall constitute a
waiver of any such breach, agreement, term, covenant or condition.
15.08 Bind and Inure. The terms, provisions, covenants and conditions
contained in this Lease shall bind and inure to the benefit of Landlord and
Tenant, and, except as otherwise provided herein, their respective heirs, legal
representatives, successors and assigns.
15.09 Landlord's Liability.
(a) The term "Landlord" as used herein and throughout the
Lease shall mean only the owner or owners at the time in question of Landlord's
interest in this Lease. Upon any transfer of such interest, from and after the
date of such transfer, Landlord herein named (and in case of any subsequent
transfers the then transferor) and each of its partners, principals,
shareholders, beneficiaries or co-tenants, as the case may be, ("Landlord's
Constituent Parties") shall be relieved of all liability for the performance of
any obligations on the part of the Landlord contained in this Lease, provided
that any monies in the hands of Landlord or the then transferor at the time of
such transfer, in which Tenant has an interest, shall be delivered to the
transferee.
(b) The obligations contained in this Lease to be performed by
Landlord shall be binding on Landlord's successors and assigns, only during
their respective periods of ownership, provided, however, that Landlord and each
of Landlord's Constituent Parties shall be under no personal liability with
respect to any of the provisions, covenants or agreements of this Lease. If
Landlord becomes obligated to pay Tenant a money judgment arising out of any
failure by Landlord to perform any of its obligations under this Lease, Tenant
shall be limited for the satisfaction of the money judgment solely to Landlord's
interest in the Building and no other property or assets of Landlord or
Landlord's Constituent Parties shall be subject to levy, execution or other
enforcement procedure whatsoever for the satisfaction of the money judgment.
15.10 Interpretation. The words "Landlord" and "Tenant" as used herein
shall include the plural as well as the singular. The words used in neuter
gender include the masculine and feminine. If there is more than one Tenant, the
obligations under this Lease imposed on Tenant shall be joint and several. The
captions preceding the articles of this Lease have been inserted solely as a
matter of convenience and such captions in no way define or limit the scope or
intent of any provision of this Lease.
15.11 Force Majeure. Landlord shall be excused for the period of any
delay in the performance of any obligations hereunder, when prevented from so
doing by cause or causes beyond Landlord's control including, without
limitation, civil commotion, war, labor disputes or strikes, governmental
regulations or controls, inspection delays by governmental authorities, delays
in obtaining governmental permits, inability to obtain any material or services,
casualty, acts of God, or the elements. Tenant shall similarly be excused for
delay in the performance of obligations hereunder provided: (a) nothing
contained in this Section or elsewhere in this Lease shall be deemed to excuse
or permit any delay in the payment of any sums of money required hereunder, or
any delay in the cure of any default which may be cured by the payment of money;
(b) no reliance by Tenant upon this Section shall limit or restrict in any way
Landlord's right of self-help as provided in this Lease; and (c) Tenant shall
not be entitled to rely upon this Section unless it shall advise Landlord in
writing, of the existence of any force majeure
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preventing the performance of an obligation of Tenant promptly after the
commencement of the force majeure.
15.12 Joint and Several. If two or more individuals, corporations,
partnerships or other business associations (or any combination of two or more
thereof) shall sign this Lease as Tenant, the liability of each such individual,
corporation, partnership or other business association to pay Rent and perform
all other obligations hereunder shall be deemed to be joint and several.
15.13 Entire Agreement. This Lease, including the Exhibits hereto,
which are made part of this Lease, contain the entire agreement of the parties
and all prior negotiations and agreements are merged herein. Neither Landlord
nor Landlord's agents have made any representations or warranties with respect
to the Premises, the Building or this Lease except as expressly set forth
herein, and no rights, easements or licenses are or shall be acquired by Tenant
by implication or otherwise unless expressly set forth herein. Tenant covenants
and agrees that no diminution of light, air or view by any structure that may
hereafter be erected (whether or not by Landlord) shall entitle Tenant to any
reduction of Annual Base Rent or Additional Rent under this Lease, result in any
liability of Landlord or Tenant, or in any other way affect this Lease or
Tenant's obligations hereunder. Landlord covenants that it has good leasehold
title to the land upon which the Building is located and it has good and lawful
right and authority to make this Lease.
15.14 Authority. If Tenant signs as a corporation or a partnership,
each person executing this Lease on behalf of Tenant hereby covenants and
warrants that Tenant is a duly authorized and existing entity, that Tenant is
duly qualified to do business in Connecticut, that Tenant has full right and
authority to enter into this Lease, and that each person signing on behalf of
Tenant is duly authorized to do so and that no other signatures are necessary.
Upon Landlord's request, Tenant shall provide Landlord with evidence reasonably
satisfactory to Landlord confirming the foregoing covenants and warranties.
15.15 Governing Law. This Lease and the rights and obligations of the
parties hereunder shall be construed and enforced in accordance with the laws of
the State of Connecticut.
15.16 Survival. All agreements, covenants and indemnifications
contained herein or made in writing pursuant to the terms of this Lease by or on
behalf of Tenant shall be deemed material and shall survive expiration or sooner
termination of this Lease.
15.17 Building Name. The Building and the Project may be known by such
name as Landlord, in its sole discretion, may elect, and Landlord shall have the
right from time to time to change such designation or name without Tenant's
consent upon thirty (30) days prior written notice to Tenant.
15.18 Submission. Submission of this instrument for examination does
not constitute a reservation of or option for lease of the Premises, and it is
not effective as a lease or otherwise until this Lease has been executed by both
Landlord and Tenant and a fully executed copy has been delivered to each.
IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease the
day and year first above written.
WITNESSESS LANDLORD:
WILTON EXECUTIVE CAMPUS ASSOCIATES
/s/
- ----------------------------------
William M. Petroccio
By /s/
---------------------------
/s/
- ----------------------------------
Jonathan A. Flatow
TENANT:
GREENFIELD ONLINE, INC.
/s/
- ----------------------------------
Jonathan A. Flatow
/s/ By: /s/
- ---------------------------------- ------------------------------
Susan Rosovsky Name: Rudy Nadilo
Title: Pres + CEO
23
<PAGE>
STATE OF CONNECTICUT )
) ss. Fairfield
COUNTY OF FAIRFIELD
On this the 20th day of October, 1999, before me, William M. Petroccio,
the undersigned officer, personally appeared Stephen J. Saft, known to me (or
satisfactorily proven) to be the person whose name is subscribed to the within
instrument, and acknowledged himself/herself to be a general manager of , Wilton
Executive Campus Associates a general partnership, and that he/she, as such
general manager, being authorized so to do, executed the foregoing instrument as
the free act and deed of the company for the purposes contained therein by
signing the name of the company by himself/herself as such manager.
IN WITNESS WHEREOF, I hereunto set my hand.
/s/
---------------------------------------
Commissioner of the Superior Court/
Notary Public
[Affix Notarial Seal] My Commission Expires:
STATE OF CONNECTICUT)
) ss. Westport
COUNTY OF FAIRFIELD)
On this the 20 day of October, 1999, before me, Jonathan A. Flatow, the
undersigned officer, personally appeared Rudy Nadilo, who acknowledged himself
to be the President of Greenfield OnLine, Inc., a corporation, and that he, as
such President, being authorized so to do, executed the foregoing instrument as
his free act and deed and the free act and deed of the corporation for the
purposes contained therein by signing the name of the corporation by himself as
such officer.
IN WITNESS WHEREOF, I hereunto set my hand.
/s/
---------------------------------------
Commissioner of the Superior Court
<PAGE>
EXHIBIT B
---------
Legal Description
-----------------
All that certain piece, parcel or tract of land situated in the Town of Wilton,
County of Fairfield, State of Connecticut, shown and designated as Area =
578,349 square feet 13.2771 Acres or a certain map entitled MAP SHOWING REVISION
OF PROPERTY LINES PERPARED FOR NABISCO BRANDS, INC. WILTON, CONN. SCALE: 1" =
100', JUNE 21, 1985 which map is on file in the office of the Town Clerk of the
said Town of Wilton as the map numbered 4240 referenced thereto.
<PAGE>
EXHIBIT C
---------
Rules and Regulations Attached to
and Made a Part of this Lease
-----------------------------
1. Tenant shall not display, inscribe, print, paint, maintain or affix
on any place or in or about the Building any sign, notice, legend, direction,
figure or advertisement, except on the doors of the Premises and on the
Directory Boards, and then only such name or names and matter, and in such
color, size, style, place and materials, as shall first have been approved in
writing by Landlord.
2. Tenant shall not advertise the business, profession or activities of
Tenant conducted in the Building in any manner which violates the letter or
spirit of any code of ethics adopted by any recognized association or
organization pertaining to such business, profession or activities or, which in
Landlord's reasonable judgment, tends to impair the reputation of the Building
or its desirability as a building for offices, and shall not use the name of the
Building for any purpose other than as the business address of Tenant, and
Tenant shall not use any picture or likeness of the Building in any circulars,
notices, advertisements or correspondence without Landlord's prior written
consent.
3. Tenant shall not use the Premises for housing accommodations or
lodging or sleeping purposes, or do any cooking therein (except any convenience
kitchen), or use any illumination other than electric light, or use or permit to
be brought into the Building any flammable oils or fluids such as gasoline,
kerosene, naptha, and benzine, or any explosives, radioactive materials or other
articles deemed hazardous to life, limb or property.
4. Tenant shall not contract for any work or service which might
involve the employment of labor incompatible with the Building employees or
employees of contractors doing work or performing services by or on behalf of
Landlord or with the terms and conditions of any collective bargaining agreement
to which Landlord or Landlord's agents or contractors may be a party.
5. Tenant shall not place anything or allow anything to be placed near
the glass of any window, door, partition or wall which may appear unsightly from
outside the Premises, and Tenant shall not cover or obstruct the sashes, sash
doors, skylights, windows and doors that reflect or admit light and air into the
public places in the Building.
6. No Tenant shall have any property stored outside, except with the
prior consent of Landlord.
7. All sidewalks, halls, passages, exits, entrances, elevators, lobbies
and stairways of the Building, if any, shall not be obstructed by any Tenant or
used by him for any purpose other than for ingress to and egress from his
respective Premises no shall any door be locked during normal business hours. No
Tenant and no employees or invitees of Tenant shall go upon the roof of the
Building.
8. Tenant shall not alter any lock nor install any new or additional
locks or any bolts on any door of the Premises, except with the prior consent of
Landlord, which consent shall not be unreasonably withheld.
9. Tenant shall not overload the floor of the Premises or mark, drive
nails, screw or drill into the partitions, woodwork or plaster or in any way
deface the Premises or any part thereof.
<PAGE>
10. 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 therein, nor
shall any animals, fish or birds, bicycles or other vehicles be brought in or
kept in or about the Premises or the Building. All bicycles shall be parked in
areas designated by Landlord at the Building.
11. Tenant shall not use or keep in the Premises or the Building any
kerosene, gasoline or inflammable or combustible fluid or material, or use any
method of heating or air-conditioning other than that supplied by Landlord.
12. Landlord will direct Tenant as to where and how telephone and
telegraph wire are to be introduced. No boring or cutting for wires will be
allowed without the consent of Landlord. The location of telephones, call boxes
and other office equipment affixed to the Premises shall be subject to the
approval of Landlord.
13. Each Tenant, upon the termination of his tenancy, shall deliver to
Landlord the card access keys for entrance to the Building as well as keys to
offices, rooms and toilet rooms which shall have been furnished Tenant or which
Tenant shall have had made, and in the event of loss of any keys or card access
keys so furnished, shall pay the Landlord therefor.
14. Landlord reserves the right to exclude or expel from the Building
any person who, in the judgment of Landlord, is intoxicated or under the
influence of liquor or drugs, or who shall in any manner do any act in violation
of any of the Rules and Regulations of the Building.
15. No vending machine or machines of any description shall be
installed, maintained or operated outside the Premises without the written
consent of Landlord. Should tenants desire vending machines of any type within
their Premises, such vending machines shall be provided, maintained and serviced
by Landlord or Landlord's designee.
16. Tenant shall not disturb, solicit, or canvass any occupant of the
Building and shall cooperate to prevent same.
17. Any permitted corrosive, flammable or other special wastes shall be
handled for disposal as directed by Landlord and strictly in accordance with all
applicable law.
18. Tenant's use of the Common Areas shall be limited to access and
parking purposes and under no circumstances shall Tenant be permitted to store
any goods or equipment, conduct any operations or construct or place any
improvements, barriers or obstructions in the Common Areas, or otherwise
adversely affect the appearance thereof, without the prior consent of Landlord.
19. Tenant agrees to handle and dispose of all rubbish, garbage, and
waste from Tenant's operations in accordance with regulations established by
Landlord and not permit the accumulation or burning of any rubbish or garbage
in, or about any part of the Building.
20. Tenant shall not change (whether by alteration, replacement,
rebuilding or otherwise) the exterior color and/or architectural treatment of
the Premises or of the Building in which the same are located, or any part
thereof.
<PAGE>
21. Tenant shall not use the plumbing facilities for any purpose other
than for which they were constructed, or dispose of any garbage or other foreign
substance therein, whether through the utilization of so-called "disposal" or
similar units, or otherwise.
22. Tenant shall not subject any fixtures, furnishings or equipment in
or on the Premises and affixed to the realty, to any mortgages, liens,
conditional sales agreements or encumbrances.
23. Tenant shall not install any awnings or curtains, blinds, shades or
screens in, on or outside the Premises, which are visible to public view outside
the Premises.
24. Tenant shall not permit window cleaning or other exterior
maintenance and janitorial services in and for the Premises to be performed
except by such person(s) as shall be approved by Landlord and except during
reasonable hours designated for such purposes by Landlord.
25. Tenant shall not install, operate or maintain in the Premises any
electrical equipment which will overload the electrical system therein, or any
part thereof, beyond its reasonable capacity for proper and safe operation as
determined by Landlord in light of the over-all system and requirements therefor
in the Building, or which does not bear underwriters' approval.
26. Landlord reserves the right to make such other and further
nondiscriminatory Rules and Regulations as in its judgment may be necessary or
desirable for the safety, care and cleanliness of the Premises and the Building
and for the preservation of good order therein. Tenant agrees to abide by all
such Rules and Regulations hereinabove stated and any additional Rules and
Regulations which are adopted.
27. Heating, lighting and plumbing: The Landlord or his agent should be
notified at once of any trouble with heating, lighting or plumbing fixtures.
Tenants must not leave doors of the Premises unlocked at night.
28. All freight, furniture, etc. must be received and delivered through
entrances to the Building designated for such purpose unless otherwise
authorized by the Landlord, and only during such hours and in such elevators as
Landlord may reasonably determine from time to time.
29. Nothing shall be thrown from or taken in through the windows, nor
shall anything be left outside the building on the windowsills of the Premises.
30. No person shall loiter in the halls, corridors or lavatories.
31. The Landlord, its agents and employees shall have access at
reasonable times to perform their duties in the maintenance and operation of the
Premises.
32. No Tenant shall use any method of heating other than that provided
for in the Tenant's lease without the consent of the Landlord.
33. Any damage caused to the Building or the Premises or to any person
or party herein as a result of any breach of any of the rules and regulations by
the Tenant shall be borne by the Tenant.
34. Landlord reserves the right to inspect all objects and matter to be
brought into the Building and to exclude from the Building all objects and
matter which violate any of these Rules and
<PAGE>
Regulations or the Lease. Landlord may require any person leaving the Building
with any package or other object or matter to submit a pass, listing such
package or object or matter, from the tenant from whose premises the package or
object or matter is being removed, but the establishment and enforcement of such
requirement shall not impose any responsibility on Landlord for the protection
of any tenant against the removal of property from the premises of such tenant.
Landlord shall in no way be liable to Tenant for damages or loss arising from
the admission, exclusion or ejection of any person to or from the Premises or
the Building under the provisions of this Rule or the following Rule.
35. Tenant shall not occupy or permit any portion of the Premises to be
occupied as an office for a public stenographer or public typist, or for the
warehousing, manufacture or sale to the general public of beer, wine, liquor, or
drugs; for rendition of medical, dental or other diagnostic or therapeutic
services; as a barber, beauty or manicure shop; as an employment bureau; or for
the preparation, dispensing or consumption of food and beverages in any manner
not consistent with office use, unless specifically approved and agreed to in
writing by Landlord and only for the exclusive use of Tenant, its employees and
visitors. Tenant shall not use the Premises or any part thereof, or permit the
Premises or any part thereof to be used, for sale at retail or auction of
merchandise, goods or property of any kind, except for promotional purposes, or
for manufacturing, printing or electronic data processing, except for the
operation of normal business office reproducing or printing equipment and other
business machines for Tenant's own requirements at the Premises; provided that
such use shall not exceed that portion of the mechanical or electrical
capabilities of the Building equipment allocable to the Premises.
36. Tenant shall not take or permit any action which would impair or
interfere with any of the Building services or the proper and economic heating,
cleaning, air conditioning or other servicing of the Building or the Demised
Premises, or impair or interfere with or tend to impair or interfere with the
use of any of the other areas of the Building by occasion or discomfort,
annoyance or inconvenience to, Landlord or any other tenants or occupants of the
Building. Tenant shall cooperate with Landlord in obtaining maximum
effectiveness of the cooling system and if requested by Landlord shall lower and
close drapes and curtains when the sun's rays fall directly on the windows of
the Premises.
37. Tenant shall comply with such rules and regulations governing
parking as may be promulgated from time to time by Landlord, including, without
limitation, rules and regulations requiring the parking of vehicles in
designated spaces or areas or regarding the exclusion of other spaces or areas.
38. If any governmental license or permit shall be required for the
property and lawful conduct of Tenant's business in the Premises, or any part
thereof, and if failure to secure such license or permit would in any affect
Landlord, then Tenant, at its expense, shall duly procure and thereafter
maintain such license or permit and submit the same inspection by Landlord.
Tenant shall at all times comply with the terms and conditions of each such
license or permit, and failure to procure and maintain same by Tenant shall not
affect Tenant's obligations hereunder.
39. Business machines and mechanical equipment shall be placed and
maintained by Tenant at Tenant's expense, in such a manner as shall be
sufficient in Landlord's judgment to absorb and prevent vibration, noise and
annoyance.
40. In the moving, delivery of receipt of safes, freight, furniture,
packages, boxes, crates, paper, office material, or any other matter or thing,
Tenant shall use and shall cause its employees and contractors and any others
making deliveries to the Premises to use hand trucks equipped with rubber tires,
side guards and such other safeguards as Landlord shall reasonably require.
<PAGE>
41. Landlord shall have the right to prohibit any advertising by any
Tenant which, in Landlord's opinion, tends to impair the reputation of the
building or its desirability as a building for offices, and upon written notice
from Landlord, Tenant shall refrain from or discontinue such advertising. Tenant
shall not use the name of the building or its owner in any advertising without
the express prior written consent of the Landlord.
Landlord's Initials:________ Tenant's Initials: __________
<PAGE>
LEASE
between
WILTON CAMPUS PROPERTIES, LLC, as Landlord
and
GREENFIELD ONLINE, INC., as Tenant
15 RIVER ROAD
WILTON, CT
October 20, 1999
1
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LEASE
TABLE OF CONTENTS
ARTICLE 1. GRANT..............................................................1
ARTICLE 2. TERM...............................................................1
ARTICLE 3. COMPLETION AND OCCUPANCY OF THE PREMISES...........................2
ARTICLE 4. RENT AND SECURITY..................................................3
ARTICLE 5. ADDITIONAL RENT FOR ESCALATIONS IN REAL ESTATE TAXES...............5
ARTICLE 6. SERVICES AND UTILITIES.............................................9
ARTICLE 7. CONDUCT OF BUSINESS BY TENANT.....................................10
ARTICLE 8. ALTERATIONS, IMPROVEMENTS AND SIGNAGE.............................12
ARTICLE 9. INSURANCE.........................................................13
ARTICLE 10. CASUALTY..........................................................15
ARTICLE 11. CONDEMNATION......................................................16
ARTICLE 12. ASSIGNMENT AND SUBLETTING.........................................17
ARTICLE 13. DEFAULTS AND REMEDIES.............................................19
ARTICLE 14. NONDISTURBANCE AND RIGHTS OF MORTGAGE HOLDERS.....................22
ARTICLE 15. NOTICES...........................................................23
ARTICLE 16. MISCELLANEOUS.....................................................23
ARTICLE 17. OPTION TO RENEW...................................................25
ARTICLE 18. RIGHT TO CANCEL...................................................25
ARTICLE 19. GROUND LEASE......................................................26
LIST OF EXHIBITS
Exhibit A Premises
Exhibit B Site Description
Exhibit C Base Building Improvements
Exhibit D Rules and Regulations Attached to and Made a Part of this Lease
Exhibit E Ground Lease
<PAGE>
LEASE
This Lease is made and entered into as of this 20th day of October,
1999, by and between WILTON CAMPUS PROPERTIES, LLC, a Connecticut Limited
Liability Company, with its principal place of business at 1300 Post Road East,
Westport, Connecticut (the "Landlord") and GREENFIELD ONLINE, INC., a
Connecticut Corporation with its principal place of business at 274 Riverside
Avenue, Westport, Connecticut (the "Tenant").
ARTICLE 1. GRANT
1.01 Premises. Landlord, for and in consideration of the rents herein
reserved and of the covenants and agreements herein contained on the part of
Tenant to be performed, hereby leases to Tenant and Tenant accepts from
Landlord, certain space shown on Exhibit A attached hereto and made a part
hereof, containing approximately 30,500 rentable square feet of second floor
offices (hereinafter referred to as the "Premises"), situated in a building to
be constructed on the property located at 11-15 River Road, Wilton, Connecticut,
(the "Building"). The Premises, Building, the "Common Areas" (defined below) and
the land upon which the same are located, which is legally described in Exhibit
B (the "Site"), together with all other improvements thereon and thereunder are
collectively referred to as the "Project". The actual rentable square footage of
the Premises will be determined by a measurement conducted by a third party
architect selected by Landlord and Tenant using the Building Owners and Managers
Association ("BOMA") standards and methodology. Such measurement shall be in
connection with the Premises on the second floor of the Building only. Any
adjustment to the 30,500 rentable square feet demised by this Lease, greater or
lesser, shall be based on the assumption that the second floor rentable square
footage is 29,732. The rentable square footage for the Premises (30,500) shall
be increased or decreased based on the difference between 29,732 and the
measurement undertaken pursuant to this Section. The results of such measurement
shall be set forth in the recordable certificate of the Commencement Date
executed by the parties pursuant to this Lease upon completion of construction.
1.02 Common Areas. Landlord hereby grants to Tenant during the term of
this Lease, a license to use, in common with the others entitled to such use,
the Common Areas as they from time to time exist, subject to the rights, powers
and privileges herein reserved to Landlord. The term "Common Areas" as used
herein will include the first floor lobby as shown on Exhibit A-1 which shall be
available only to the second floor tenants in the Building and for emergency
ingress and egress in favor of the adjacent first floor tenant together with all
areas and facilities outside the Premises that are provided and designated by
Landlord for general use and convenience of Tenant and other tenants including,
but not limited to the hallways, lobbies, stairways, elevators, pedestrian
sidewalks, landscaped areas, loading areas, roadways, parking areas, rights of
way, walking and jogging paths, if any.
1.03 Parking. Tenant shall be entitled to use the parking facilities at
the Building in common with other tenants, but such right shall be limited to
approximately four (4) non-exclusive tenant parking spaces for each 1,000
rentable square feet of Premises, rounded to the nearest whole digit. Tenant
agrees not to overburden the parking facilities and agrees to cooperate with
Landlord and other tenants in the use of parking facilities. Landlord reserves
the right, at any time, to designate parking spaces in the Common Areas for the
handicapped and visitors to the Building and all tenants. For the term of this
Lease, Landlord agrees to reserve six (6) parking spaces in a reasonable
location of which two (2) spaces shall be as close to the entrance of the
Premises as possible, to be determined by Landlord.
ARTICLE 2. TERM
2.01 Lease Term.
(a) The Premises are leased for a term to commence on the
"Commencement Date" (as defined in Section 3.01(b)) and shall end on the date
(the "Expiration Date") that is nine (9) "Lease Years" (defined below) after the
Commencement Date unless sooner terminated as herein provided (including any
option terms, the "Term"). If Landlord gives and Tenant accepts possession prior
to the Commencement Date, such occupancy shall be subject to all the terms and
conditions of this Lease and rent and other charges shall be prorated to the
date that Tenant takes possession of the Premises.
(b) The first "Lease Year" shall begin on the date hereof and
shall end on the last day of the twelfth (12th) full calendar month following
the Commencement Date. Each Lease Year thereafter shall consist of twelve (12)
consecutive calendar months following the end of the immediately preceding Lease
Year except that the final Lease Year shall end on the Expiration Date.
2.02 Holdover Tenancy. Tenant acknowledges that if it fails to deliver
possession of the Premises to Landlord upon the expiration or sooner termination
of this Lease, Landlord shall incur substantial economic loss. In the event that
Tenant shall hold the Premises, or any part thereof, after the expiration of the
Lease Term without the prior written consent of the Landlord, such holding shall
1
<PAGE>
constitute and be construed as a tenancy at will only and for the first six (6)
months of such holding over carry a daily rental equal to 125% of the daily
Annual Base Rent payable during the last month, and for all periods after said
six (6) months a daily rental equal to 150% of the daily Annual Base Rent
payable during the last month of the Lease Term, plus 100% of the daily rate of
Additional Rent and other sums due under this Lease during the last month of the
Lease Term. In addition to such increased rental payment and any other
liabilities to Landlord accruing therefrom, Tenant shall indemnify and hold
Landlord harmless from loss or liability resulting from such failure, including,
without limiting the generality of the foregoing, both direct and consequential
liabilities and damages of Landlord arising from claims made by any succeeding
tenant arising due to such failure. Nothing contained herein shall be construed
as Landlord's consent for Tenant's holdover.
ARTICLE 3. COMPLETION AND OCCUPANCY OF THE PREMISES
Delivery of the Premises. (a)Landlord shall construct the base building
improvements ("Base Building Improvements") described on Exhibit C attached
hereto. Landlord shall complete the Base Building Improvements no later than
August 15, 2000 .Landlord's obligation to deliver the Premises to Tenant with
the Base Building Improvements substantially completed on or before August 15,
2000 shall be extended by the number of days of delay resulting from any "Force
Majeure Delay" as defined in Section 16.12 hereof. Landlord represents and
warrants to Tenant (i) that as of the date of this Lease it has obtained all
required permits and approvals from all relevant municipal, state and federal
agencies and departments with jurisdiction over the Project, authorizing and
permitting the Landlord to begin construction of the Base Building Improvements;
and, (ii) that during the construction of the Base Building Improvements
Landlord will comply with all terms and conditions of all permits and approvals
issued in connection with the Project and the construction of the Base Building
Improvements. For the purposes of this Section 3.01, the term "substantially
complete" shall mean Landlord has sufficiently completed the Base Building
Improvements in accordance with this Lease ( except minor punchlist items which
Landlord shall thereafter promptly complete) so that Tenant can proceed to
construct the Leasehold Improvements continuously and without interruption.
(a) As soon as reasonably possible after the execution of this
Lease, the parties and their respective architects shall work cooperatively and
diligently to prepare and approve the space plan for the Premises which shows
Tenant's leasehold improvements and installations (the "Leasehold Improvements")
and thereafter, architectural and construction plans and drawings prepared for
the Leasehold Improvements (the "Final Plans"). Tenant's architect, VanSummern
Group Architects, will cooperate with Landlord's architect to arrive at mutually
agreed upon space plans and building features. Tenant shall be responsible for
the selection of a general contractor to complete the Leasehold Improvements,
subject to the reasonable approval of Landlord. Landlord shall contribute an
allowance ("Landlord's Allowance") of not greater than $25 per rentable square
feet to be fully applied toward the cost of Leasehold Improvements. Landlord
shall pay the Landlord's Allowance to the Tenant as billed by Tenant commencing
with the first expenditures for the Leasehold Improvements. Tenant shall provide
Landlord with reasonable documentation as to expenditures.
(b) Tenant shall substantially complete the Leasehold
Improvements in accordance with the Final Plans and obtain the issuance of a
final certificate of occupancy no later than November 15, 2000..However, this
period to obtain a final certificate of occupancy shall be extended by twice the
number of days past August 15, 2000 that the Landlord completes the Base
Building Improvements and delivers the Base Building to the Tenant. The term of
this Lease and the obligations of the parties hereto shall commence on a date
which shall be the sooner of (a) the date Tenant commences operation of its
business in all or any portion of the Premises; or (b) A date which is
determined by counting past November 15, 2000 a number of days equal to twice
the number of days from August 15, 2000 that the Landlord completes the Base
building Improvements and delivers the Base Building to Tenant. For every day
beyond September 1, 2000 that the Landlord fails to complete the Base Building
Improvements the Landlord shall grant Tenant a rent credit equal to two days of
the Daily Annual Base Rent for the first Lease Year, such credit to be used by
the Tenant starting with the Commencement Date. In the event that the Landlord
fails to complete the Base Building Improvements on or before September 1, 2000,
and Tenant receives the rent credits provided for in this section, the Term of
this Lease shall not be extended by the number of free rent days to which Tenant
is entitled, but shall terminate on a date calculated according to the terms of
this Lease under the assumption that the Landlord had completed the Base
Building Improvements on September 1, 2000.
(c) The term "Commencement Date" shall mean and refer to the
date the later of November 15, 2000 or the extended date determined in
accordance with Section 3.01(b) above, whichever is applicable.
3.02 Tenant's Communications Systems. Tenant shall be responsible for
the design, installation and construction of Tenant's data, telephone and video
systems and wiring and payment of all cost and expense related thereto.
2
<PAGE>
3.03 Confirmatory Amendments. When the Commencement Date and Expiration
Date hereof have been determined in accordance with the provisions set forth in
this Lease, the parties hereto shall execute a document, setting forth said
dates and said document shall be deemed a supplement to and part of this Lease.
The parties hereto agree to execute such confirmatory document not later than
thirty (30) days following the Commencement Date.
ARTICLE 4. RENT AND SECURITY
4.01 Annual Base Rent. Beginning with the Commencement Date and
continuing throughout the Term, Tenant shall pay to or upon the order of
Landlord an annual rental (the "Annual Base Rent") as set forth below which
shall be payable in consecutive monthly installments on or before the first day
of each calendar month in advance in the monthly amount set forth below, as
adjusted by the measurement required by Section 1.01:
Annual Base Rent per
Period Annual Base Rent Rentable Square Foot Monthly Base Rent
- ------ ---------------- -------------------- -----------------
Lease Years 1-3 $823,500.00 $27.00 $68,625.00
Lease Years 4-6 $884,500.00 $29.00 $73,708.33
Lease Years 7-9 $945,500.00 $31.00 $78,791.67
All payments of rent shall be made without demand, deduction,
counterclaim, set-off, discount or abatement in lawful money of the United
States of America. If the Commencement Date should occur on a day other than the
first day of a calendar month, or the Expiration Date should occur on a day
other than the last day of a calendar month, then the monthly installment of
Annual Base Rent for such fractional month shall be prorated upon a daily basis
based upon a thirty (30) day month.
4.02 Additional Rent. Tenant shall pay to Landlord all charges and
other amounts required under this Lease and the same shall constitute additional
rent hereunder (herein called "Additional Rent"), including, without limitation,
any sums due resulting from the provisions of Article 5 hereof. All such amounts
and charges shall be payable to Landlord at the place where the Annual Base Rent
is payable. Landlord shall have the same remedies for a default in the payment
of Additional Rent as for a default in the payment of Annual Base Rent. The term
"Rent" as used in this Lease shall mean the Annual Base Rent and the Additional
Rent.
4.03 Place of Payment. The Annual Base Rent and all other sums payable
to Landlord under this Lease shall be paid to Landlord at P.O. Box 703,
Westport, Connecticut 06881, or at such other place as Landlord shall designate
in writing to Tenant from time to time.
4.04 Terms of Payment. Tenant shall pay to Landlord all Annual Base
Rent as provided in Section 4.01 above and Tenant shall pay all Additional Rent
payable under Articles 5 and 6 on the terms provided therein. Except as provided
in this Article 4 and as may otherwise be expressly provided by the terms of
this Lease, Tenant shall pay to Landlord, within fifteen (15) days after
delivery by Landlord to Tenant of bills or statements therefor: (a) sums equal
to all expenditures made and monetary obligations incurred by Landlord under
this Lease for Tenant's account including, without limitation, expenditures made
and obligations incurred in connection with the remedying by Landlord any of
Tenant's defaults pursuant to the provisions of this Lease; (b) sums equal to
all expenditures made and monetary obligations incurred by Landlord for
reasonable counsel fees, in collecting or attempting to collect the Rent or any
other sum of money accruing under this Lease or in enforcing or attempting to
enforce any rights of Landlord under this Lease or pursuant to law; and (c) all
other sums of money accruing from Tenant to Landlord under the provisions of
this Lease.
4.05 Late Charges. If Tenant shall fail to pay any Annual Base Rent or
Additional Rent within ten (10) days after the date same is due and payable,
Tenant shall pay to Landlord (a) an administrative fee equal to five percent
(5%) of the amount due to cover Landlord's additional administrative costs and
cost of funds resulting from Tenant's failure, and (b) interest on the amount
due from its due date until paid at the lesser of 12% per annum or the maximum
legal rate that Landlord may charge Tenant; provided that, no such charges or
interest shall be payable with respect to any delinquent payment if such payment
is received by Landlord within five (5) days following written notice of such
failure. Such charges shall be paid to Landlord together with such unpaid
amounts. Such late payment charge shall not diminish or impair any other
remedies available to Landlord.
4.06 Security Deposit.
(a) For the faithful performance of all terms, covenants and
conditions of this Lease, Tenant shall pay to and deposit with
Landlord, a security deposit in the amount of Five Hundred
Thousand Dollars and 00/100 ($500,000.00) as follows (the
"Security Deposit"): the sum of Two Hundred Thousand Dollars
and 00/100 ($200,000.00) payable
3
<PAGE>
upon the execution of this Lease; One Hundred Thousand Dollars
and 00/100 ($100,000.00) payable on March 1, 2000 and, upon
Landlord's completion of the Base Building Improvements, an
unconditional, clean, letter of credit (the "L-C") in the
initial amount of Two Hundred Thousand Dollars ($200,000.00),
which L-C shall be issued by a money-center bank (a bank which
accepts deposits, maintains accounts, has a local Fairfield
County office which will negotiate a letter of credit, and
whose deposits are insured by the FDIC) reasonably acceptable
to Landlord, and which L-C shall be in a form and content
reasonably acceptable to Landlord. Tenant shall pay all
expenses, points and/or fees incurred by Tenant in obtaining
the L-C.
(b) The L-C shall not be mortgaged, assigned or encumbered in
any manner whatsoever by Tenant without the prior written consent of Landlord.
If Tenant defaults with respect to any provisions of this Lease, including, but
not limited to, the provisions relating to the payment of Rent, or if Tenant
fails to renew the L-C at least thirty (30) days before its expiration, Landlord
may, but shall not be required to, draw upon all or any portion of the L-C for
payment of any Rent or any other sum in default, or for the payment of any
amount that Landlord may reasonably spend or may become obligated to spend by
reason of Tenant's default, or to compensate Landlord for any other loss or
damage that Landlord may suffer by reason of Tenant's default. The use,
application or retention of the L-C, or any portion thereof, by Landlord shall
not prevent Landlord from exercising any other right or remedy provided by this
Lease or by law, it being intended that Landlord shall not first be required to
proceed against the L-C and shall not operate as a limitation on any recovery to
which Landlord may otherwise be entitled. Any amount of the L-C which is drawn
upon by Landlord, but is not used or applied by Landlord, shall be held by
Landlord and deemed a security deposit (the "L-C Security Deposit"). If any
portion of the L-C is drawn upon, Tenant shall, within five (5) days after
written demand therefor, either (i) deposit cash with Landlord (which cash shall
be applied by Landlord to the L-C Security Deposit) in an amount sufficient to
cause the sum of the L-C Security Deposit and the amount of the remaining L-C to
be equivalent to the amount of the L-C then required under this Lease or (ii)
reinstate the L-C to the amount then required under this Lease, and if any
portion of the L-C Security Deposit is used or applied, Tenant shall, within
five (5) days after written demand therefor, deposit cash with Landlord (which
cash shall be applied by Landlord to the L-C Security Deposit) in an amount
sufficient to restore the L-C Security Deposit to the amount then required under
this Lease, and Tenant's failure to do so shall be a default under this Lease.
Tenant acknowledges that Landlord has the right to transfer or mortgage its
interest in the Project and the Building and in this Lease and Tenant agrees
that in the event of any such transfer or mortgage, Landlord shall have the
right to transfer or assign the L-C Security Deposit and/or the L-C to the
transferee or mortgagee, and in the event of such transfer and the assumption by
the transferee of all of the Landlord's obligations under this Lease, Tenant
shall look solely to such transferee or mortgagee for the return of the L-C
Security Deposit and/or the L-C.
(c) Provided Tenant is not in default of any of the terms,
provisions and/or conditions of this Lease, Landlord shall return a portion of
the Security Deposit to Tenant as follows: One Hundred Thousand Dollars
($100,000.00) within sixty (60) days following the end of the first Lease Year
and, One Hundred Thousand Dollars ($100,000.00) within sixty (60) days following
the end of the second Lease Year.
(d) Tenant agrees that Landlord may, without waiving any of
Landlord's other rights and remedies under this Lease upon the occurrence of any
of the Events of Default described in Article 13 hereof, apply the Security
Deposit (i) to remedy any failure by Tenant to repair or maintain the Premises
or to perform any other terms, covenants or conditions contained herein, or (ii)
to compensate Landlord for damages incurred, or to reimburse Landlord as
provided herein, in connection with any such Event of Default. Should Landlord
use any portion of the Security Deposit to cure any Event of Default by Tenant
hereunder, Tenant shall forthwith replenish the Security Deposit to the original
amount. Landlord shall not be required to keep the Security Deposit separate
from its general funds, and Tenant shall not be entitled to interest on any such
deposit.
(e) In the event of a sale or leasing of the Building,
Landlord shall have the right to transfer the balance of the Security Deposit to
the new owner or to tenant. Landlord shall thereupon be released by Tenant from
all liability for the return of the Security Deposit; and Tenant agrees to look
to the new landlord. If any mortgagee, including Landlord's Mortgagee (defined
in Section 14.01(a) below) should succeed to Landlord's interests hereunder,
such mortgagee should only be liable to Tenant for any security deposited by
Tenant hereunder to the extent such security was actually transferred to such
mortgagee.
(f) If Tenant performs all of Tenant's obligations hereunder,
Landlord will, within 30 days after the expiration or earlier termination of the
Lease, return the remainder of the Security Deposit, or so much as has not been
applied by Landlord, to Tenant or the last permitted assignee of Tenant's
interest hereunder
4
<PAGE>
ARTICLE 5. ADDITIONAL RENT FOR ESCALATIONS IN REAL ESTATE TAXES
AND OPERATING EXPENSES
5.01 Definitions. Annual Base Rent does not anticipate any increase in
the amount of taxes on the Building, or in the cost of the operation and
maintenance thereof. In order that the rent payable hereunder shall reflect any
such increases, Tenant agrees to pay as Additional Rent, an amount calculated as
hereinafter set forth. For purposes of this Article 5, the following definitions
shall apply:
"Tax Year": means the fiscal year of the Town of Wilton (July
1 - June 30) or other applicable governmental authority for real estate tax
purposes or such other twelve (12) month period as may be duly adopted in place
thereof.
"Base Taxes": shall mean the amount of Building Taxes as
assessed by the Town of Wilton during the Grand List Year of the issuance of a
Certificate of Occupancy for the Building, and the amount of LandTaxes assessed
against the land constituting the Site on the Grand List of October 1, 2000.
"Building Taxes": shall mean all Taxes assessed against the
Building.
"Land Taxes" : shall mean all Taxes assessed against the land
constituting the Site, against those improvements to the land which are part of
the Common Areas of the Site, and against the signs, if any on the Site, but the
Land Tax shall not include any Taxes assessed against any buildings at the
Project.
"Taxes": All taxes, assessments and charges of every kind and
nature levied, assessed or imposed at any time by any governmental authority
upon or against the Project or any improvements, fixtures and equipment of
Landlord or the owner of the Project used in the operation thereof whether such
taxes and assessments are general or special, ordinary or extraordinary,
foreseen or unforeseen in respect of each Tax Year following wholly or partially
within the Term. Taxes shall include, without limitation, all general real
property taxes and general and special assessments, charges, fees or assessments
for all governmental services or purported benefits to the Project, service
payments in lieu of taxes, all business privilege taxes, and any tax, fee or
excise on the act of entering into this Lease or any other lease of space in the
Building, or on the use or occupancy of the Building or any part thereof, or on
the rent payable under any lease or in connection with the business of renting
space under any lease or in connection with the business of renting space in the
Building, that are now or hereafter levied or assessed against Landlord by the
United States of America, the State of Connecticut, or any political
subdivision, public corporation, district or other political or public entity,
including legal fees, experts' and other witnesses' fees, costs and
disbursements incurred in connection with proceedings to contest, determine or
reduce Taxes. In the event that the Town of Wilton levies real property taxes on
the Project based on an assessment of the Project's value in a manner that
differentiates between rentable square footage at the Project used for retail
purposes as opposed to rentable square footage used for office purposes, Tenant
shall be responsible only for Additional Rent payments based on the increases in
real estate taxes levied on the rentable square footage devoted to office uses
multiplied by the Tenant's proportionate share of the rentable square footage at
the Project devoted to office use. Taxes shall also include any other tax, fee
or other excise, however described, that may be levied or assessed as a
substitute for, or as an addition to, in whole or in part, any other Taxes
(including, without limitation, any municipal income tax) and any license fees,
tax measured or imposed upon rents, or other tax or charge upon Landlord's
business of leasing the Building, whether or not now customary or in the
contemplation of the parties on the date of this Lease.
Taxes shall not include: (i) franchise, transfer, gift excise,
capital stock, estate, succession and inheritance taxes, and federal and state
income taxes measured by the net income of Landlord from all sources, unless due
to a change in the method of taxation such tax is levied or assessed against
Landlord as a substitute for, or as an addition to, in whole or in part, any
other Tax that would constitute a Tax; or (ii) penalties or interest for late
payment of Taxes.
"Base Expense Year": shall mean the calendar year 2001.
"Expense Year": shall mean the first and full calendar year
following the Base Expense Year and each calendar year thereafter.
"Base Expenses": shall mean the Operating Expenses for the
Base Expense Year equitably adjusted to the amount such Operating Expenses would
have been if ninety-five percent (95%) of the rentable area in the Building had
been occupied during the Base Expense Year if there is less than ninety-five
percent (95%) occupancy in the Base Expense Year. Only those component expenses
that are affected by variation in occupancy levels shall be "grossed-up". For
purposes of determining Tenant's Proportionate Share of increases in the
Operating Expenses, the Base Expenses shall be deemed to have been incurred by
Landlord during the Base Expense Year.
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"Expense Increases": attributable to an Expense Year, shall
mean the excess, if any, of the Operating Expenses incurred during such Expense
Year equitably adjusted, if less than ninety-five percent (95%) occupancy, to
the amount such Operating Expenses would have been if ninety-five percent (95%)
of the rentable area in the Building had been occupied during the Expense Year
over the Base Expenses. Only those component expenses that are affected by
variation in occupancy levels shall be "grossed-up".
"Operating Expenses": all costs and expenses (and taxes, if
any, thereon) paid or incurred on behalf of Landlord (whether directly through
the Ground Lease or through independent contractors) in connection with the
ownership, management, operation, maintenance and repair of the Building and
Common Areas and the Building's equitable share of any facilities or amenities
benefiting the Building or Site (including any sales or other taxes thereon)
during the Term as a first-class building, including, without limitation:
(a) Charges of independent contractors for expenses otherwise
includable in Operating Expenses, including, without limitation, charges for
window washing and other cleaning and janitorial services, snow and ice removal
services, exterior and interior landscaping, pest extermination services and
services for the maintenance and repair of the parking facilities, roadways and
light poles;
(b) All heating, ventilating, air conditioning, plumbing,
electrical, mechanical, sewer, fire detection, life safety and security systems,
telecommunications facilities, elevators and escalators, tenant directories,
emergency generator, sprinkler systems, and other equipment used in common by,
or for the benefit of, the Common Areas, occupants of the Building; and Utility
Expenses (excluding electricity supplied to the Premises and billed to Tenant
pursuant to Section 5.04 and electricity used by other tenants of the Building
within their leased space and billed directly to such tenants);
(c) The premiums for fire, extended coverage, loss of rents,
boiler, machinery, sprinkler, public liability, property damage, earthquake,
flood, and all other insurance relative to the Project and the operation and
maintenance thereof plus the cost of the deductible payments made by Landlord in
connection therewith;
(d) All supplies, tools, materials, equipment and maintenance
and service contracts in connection therewith; telephone, stationery, office
supplies and other office costs of administration; consulting fees, legal fees
and accounting fees and other expenses of maintaining and auditing Project
accounting records and preparing Landlord's Statements;
(e) Replacing, repairing, and/or adding any equipment, device,
improvement in order to reduce (or avoid an increase in) operation or
maintenance expenses with respect to the Project, or to comply with laws or
governmental orders or the requirements of Landlord's insurers, and any repairs
or removals necessitated thereby, amortized over their useful life as determined
in the reasonable judgment of Landlord's accountant (including interest at the
rate of 12% per annum or such higher rate as may have been paid by Landlord on
funds borrowed for the purpose of constructing such improvements);
(f) Salaries, wages, compensation, out-of-pocket expenses,
union benefits and labor costs (including the amount of any taxes, social
security taxes, unemployment insurance contributions, insurance, retirement,
medical, workers' compensation and other employee benefits) of janitors,
janitresses, engineers and other employees of Landlord, and any on-site
employees (below the executive level) of Landlord's property management agent;
(g) Fees for management services whether rendered by Landlord
(or affiliate) or a third-party property manager which shall be limited to an
amount no greater than 4% of the gross rents of the Building ;
Operating Expenses shall not include: (a) utility expenses
that are separately metered for any individual tenant in the Building; (b) any
expense for which Landlord is reimbursed by a specific tenant by reason of a
special agreement or requirement of the occupancy of the Building by such
tenant; (c) expenses for services provided by Landlord for the exclusive benefit
of a given tenant or tenants for which Landlord is directly reimbursed by such
tenant or tenants; (d) all costs, fees and disbursements relating to activities
for the solicitation, negotiation and execution of leases for space in the
Building (including but not limited to attorneys' fees therefor); (e) the costs
of alterations to, or the decorating or the redecorating of, space in the
Building leased to other tenants; (f) except as stated in subparagraph (g) of
the definition of Operating Expenses, the costs associated with the operation of
the business of the ownership or entity which constitutes "Landlord", including
costs of selling, syndicating, financing or mortgaging any of Landlord's
interest in the Project; (g) depreciation, interest and principal payments on
mortgages and other debt costs, if any; (h) repairs or other work required due
to fire or other casualty to the extent of insurance proceeds received by
Landlord; (i) capital expenses for items that are not included
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in the definition of "Operating Expenses; (j) all payments of Base Rent made by
Landlord pursuant to the Ground Lease.
"Tenant's Proportionate Share": On the Commencement Date,
Tenant's Proportionate Share shall be (i) 41.89%) percent for Building Taxes and
Operating Expenses which are solely related to the Building , (ii) 16.08%
percent for Land Taxes and Operating Expenses incurred for the benefit of all of
the rentable square footage at the Project .
"Landlord's Statement": Shall mean an instrument containing a
computation of any Additional Rent due pursuant to the provisions of this
Article 5.
"Utility Expenses": All expenses paid or incurred on behalf of
Landlord for utility or utility services for the Common Areas of the Project,
including, but not limited to, water, sewer, electric, gas, steam, fuel oil and
chilled water, together with any taxes on said costs.
5.02 Payment of Taxes. Tenant shall pay, as Additional Rent, Tenant's
Proportionate Share of all Land Taxes and all Building Taxes in respect of any
Tax Year falling wholly or partially within the Term, to the extent that Taxes
for any such period shall exceed the Base Taxes (which payment shall be adjusted
by proration with respect to any partial Tax Year. Landlord shall submit to
Tenant a copy of the bill for Taxes payable by Landlord under the Ground Lease
and a copy of the bill for Building Taxes together with Landlord's Statement and
Tenant shall pay the Additional Rent set forth on such Landlord's Statement
(less the amount of estimated payments paid by Tenant on account thereof) as set
forth herein. Landlord, at its option, may require Tenant to make monthly
payments on account of Tenant's Proportionate Share of Taxes in excess of the
Base Taxes. The monthly payments shall be one-twelfth (1/12th) of the amount of
Tenant's Proportionate Share of Taxes in excess of the Base Taxes and shall be
payable on or before the first day of each month during the Term, in advance, in
an amount estimated by Landlord and billed by Landlord to Tenant; provided that
Landlord shall have the right initially to determine such monthly estimates and
to revise such estimates from time to time. With reasonable promptness after
Landlord has received the tax bills for any Tax Year, Landlord shall furnish
Tenant with Landlord's Statement with respect thereto. If the actual amount of
Tenant's Proportionate Share of Taxes exceeds the estimated amount of Tenant's
Proportionate Share of Taxes paid by Tenant for any Tax Year, then Tenant shall
pay to Landlord as Additional Rent the difference between the amount of
estimated Tenant's Proportionate Share of Taxes paid by Tenant and the actual
amount of Tenant's Proportionate Share of Taxes. This Additional Rent payment
shall be due and payable within thirty (30) days after delivery of Landlord's
Statement. If the total amount of estimated payments made by Tenant in respect
of Tenant's Proportionate Share of Taxes paid by Tenant for any Tax Year shall
exceed the actual amount of Tenant's Proportionate Share of Taxes for such Tax
Year, then such excess amount shall be credited against the monthly installments
of Additional Rent due and payable from Tenant to Landlord hereunder with
respect to Taxes, until such amount shall have been refunded in full to Tenant.
5.03 Payment of Operating Expenses. Tenant shall pay to Landlord on
account of Tenant's Proportionate Share of Expense Increase and as Additional
Rent, a sum equal to one-twelfth (1/12) of the amount of Tenant's Proportionate
Share of Expense Increases for each Expense Year on or before the first day of
each month of such Expense Year, in advance, in an amount estimated by Landlord
and billed by Landlord to Tenant; provided that Landlord shall have the right
initially to determine such monthly estimates and to revise such estimates from
time to time. After the expiration of the Base Expense Year and each Expense
Year, Landlord shall prepare and furnish Tenant with Landlord's Statement
showing the Base Expenses or the Operating Expenses incurred during such Expense
Year. Within thirty (30) days after receipt of Landlord's Statement for any
Expense Year setting forth Tenant's Proportionate Share of any Expense Increase
attributable to such Expense Year, Tenant shall pay Tenant's Proportionate Share
of such Expense Increase (less the amount of estimated payments paid by Tenant
on account thereof) to Landlord as Additional Rent. If the actual amount of
Tenant's Proportionate Share of the Expense Increase for such Expense Year
exceeds the estimated amount of Tenant's Proportionate Share of Expense
Increases paid by Tenant for such Expense Year, then Tenant shall pay to
Landlord the difference between the estimated amount of Tenant's Proportionate
Share of Expense Increases paid by Tenant and the actual amount of Tenant's
Proportionate Share of Expense Increases. This Additional Rent payment shall be
due and payable within thirty (30) days following delivery of Landlord's
Statement. If the total amount of estimated payments made by Tenant in respect
of Tenant's Proportionate Share of Expense Increases for such Expense Year shall
exceed the actual amount of Tenant's Proportionate Share of Expense Increases
for such Expense Year, then such excess amount shall be credited against the
monthly installments of Additional Rent due and payable from Tenant to Landlord
hereunder with respect to Expense Increases until such amount shall have been
refunded in full to Tenant. Notwithstanding anything to the contrary herein, in
no event shall the aggregate credits allowable to Tenant, in any Expense Year
pursuant to this Article 5 exceed the aggregate of the Additional Rent payments
payable by Tenant pursuant to this Article 5; provided, however, any excess
payments made by Tenant during the Term that have not been so applied and are
outstanding at the end of the Term shall be paid to Tenant promptly following
Landlord's final accounting for the final Expense Year.
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5.04 Payment of Electric Expense. Tenant shall pay for a portion of the
electric energy consumed within the Premises (the "Electric Expense") subject to
the provisions of this Section 5.04. During the first Lease Year Tenant shall
pay to Landlord, monthly in advance, an Electric Expense at the per annum rate
of $2.25 per rentable square foot of the Premises. During the remainder of the
term of this Lease, Tenant shall pay to Landlord an annual Electric Expense
equal to the sum of (x) $2.25 per rentable square feet plus a portion of the
increase of the actual per rentable square foot electric expense calculated as
follows: The actual per rentable square foot electrical expense for the first
Lease Year shall be subtracted from the actual per rentable square foot
electrical expense for the second Lease Year. The resulting number shall be
multiplied by a fraction, the numerator of which is the said result and the
denominator is the actual per rentable square foot electrical expense for the
first Lease Year. This same calculation shall be made from year to year.
For example, if the actual per rentable square foot electrical expense for the
first Lease Year is $3.00, and the actual per rentable square foot electrical
expense for the second Lease Year is $3.10, the Tenant would owe a per rentable
square foot electric expense for the second Lease Year of $2.25 plus an amount
equal to $3.10 - 3.00 = .10, with the resulting figure of .10 being multiplied
by the quotient of .10/3.00 or 0.033, which equals 3.3 cents, for a total per
rentable square footage electrical payment in the second year of $2.25 plus
3.3cents or $2.28.3. This same calculation would be applied in subsequent years
by substituting Lease Year two for Year one and Lease Year three for Lease Year
two and so on.
The Electric Expense payable in respect of the Premises shall constitute
Additional Rent under this Lease (but shall not be included as an Operating
Expense), and shall be due and payable quarterly in arrears beginning on the
Commencement Date and continuing on the first day of each calendar month during
the Term.
5.05 Landlord's Statements and Tenant's Inspection Rights.
(a) Landlord's Statements shall be rendered to Tenant, but
Landlord's failure to render Landlord's Statement with respect to the Base
Expense Year, any Expense Year or any Tax Year or Landlord's delay in rendering
said Statement beyond a date specified herein shall not prejudice Landlord's
right to render a Landlord's Statement with respect to that or any subsequent
Expense Year or Tax Year. The obligations of Landlord and Tenant under the
provisions of this Article with respect to any Additional Rent incurred during
the Term shall survive the expiration or any sooner termination of the Term. If
Landlord fails to give Tenant a statement of projected Operating Expenses prior
to the commencement of any Expense Year, Tenant shall continue to pay Operating
Expenses in accordance with the previous statement, until Tenant receives a new
statement from Landlord.
(b) During the thirty (30) day period after receipt of any
Landlord's Statement (the "Review Period"), Tenant may inspect and audit
Landlord's records relevant to the cost and expense items reflected in such
Landlord's Statement at a reasonable time mutually agreeable to Landlord and
Tenant during Landlord's usual business hours. In the absence of recklessness or
fraud, each Landlord's Statement shall be conclusive and binding upon Tenant
unless within thirty (30) days after receipt of such Landlord's Statement Tenant
shall notify Landlord that it disputes the correctness of Landlord's Statement,
specifying the respects in which Landlord's Statement is claimed to be
incorrect. If, after such inspection, Tenant disputes the amount of its
Proportionate Share of Operating Expenses or Taxes, Tenant shall be entitled to
retain an independent company or certified public accountant reasonably
acceptable to Landlord to review Landlord's records to determine the proper
amount of such Additional Rent. If such audit or review reveals that Landlord
has overcharged Tenant, then within thirty (30) days after the results of such
audit are made available to Landlord, Landlord shall reimburse Tenant the amount
of such overcharge. If the audit reveals that Tenant was undercharged, then
within thirty (30) days after the results of the audit are made available to
Tenant, Tenant shall reimburse Landlord the amount of such undercharge. If
Landlord desires to contest such audit results, Landlord may do so by submitting
the results of the audit to arbitration pursuant to Section 13.06 of the Lease
within thirty (30) days of receipt of the results of the audit, and the
arbitration shall be final and binding upon Landlord and Tenant. Tenant agrees
to pay the cost of such audit, however, should the audit determine that the
applicable Landlord's statement overcharged the Tenant by 15% or more, Landlord
shall pay all of Tenant's reasonable expenses, including accountant's and
attorney's fees, incurred in connection with the audit. Pending the
determination of such dispute as hereinafter provided, Tenant shall pay
Additional Rent in accordance with the applicable Landlord's Statement, and such
payment shall be without prejudice to Tenant's position. All inspections and
audits of Landlord's books and records and any arbitration shall be subject to a
confidentiality agreement reasonably acceptable to Landlord.
5.06 Additional Rent Adjustments. If the Term shall expire on a date
other than December 31st, any Additional Rent for the Lease Year in which the
expiration date shall occur shall be apportioned (based upon the immediately
preceding 12 month period) in that percentage which the number of days in the
period from January 1st of such Lease Year to such date of expiration, both
inclusive, shall bear to the total number of days in the calendar year in which
such expiration occurs.
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ARTICLE 6. SERVICES AND UTILITIES
6.01 Services. Landlord shall provide the following services to the
Building and Premises (subject to Tenant's reimbursement and payment obligations
therefor in accordance with the operation of Article 5 hereof):
(a) Janitor services for the Common Areas, including garbage
removal, excluding Saturdays, Sundays and union and state and federal government
holidays (the "Holidays").
(b) Heat and air-conditioning as required to maintain
comfortable temperature throughout the Premises (excluding specialized
temperature and humidity control for computers, printers and other equipment)
daily from 8:00 a.m. to 7:00 p.m. Monday through Friday and Saturdays from 8:00
a.m. to 12:00 noon ("Normal Business Hours").
(c) Hot and cold running water for cleaning, landscaping,
grounds maintenance, fire protection, drinking, lavatory and toilet purposes
drawn through fixtures installed by Landlord or by Tenant with Landlord's
written consent. If Tenant's water use increases beyond customary office user
levels, Landlord shall have the right to install a water meter at Tenant's
expense and to charge Tenant as Additional Rent for its water consumption in the
Premises in accordance with readings from such meter.
(d) Electric current only, in amounts required for normal
lighting by building standard lighting overhead fixtures and for Tenant's normal
business operations, including without limitation, personal computers, copiers,
facsimiles and other ordinary business, subject, however, to Landlord's approval
of Tenant's final electrical plan for the Premises (but specifically excluding
electric current surge protection).
(e) Window washing of all windows in the Premises both inside
and out, weather permitting at intervals established by Landlord.
(f) Maintenance of the Common Areas so that they are clean and
free from accumulations of snow, debris, filth, rubbish and garbage.
(g) Access by Tenant to the Premises and use of designated
elevator service 24 hours per day, seven (7) days per week, 52 weeks per year,
subject to the operation of Landlord's computerized access system at the
Building's entrances and to Landlord's Rules and Regulations. Overtime HVAC and
other services shall be available as provided in Section 6.02 hereof, if
applicable.
6.02 Additional Services. Landlord shall impose reasonable charges and
may establish reasonable rules and regulations for the following: (a) the use of
any heating, air-conditioning, ventilation, electric current or other utility
services or equipment by Tenant at any time other than during the hours set
forth in Section 6.01(b) above ("Overtime HVAC"); (b) the usage of any
additional or unusual janitorial services required because of any non-building
standard improvements in the Premises, the carelessness of Tenant, the nature of
Tenant's business (including the operation of Tenant's business other than
during the hours set forth in Section 6.01(b); and (c) the removal of any refuse
and rubbish left outside the Building or in the Common Areas. The expense
charged by Landlord to Tenant for any Overtime HVAC shall be based on Landlord's
actual cost for such utility services as charged to Landlord by the utility
companies providing such services over and above the cost to Landlord for the
usual Building temperature maintained by Landlord after Normal Business Hours
This amount shall constitute Additional Rent and shall be payable in accordance
with Section 4.04.
6.03 Excessive Current. Tenant shall comply with the conditions of
occupancy and connected electrical load reasonably established by Landlord for
the Building and Tenant shall not use utilities or other services in excess of
the services described above in Section 6.01 or in a manner which exceeds or
interferes with any Building systems or Landlord's ability to provide services
to other tenants in the Building. To avoid possible adverse effects upon the
Building's electrical and mechanical systems, Tenant shall not, without
Landlord's prior consent in each instance (which shall not be unreasonably
withheld), connect air conditioning equipment, computers, (excluding personal
computers and printers and office copiers and facsimile machines), major
appliances (excluding coffee makers, microwave ovens and other similar food
preparation appliances) or heavy duty equipment ("High Usage Equipment") to the
Building's electrical system. Landlord may survey Tenant's use of services from
time to time. Tenant shall pay Landlord all costs arising out of any excess use
or other connection of High Usage Equipment, including the cost of all repairs
and alterations to the Building's mechanical and electrical systems (including
the installation of meters) and the cost of additional electricity made
available to Tenant, if any. Such costs shall constitute Additional Rent and
Tenant shall pay such costs pursuant to Section 4.04.
6.04 Maintenance of Common Areas. The manner in which the Common Areas
are maintained and operated and the expenditures therefor shall be at the sole
discretion of Landlord and in accordance with the standards of comparable first
class buildings in Fairfield County. Landlord reserves
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the right from time to time to (a) make changes in the shape, size, location and
appearance of the land and improvements which constitute the Common Areas,
provided that Landlord shall not materially impair the Tenant's ability to
operate its business or reduce the parking allotted to Tenant below the parking
available as of the Commencement Date, except temporary impairments required by
said changes; (b) make such improvements, alterations and repairs to the Common
Areas as may be required by governmental authorities or by utility companies
servicing the Building; (c) construct, maintain and operate lighting and other
facilities on all said areas and improvements; and (d) to add or remove
improvements and facilities to or from the Common Areas. The use of the Common
Areas shall be subject to such reasonable regulations and changes therein as
Landlord shall make from time to time, including (but not by way of limitation)
the right to close from time to time, if necessary, all or any portion of the
Common Areas to such extent as may be legally sufficient, in the opinion of
Landlord's counsel, to prevent a dedication thereof or the accrual of rights of
any person or of the public therein; provided, however, Landlord shall do so at
such times and in such manner as shall minimize any disruption to Tenant to the
extent reasonably possible.
6.05 Access to Premises. Landlord shall have the right to enter the
Premises without abatement of Rent at all reasonable times upon twenty-four (24)
hours prior notice to Tenant (except in emergencies when no notice shall be
required), (i) to supply any service to be provided by Landlord to Tenant
hereunder, (ii) to show the Premises to Landlord's Mortgagee and to prospective
purchasers, mortgagees and tenants, and (iii) to inspect, alter, improve or
repair the Premises and any portion of the Building. For each of the purposes
stated above in this Section 6.05, Landlord shall at all times have and retain a
key with which to unlock all of the doors in, upon and about the Premises,
excluding Tenant's vaults and safes, or special security areas (designated in
advance), and Landlord shall have the right to use any and all means that
Landlord may deem necessary or proper to open said doors in an emergency, in
order to obtain entry to any portion of the Premises. Landlord and its agents
and representatives shall have the right to enter upon the Premises for any and
all of the purposes set forth in this Article and may exercise any and all of
the foregoing rights without being deemed guilty of a forcible or unlawful entry
into, or a detainer of, the Premises, or an eviction, actual or constructive of
Tenant from the Premises, or any portion thereof, if reasonably necessary to
comply with any governmental statute, ordinance or building, fire or other code.
6.06 Interruption of Services. There shall be no abatement of Rent and
Landlord shall not be liable in any respect whatsoever for the inadequacy,
stoppage, interruption, or discontinuance of any utility or service due to riot,
strike, labor dispute, government request or direction, breakdown, accident,
repair, or other cause. The foregoing notwithstanding, in the event of any
interruption or stoppage of any essential utility service which Landlord is
required to provide, if such interruption or stoppage is for more than five (5)
consecutive days or more than ten (10) total days in any calendar year, and is
of a nature which materially interferes with the Tenant's use of the Premises
for the conduct of its business, is not rendered necessary by the negligence or
misconduct of Tenant or any Tenant Parties, and is within Landlord's reasonable
control, then the Rent shall be abated at the rate of one (1) day for each day
of interruption and stoppage after said fifth (5th) consecutive day or tenth
(10th)after notice by Tenant to Landlord of such interruption or stoppage until
such service is restored.
ARTICLE 7. CONDUCT OF BUSINESS BY TENANT
7.01 Permitted Use. The Premises shall be used and occupied for general
office purposes and ancillary uses related thereto including the conduct of
"focus groups". Tenant shall not use or occupy, or permit the use or occupancy
of, the Premises or any part thereof for any use other than the sole use
specifically set forth above or in any illegal manner, or in any manner that, in
Landlord's judgment, would adversely affect or interfere with any services
required to be furnished by Landlord to Tenant or to any other tenant or
occupant of the Building, or with the proper and economical rendition of any
such service, or with the use and enjoyment of any part of the Building by any
other tenant or occupant. Tenant agrees that it will not exceed the maximum
floor bearing capacity for the Premises.
7.02 Compliance with Laws.
(a) Tenant, at Tenant's expense, shall comply promptly with
the laws, ordinances, rules, regulations and orders of all governmental
authorities in effect from time to time during the Term that shall impose any
duty on Tenant with respect to the Premises or the use, occupancy and operation
thereof, including, without limitation, the Americans with Disabilities Act
("ADA"), and all applicable zoning, fire and health codes. Tenant will obtain
and maintain in full force and effect any and all licenses and permits necessary
for its use. Tenant shall make any Alterations in or to the Premises in order to
comply with the foregoing, which are necessitated or occasioned, in whole or in
part by the use or occupancy or manner of use, occupancy or operation of the
Premises by Tenant or any of its officers, employees, agents, contractors,
invitees, licensees or subtenants (the "Tenant Parties").
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(b) Landlord shall comply with all laws, ordinances, rules,
regulations and orders of all governmental authorities in effect from time to
time during the Term that shall impose any duty on Landlord with respect to the
Common Areas of the Building, and excluding any matters that arise from the acts
or omissions of Tenant or other tenants of the Building or that are Tenant's
responsibility under this Lease or the responsibility of other tenants of the
Building. The Leasehold Improvements designed and constructed by Landlord will
conform upon completion to all applicable legal requirements, including, without
limitation, the requirements of Title III of the ADA. Notwithstanding anything
to the contrary contained herein, Tenant shall be responsible for legal
compliance, including the requirements of the ADA, with respect to (i) any and
all requirements on account of Tenant's use of or operations in the Premises,
and (ii) all Alterations designed or constructed by Tenant or its contractors or
agents.
7.03 Landlord's Rules and Regulations. Tenant shall faithfully observe
and comply with the rules and regulations attached to this Lease as Exhibit C,
and all reasonable modifications thereof and additions thereto from time to time
put into effect by Landlord (the "Rules and Regulations"). Tenant shall not use
or permit the use of the Premises in any manner that will tend to create waste
or a nuisance, or which shall tend to unreasonably disturb other tenants of the
Building. Landlord shall not be responsible to Tenant for the nonperformance of
any of the Rules and Regulations by any other tenants or occupants on the
Building. Landlord shall use reasonable efforts to enforce the Rules and
Regulations in a fair and non-discriminatory manner. In the event of an express
and direct conflict between the terms, covenants, agreements and conditions of
this Lease and the terms, covenants, agreements and conditions of such rules and
regulations, as modified and amended from time to time by Landlord, this Lease
shall control.
7.04 No Liens. Tenant shall keep the Premises and Project free from any
liens or encumbrances arising out of any work performed, material furnished or
obligations incurred by or for Tenant or any person or entity claiming through
or under Tenant. Prior to Tenant performing any construction or other work on or
about the Premises for which a lien could be filed against the Premises or the
Project, Tenant shall obtain satisfactory lien waiver agreements with each
contractor who is to perform such work or furnish any material. Any claim to, or
lien upon, the Premises or the Building arising from any act or omission of
Tenant shall accrue only against the leasehold estate of Tenant and shall be
subject and subordinate to the paramount title and rights of Landlord in and to
the Premises and the Project. If any mechanics' or other lien shall be filed
against the Premises or the Project purporting to be for labor or material
furnished or to be furnished at the request of the Tenant, then Tenant shall at
its expense cause such lien to be discharged of record by payment, bond or
otherwise, within thirty (30) days after the filing thereof, or shall within
thirty (30) days after filing commence an action in the Superior Court to have
the Lien discharged and diligently prosecute said action.
7.05 Hazardous Substances.
(a) Tenant shall not generate, store (except for small
quantities of substances ordinarily stored and used in connection with general
office use if stored, used and disposed of, in accordance with all laws relating
thereto), dispose of or release, or permit the storage, use, disposal or release
of, any "Hazardous Substances" (as hereinafter defined), in, above, on or under
the Premises or the Project. Tenant shall remove, clean-up and remedy any
Hazardous Substance on the Premises or in accordance with applicable law,
provided that the presence of such Hazardous Substance resulted from the action
or inaction of Tenant, or any Tenant Parties and Tenant shall be obligated to
continue to pay Rent hereunder until such removal, clean-up or remedy is
completed in accordance with applicable laws, whether or not the Term shall
terminate or expire.
(b) Tenant shall not take or permit any action that would
cause the Premises or Project to become an "establishment" (as defined in the
Connecticut Transfer Act, C.G.S. ss. 22a-134). Tenant hereby grants Landlord the
right to inspect the Premises on not less than twenty-four (24) hours notice to
Tenant (except in the event of an emergency in which case Landlord will use
reasonable efforts commensurate with the nature of the emergency condition to
give Tenant prior notice) throughout the Term, to determine that Tenant is in
compliance with applicable laws and Tenant agrees to provide Landlord with all
information necessary to ascertain that Tenant is in compliance with applicable
laws. Tenant shall cooperate with Landlord in satisfying any legal requirements
imposed upon Landlord relating to Tenant's operations, and, upon Landlord's
written request, shall furnish complete information to Landlord with regard to
its operations. In connection with any transfer of the Premises or Project,
Tenant shall comply with the Connecticut Transfer Act and any other applicable
laws relative to its operations.
(c) "Hazardous Substances" shall mean any petroleum, petroleum
products, fuel oil, waste oil, explosives, reactive materials, ignitable
materials, corrosive materials, hazardous chemicals, hazardous wastes, hazardous
substances, extremely hazardous substances, toxic substances, toxic chemicals,
radioactive materials, medical waste, pollutants, herbicides, fungicides,
rodenticides, insecticides, contaminant, or pesticides and including, but not
limited to any other element, compound,
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mixture, solution or substance which may pose a present or potential hazard to
human health or the environment. Tenant shall comply with all laws applicable to
the generation, storage, use, disposal or release of Hazardous Substances,
including but not limited to, obtaining and maintaining any permits from, or
making any filings or registrations with, by any governmental authority as
required under any applicable law.
(d) Tenant shall indemnify, defend with counsel reasonably
acceptable to Landlord, and hold Landlord fully harmless and any mortgagee of
the Project, from and against any and all liability, loss, suits, claims,
actions, causes of action, remediation orders, proceedings, demands, costs,
penalties, damages, fines and expenses, including, without limitation,
attorneys' fees, consultants' fees, laboratory fees and clean-up costs, and the
costs and expenses of investigating and defending any claims or proceedings,
resulting from, or attributable to, (i) the presence of any Hazardous Substance
on the Premises or the Project arising from the action, inaction or negligence
of Tenant, its officers, employees, contractors, agents, subtenants or invitees,
or arising out the generation, storage, treatment, handling, transportation,
disposal or release by Tenant of any Hazardous Substance at or near the Premises
or the Project, and (ii) any violation(s) by Tenant of any applicable law
regarding Hazardous Substances, and (iii) default of any of its agreements under
Section 7.05 of this Lease.
7.06 Tenant's Failure to Maintain. If Landlord gives Tenant written
notice of the necessity of any repairs or replacements required to be made under
Section 8.02 and Tenant fails to commence diligently to cure the same within
thirty (30) days thereafter (except that no notice will be required in case of
any emergency repair or replacement necessary to prevent substantial damage or
deterioration), Landlord, at its option and in addition to any other remedies,
may proceed to make such repairs or replacements and the expenses incurred by
Landlord in connection therewith plus 10% thereof for Landlord's supervision,
shall be due and payable from Tenant in accordance with Section 4.04 hereof, as
Additional Rent; provided, that Landlord's making any such repairs or
replacements shall not be deemed a waiver of Tenant's default in failing to make
the same.
7.07 Surrender. Upon the expiration or sooner termination of the Term,
Tenant will quietly and peacefully surrender to Landlord the Premises in as good
condition as when Tenant took possession, ordinary wear and tear excepted, and
otherwise as is required in Article 8. In addition, at such time Tenant shall
remove all Hazardous Substances stored, or disposed of, or generated by Tenant
in its use or operation of the Premises and all equipment and materials
contaminated or affected by such Hazardous Substances in conformity with the
Hazardous Substance laws. Tenant shall surrender the Premises to Landlord at the
end of the Term hereof, without notice of any kind, and Tenant waives all right
to any such notice as may be provided under any laws now or hereafter in effect
in Connecticut.
ARTICLE 8. ALTERATIONS, IMPROVEMENTS AND SIGNAGE
8.01 Landlord's Obligations. Landlord will maintain all structural
components of the Building, including, without limitation, the roof, foundation,
exterior and load-bearing walls (including exterior windows and doors), the
structural floor slabs and all other structural elements of the Premises, as
well as the Common Areas of the Building, in good repair, reasonable wear and
use, casualty and condemnation excepted. Maintenance and repair expenses caused
by Tenant's willful misconduct or negligent acts or omissions shall be paid
directly to Landlord by Tenant in accordance with Section 4.04, and shall not
constitute an Operating Expense. Landlord shall not be liable for and there
shall be no abatement of Rent with respect to any injury to or interference with
Tenant's business arising from any repairs, maintenance, alteration or
improvement in or to any portion of the Project, including the Premises, or in
or to the fixtures, appurtenances and equipment therein unless caused by the
negligent or intentional acts or omissions of the Landlord, the Landlord Parties
or their respective contractors, agents, servants and employees.
(a) Tenant's Obligations. Tenant shall take good care of the
Premises, and at Tenant's cost and expense, shall make all repairs and
replacements necessary to preserve the Premises in good working order and in a
clean, safe and sanitary condition, and will suffer no waste. Interior cleaning
of the Premises shall be contracted and paid for by Tenant. Tenant shall
maintain, at its own expense, in good order, condition and repair to Landlord's
reasonable satisfaction, all plumbing facilities and electrical fixtures and
devices (including replacement of all lamps, starters and ballasts) located
within the Premises. Tenant shall repair, at its cost, all deteriorations or
damages to the Project occasioned by its negligent acts or omissions or willful
misconduct. If Tenant does not make such repairs to the Building within thirty
(30) days following notice from Landlord, Landlord may, but need not, make such
repairs, and Tenant shall pay the cost thereof as provided in Section 7.06
hereof. All repairs and replacements made by or on behalf of Tenant shall be
made and performed in accordance with the "Construction Standards" (as defined
in Section 8.03).
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8.02 Tenant's Alterations.
(a) Tenant shall not make or permit any improvements,
installations, alterations or additions ("Alterations") in or to the Premises,
the Building or the Project; provided, however, Tenant may, with Landlord's
advance written consent, which consent shall not be unreasonably withheld, make
Alterations to the Premises that do not involve or affect either structural
portions of the Premises or the Building or any of the Building's HVAC,
mechanical, electrical, plumbing or other systems or equipment (the "Building
Systems"). At the expiration of the Term, Landlord may require the removal of
any or all of said Alterations and the restoration of the Premises and the
Project to their prior condition, at Tenant's expense in accordance with Section
8.05.
(b) All Alterations permitted by Landlord and made by or on
behalf of Tenant shall be made and performed: (a) at Tenant's cost and expense
and at such time and in such manner as Landlord may reasonably designate, (b) by
contractors or mechanics approved by Landlord, who shall carry liability
insurance of a type and in such amounts as Landlord shall reasonably require,
naming Landlord and Tenant as additional insureds, (c) in a good and workmanlike
manner, (d) so that same shall be at least equal in quality, value, and utility
to the original work or installation, (e) in accordance with the Rules and
Regulations for the Building adopted by Landlord from time to time and in
accordance with all applicable Laws, and (f) pursuant to plans, drawings and
specifications ("Tenant's Plans") which have been reviewed and approved by
Landlord prior to the commencement of the repairs or replacements and approved
by, and filed with, all applicable governmental authorities, and subject to all
other terms and conditions of this Lease, including, but not limited to, Section
7.05 (collectively the "Construction Standards"). All Alterations made by Tenant
shall become, upon installation, the property of Landlord and remain upon and be
surrendered with the Premises at the expiration of the Lease term, unless
Landlord requires their removal pursuant to Section 8.03(a). Landlord agrees not
to unreasonably withhold any approvals requested under this Section 8.03(b).
Landlord agrees to review all Tenant's Plans and provide written notice of its
approval within 10 business days of receipt, or such Plans will be deemed
approved.
8.03 Tenant's Property. Any trade fixtures, furnishings, equipment and
personal property placed in the Premises that are removable without damage to
the Building or the Premises, whether the property of Tenant or leased by
Tenant, are herein sometimes called "Tenant's Property". Any of Tenant's
Property remaining on the Premises at the expiration of the Term shall be
removed by Tenant at Tenant's cost and expense, and Tenant shall, at its cost
and expense, repair any damage to the Premises or the Building caused by such
removal. Any of Tenant's Property not removed from the Premises prior to the
Expiration Date shall, at Landlord's option, become the property of Landlord or
Landlord may remove such Tenant's Property, and Tenant shall pay to Landlord,
Landlord's cost of removal and of any repairs in connection therewith in
accordance with Section 4.04(b) hereof.
8.04 Ownership and Removal. All appurtenances, additions, fixtures and
improvements attached to or installed in or upon the Premises, whether placed
there by Tenant or by Landlord, shall be Landlord's property and shall remain
upon the Premises at the termination of this Lease by lapse of time or otherwise
without compensation or allowance or credit to Tenant. Landlord may require, in
its discretion, the removal by Tenant of any Tenant's Property or Alterations
which have been attached to or installed in the Premises (excluding the initial
Leasehold Improvements) unless Landlord consents to a written request from
Tenant at the time of its approval of the Tenant's Plans that an installation
need not be so removed. On or before the Expiration Date, or the sooner date of
termination of this Lease, Tenant shall pay to Landlord the cost of repairs of
any damage to the Premises or Building and losses caused by the removal of such
property.
8.05 Signage. Landlord shall provide building standard signage
identifying Tenant by name on the Building multi-tenant signage in the main
Building lobby directory and will also provide building standard entry signage
at the main entry to the Premises Subject to local zoning regulations, Tenant
shall have the right to Tenant specific signage on the exterior Building subject
to Landlord's prior written approval (which shall not be unreasonably withheld
or delayed). Except as set forth above, Tenant has no right to any Tenant
signage, monuments, graphics or advertising on the exterior of the Premises or
any other location in or at the Project. Landlord shall have the absolute and
exclusive right to approve or disapprove the content, design, size and location
of any and all proposed Tenant signage and monuments proposed to be erected
and/or maintained at the Premises or Project.
ARTICLE 9. INSURANCE
9.01 Tenant's Insurance. Tenant, at its own expense, shall provide and
keep in force with companies acceptable to Landlord during the Term: (a)
comprehensive general liability insurance insuring against liability for bodily
injury and property damage, including contractual liability, in the amount of
$6,000,000 maximum combined single limit; (b) "Special Form" property insurance,
including standard fire and extended coverage insurance, in amounts necessary to
provide replacement cost coverage, for Tenant's Property, trade fixtures,
machinery, equipment, furniture, furnishings and any Alterations in which Tenant
has an insurable property interest, including, without limitation, vandalism and
malicious mischief and sprinkler leakage coverage, and "all risk" Builder's Risk
insurance, completed value, non-
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reporting form at any time that Tenant has commenced construction of any
leasehold improvements or any Alterations, and at any time any other
construction activities are underway at the Premises; (c) plate glass insurance
for the Premises; (d) Workers' Compensation Insurance in statutory limits as
required by applicable law; and (e) any other insurance reasonably required by
Landlord.
9.02 Delivery of Policies. The aforesaid insurance shall be provided by
companies and in form, substance and amounts (where not above stated)
satisfactory to Landlord and to Landlord's Mortgagee by companies rated A-/VII
or better by A.M. Best Company. Such insurance shall name Landlord as an
additional insured, shall specifically include the liability assumed hereunder
by Tenant (provided that the amount of such insurance shall not be construed to
limit the liability of Tenant hereunder), and shall provide that it is primary
insurance, and not excess over or contributory with any other valid, existing
and applicable insurance in force for or on behalf of Landlord, and shall
provide that Landlord shall receive thirty (30) days' written notice from the
insurer prior to any cancellation or change of coverage. With respect to
Tenant's comprehensive general liability insurance, Landlord shall be named as
an additional insured with respect to its liability relative to this Lease and
the Building. Tenant shall deliver policies of such insurance or certificates
thereof to Landlord on or before the Commencement Date, and thereafter at least
thirty (30) days before the expiration dates of expiring policies; and, in the
event Tenant shall fail to procure such insurance, or to deliver such policies
or certificates, Landlord may, at its option, procure same for the account of
Tenant, and the cost thereof shall be paid to Landlord as Additional Rent within
five (5) days after delivery to Tenant of bills therefor. Tenant's compliance
with the provisions of this Article 9 shall in no way limit Tenant's liability
under any of the other provisions of this Lease.
9.03 Increased Insurance Risk. Tenant shall not do or permit anything
to be done, or keep or permit anything to be kept in the Premises, which would:
(a) be in violation of any governmental law, regulation or requirement, (b)
invalidate or be in conflict with the provision of any fire or other insurance
policies covering the Building or any property located therein, (c) result in a
refusal by fire insurance companies of good standing to insure the Building or
any such property in amounts required by Landlord's Mortgagee (as hereinafter
defined) or reasonably satisfactory to Landlord, (d) subject Landlord to any
liability or responsibility for injury to any person or property by reason of
any business operation being conducted in the Premises, or (e) cause any
increase in the fire insurance rates applicable to the Project or property
located therein at the beginning of the Term or at any time thereafter. Tenant,
at Tenant's expense, shall comply with all rules, orders, regulations or
requirements of the American Insurance Association (formerly the National Board
of Fire Underwriters) and with any similar body that shall hereafter perform the
function of such Association. In the event that any use of the Premises by
Tenant increases such cost of insurance, Landlord shall give Tenant written
notice of such increase and a reasonable opportunity to cure its use to prevent
such increase; provided, however, if Tenant fails to do so, Tenant shall pay
such increased cost to Landlord in accordance with Section 4.04 hereof.
Acceptance of such payment shall not be construed as consent by Landlord to
Tenant's such use or limit Landlord's remedies under this Lease.
9.04 Cross-Indemnification.
(a) Tenant agrees to protect, indemnify and save harmless
Landlord, from and against any and all loss, cost, liability, damage and expense
including, without limitation, claims, demands, penalties, causes of action,
costs and expenses and attorneys' fees imposed upon and incurred by or asserted
against Landlord from any cause in, on, or about the Premises, including,
without limitation, those relating to the following: (i) Tenant's default in its
observance or performance of any of the terms, covenants or conditions of this
Lease, (ii) the use or occupancy or manner of use or occupancy of the Premises
by Tenant or of any Tenant Parties, (iii) any acts, omissions or negligence of
Tenant or any Tenant Parties, in, on or about the Premises or the Project,
either prior to, during, or after the expiration of, the Term including, without
limitation, any acts, omissions or negligence in the making or performing of any
Alterations in or to the Premises, or (iv) for personal injury, including
without limitation, bodily injury, death or property damage, occasioned by any
use, occupancy, condition, occurrence, omission or negligence referred to in the
preceding clauses. In case any action, suit or proceeding is brought against
Landlord by reason of any such occurrence, Tenant will, at Tenant's expense,
resist and defend such action, suit or proceeding or cause the same to be
resisted or defended by counsel reasonably approved by Landlord.
(b) Landlord agrees to protect, indemnify and save harmless
Tenant from and against any and all loss, cost, liability, damage and expense
including, without limitation, claims, demands, penalties, causes of action,
costs and expenses and attorneys' fees imposed upon and incurred by or asserted
against Tenant that result from the conduct of Landlord or its employees, agents
or contractors (the "Landlord Parties") at, on or about the Project, including,
without limitation, those relating to the following: (a) for personal injury,
death or property damage arising from the negligence or willful misconduct of
Landlord or any Landlord Parties, (b) Landlord's default in its observance or
performance of any of the terms, covenants or conditions of this Lease or (c)
any acts, omissions or negligence of Landlord or any Landlord Parties, in, on or
about the Premises or the Project, either prior to, during, or
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after the expiration of, the Term including, without limitation, any acts,
omissions or negligence in the construction of the Base Building Improvements,
the Leasehold Improvement or the making or performing of any repairs or capital
improvements in or to the Premises or the Project. In case any action, suit or
proceeding is brought against Tenant by reason of any such occurrence, Landlord
will, at Landlord's expense, resist and defend such action, suit or proceeding
or cause the same to be resisted or defended by counsel reasonably approved by
Tenant.
9.05 Limitation on Landlord's Liability. Landlord shall not be
responsible or liable to Tenant for any loss or damage to Tenant, or its
business (including any loss of income therefrom) or its property occasioned by
or through the acts or omissions of persons occupying adjoining premises or any
part of the premises adjacent to or connected with the Premises or any part of
the Project, or for any loss or damage resulting to Tenant, or its business
(including any loss of income therefrom), or its property from smoke, fire,
electricity, steam, gas, vapor, water or rain, or other airborne contaminants,
or from the breakage, leakage, obstruction or other defects of pipes, wires,
appliances, plumbing, heating, air-conditioning or lighting fixtures, or from
any other cause, whether the said damage or injury results from conditions
arising from or upon Premises or upon other portions of the Project, or from
other sources or places, including theft, except to the extent that any such
damage or loss is occasioned by the intentional or negligent act or omission of
the Landlord or any Landlord Parties.
9.06 Waiver of Claims.
(a) Landlord and Tenant hereby agree and hereby waive any and
all rights of recovery against each other for loss or damage occurring to the
Premises or the Project or any of Landlord's or Tenant's Property contained
therein regardless of the cause of such loss or damage to the extent that the
loss or damage is covered by the injured party's insurance or the insurance the
injured party is required to carry under this Lease, whichever is greater
(without regard to any deductible provision in any policy). This waiver does not
apply to claims caused by a party's willful misconduct. This waiver also applies
to each party's directors, officers, employees, shareholders, and agents.
(b) Each party will assure that its insurance permits waiver
of liability and contains a waiver of subrogation. Each party shall secure an
appropriate clause in, or an endorsement to, each insurance policy obtained by
or required to be obtained by Landlord or Tenant, as the case may be, under this
Lease, pursuant to which the insurance company: (i) waives any right of
subrogation against Landlord or Tenant as the same may be applicable, or (ii)
permits Landlord or Tenant, prior to any loss to agree to waive any claim it
might have against the other without invalidating the coverage under the
insurance policy. If, at any time, the insurance carrier of either party refuses
to write (and no other insurance carrier licensed in Connecticut will write)
insurance policies which consent to or permit such release of liability, then
such party shall notify the other party and upon the giving of such notice, this
Section shall be void and of no effect.
9.07 Landlord's Insurance. Landlord shall maintain and keep in effect
during the entire Term the following insurance coverage (together with such
other coverages as Landlord may reasonably elect to carry for the benefit of the
Project):
(a) Standard Commercial General Liability Insurance with a
Broad Form Comprehensive General Liability endorsement. The limits of liability
of such insurance shall be an amount not less than $6,000,000 per occurrence,
bodily injury including death, and $3,000,000 per occurrence, property damage
liability or $6,000,000 combined single limit for bodily injury and property
damage liability;
(b) "Special Form" fire and extended coverage insurance on the
Project insuring the guaranteed replacement value thereof, excluding Tenant's
Property and Tenant's Alterations. The insurance shall include, but not be
limited to, fire and extended coverage perils and shall be placed with companies
licensed to sell insurance in Connecticut.
ARTICLE 10. CASUALTY
10.01 Damage or Destruction. Tenant shall give prompt notice to
Landlord of any damage by fire or other casualty to the Premises or any portion
thereof. In the event that the Premises, or any part thereof, or access thereto,
shall be so damaged or destroyed by fire or other insured casualty (a
"Casualty") that the Tenant shall not have reasonably convenient access to the
Premises or any portion of the Premises shall thereby be otherwise rendered
unfit for use and occupancy by the Tenant for the purposes set forth in Section
7.01, and if in the judgment of the Landlord the damage or destruction may be
repaired within one hundred and eighty (180) days with available insurance
proceeds, then the Landlord shall so notify the Tenant within sixty (60) days
after the occurrence of the damage or destruction (the "Notice Period") and
shall repair such damage or destruction (except damage or destruction to
Tenant's Property or Tenant's Alterations) with reasonable diligence. In the
event that the Landlord shall not complete such repairs within one hundred and
eighty (180) days after the elapse of the
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Notice Period, then the Tenant shall have the right to terminate the term of
this lease by giving written notice of such termination to the Landlord within
twenty (20) days after the end of such one hundred and eighty (180) day period;
provided, however, that in the event that the completion of repairs shall be
delayed by causes beyond the Landlord's control, including those events
described in Section 16.11 hereof, the time for completion shall be extended by
the period of such delay. If in the judgment of the Landlord the Premises, or
means of access thereto, cannot be repaired within one hundred and eighty twenty
(180) days after the elapse of the Notice Period with available insurance
proceeds and the Landlord does not deliver the Tenant notice of its decision to
repair such damage within sixty (60) days after the occurrence of the Casualty,
then either party shall have the right to terminate the term of this Lease by
giving written notice of such termination to the other party within the period
of sixty (60) to seventy-five (75) days after the occurrence of the Casualty.
10.02 Abatement of Rent. Annual Base Rent and Additional Rent shall not
be abated or suspended if, following any Casualty, Tenant shall continue to have
reasonably convenient access to the entire Premises and no portion of the
Premises are rendered unfit for use and occupancy. If Tenant shall not have
reasonably convenient access to the entire Premises or any portion of the
Premises shall be otherwise rendered unfit for use and occupancy by the Tenant
for the purposes set forth in Section 7.01 by reason of such Casualty, then Rent
shall be equitably suspended or abated relative to the portion of the Premises
that cannot be used by Tenant for any of its business operations, effective as
of the date of the Casualty until Landlord has (i) substantially completed the
repair of the Premises and the means of access thereto, and (ii) has delivered
notice thereof to Tenant. If such damage or destruction was caused by the
negligence or willful act or omission of the Tenant or any of its officers,
employees, contractors, agents or invitees, then there shall be no abatement of
Rent; an election by Landlord to carry rental loss insurance shall not affect
the provisions of this Article 10.
10.03 Events of Termination. In addition to the foregoing termination
rights provided in Section 10.01 hereof, in the event of a Casualty, the
following termination rights shall apply:
(a) If more than 25% of the gross rentable area of the
Premises shall be wholly or substantially damaged or destroyed by Casualty at
any time during the last six (6) months of the Term, either Landlord or Tenant
may terminate this Lease by delivery of written notice of such termination to
the other party within thirty (30) days after the occurrence of such damage.
(b) Notwithstanding the provisions of this Article 10, if,
prior to or during the Term the Building shall be so damaged by Casualty that,
in Landlord's reasonable estimate, the cost to repair the damage will be more
than 25% of the replacement value of the Building immediately prior to the
occurrence of the Casualty (whether or not the Premises shall have been damaged
or rendered untenantable), then, in any of such events, Landlord, at Landlord's
option, and with the written consent of Landlord's Mortgagee, may give to
Tenant, within ninety (90) days after such Casualty, a thirty (30) days' notice
of the termination of this Lease and, in the event such notice is given, this
Lease and the term shall terminate upon the expiration of such thirty (30) days
with the same effect as if such date were the Expiration Date; and the Rent
shall be apportioned as of such date and any prepaid portion of Rent for any
period after such date shall be refunded by Landlord to Tenant within thirty
(30) days following the Expiration Date. In the event that Landlord chooses to
terminate the Lease pursuant to this Section 10.03 it shall pay to Tenant an
amount equal to the Unamortized Cost of the Tenant's Leasehold Improvements,
less any amounts received by Tenant on account of insurance covering the same
and less the amount of payments made by Landlord in accordance with Section
3.10(b). For the purposes of this Section the term Unamortized Cost shall mean
Costs incurred by the Tenant, amortized on a nine year schedule beginning on the
Commencement Date and assuming equal monthly payments of principal and interest,
with interest at a rate equal to one percent (1%) over the prime rate of
Citibank, N.A. on the Commencement Date. The Term "Costs" shall mean and refer
to all actual expenditures of the Tenant, for its Leasehold Improvements.
10.04 Insurance Proceeds Upon Termination. If this Lease is terminated
pursuant to any right granted or reserved to Landlord under this Section, all
insurance proceeds payable with respect to the damage giving rise to such right
of termination shall be paid to Landlord, and Tenant shall have no claim
therefor. No damages, compensation or claim shall be payable by the Landlord to
Tenant, or any other person, by reason of inconvenience, loss of business or
annoyance arising from any damage or destruction, or any repair thereof, as is
referred to in this Article 10.
10.05 Scope of Landlord's Repairs. In the event Landlord elects or
shall be obligated to repair or restore any damage or destruction as aforesaid,
the scope of work shall be limited to the original Leasehold Improvements that
were constructed by Landlord at its expense, and Landlord shall have no
obligation to restore or replace Tenant's Property or Tenant's Alterations.
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ARTICLE 11. CONDEMNATION
11.01 Entire Condemnation. In the event that the whole of the Premises
shall be taken under the power of eminent domain, this Lease and the term and
estate hereby granted shall automatically terminate as of the earlier of the
date of the vesting of title or the date of dispossession of Tenant as a result
of such taking.
11.02 Partial Condemnation.
(a) In the event that only a part of the Premises shall be
taken by Condemnation and Tenant shall have reasonable, convenient access to and
from the Premises, the Term shall expire as to that portion of the Premises
condemned effective as of the date of the vesting of title in the condemning
authority, and this Lease shall continue in full force and effect as to the part
of the Premises not so taken.
(b) In the event that a part of the Project shall be subject
to Condemnation (whether or not the Premises are affected), Landlord may, at its
option, terminate this Lease as of the date of such vesting of title, by
notifying Tenant in writing of such termination within ninety (90) days
following the date on which Landlord shall have received notice of the vesting
of title in the condemning authority if in Landlord's reasonable opinion: (i) a
substantial alteration or reconstruction of the Project (or any portion thereof)
shall be necessary or appropriate, or (ii) the portion of the Project so
condemned has the effect of rendering the remainder of the Project uneconomic to
maintain.
(c) In the event that this Lease is not terminated in
accordance with subsection (b) hereof, Landlord shall, upon receipt of the award
in condemnation, make all necessary repairs or alterations to the Building in
which the Premises are located so as to constitute the remaining Premises a
complete architectural unit to the extent feasible, but Landlord shall not be
required to spend for such work an amount in excess of the amount received by
Landlord as damages for the part of the Premises so taken. "Amount received by
Landlord" shall mean that part of the award in condemnation which is free and
clear to Landlord of any collection by mortgagees and after payment of all costs
involved in collection, including but not limited to attorney's fees. Tenant, at
is own cost and expense shall, restore all exterior signs, trade fixtures,
equipment, furniture, furnishings and other installations of personalty of
Tenant which are not taken to as near its former condition as the circumstances
will permit. In the event of a partial taking, all provisions of this Lease
shall remain in full force and effect.
11.03 Temporary Taking. If there is a taking of the Premises for
temporary use arising out of a temporary emergency or other temporary situation,
this Lease shall continue in full force and effect, and Tenant shall continue to
comply with Tenant's obligations under this Lease, except to the extent
compliance shall be rendered impossible or impracticable by reason of the
taking, and Tenant shall be entitled to the award for its interest.
11.04 Condemnation Awards. Except as provided in the preceding Section
11.03, Landlord shall be entitled to the entire award in any condemnation
proceeding or other proceeding for taking for public or quasi-public use,
including, without limitation, any award made for the value of the leasehold
estate created by this Lease. No award for any partial or entire taking shall be
apportioned, and Tenant hereby assigns to Landlord any award that may be made in
such condemnation or other taking, together with any and all rights of Tenant
now or hereafter arising in or to same or any part thereof; provided, however,
that nothing contained herein shall be deemed to give Landlord any interest in
or to require Tenant to assign to Landlord any award made to Tenant specifically
for its relocation expenses or the taking of Tenant's Property or the loss of
Tenant's Leasehold Improvements, provided that such award does not diminish or
reduce the amount of the award payable to Landlord.
11.05 Proration. In the event of a partial condemnation or other taking
that does not result in a termination of this Lease as to the entire Premises,
then the Annual Base Rent and Tenant's Proportionate Share shall be adjusted in
proportion to that portion of the Premises taken by such condemnation or other
taking and Tenant's Proportionate Share.
ARTICLE 12. ASSIGNMENT AND SUBLETTING
12.01 Assignment and Subletting. Tenant shall not, without the prior
written consent of the Landlord, which consent shall not be unreasonably
withheld, assign, mortgage, encumber or otherwise transfer this Lease or any
interest herein directly or indirectly, by operation of law or otherwise, or
sublet the Premises or any part thereof, or permit the use or occupancy of the
Premises by any party other than Tenant (any such action, a "Transfer"). If at
any time or from time to time during the Term, when no Event of Default has
occurred and is continuing, Tenant desires to effect a Transfer, Tenant shall
deliver to Landlord written notice ("Transfer Notice") setting forth the terms
of the proposed Transfer and the identity of the proposed assignee, sublessee or
other transferee (each a "Transferee"). Tenant shall also deliver to Landlord
with the Transfer Notice an acceptable assumption agreement for Tenant's
obligations under this Lease together with all relevant information requested by
Landlord concerning the proposed Transferee to assist Landlord in making an
informed judgment regarding the financial responsibility,
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creditworthiness, reputation, and business experience of the Transferee. Tenant
shall reimburse Landlord promptly for all reasonable out-of-pocket expenses
incurred by Landlord including reasonable attorneys' fees in connection with the
review of Tenant's request for Landlord's approval of any Transfer. The
provisions of this Section 12.01 shall apply to a transfer (by one or more
Transfers) of fifty percent (50%) or more of the interest in the stock or
partnership or membership interests or other evidences of equity interests of
Tenant as if such Transfer were an assignment of this Lease; provided that if
equity interests in Tenant at any time are or become traded on a public stock
exchange, the transfer of equity interests in Tenant on a public stock exchange
shall not be deemed an assignment within the meaning of this Section.
12.02 Landlord's Options. Landlord shall have the option, exercisable
by written notice delivered to Tenant within thirty (30) days after Landlord's
receipt of a Transfer Notice accompanied by the other information described in
Section 12.01, to: (a) permit Tenant to Transfer the Premises; or (b) disapprove
the Tenant's Transfer of the Premises and to continue the Lease in full force
and effect as to the entire Premises. (c) if the Tenant proposes to sublease
more than fifty (50%) percent of the rentable square footage, terminate the
Lease as to the portion of the Premises affected by the Transfer as of the date
set forth in Landlord's notice of exercise of such option, which date shall not
be less than thirty (30) days nor more than ninety (90) days following the
giving of such notice. If Landlord exercises its option to terminate this Lease
(or in the case of a partial sublet to release Tenant with respect to a portion
of the Premises), Tenant shall surrender possession of such Premises on the date
set forth in Landlord's notice, and thereafter neither Landlord nor Tenant shall
have any further liability with respect thereto. If this Lease shall be
terminated as to a portion of the Premises only, Rent and Tenant's parking
allocation shall be readjusted proportionately according to the ratio that the
number of square feet and the portion of the space surrendered compares to the
floor area of Tenant's Premises during the Term of the proposed sublet. The
provisions of this section shall not apply to a sublease or assignment of all or
any portion of the Premises to an entity affiliated with and under the common
control of Tenant ("Affiliated Entity").
12.03 Additional Conditions.
(a) Tenant shall not offer to make, or enter into negotiations
with respect to any Transfer to: (i) any tenant of the Building or Project or
any entity owned by, or under the common control of, whether directly or
indirectly, a tenant in the Building or Project unless there is no competing
space then available for leases therein; or (ii) any party with whom Landlord
(or its affiliate) is then negotiating with respect to other space in the
Building or Project unless there is no competing space then available for leases
therein; or (iii) any party which would be of such type, character, or condition
as to be inappropriate as a tenant for the Building. It shall not be
unreasonable for Landlord to disapprove any proposed assignment, sublet or
transfer to any of the foregoing entities.
(b) If Landlord approves of the proposed Transfer pursuant to
Section 12.01 above, Tenant may enter into the proposed Transfer with such
proposed Transferee subject to the following further conditions: (i) the
Transfer shall be on the same terms set forth in the Transfer Notice, and (ii)
no Transfer shall be valid and no Transferee shall take possession of the
Premises until an executed counterpart of the assignment, sublease or other
instrument effecting the Transfer (in the form approved by Landlord) has been
delivered to Landlord pursuant to which the Transferee shall expressly assume
all of Tenant's obligations under this Lease; and (iii) Tenant shall provide
Landlord with a written ratification agreement from each guarantor of this Lease
in form and substance satisfactory to Landlord.
12.04 No Release. No Transfer shall be effective unless approved in
writing by Landlord. Landlord's consent to a Transfer shall not release Tenant
of Tenant's obligations under this Lease and this Lease and all of the
obligations of Tenant under this Lease shall continue in full force and effect
as the obligations of a principal (and not as the obligations of a guarantor or
surety). From and after any Transfer, the Lease obligations of the Transferee
and of the original Tenant named in this Lease shall be joint and several. No
acceptance of Rent by Landlord from or recognition in any way of the occupancy
of the Premises by a Transferee shall be deemed a consent to such Transfer, or a
release of Tenant from direct and primary liability for the further performance
of Tenant's covenants hereunder. The consent by Landlord to a particular
Transfer shall not relieve Tenant from the requirement of obtaining the consent
of Landlord to any further Transfer. Each violation of any of the covenants,
agreements, terms or conditions of this Lease, whether by act or omission, by
any of Tenant's permitted Transferees, shall constitute a violation thereof by
Tenant. In the event of default by any Transferee of Tenant or any successor of
Tenant in the performance of any of the terms hereof, Landlord may proceed
directly against Tenant without the necessity of exhausting remedies against
such Transferee or successor.
12.05 Transfer Profit. Fifty percent (50%) of any rent and other
economic consideration received by Tenant as a result of such Transfer to an
entity other than an Affiliated Entity in which case the Tenant shall keep all
excess rent, which exceeds, in the aggregate, (a) the total of the remaining
rent which Tenant is obligated to pay Landlord under this Lease (prorated to
reflect obligations allocable to any portion of the Premises subleased) plus (b)
any reasonable tenant fit-up costs, brokerage commissions and attorneys' fees
actually paid by Tenant in connection with such Transfer (specifically excluding
moving or relocation costs paid to the Transferee), shall be paid to Landlord on
a monthly basis within ten
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(10) days after receipt thereof as Additional Rent under this Lease, without
affecting or reducing any other obligations of Tenant hereunder. Each such
payment shall be sent with a detailed statement. Landlord shall have the right
to audit Tenant's books and records to verify the accuracy of the detailed
statement.
ARTICLE 13. DEFAULTS AND REMEDIES
13.01 Events of Default. The occurrence of any one or more of the
following events shall constitute an event of default (each an "Event of
Default") hereunder:
(a) Nonpayment of Annual Base Rent or Additional Rent. Failure
by Tenant to pay any installment of Annual Base Rent or Additional Rent due and
payable hereunder, upon the date when said payment is due; provided, however, on
two(2) occasions only during any Lease Year, Landlord shall permit Tenant a
5-day grace period from the date when said payment is due to cure such failure.
(b) Certain Obligations. Failure by Tenant to perform, observe
or comply with any obligation, agreement or covenant contained in Sections 7.05
("Hazardous Substances"), 8.02 ("Alterations"), Section 9.01 ("Tenant's
Insurance") and Article 12 ("Assignment and Subletting") of this Lease or
failure by Tenant to perform observe or comply with any obligation, agreement or
covenant, after the expiration of all applicable notice and cure periods,
contained in a certain Lease dated October 20, 1999 for approximately 3083
rentable square feet at the Project ____________by and between Wilton Executive
Campus Associates, as Landlord__________and Tenant ( the "Data Center Lease") or
a certain Lease dated_October 20, 1999 for approximately 20,058 rentable square
feet at the Project by and between Landlordand Tenant.
(c) Other Obligations. Failure by Tenant to perform any
obligation, agreement or covenant under this Lease other than those matters
specified in subparagraph (a) or (b) of this Section 13.01, such failure
continuing for thirty (30) days after written notice by Landlord to Tenant of
such failure; provided, however, that if the nature of Tenant's obligation is
such that more than thirty (30) days are required for performance, then Tenant
shall not be in default if Tenant commences performance within such thirty (30)
day period and thereafter diligently and continuously prosecutes the same to
completion within sixty (60) days following the date of Landlord's written
notice with respect to such failure.
(d) Abandonment. Abandonment of the Premises by Tenant for a
continuous period in excess of twenty (20) business days.
(e) Assignment; Receivership; Attachment. (i) The making by
Tenant of any arrangement or assignment for the benefit of creditors; (ii) 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,
where possession is not restored to Tenant within thirty (30) days; or (iii) 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 such seizure is not discharged within thirty (30) days.
(f) Bankruptcy. The admission by Tenant or Tenant's guarantor
(if any) in writing of its inability to pay its debts as they become due, the
filing by Tenant or Tenant's guarantor (if any) of a petition in bankruptcy
seeking any reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any present or future statute, law or
regulation, the filing by Tenant or Tenant's guarantor (if any) of an answer
admitting or failing timely to contest a material allegation of a petition filed
against Tenant or Tenant's guarantor (if any) in any such proceeding or, if
within forty-five (45) days after the commencement of any proceeding against
Tenant or Tenant's guarantor (if any) seeking any involuntary reorganization, or
arrangement, composition, readjustment, liquidation, dissolution or similar
relief under any present or future statute, law or regulation by any of Tenant's
creditors or such guarantor's creditors, such proceeding shall not have been
dismissed.
13.02 Remedies. Upon the occurrence of any Events of Default by Tenant
which is not cured by Tenant within the grace periods specified in Section 13.01
hereof, if any, Landlord shall have the following rights and remedies, in
addition to all other rights or remedies available to Landlord in law or equity:
(a) Landlord may give written notice to Tenant specifying such
Event of Default or Events of Default and stating that this Lease and the Term
hereby demised shall expire and terminate on the date specified in such notice,
and upon the date specified in such notice, this Lease and the Term hereby
demised, and all rights of Tenant under this Lease shall expire and terminate.
Upon any termination of this Lease, Tenant shall quit and peaceably surrender
the Premises, and all portions thereof, to Landlord. Following any such
termination, Landlord may, without further notice, enter the Premises, and any
portions thereof, and take possession thereof by summary proceeding, ejectment
or otherwise,
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and may dispossess Tenant and remove Tenant and all other persons and property
from the Premises and Landlord shall have the right to receive all rental and
other income of and from the same.
(b) At Landlord's election, without terminating this Lease,
Landlord may, without re-entry, recover possession of the Premises in the manner
prescribed by any statute relating to summary process, and any demand for the
Rent, re-entry for condition broken, and any and all notices to quit, or other
formalities of any nature, to which Tenant may be entitled, are hereby
specifically waived. Landlord may relet the Premises for the account of Tenant.
No such termination of Tenant's right to possess the Premises under this Section
13.02(b) shall relieve Tenant of its liabilities and obligations under this
Lease (as if such right of possession had not been so terminated or expired),
and such liabilities and obligations shall survive any such termination of
Tenant's possessory interest. In the event of any such termination of this Lease
or Tenant's right of possession, whether or not the Premises, or any portion
thereof, shall have been relet, Tenant shall pay the Landlord a sum equal to the
Rent and any other charges required to be paid by Tenant up to the time of such
termination of such right of possession and thereafter Tenant, until the end of
the Term, shall be liable to Landlord for and shall pay to Landlord: (i) the
equivalent of the amount of the Rent payable under this Lease, less (ii) the net
proceeds of any reletting effected pursuant to the provisions hereof after
deducting all of Landlord's "Reletting Expenses" (as defined in Section 13.02).
Tenant shall pay such amounts in accordance with the terms of this Section
13.02(b) as set forth in a written statement thereof from Landlord to Tenant
(hereinafter, the "Deficiency") to Landlord in monthly installments on the days
on which the Annual Base Rent is payable under this Lease, and Landlord shall be
entitled to recover from Tenant each monthly installment of the Deficiency as
the same shall arise. Tenant shall also pay to Landlord upon demand the costs
incurred by Landlord in curing Tenant's defaults existing at or prior to the
date of such termination and the cost of recovering possession of the Premises.
Tenant agrees that Landlord may file suit to recover any sums that become due
under the terms of this Section from time to time, and all reasonable costs and
expenses of Landlord, including attorneys' fees and costs incurred in connection
with such suits shall be payable by Tenant on demand.
(c) At any time after an Event of Default and termination of
the Lease by Landlord, whether or not Landlord shall have collected any monthly
Deficiency as set forth in Section 13.02(b), Landlord shall be entitled to
recover from Tenant, and Tenant shall pay to Landlord, on demand, as and for
final damages for Tenant's default and in lieu of any subsequent Deficiency (but
without limitation of the provisions of subsection (f) hereof):
(i) all Rent and other sums due and payable by Tenant on the
date of termination; plus
(ii) the costs of curing Tenant's defaults existing at or
prior to the date of termination; plus
(iii) the cost of recovering possession of the Premises and
the Reletting Expenses; plus
(iv) an amount equal to the difference between the then
present worth of the aggregate of the Rent and any other charges to be
paid by Tenant hereunder for the then unexpired term of this Lease
(assuming this Lease had not been so terminated), and the then present
worth of the then aggregate fair market rent of the Premises for the
same period (taking into account rentals received by Landlord under a
replacement Lease of the Premises). In the computation of present
worth, a discount at the then market discount rate as reasonably
determined by Landlord shall be employed.
(d) In connection with any reletting of the Premises following
an Event of Default, Landlord shall be entitled to grant such rental and
economic concessions and other incentives as may be customary for similar space
in eastern Fairfield County.
(e) Any and all property belonging to Tenant or to which
Tenant is or may be entitled which may be removed from the Premises by Landlord
pursuant to the authority of this Lease or applicable law, may be handled,
removed or stored in a commercial warehouse or otherwise by Landlord at Tenant's
risk and expense and Landlord shall in no event be responsible for the value,
preservation or safekeeping thereof. Tenant shall pay to Landlord, upon demand,
any and all expenses incurred in such removal and all storage charges for such
property so long as the same shall be in Landlord's possession or under
Landlord's control.
(f) Landlord shall have the right of injunction, in the event
of a breach or threatened breach by Tenant of any of the agreements, conditions,
covenants or terms hereof, to restrain the same and the right to invoke any
remedy allowed by law or in equity, whether or not other remedies, indemnity or
reimbursements are herein provided. The rights and remedies given to Landlord in
this Lease are
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distinct, separate and cumulative remedies; and no one of them, whether or not
exercised by Landlord, shall be deemed exclusive of any of the others.
(g) For purposes of this Section 13.02, "Reletting
Alterations" shall mean all repairs, made by Landlord in or to the Premises to
the extent deemed reasonably necessary by Landlord to prepare the Premises for
the re-leasing following an Event of Default; and "Reletting Expenses" shall
mean the reasonable expenses paid or incurred by Landlord in connection with any
re-leasing of the Premises following an Event of Default, including, without
limitation, marketing expenses, brokerage commissions, management fees,
attorneys' fees, the costs of Reletting Alterations, operating expenses and rent
and other economic concessions reasonable and customary in Fairfield County at
the time, provided to the new tenant.
13.03 Landlord's Right to Cure Defaults. If the Tenant shall default in
the observance or performance of any condition or covenant on Tenant's part to
be observed or performed under or by virtue of any of the provisions of this
Lease, and such default continues beyond any applicable notice and cure period
or Landlord reasonably determines that an emergency exists, the Landlord,
without being under any obligation to do so and without thereby waiving such
default, may remedy such default for the account and at the expense of the
Tenant. If the Landlord makes any expenditures or incurs any obligations for the
payment of money in connection therewith, including but not limited to
reasonable attorney's fees in instituting, prosecuting or defending any action
or proceeding, such sums paid or obligation incurred and costs, shall be paid
upon demand to the Landlord by the Tenant as Additional Rent pursuant to Section
4.04 hereof and if not so paid with interest from its due date until paid at the
lesser of eighteen (18%) percent per annum or the maximum legal rate that
Landlord may charge Tenant.
13.04 No Accord and Satisfaction. Landlord may collect and receive any
rent due from Tenant, and the payment thereof shall not constitute a waiver of
or affect any notice or demand given, suit instituted or judgment obtained by
Landlord, or be held to waive, affect, change, modify or alter the rights or
remedies that Landlord has against Tenant in equity, at law, or by virtue of
this Lease. No receipt or acceptance by Landlord from Tenant of less than the
monthly rent herein stipulated shall be deemed to be other than a partial
payment on account for any due and unpaid stipulated rent; no endorsement or
statement on any check or any letter or other writing accompanying any check or
payment of rent to Landlord shall be deemed an accord and satisfaction, and
Landlord may accept and negotiate such check or payment without prejudice to
Landlord's rights to (i) recover the remaining balance of such unpaid rent, or
(ii) pursue any other remedy provided in this Lease.
13.05 Arbitration. Any dispute arising out of or relating to Article 5
of this Lease (with respect to the issues expressly stated therein) shall be
submitted to and determined in binding arbitration under the Commercial
Arbitration Rules of the American Arbitration Association. The arbitration shall
be conducted before and by a single arbitrator selected by the parties. If the
parties have not selected an arbitrator within 30 days of written demand for
arbitration, the arbitrator shall be selected by the American Arbitration
Association pursuant to the then current rules of that Association on
application by either party. The arbitrator shall have authority to fashion such
just, equitable and legal relief as he, in his sole discretion, may determine.
The parties agree that the arbitration hearing shall be held within thirty (30)
business days following notification to the parties of the appointment of such
arbitration, and that the arbitration proceedings shall be concluded within
thirty (30) business days following the first scheduled arbitration hearing.
Each party shall bear all its own expenses of arbitration and shall bear equally
the costs and expenses of the arbitrator. All arbitration proceedings shall be
conducted in the City of Stamford, State of Connecticut. Landlord and Tenant
further agree that they will faithfully observe this agreement and rules, and
that they will abide by and perform any award rendered by the arbitrator and
that a judgment of the court having jurisdiction may be entered upon the award.
The duty to arbitrate shall survive the cancellation or termination of this
Lease. Landlord and Tenant further agree that in addition to the discovery
rights available to them under the Commercial Arbitration Rules they shall have
all rights of discovery available to litigants pursuant to the Connecticut Rules
of Court then appertaining.
13.06 Indirect Damages. Notwithstanding any provision of this Lease to
the contrary (except Section 2.02), none of the provisions of this Lease shall
cause either party to be liable to the other party, or anyone claiming through
or on behalf of such other party, for any special, indirect or consequential
damages, including, without limitation, lost profits or revenues.
13.07 Waivers. TENANT HEREBY REPRESENTS, COVENANTS AND AGREES THAT IT
IS ENGAGED PRIMARILY IN COMMERCIAL PURSUITS, AND THAT THE LEASE IS A "COMMERCIAL
TRANSACTION" WITHIN THE MEANING OF SECTION 52-278a(a) OF THE CONNECTICUT GENERAL
STATUTES (REV. 1958), AS AMENDED. TENANT HEREBY WAIVES ALL RIGHTS TO NOTICE,
PRIOR JUDICIAL HEARING OR COURT ORDER UNDER SECTION 52-278a ET SEQ. OF THE
CONNECTICUT GENERAL STATUTES (REV. 1958) AS AMENDED OR UNDER ANY OTHER STATE OR
FEDERAL LAW WITH RESPECT TO ANY PREJUDGMENT REMEDIES THE LANDLORD MAY EMPLOY TO
ENFORCE ITS RIGHTS AND REMEDIES HEREUNDER.
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13.08 Claims in Bankruptcy. Nothing herein shall limit or prejudice the
right of Landlord to prove for and obtain in proceedings for bankruptcy or
insolvency by reason of any such termination, an amount equal to the maximum
allowed by any statute or rule of law in effect at the time when, and governing
the proceedings in which, the damages are to be proved, whether or not the
amount be greater, equal to or less than the amount of the loss or damage
referred to above. Without limiting any of the provisions of this Article 13, if
pursuant to the Bankruptcy Code, as the same may be amended, Tenant is permitted
to assign this Lease in disregard of the restrictions contained in Article 12,
Tenant agrees that adequate assurance of future performance by the assignee
permitted under the Bankruptcy Code shall mean the deposit of cash security with
Landlord in any amount equal to all Rent payable under this Lease for the
calendar year preceding the year in which such assignment is intended to become
effective, which deposit shall be held by Landlord, without interest, for the
balance of the term as security for the full and faithful performance of all of
the obligations under this Lease on the part of Tenant yet to be performed. If
Tenant receives or is to receive any valuable consideration for such an
assignment of this Lease, such consideration, after deducting therefrom (a) the
brokerage commissions, if any, and other expenses reasonably designated by the
assignee as paid for the purchase of Tenant's property in the Premises, shall be
and become the sole exclusive property of Landlord and shall be paid over to
Landlord directly by such assignee. In addition, adequate assurance shall mean
that any such assignee of this Lease shall have a net worth indicating said
assignee's reasonable ability to pay the Rent, and abide by the terms of this
Lease for the remaining portion thereof applying commercially reasonable
standards.
ARTICLE 14. NONDISTURBANCE AND RIGHTS OF MORTGAGE HOLDERS
14.01 Subordination.
(a) Subject to the provisions of this Section 14.01, without
the necessity of any additional document being executed by Tenant for the
purpose of effecting a subordination, Tenant agrees that this Lease and Tenant's
tenancy hereunder are and shall be automatically subject and subordinate at all
times to (a) the lien (and the terms and conditions) of any mortgage that may
now exist or hereafter be executed in any amount for which the Site, the
Building, or Landlord's interest or estate in any of said items is specified as
security; and (b) renewals, modifications, consolidations, replacements, and
extensions of any of the foregoing. Landlord agrees to obtain from the holders
of any mortgage lien on the Site and the Building or Site (collectively,
"Landlord's Mortgagee") a recordable instrument by which Landlord's Mortgagee
shall agree not to disturb Tenant's possession and occupancy of the Premises or
join Tenant in any such action as a party defendant so long as Tenant is not in
default in the performance or observance of any of the terms, covenants or
conditions contained in the Lease.
(b) In the event that any such first mortgage is foreclosed or
a conveyance in lieu of foreclosure is made for any reason, Tenant shall, at the
option of Landlord's Mortgagee or the grantee or purchaser in foreclosure,
notwithstanding any subordination of any such lien to this Lease, attorn to and
become the Tenant of the successor in interest to Landlord at the option of such
successor in interest. Tenant covenants and agrees to execute and deliver,
within ten (10) days following delivery of request by Landlord, Landlord's
Mortgagee, or by Landlord's successor in interest and in the form requested by
Landlord, Landlord's Mortgagee, or by Landlord's successor in interest, any
additional documents evidencing the priority or subordination of this Lease with
respect to the lien of any such first mortgage, which additional documents shall
be satisfactory to Landlord, Landlord's Mortgagee, and Landlord's successors in
interest.
(c) If Landlord's Mortgagee shall succeed to the interest of
Landlord under this Lease, Landlord's Mortgagee shall assume and perform
Landlord's obligations under this Lease only while it is the fee owner of the
Building and shall not be (i) liable for any breach, act or omission of any
prior landlord, including Landlord; (ii) subject to offsets, claims or defenses
which Tenant might have against prior landlords; (iii) bound by the payment of
Annual Base Rent or Additional Rent or other payment in lieu of rent which
Tenant may have paid to any prior landlord for more than thirty (30) days in
advance of its due date; (iv) bound by any assignment, surrender, termination,
waiver, lease amendment or modification of or affecting this Lease made without
its consent; or (v) bound by any of the construction obligations of Landlord
under this Lease.
14.02 Notices. If Tenant is given written notice of the identity and
address of Landlord's Mortgagee, then Tenant shall give to such Landlord's
Mortgagee written notice of any default by Landlord under the terms of this
Lease by registered or certified mail, and such Landlord's Mortgagee shall be
given the opportunity to cure Landlord's default within the thirty (30) days
following such written notice; provided, however, that said thirty (30) day
period shall be extended so long as within said thirty (30) day period such
party has commenced to cure the default and such party is proceeding with due
diligence (including the exercise of its remedies against Landlord if necessary
to obtain possession of the Premises) to effect such cure.
14.03 Estoppel Certificates. Tenant shall at any time, and from time to
time, upon not less than five (5) days prior written notice from Landlord
execute, acknowledge and deliver to Landlord, to
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any prospective purchaser, or Landlord's Mortgagee, a written certificate of
Tenant in form and substance reasonably satisfactory to Landlord , or Landlord's
Mortgagee stating, in part: (a) whether Tenant has accepted the Premises and the
commencement date and termination date of this Lease; (b) that this Lease is
unmodified and in full force and effect (or if there have been modifications,
that the same is in full force and effect as modified and stating the
modifications), and has not been assigned; (c) that there are not, to Tenant's
best knowledge, any uncured defaults on the part of the Landlord or Tenant
hereunder, or specifying any defaults that may exist; (d) whether or not there
are then existing any defenses against the enforcement of any of the obligations
of Tenant under this Lease (and, if so, specifying same); (e) whether Tenant has
received all required contributions from Landlord on account of Tenant's
improvements; (f) the dates, if any, to which the Annual Base Rent and
Additional Rent and other charges under this Lease have been paid and the
amounts of said Annual Base Rent and Additional Rent, and that no Annual Base
Rent, Additional Rent, or security deposit has been paid in advance of its due
date, and (g) any other information that may reasonably be required by any of
such persons. It is intended that any such certificate of Tenant delivered
pursuant to this Section 14.03 may be relied upon by Landlord and any
prospective purchaser or Landlord's Mortgagee of any part of the Building.
14.04 Quiet Enjoyment. Upon Tenant paying the Annual Base Rent and
Additional Rent and performing all of Tenant's obligations under this Lease,
Tenant may peacefully and quietly enjoy the Premises during the Term as against
all persons or entities lawfully claiming by or through Landlord; subject,
however, to the provisions of this Lease and to the rights of Landlord's
Mortgagee.
ARTICLE 15. NOTICES
15.01 Manner of Notice.
(a) All notices, demands and other communications ("notices")
permitted or required to be given under this Lease shall be in writing and sent
by personal service, telecopy transmission (if a copy thereof is also sent on
the same day by a nationally recognized overnight courier service), certified
mail (postage prepaid) return receipt requested or by a nationally recognized
overnight courier service, (a) to Tenant (i) at 274 Riverside Avenue, Westport,
Connecticut 06880, if sent prior to Tenant's taking possession of the Premises,
or (ii) at the Building if sent subsequent to Tenant's taking possession of the
Premises, or (iii) at any place where Tenant or any agent or employee of Tenant
may be found if sent subsequent to Tenant's vacating, abandoning or surrendering
the Premises, with a copy of all notices to be sent to Jonathan A. Flatow, Esq.,
Wake, See, Dimes & Bryniczka, 27 Imperial Ave., Westport, CT 06880 and (b) to
Landlord at P.O. Box 703, Westport, Connecticut 06881 or (c) to such other
address as either Landlord or Tenant may designate as its new address for such
purpose by notice given to the other in accordance with the provisions of this
Section 15.01.
(b) Notices shall be deemed to have been given (i) when hand
delivered (provided that delivery shall be evidenced by a receipt executed by or
on behalf of the addressee if delivered by personal service) if personal service
is used, (ii) on the date of transmission if sent before 4:00 p.m. (Hartford
time) on a business day when telecopy transmission is used, (iii) the sooner of
the date of receipt or the date that is three (3) days after the date of mailing
thereof if sent by postage pre-paid registered or certified mail, return receipt
requested, and (iv) one (1) day after being sent by Federal Express or other
reputable overnight courier service (with delivery evidenced by written receipt)
if overnight courier service is used.
ARTICLE 16. MISCELLANEOUS
16.01 Brokers. Landlord and Tenant warrant to each other that they have
had no dealings with any broker, agent or finder in connection with this Lease
except Reliance Property Group and Cushman & Wakefield of CT. Landlord agrees to
pay the commissions due to such brokerage companies pursuant to separate
agreements. Both parties hereto agree to protect, indemnify and hold harmless
the other from and against any final judgment relating to compensation,
commissions and charges claimed by any other broker, agent or finder not
identified above with respect to this Lease or the negotiation thereof that is
made by reason of any action or agreement by such party.
16.02 Attorney's Fees. If on account of any default by Tenant in
Tenant's obligations under the terms of this Lease, it becomes necessary or
appropriate for Landlord to employ attorneys to enforce any of Landlord's rights
or remedies hereunder, Tenant shall pay as Additional Rent hereunder all
reasonable fees of such attorneys incurred in connection with any action to
enforce such rights and remedies in which the landlord prevails and all
reasonable costs so incurred. If on account of any default by Landlord of
Landlord's obligations under this Lease, it becomes necessary or appropriate for
Tenant to employ attorneys to enforce Tenant's rights and remedies hereunder,
Landlord shall pay Tenant all reasonable attorney's fees incurred in connection
with any action to enforce such rights and remedies in which the Tenants
prevails and all reasonable costs so incurred.
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16.03 Site Development. Landlord reserves the right to design, develop
and operate an additional building and related improvements adjacent to the
Building. Landlord reserves the right to enter into agreements necessary for
shared parking and other shared amenities. Landlord shall use all reasonable
efforts to avoid disturbing or impairing Tenant's right to quite possession by
virtue of any site development reserved hereunder
16.04 No Merger. There shall be no merger of this Lease or of the
leasehold estate hereby created with the fee estate in the Premises or any part
thereof by reason of the fact that the same person may acquire or hold, directly
or indirectly, this Lease or the leasehold estate hereby created or any interest
in this Lease or in such leasehold estate as well as the fee estate in the
leasehold Premises or any interest in such fee estate.
16.05 Easements. Landlord reserves the right, from time to time, to
grant easements and rights, make dedications, agree to restrictions and record
maps affecting the Project as Landlord may deem necessary or desirable, so long
as such easements, rights, dedications, restrictions, and maps do not
unreasonably interfere with the use of the Premises by Tenant; and this Lease
shall be subordinate to such instruments.
16.06 Severability. If any provision of this Lease or the application
thereof to any person or circumstance shall, to any extent, be invalid or
unenforceable, the remainder of this Lease, or the application of such provision
to persons or circumstances other than those as to which it is invalid or
unenforceable, shall not be affected thereby, and each provision of this Lease
shall be valid and enforceable to the full extent permitted by law. No remedy or
election hereunder shall be deemed exclusive, but shall wherever possible, be
cumulative with all other remedies at law or in equity. Neither this Lease nor
any term or provision hereof may be changed, waived, discharged or terminated
orally, and no breach thereof shall be waived, altered or modified, except by a
written instrument signed by the party against which the enforcement of the
change, waiver, discharge or termination is sought. Any right to change, waive,
discharge, alter or modify, or terminate this Lease shall be subject to the
prior express written consent of Landlord's Mortgagee.
16.07 No Waiver. No waiver of any provision hereof shall be deemed a
waiver of any other provision hereof or of any subsequent breach of the same or
any other provision. No waiver of any breach shall affect or alter this Lease,
but each and every term, covenant and condition of this Lease shall continue in
full force and effect with respect to any other then existing or subsequent
breach thereof. No reference to any specific right or remedy shall preclude the
exercise of any other right or remedy permitted hereunder or that may be
available at law or in equity. No failure by Landlord to insist upon the strict
performance of any agreement, term, covenant or condition hereof, or to exercise
any right or remedy consequent upon a breach thereof, and no acceptance of full
or partial rent during the continuance of any such breach, shall constitute a
waiver of any such breach, agreement, term, covenant or condition.
16.08 Bind and Inure. The terms, provisions, covenants and conditions
contained in this Lease shall bind and inure to the benefit of Landlord and
Tenant, and, except as otherwise provided herein, their respective heirs, legal
representatives, successors and assigns.
16.09 Landlord's Liability.
(a) The term "Landlord" as used herein and throughout the
Lease shall mean only the owner or owners at the time in question of Landlord's
interest in this Lease. Upon any transfer of such interest, from and after the
date of such transfer, Landlord herein named (and in case of any subsequent
transfers the then transferor) and each of its partners, principals,
shareholders, beneficiaries or co-tenants, as the case may be, ("Landlord's
Constituent Parties") shall be relieved of all liability for the performance of
any obligations on the part of the Landlord contained in this Lease, provided
that any monies in the hands of Landlord or the then transferor at the time of
such transfer, in which Tenant has an interest, shall be delivered to the
transferee.
(b) The obligations contained in this Lease to be performed by
Landlord shall be binding on Landlord's successors and assigns, only during
their respective periods of ownership, provided, however, that Landlord and each
of Landlord's Constituent Parties shall be under no personal liability with
respect to any of the provisions, covenants or agreements of this Lease. If
Landlord becomes obligated to pay Tenant a money judgment arising out of any
failure by Landlord to perform any of its obligations under this Lease, Tenant
shall be limited for the satisfaction of the money judgment solely to Landlord's
interest in the Building and no other property or assets of Landlord or
Landlord's Constituent Parties shall be subject to levy, execution or other
enforcement procedure whatsoever for the satisfaction of the money judgment.
16.10 Interpretation. The words "Landlord" and "Tenant" as used herein
shall include the plural as well as the singular. The words used in neuter
gender include the masculine and feminine. If there is more than one Tenant, the
obligations under this Lease imposed on Tenant shall be joint and
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several. The captions preceding the articles of this Lease have been inserted
solely as a matter of convenience and such captions in no way define or limit
the scope or intent of any provision of this Lease.
16.11 Force Majeure. Landlord shall be excused for the period of any
delay in the performance of any obligations hereunder, when prevented from so
doing by cause or causes beyond Landlord's control including, without
limitation, civil commotion, war, labor disputes or strikes, governmental
regulations or controls, inspection delays by governmental authorities, delays
in obtaining governmental permits not occasioned by Landlord's delays, mistakes,
errors or omissions, inability to obtain any material or services, casualty,
acts of God, or the elements. Tenant shall similarly be excused for delay in the
performance of obligations hereunder provided: (a) nothing contained in this
Section or elsewhere in this Lease shall be deemed to excuse or permit any delay
in the payment of any sums of money required hereunder, or any delay in the cure
of any default which may be cured by the payment of money; (b) no reliance by
Tenant upon this Section shall limit or restrict in any way Landlord's right of
self-help as provided in this Lease; and (c) Tenant shall not be entitled to
rely upon this Section unless it shall advise Landlord in writing, of the
existence of any force majeure preventing the performance of an obligation of
Tenant promptly after the commencement of the force majeure.
16.12 Joint and Several. If two or more individuals, corporations,
partnerships or other business associations (or any combination of two or more
thereof) shall sign this Lease as Tenant, the liability of each such individual,
corporation, partnership or other business association to pay Rent and perform
all other obligations hereunder shall be deemed to be joint and several.
16.13 Entire Agreement. This Lease, including the Exhibits hereto,
which are made part of this Lease, contain the entire agreement of the parties
and all prior negotiations and agreements are merged herein. Neither Landlord
nor Landlord's agents have made any representations or warranties with respect
to the Premises, the Building or this Lease except as expressly set forth
herein, and no rights, easements or licenses are or shall be acquired by Tenant
by implication or otherwise unless expressly set forth herein. Tenant covenants
and agrees that no diminution of light, air or view by any structure that may
hereafter be erected (whether or not by Landlord) shall entitle Tenant to any
reduction of Annual Base Rent or Additional Rent under this Lease, result in any
liability of Landlord or Tenant, or in any other way affect this Lease or
Tenant's obligations hereunder.
16.14 Authority. If Tenant signs as a corporation or a partnership,
each person executing this Lease on behalf of Tenant hereby covenants and
warrants that Tenant is a duly authorized and existing entity, that Tenant is
duly qualified to do business in Connecticut, that Tenant has full right and
authority to enter into this Lease, and that each person signing on behalf of
Tenant is duly authorized to do so and that no other signatures are necessary.
Upon Landlord's request, Tenant shall provide Landlord with evidence reasonably
satisfactory to Landlord confirming the foregoing covenants and warranties.
16.15 Governing Law. This Lease and the rights and obligations of the
parties hereunder shall be construed and enforced in accordance with the laws of
the State of Connecticut.
16.16 Survival. All agreements, covenants and indemnifications
contained herein or made in writing pursuant to the terms of this Lease by or on
behalf of Tenant shall be deemed material and shall survive expiration or sooner
termination of this Lease.
16.17 Building Name. The Building and the Project may be known by such
name as Landlord, in its sole discretion, may elect, and Landlord shall have the
right from time to time to change such designation or name without Tenant's
consent upon thirty (30) days prior written notice to Tenant.
16.18 Submission. Submission of this instrument for examination does
not constitute a reservation of or option for lease of the Premises, and it is
not effective as a lease or otherwise until this Lease has been executed by both
Landlord and Tenant and a fully executed copy has been delivered to each.
ARTICLE 17. OPTION TO RENEW
17.01 Option (a) In the event, but only in the event, that a) Tenant
complies with all provisions of this entire Article as and when required, and b)
at the time of the expiration of the then current term ("current term"), 1)
Tenant, has not been in material default of the terms and provisions of this
Lease during the last 18 months of the Current Term, and 2) this Lease shall
then be in full force and effect, Tenant shall have the option to extend the
term of this Lease for two (2) successive five (5) year terms (each an "option
term") commencing at midnight on the date on which the then current term
terminates. In the event Tenant elects to exercise its option, Tenant shall so
notify Landlord by giving Landlord written notice ("Notice to Landlord")
received by Landlord no later than nine (9) months prior to the expiration of
the then current term. Each option term shall be on the same terms, covenants
and conditions as the initial term except for the amount of the Annual Base Rent
and further except that there shall be absolutely no option whatsoever to extend
the term of this Lease beyond such option terms.
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(b) The Annual Base Rent payable during each Lease Year of each option
term shall be equal to the prevailing market rental rate for office space
located within Landlord's buildings at the Project or within the local market at
the time of commencement of each option term, as determined by agreement between
Landlord and Tenant. If Tenant exercises its option as provided above, it shall
specify in such notice its evaluation of the fair rental value of the Demised
Premises ("Tenant's Rent") for the option term . Within one (1) month
thereafter, Landlord shall send to Tenant a notice stating either (i) Landlord's
agreement with Tenant's Rent, in which event such amount shall be fixed as the
rent payable by Tenant for the option term or (ii) Landlord's evaluation of such
fair rental value ("Landlord's Rent"). If Landlord and Tenant are unable to
agree upon such fair rental value within three months from the date of sending
the notice described in (ii)) above, the matter shall be determined by
arbitration under this Lease. The arbitrator's determination of the fair rental
value of the Demised Premises for the option term may not, in any event, be less
than Tenant's Rent nor more the Landlord's Rent. In no event, however, shall the
Annual Base Rent due and payable during each option term be less than the Annual
Base Rent payable for the immediately preceding Lease Year. Tenant shall
continue to pay Landlord the Annual Base Rent (and any Additional Rent) due
under this Lease at the rate being paid during the immediately preceding Lease
Year until such time as the Annual Base Rent for the option term has been
determined pursuant to this Section. All adjustments to said Annual Base Rent
shall be due and payable in full on the first day of the month following such
determination.
ARTICLE 18. CANCELLATION
18.01 Cancellation. In the event, but only in the event that (a) Tenant
complies with all provisions of this entire Article, as and when required, and
at the time of Tenant's exercise of its right to cancel Tenant is not in default
of all terms and/or provisions of this Lease, Tenant is hereby granted the right
to cancel this Lease at any time and for any reason after the end of the 84th
month after the Commencement Date of this Lease provided that:
(a) Tenant shall have notified Landlord by giving Landlord
written notice ("Termination Notice") received by Landlord no later than nine
(9) months prior to the date Tenant proposes to surrender the Premises to the
Landlord (the "Termination Date");
(b) Tenant actually surrenders the Premises on the Termination
Date; and
(c) Tenant pays to Landlord at the time Tenant delivers the
Termination Notice to Landlord a Termination Fee equal to one hundred percent
(100%) of the Landlord's unamortized costs defined herein. The term "unamortized
costs" shall mean Costs incurred by the Landlord, amortized on a nine year
schedule beginning on the Commencement Date and assuming equal monthly payments
of principal and interest, with interest at a rate equal to one percent (1%)
over the prime rate of Citibank, N.A. on the Commencement Date. The Term "Costs"
shall mean and refer to all actual expenditures of the Landlord, for alterations
and improvements in connection with this Lease , all leasing commissions paid by
Landlord, legal fees actually paid by Landlord in connection with the
preparation, execution and delivery of the Leases and any documents or
instruments delivered to Landlord or Tenant in connection with the Leases,
architectural fees, and all other fees and expenses of whatever kind or nature
related to the entering into, the execution and delivery of these Leases and the
performance of Landlord's obligations pursuant to the Leases which do not and
did not constitute Additional Rent and which were not otherwise paid by Tenant
or others.
ARTICLE 19. GROUND LEASE
19.01 Tenant acknowledges that Landlord has entered into a certain
ground lease (the "Ground Lease") (a copy of which (with basic rent provisions
deleted) is attached hereto as Exhibit "E") wherein Landlord has agreed to lease
a portion of the site upon which the Building is located from Wilton Executive
Campus Associates for an initial term of seventy-five (75) years. Landlord
warrants and represents to Tenant that the Ground Lease is in full force and
effect and that Landlord is not in default thereof and knows of no facts or
circumstances that would give rise to a default if such facts or circumstances
came to the attention on the Ground Lease Landlord. Landlord further warrants
and represents to Tenant that it will, for the entire Term and any extensions
and renewals thereof fully perform all of the covenants and agreements contained
in the Ground Lease and will provide Tenant prompt written notice of any
Landlord default thereunder, including but not limited to copying Tenant with
any notice of default received by Landlord from the Ground Lease Landlord. In
the event that Landlord is in default of the Ground Lease and fails to cure such
default within the cure periods provided in the Ground Lease, Tenant may, at its
option, and after ten (10) days written notice to Landlord of its intention to
do so, cure Landlord's default and deduct the total cost of such cure from the
Base Rent next coming due until the cost of cure is recovered.
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19.02 Tenant agrees that this Lease and its interest hereunder shall be
subordinate to the Ground Lease, any first mortgage, deed of trust and/or other
security instrument hereafter placed upon the Ground Lease, the Building or the
Demised Premises and/or on any portion of the Executive Campus by Wilton
Executive Campus Associates or the Landlord, and to any and all advances made or
to be made thereunder, to the interest thereof, and all renewals, replacements
and extensions thereof. Landlord shall provide Tenant with a non-disturbance
agreement from the Ground Lease Landlord and non-disturbance agreements from all
mortgagees holding a mortgage covering the ground subject to the Ground
LeaseTenant shall have the right to file a Notice of Lease on the Wilton Land
Records in accordance with C.G.S.A.ss. 47-19.
IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease the
day and year first above written.
WITNESSESS LANDLORD:
WILTON CAMPUS PROPERTIES, LLC
/s/
- --------------------------------
William M. Petroccio
/s/ By /s/
- -------------------------------- ---------------------------------
Jonathan A. Flatow Name:
Title: Manager
TENANT:
GREENFIELD ONLINE, INC.
/s/
- --------------------------------
Jonathan A. Flatow
/s/ By: /s/
- -------------------------------- ---------------------------------
Susan Rosovsky Name: Rudy Nadilo
Title: Pres + CEO
27
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STATE OF CONNECTICUT )
) ss. Fairfield
COUNTY OF FAIRFIELD )
On this the 20th day of October, 1999, before me, William M. Petroccio,
the undersigned officer, personally appeared Stephen J. Saft, known to me (or
satisfactorily proven) to be the person whose name is subscribed to the within
instrument, and acknowledged himself/herself to be a manager of Wilton Campus
Properties, LLC, a limited liability company, and that he/she, as such manager,
being authorized so to do, executed the foregoing instrument as the free act and
deed of the company for the purposes contained therein by signing the name of
the company by himself/herself as such manager.
IN WITNESS WHEREOF, I hereunto set my hand.
/s/
------------------------------------
Commissioner of the Superior Court/
Notary Public
[Affix Notarial Seal] My Commission Expires:
STATE OFCONNECTICUT )
) ss. Westport
COUNTY OF FAIRFIELD )
On this the 20 day of October, 1999, before me, Jonathan A. Flatow, the
undersigned officer, personally appeared Rudy Nadilo, who acknowledged himself
to be the President of Greenfield Online, Inc., a corporation, and that he, as
such President, being authorized so to do, executed the foregoing instrument as
his free act and deed and the free act and deed of the corporation for the
purposes contained therein by signing the name of the corporation by himself as
such officer.
IN WITNESS WHEREOF, I hereunto set my hand.
/s/
------------------------------------
Commissioner of the Superior Court
28
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EXHIBIT A
Premises
<PAGE>
EXHIBIT B
Legal Description
<PAGE>
EXHIBIT C
Base Building Improvements
<PAGE>
EXHIBIT C
Base Building Improvements
1. Exterior Walls -- gyp-board, taped, no paint;
2. Common area walls -- gyp-board, taped, no paint;
3. HVAC -- heat pump system, roof-top compressor with individual air
handling units in the closets, located in tenant space.
4. Plumbing -- central men and women's bathroom location, per ADA
requirements;
5. Elevator, lobby (upper and lower) and stairways (3) -- fully enclosed
and equipped;
6. Floor -- concrete, smooth finish; and
7. Conduit connecting Demised Premises to Data Center
<PAGE>
EXHIBIT D
Rules and Regulations Attached to
and Made a Part of this Lease
1. Tenant shall not display, inscribe, print, paint, maintain or affix
on any place or in or about the Building any sign, notice, legend, direction,
figure or advertisement, except on the doors of the Premises and on the
Directory Boards, and then only such name or names and matter, and in such
color, size, style, place and materials, as shall first have been approved in
writing by Landlord.
2. Tenant shall not advertise the business, profession or activities of
Tenant conducted in the Building in any manner which violates the letter or
spirit of any code of ethics adopted by any recognized association or
organization pertaining to such business, profession or activities or, which in
Landlord's reasonable judgment, tends to impair the reputation of the Building
or its desirability as a building for offices, and shall not use the name of the
Building for any purpose other than as the business address of Tenant, and
Tenant shall not use any picture or likeness of the Building in any circulars,
notices, advertisements or correspondence without Landlord's prior written
consent.
3. Tenant shall not use the Premises for housing accommodations or
lodging or sleeping purposes, or do any cooking therein (except any convenience
kitchen), or use any illumination other than electric light, or use or permit to
be brought into the Building any flammable oils or fluids such as gasoline,
kerosene, naptha, and benzine, or any explosives, radioactive materials or other
articles deemed hazardous to life, limb or property.
4. Tenant shall not contract for any work or service which might
involve the employment of labor incompatible with the Building employees or
employees of contractors doing work or performing services by or on behalf of
Landlord or with the terms and conditions of any collective bargaining agreement
to which Landlord or Landlord's agents or contractors may be a party.
5. Tenant shall not place anything or allow anything to be placed near
the glass of any window, door, partition or wall which may appear unsightly from
outside the Premises, and Tenant shall not cover or obstruct the sashes, sash
doors, skylights, windows and doors that reflect or admit light and air into the
public places in the Building.
6. No Tenant shall have any property stored outside, except with the
prior consent of Landlord.
7. All sidewalks, halls, passages, exits, entrances, elevators, lobbies
and stairways of the Building, if any, shall not be obstructed by any Tenant or
used by him for any purpose other than for ingress to and egress from his
respective Premises no shall any door be locked during normal business hours. No
Tenant and no employees or invitees of Tenant shall go upon the roof of the
Building.
8. Tenant shall not alter any lock nor install any new or additional
locks or any bolts on any door of the Premises, except with the prior consent of
Landlord, which consent shall not be unreasonably withheld.
9. Tenant shall not overload the floor of the Premises or mark, drive
nails, screw or drill into the partitions, woodwork or plaster or in any way
deface the Premises or any part thereof.
10. 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 therein, nor
shall any animals, fish or birds, bicycles or other vehicles be brought in or
kept in or about the Premises or the Building. All bicycles shall be parked in
areas designated by Landlord at the Building.
11. Tenant shall not use or keep in the Premises or the Building any
kerosene, gasoline or inflammable or combustible fluid or material, or use any
method of heating or air-conditioning other than that supplied by Landlord.
12. Landlord will direct Tenant as to where and how telephone and
telegraph wire are to be introduced. No boring or cutting for wires will be
allowed without the consent of Landlord. The location of telephones, call boxes
and other office equipment affixed to the Premises shall be subject to the
approval of Landlord.
<PAGE>
13. Each Tenant, upon the termination of his tenancy, shall deliver to
Landlord the keys of offices, rooms and toilet rooms which shall have been
furnished Tenant or which Tenant shall have had made, and in the event of loss
of any keys so furnished, shall pay the Landlord therefor.
14. Landlord reserves the right to exclude or expel from the Building
any person who, in the judgment of Landlord, is intoxicated or under the
influence of liquor or drugs, or who shall in any manner do any act in violation
of any of the Rules and Regulations of the Building.
15. No vending machine or machines of any description shall be
installed, maintained or operated outside the Premises without the written
consent of Landlord. Should tenants desire vending machines of any type within
their Premises, such vending machines shall be provided, maintained and serviced
by Landlord or Landlord's designee.
16. Tenant shall not disturb, solicit, or canvass any occupant of the
Building and shall cooperate to prevent same.
17. Any permitted corrosive, flammable or other special wastes shall be
handled for disposal as directed by Landlord and strictly in accordance with all
applicable law.
18. Tenant's use of the Common Areas shall be limited to access and
parking purposes and under no circumstances shall Tenant be permitted to store
any goods or equipment, conduct any operations or construct or place any
improvements, barriers or obstructions in the Common Areas, or otherwise
adversely affect the appearance thereof, without the prior consent of Landlord.
19. Tenant agrees to handle and dispose of all rubbish, garbage, and
waste from Tenant's operations in accordance with regulations established by
Landlord and not permit the accumulation or burning of any rubbish or garbage
in, or about any part of the Building.
20. Tenant shall not change (whether by alteration, replacement,
rebuilding or otherwise) the exterior color and/or architectural treatment of
the Premises or of the Building in which the same are located, or any part
thereof.
21. Tenant shall not use the plumbing facilities for any purpose other
than for which they were constructed, or dispose of any garbage or other foreign
substance therein, whether through the utilization of so-called "disposal" or
similar units, or otherwise.
22. Tenant shall not subject any fixtures, furnishings or equipment in
or on the Premises and affixed to the realty, to any mortgages, liens,
conditional sales agreements or encumbrances without the Landlord's prior
written consent, which shall not be unreasonably withheld.
23. Tenant shall not install any awnings or curtains, blinds, shades or
screens in, on or outside the Premises which are visible to public view outside
the Premises without the Landlord's prior written consent, which shall not be
unreasonably withheld.
24. Tenant shall not permit window cleaning or other exterior
maintenance and janitorial services in and for the Premises to be performed
except by such person(s) as shall be approved by Landlord and except during
reasonable hours designated for such purposes by Landlord.
25. Tenant shall not install, operate or maintain in the Premises any
electrical equipment which will overload the electrical system therein, or any
part thereof, beyond its reasonable capacity for proper and safe operation as
determined by Landlord in light of the over-all system and requirements therefor
in the Building, or which does not bear underwriters' approval.
26. Landlord reserves the right to make such other and further
nondiscriminatory Rules and Regulations as in its judgment may be necessary or
desirable for the safety, care and cleanliness of the Premises and the Building
and for the preservation of good order therein. Tenant agrees to abide by all
such Rules and Regulations hereinabove stated and any additional Rules and
Regulations which are adopted.
27. Heating, lighting and plumbing: The Landlord or his agent should be
notified at once of any trouble with heating, lighting or plumbing fixtures.
Tenants must not leave doors of the Premises unlocked at night.
28. All freight, furniture, etc. must be received and delivered through
entrances to the Building designated for such purpose unless otherwise
authorized by the Landlord, and only during such hours and in such elevators as
Landlord may reasonably determine from time to time.
<PAGE>
29. Nothing shall be thrown from or taken in through the windows, nor
shall anything be left outside the building on the window sills of the Premises.
30. No person shall loiter in the halls, corridors or lavatories.
31. The Landlord, its agents and employees shall have access at
reasonable times to perform their duties in the maintenance and operation of the
Premises.
32. No Tenant shall use any method of heating other than that provided
for in the Tenant's lease without the consent of the Landlord.
33. Any damage caused to the Building or the Premises or to any person
or party herein as a result of any breach of any of the rules and regulations by
the Tenant shall be borne by the Tenant.
34. Landlord reserves the right to inspect all objects and matter to be
brought into the Building and to exclude from the Building all objects and
matter which violate any of these Rules and Regulations or the Lease. Landlord
may require any person leaving the Building with any package or other object or
matter to submit a pass, listing such package or object or matter, from the
tenant from whose premises the package or object or matter is being removed, but
the establishment and enforcement of such requirement shall not impose any
responsibility on Landlord for the protection of any tenant against the removal
of property from the premises of such tenant. Landlord shall in no way be liable
to Tenant for damages or loss arising from the admission, exclusion or ejection
of any person to or from the Premises or the Building under the provisions of
this Rule or the following Rule.
35. Tenant shall not occupy or permit any portion of the Premises to be
occupied as an office for a public stenographer or public typist, or for the
warehousing, manufacture or sale to the general public of beer, wine, liquor, or
drugs; for rendition of medical, dental or other diagnostic or therapeutic
services; as a barber, beauty or manicure shop; as an employment bureau; or for
the preparation, dispensing or consumption of food and beverages in any manner
not consistent with office use, unless specifically approved and agreed to in
writing by Landlord and only for the exclusive use of Tenant, its employees and
visitors. Tenant shall not use the Premises or any part thereof, or permit the
Premises or any part thereof to be used, for sale at retail or auction of
merchandise, goods or property of any kind, except for promotional purposes, or
for manufacturing, printing, except for the operation of normal business office
reproducing or printing equipment and other business machines for Tenant's own
requirements at the Premises; provided that such use shall not exceed that
portion of the mechanical or electrical capabilities of the Building equipment
allocable to the Premises.
36. Tenant shall not take or permit any action which would impair or
interfere with any of the Building services or the proper and economic heating,
cleaning, air conditioning or other servicing of the Building or the Demised
Premises, or impair or interfere with or tend to impair or interfere with the
use of any of the other areas of the Building by occasion or discomfort,
annoyance or inconvenience to, Landlord or any other tenants or occupants of the
Building. Tenant shall cooperate with Landlord in obtaining maximum
effectiveness of the cooling system and if requested by Landlord shall lower and
close drapes and curtains when the sun's rays fall directly on the windows of
the Premises.
37. Tenant shall comply with such rules and regulations governing
parking as may be promulgated from time to time by Landlord, including, without
limitation, rules and regulations requiring the parking of vehicles in
designated spaces or areas or regarding the exclusion of other spaces or areas.
38. If any governmental license or permit shall be required for the
property and lawful conduct of Tenant's business in the Premises, or any part
thereof, and if failure to secure such license or permit would in any affect
Landlord, then Tenant, at its expense, shall duly procure and thereafter
maintain such license or permit and submit the same inspection by Landlord.
Tenant shall at all times comply with the terms and conditions of each such
license or permit, and failure to procure and maintain same by Tenant shall not
affect Tenant's obligations hereunder.
39. Business machines and mechanical equipment shall be placed and
maintained by Tenant at Tenant's expense, in such a manner as shall be
sufficient in Landlord's judgment to absorb and prevent vibration, noise and
annoyance.
40. In the moving, delivery of receipt of safes, freight, furniture,
packages, boxes, crates, paper, office material, or any other matter or thing,
Tenant shall use and shall cause its employees and contractors and any others
making deliveries to the Premises to use hand trucks equipped with rubber tires,
side guards and such other safeguards as Landlord shall reasonably require. No
hand trucks shall be used in passenger elevators, and no such passenger
elevators shall be used for moving, delivery or receipt of the aforementioned
articles.
<PAGE>
41. Landlord shall have the right to prohibit any advertising by any
Tenant which, in Landlord's opinion, tends to impair the reputation of the
building or its desirability as a building for offices, and upon written notice
from Landlord, Tenant shall refrain from or discontinue such advertising. Tenant
shall not use the name of the building or its owner in any advertising without
the express prior written consent of the Landlord.
Landlord's Initials: ______ Tenant's Initials: ______
<PAGE>
LEASE
between
WILTON EXECUTIVE CAMPUS ASSOCIATES as Landlord
and
GREENFIELD ONLINE, INC., as Tenant
Address
15 RIVER ROAD
WILTON, CT
Date
October 20, 1999
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LEASE
TABLE OF CONTENTS
ARTICLE 1. GRANT..................................................1
ARTICLE 2. TERM...................................................1
ARTICLE 3. RENT AND SECURITY......................................2
ARTICLE 4. ADDITIONAL RENT FOR ESCALATIONS .......................3
ARTICLE 5. SERVICES AND UTILITIES.................................6
ARTICLE 6. CONDUCT OF BUSINESS BY TENANT..........................8
ARTICLE 7. ALTERATIONS, IMPROVEMENTS AND SIGNAGE..................9
ARTICLE 8. INSURANCE.............................................11
ARTICLE 9. CASUALTY..............................................13
ARTICLE 10. CONDEMNATION..........................................14
ARTICLE 11. ASSIGNMENT AND SUBLETTING.............................15
ARTICLE 12. DEFAULTS AND REMEDIES.................................16
ARTICLE 13. NONDISTURBANCE AND RIGHTS OF MORTGAGE HOLDERS.........19
ARTICLE 14. NOTICES...............................................20
ARTICLE 15. MISCELLANEOUS.........................................20
ARTICLE 16. OPTION TO RENEW.......................................23
ARTICLE 17. RIGHT TO CANCEL.......................................23
LIST OF EXHIBITS
Attached to and Made a Part of this Lease
Exhibit A Premises
Exhibit B Legal Description
Exhibit C Rules and Regulations
<PAGE>
LEASE
This Lease is made and entered into as of this 20th day of October,
1999, by and between WILTON EXECUTIVE CAMPUS ASSOCIATES, a Connecticut general
partnership, with its principal place of business at 1300 Post Road East,
Westport, Connecticut (the "Landlord") and GREENFIELD ONLINE, INC., a
Connecticut Corporation with its principal place of business at 274 Riverside
Avenue, Westport, Connecticut (the "Tenant").
ARTICLE 1. GRANT
1.01 Premises. Landlord, for and in consideration of the rents herein
reserved and of the covenants and agreements herein contained on the part of
Tenant to be performed, hereby leases to Tenant and Tenant accepts from
Landlord, certain space shown on Exhibit A attached hereto and made a part
hereof, containing approximately 3,083 rentable square feet on the Lower Level,
West Wing (hereinafter referred to as the "Premises") situated in a building
located at 15 River Road, Wilton, Connecticut, (the "Building"). The Premises,
Building, the "Common Areas" (defined below) and the land upon which the same
are located, which is legally described in Exhibit B (the "Site"), together with
all other improvements thereon and thereunder are collectively referred to as
the "Project". Tenant agrees to lease the Demised Premises from Landlord in its
"as is" condition and no alterations to the Premises are to be performed by
Landlord.
1.02 Common Areas. Landlord hereby grants to Tenant during the term of
this Lease, a license to use, in common with the others entitled to such use,
the Common Areas as they from time to time exist, subject to the rights, powers
and privileges herein reserved to Landlord. The term "Common Areas" as used
herein will include all areas and facilities outside the Premises that are
provided and designated by Landlord for general use and convenience of Tenant
and other tenants. Common Areas include but are not limited to the hallways,
lobbies, stairways, elevators, pedestrian sidewalks, landscaped areas, loading
areas, roadways, parking areas, rights of way, walking and jogging paths, if
any.
1.03 Parking. Tenant shall be entitled to use the parking facilities at
the Building in common with other Building tenants, but such right shall be
limited to approximately four (4) non-exclusive tenant parking spaces for each
1,000 rentable square feet of Premises, rounded to the nearest whole digit.
Tenant agrees not to overburden the parking facilities and agrees to cooperate
with Landlord and other tenants in the use of parking facilities. Landlord
reserves the right, at any time, to designate parking spaces in the Common Areas
for the handicapped and visitors to the Building and all tenants.
ARTICLE 2. TERM
2.01 Lease Term.
(a) The Premises are leased for a term to commence on November 15,
2000 (the "Commencement Date"), and shall expire on November 15, 2009 (the
"Expiration Date"). If the Lease shall not commence on the first day of a
calendar month, the Rent and electricity charge for the period between the
Commencement Date and the first day of the following month shall be apportioned
at the annual rate provided herein (based on a 365 day annual period).
Notwithstanding the foregoing, it is the intention of Landlord and Tenant that
this Lease terminate on the same date as the Expiration Date of that certain
Lease dated October 20, 1999, between Tenant and Wilton Campus Properties, LLC,
concerning approximately 30,500 rentable square feet in a building to be
constructed at the Site (the "Campus Properties Lease"). In the event that the
Expiration Date of the Campus Properties Lease is other than November 15, 2009,
the Expiration Date of this Lease shall be amended to coincide with the
Expiration Date of the Campus Properties Lease. Contemporaneously with the
determination of the Expiration Date of the Campus Properties Lease, Landlord
and Tenant shall execute an Addendum to Lease to confirm the Expiration Date of
this Lease.
(b) The first "Lease Year" shall begin on the date hereof and
shall end on the last day of the twelfth (12th) full calendar month following
the Commencement Date. Each Lease Year thereafter shall consist of twelve (12)
consecutive calendar months following the end of the immediately preceding Lease
Year except that the final Lease Year shall end on the Expiration Date.
2.02 Holdover Tenancy. Holdover Tenancy. Tenant acknowledges that if it
fails to deliver possession of the Premises to Landlord upon the expiration or
sooner termination of this Lease, Landlord shall incur substantial economic
loss. In the event that Tenant shall hold the Premises, or any part thereof,
after the expiration of the Lease Term without the prior written consent of the
Landlord, such holding shall constitute and be construed as a tenancy at will
only and for the first six (6) months of such holding over carry a daily rental
equal to 125% of the daily Annual Base Rent payable during the last month, and
for all periods after said six (6) months a daily rental equal to 150% of the
daily Annual Base Rent payable during the last month of the Lease Term, plus
100% of the daily rate of Additional Rent and other sums due under this Lease
during the last month of the Lease Term. In addition to such increased
1
<PAGE>
rental payment and any other liabilities to Landlord accruing therefrom, Tenant
shall indemnify and hold Landlord harmless from loss or liability resulting from
such failure, including, without limiting the generality of the foregoing, both
direct and consequential liabilities and damages of Landlord arising from claims
made by any succeeding tenant arising due to such failure. Nothing contained
herein shall be construed as Landlord's consent for Tenant's holdover.
ARTICLE 3. RENT AND SECURITY
3.01 Annual Base Rent. Beginning with the Commencement Date and
continuing throughout the Term, Tenant shall pay to or upon the order of
Landlord an annual rental (the "Annual Base Rent") as set forth below which
shall be payable in consecutive monthly installments on or before the first day
of each calendar month in advance in the monthly amount set forth below:
Annual Annual Base Rent per
Period Base Rent Rentable Square Foot Monthly Base Rent
- ------ --------- -------------------- -----------------
November 15, 2000 - $49,328.04 $16.00 $4,110.67
November 14, 2004
November 15, 2004 - $55,494.00 $18.00 $4,624.50
November 15, 2009
All payments of rent shall be made without demand, deduction,
counterclaim, set-off, discount or abatement in lawful money of the United
States of America. If the Commencement Date should occur on a day other than the
first day of a calendar month, or the Expiration Date should occur on a day
other than the last day of a calendar month, then the monthly installment of
Annual Base Rent for such fractional month shall be prorated upon a daily basis
based upon a thirty (30) day month.
3.02 Additional Rent. Tenant shall pay to Landlord all charges and
other amounts required under this Lease and the same shall constitute additional
rent hereunder (herein called "Additional Rent"), including, without limitation,
any sums due resulting from the provisions of Article 4 hereof. All such amounts
and charges shall be payable to Landlord at the place where the Annual Base Rent
is payable. Landlord shall have the same remedies for a default in the payment
of Additional Rent as for a default in the payment of Annual Base Rent. The term
"Rent" as used in this Lease shall mean the Annual Base Rent and the Additional
Rent.
3.03 Place of Payment. The Annual Base Rent and all other sums payable
to Landlord under this Lease shall be paid to Landlord at P.O. Box 703,
Westport, Connecticut 06881, or at such other place as Landlord shall designate
in writing to Tenant from time to time.
3.04 Terms of Payment. Tenant shall pay to Landlord all Annual Base
Rent as provided in Section 4.01 above and Tenant shall pay all Additional Rent
payable under Articles 4 and 5 on the terms provided therein. Except as provided
in this Article 3 and as may otherwise be expressly provided by the terms of
this Lease, Tenant shall pay to Landlord, within fifteen (15) days after
delivery by Landlord to Tenant of bills or statements therefor: (a) sums equal
to all expenditures made and monetary obligations incurred by Landlord under
this Lease for Tenant's account including, without limitation, expenditures made
and obligations incurred in connection with the remedying by Landlord any of
Tenant's defaults pursuant to the provisions of this Lease; (b) sums equal to
all expenditures made and monetary obligations incurred by Landlord, including,
without limitation, expenditures and obligations incurred for reasonable counsel
fees, in collecting or attempting to collect the Rent or any other sum of money
accruing under this Lease or in enforcing or attempting to enforce any rights of
Landlord under this Lease or pursuant to law; and (c) all other sums of money
accruing from Tenant to Landlord under the provisions of this Lease.
3.05 Late Charges. If Tenant shall fail to pay any Annual Base Rent or
Additional Rent within ten (10) days after the date same is due and payable,
Tenant shall pay to Landlord (a) an administrative fee equal to five percent
(5%) of the amount due to cover Landlord's additional administrative costs and
cost of funds resulting from Tenant's failure, and (b) interest on the amount
due from its due date until paid at the lesser of 12% per annum or the maximum
legal rate that Landlord may charge Tenant; provided that, on the first (1st)
occasion only during each Lease Year, no such charges or interest shall be
payable with respect to any delinquent payment if such payment is received by
Landlord within five (5) days following written notice of such failure. Such
charges shall be paid to Landlord together with such unpaid amounts. Such late
payment charge shall not diminish or impair any other remedies available to
Landlord.
2
<PAGE>
ARTICLE 4. ADDITIONAL RENT FOR ESCALATIONS IN REAL ESTATE TAXES
AND OPERATING EXPENSES
4.01 Definitions. Annual Base Rent does not anticipate any increase in
the amount of taxes on the Building, or in the cost of the operation and
maintenance thereof. In order that the rent payable hereunder shall reflect any
such increases, Tenant agrees to pay as Additional Rent, an amount calculated as
hereinafter set forth. For purposes of this Article 4, the following definitions
shall apply:
"Tax Year": means the fiscal year of the Town of Wilton (July 1 -
June 30) or other applicable governmental authority for real estate tax purposes
or such other twelve (12) month period as may be duly adopted in place thereof.
"Base Taxes": shall mean the amount of taxes attributable to the
Project on the basis of rentable square feet for the period July 1, 2000 through
June 30, 2001.
"Taxes": All taxes, assessments and charges of every kind and
nature levied, assessed or imposed at any time by any governmental authority
upon or against the Project or any improvements, fixtures and equipment of
Landlord used in the operation thereof whether such taxes and assessments are
general or special, ordinary or extraordinary, foreseen or unforeseen in respect
of each Tax Year following wholly or partially within the Term. Taxes shall
include, without limitation, all general real property taxes and general and
special assessments, charges, fees or assessments for all governmental services
or purported benefits to the Project, service payments in lieu of taxes, all
business privilege taxes, and any tax, fee or excise on the act of entering into
this Lease or any other lease of space in the Building, or on the use or
occupancy of the Building or any part thereof, or on the rent payable under any
lease or in connection with the business of renting space under any lease or in
connection with the business of renting space in the Building, that are now or
hereafter levied or assessed against Landlord by the United States of America,
the State of Connecticut, or any political subdivision, public corporation,
district or other political or public entity, including legal fees, experts' and
other witnesses' fees, costs and disbursements incurred in connection with
proceedings to contest, determine or reduce Taxes. In the event that the Town of
Wilton levies real property taxes on the Project based on an assessment of the
Project's value in a manner that differentiates between rentable square footage
at the Project used for retail purposes as opposed to rentable square footage
used for office purposes, Tenant shall be responsible only for Additional Rent
payments based on the increases in real estate taxes levied on the rentable
square footage devoted to office uses multiplied by the Tenant's proportionate
share of the rentable square footage at the Project devoted to office use. Taxes
shall also include any other tax, fee or other excise, however described, that
may be levied or assessed as a substitute for, or as an addition to, in whole or
in part, any other Taxes (including, without limitation, any municipal income
tax) and any license fees, tax measured or imposed upon rents, or other tax or
charge upon Landlord's business of leasing the Building, whether or not now
customary or in the contemplation of the parties on the date of this Lease.
Taxes shall not include: (i) franchise, transfer, gift excise,
capital stock, estate, succession and inheritance taxes, and federal and state
income taxes measured by the net income of Landlord from all sources, unless due
to a change in the method of taxation such tax is levied or assessed against
Landlord as a substitute for, or as an addition to, in whole or in part, any
other Tax that would constitute a Tax; or (ii) penalties or interest for late
payment of Taxes.
"Base Expense Year": shall mean the calendar year 2001.
"Expense Year": shall mean the first and full calendar year
following the Base Expense Year and each calendar year thereafter.
"Base Expenses": shall mean the Operating Expenses for the Base
Expense Year equitably adjusted to the amount such Operating Expenses would have
been if ninety-five percent (95%) of the rentable area in the Building had been
occupied during the Base Expense Year if there is less than ninety-five percent
(95%) occupancy in the Base Expense Year. Only those component expenses that are
affected by variation in occupancy levels shall be "grossed-up". For purposes of
determining Tenant's Proportionate Share of increases in the Operating Expenses,
the Base Expenses shall be deemed to have been incurred by Landlord during the
Base Expense Year.
"Expense Increases": attributable to an Expense Year, shall mean
the excess, if any, of the Operating Expenses incurred during such Expense Year
equitably adjusted, if less than ninety-five percent (95%) occupancy, to the
amount such Operating Expenses would have been if ninety-five percent (95%) of
the rentable area in the Building had been occupied during the Expense Year over
the Base Expenses. Only those component expenses that are affected by variation
in occupancy levels shall be "grossed-up".
"Operating Expenses": all costs and expenses (and taxes, if any,
thereon) paid or incurred on behalf of Landlord (whether directly or through
independent contractors) in connection with
3
<PAGE>
the ownership, management, operation, maintenance and repair of the Building and
Common Areas and the Building's equitable share of any facilities or amenities
benefitting the Building or Site (including any sales or other taxes thereon)
during the Term as a first-class building, including, without limitation:
(a) Charges of independent contractors for expenses otherwise
includable in Operating Expenses, including, without limitation, charges for
scavenger services, window washing and other cleaning and janitorial services,
snow and ice removal services, exterior and interior landscaping, pest
extermination services and services for the maintenance and repair of the
parking facilities, roadways and light poles;
(b) All heating, ventilating, air conditioning, plumbing,
electrical, mechanical, sewer, fire detection, life safety and security systems,
telecommunications facilities, elevators and escalators, tenant directories,
emergency generator, sprinkler systems, and other equipment used in common by,
or for the benefit of, occupants of the Building; and Utility Expenses
(excluding electricity supplied to the Premises and billed to Tenant pursuant to
Section 4.04 and electricity used by other tenants of the Building within their
leased space and billed directly to such tenants);
(c) The premiums for fire, extended coverage, loss of rents,
boiler, machinery, sprinkler, public liability, property damage, earthquake,
flood, and all other insurance relative to the Building and the operation and
maintenance thereof (inclusive of the Building's fitness center and cafeteria)
plus the cost of the deductible payments made by Landlord in connection
therewith;
(d) All supplies, tools, materials, equipment and maintenance and
service contracts in connection therewith; telephone, stationery, office
supplies and other office costs of administration; consulting fees, legal fees
and accounting fees and other expenses of maintaining and auditing Project
accounting records and preparing Landlord's Statements;
(e) Replacing, repairing, and/or adding any equipment, device,
improvement in order to reduce (or avoid an increase in) operation or
maintenance expenses with respect to the Project, or to comply with laws or
governmental orders or the requirements of Landlord's insurers, and any repairs
or removals necessitated thereby, amortized over their useful life as determined
in the reasonable judgment of Landlord's accountant (including interest at the
rate of 12% per annum or such higher rate as may have been paid by Landlord on
funds borrowed for the purpose of constructing such improvements);
(f) Salaries, wages, compensation, out-of-pocket expenses, union
benefits and labor costs (including the amount of any taxes, social security
taxes, unemployment insurance contributions, insurance, retirement, medical,
workers' compensation and other employee benefits) of janitors, janitresses,
engineers and other employees of Landlord, and any on-site employees (below the
executive level) of Landlord's property management agent;
(g) Fees for management services whether rendered by Landlord (or
affiliate) or a third-party property manager which shall be limited to an amount
no greater than 4% of the gross rents of the Building;
Operating Expenses shall not include: (a) utility expenses that
are separately metered for any individual tenant in the Building; (b) any
expense for which Landlord is reimbursed by a specific tenant by reason of a
special agreement or requirement of the occupancy of the Building by such
tenant; (c) expenses for services provided by Landlord for the exclusive benefit
of a given tenant or tenants for which Landlord is directly reimbursed by such
tenant or tenants; (d) all costs, fees and disbursements relating to activities
for the solicitation, negotiation and execution of leases for space in the
Building (including but not limited to attorneys' fees therefor); (e) the costs
of alterations to, or the decorating or the redecorating of, space in the
Building leased to other tenants; (f) except as stated in subparagraph (g) of
the definition of Operating Expenses, the costs associated with the operation of
the business of the ownership or entity which constitutes "Landlord", including
costs of selling, syndicating, financing or mortgaging any of Landlord's
interest in the Project; (g) depreciation, interest and principal payments on
mortgages and other debt costs, if any; (h) repairs or other work required due
to fire or other casualty to the extent of insurance proceeds received by
Landlord; and (i) capital expenses for items that are not included in the
definition of "Operating Expenses
"Tenant's Proportionate Share": On the Commencement Date, the
Tenant's Proportionate Share is 2.63%. "Landlord's Statement": Shall mean an
instrument containing a computation of any Additional Rent due pursuant to the
provisions of this Article 4.
"Utility Expenses": All expenses paid or incurred on behalf of
Landlord for utility or utility services for the Project, including, but not
limited to, water, sewer, electric, gas, steam, fuel oil and chilled water,
together with any taxes on said costs.
4
<PAGE>
4.02 Payment of Taxes. Tenant shall pay, as Additional Rent, Tenant's
Proportionate Share of all Taxes in respect of any Tax Year falling wholly or
partially within the Term, to the extent that Taxes for any such period shall
exceed the Base Taxes (which payment shall be adjusted by proration with respect
to any partial Tax Year. Landlord shall submit to Tenant a copy of the bill for
Taxes payable by Landlord under the Ground Lease together with Landlord's
Statement and Tenant shall pay the Additional Rent set forth on such Landlord's
Statement (less the amount of estimated payments paid by Tenant on account
thereof) as set forth herein. Landlord, at its option, may require Tenant to
make monthly payments on account of Tenant's Proportionate Share of Taxes in
excess of the Base Taxes. The monthly payments shall be one-twelfth (1/12th) of
the amount of Tenant's Proportionate Share of Taxes in excess of the Base Taxes
and shall be payable on or before the first day of each month during the Term,
in advance, in an amount estimated by Landlord and billed by Landlord to Tenant;
provided that Landlord shall have the right initially to determine such monthly
estimates and to revise such estimates from time to time. With reasonable
promptness after Landlord has received the tax bills for any Tax Year, Landlord
shall furnish Tenant with Landlord's Statement with respect thereto. If the
actual amount of Tenant's Proportionate Share of Taxes exceeds the estimated
amount of Tenant's Proportionate Share of Taxes paid by Tenant for any Tax Year,
then Tenant shall pay to Landlord as Additional Rent the difference between the
amount of estimated Tenant's Proportionate Share of Taxes paid by Tenant and the
actual amount of Tenant's Proportionate Share of Taxes. This Additional Rent
payment shall be due and payable within thirty (30) days after delivery of
Landlord's Statement. If the total amount of estimated payments made by Tenant
in respect of Tenant's Proportionate Share of Taxes paid by Tenant for any Tax
Year shall exceed the actual amount of Tenant's Proportionate Share of Taxes for
such Tax Year, then such excess amount shall be credited against the monthly
installments of Additional Rent due and payable from Tenant to Landlord
hereunder with respect to Taxes, until such amount shall have been refunded in
full to Tenant.
4.03 Payment of Operating Expenses. Tenant shall pay to Landlord on
account of Tenant's Proportionate Share of Expense Increase and as Additional
Rent, a sum equal to one-twelfth (1/12) of the amount of Tenant's Proportionate
Share of Expense Increases for each Expense Year on or before the first day of
each month of such Expense Year, in advance, in an amount estimated by Landlord
and billed by Landlord to Tenant; provided that Landlord shall have the right
initially to determine such monthly estimates and to revise such estimates from
time to time. After the expiration of the Base Expense Year and each Expense
Year, Landlord shall prepare and furnish Tenant with Landlord's Statement
showing the Base Expenses or the Operating Expenses incurred during such Expense
Year. Within thirty (30) days after receipt of Landlord's Statement for any
Expense Year setting forth Tenant's Proportionate Share of any Expense Increase
attributable to such Expense Year, Tenant shall pay Tenant's Proportionate Share
of such Expense Increase (less the amount of estimated payments paid by Tenant
on account thereof) to Landlord as Additional Rent. If the actual amount of
Tenant's Proportionate Share of the Expense Increase for such Expense Year
exceeds the estimated amount of Tenant's Proportionate Share of Expense
Increases paid by Tenant for such Expense Year, then Tenant shall pay to
Landlord the difference between the estimated amount of Tenant's Proportionate
Share of Expense Increases paid by Tenant and the actual amount of Tenant's
Proportionate Share of Expense Increases. This Additional Rent payment shall be
due and payable within thirty (30) days following delivery of Landlord's
Statement. If the total amount of estimated payments made by Tenant in respect
of Tenant's Proportionate Share of Expense Increases for such Expense Year shall
exceed the actual amount of Tenant's Proportionate Share of Expense Increases
for such Expense Year, then such excess amount shall be credited against the
monthly installments of Additional Rent due and payable from Tenant to Landlord
hereunder with respect to Expense Increases until such amount shall have been
refunded in full to Tenant. Notwithstanding anything to the contrary herein, in
no event shall the aggregate credits allowable to Tenant, in any Expense Year
pursuant to this Article 4 exceed the aggregate of the Additional Rent payments
payable by Tenant pursuant to this Article 4; provided, however, any excess
payments made by Tenant during the Term that have not been so applied and are
outstanding at the end of the Term shall be paid to Tenant promptly following
Landlord's final accounting for the final Expense Year.
4.04 Payment of Electric Expense. In addition to Base Rent and/or any
Additional Rent, Tenant shall pay Landlord the sum of $578.06 per month for
electricity ("Electric Expense") on the first day of each month, which payment
shall continue throughout the term of the Lease.
4.05 Landlord's Statements and Tenant's Inspection Rights.
(a) Landlord's Statements shall be rendered to Tenant, but
Landlord's failure to render Landlord's Statement with respect to the Base
Expense Year, any Expense Year or any Tax Year or Landlord's delay in rendering
said Statement beyond a date specified herein shall not prejudice Landlord's
right to render a Landlord's Statement with respect to that or any subsequent
Expense Year or Tax Year. The obligations of Landlord and Tenant under the
provisions of this Article with respect to any Additional Rent incurred during
the Term shall survive the expiration or any sooner termination of the Term. If
Landlord fails to give Tenant a statement of projected Operating Expenses prior
to the commencement of any Expense Year, Tenant shall continue to pay Operating
Expenses in accordance with the previous statement, until Tenant receives a new
statement from Landlord.
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(b) During the thirty (30) day period after receipt of any
Landlord's Statement (the "Review Period"), Tenant may inspect and audit
Landlord's records relevant to the cost and expense items reflected in such
Landlord's Statement at a reasonable time mutually agreeable to Landlord and
Tenant during Landlord's usual business hours. In the absence of recklessness or
fraud, each Landlord's Statement shall be conclusive and binding upon Tenant
unless within thirty (30) days after receipt of such Landlord's Statement Tenant
shall notify Landlord that it disputes the correctness of Landlord's Statement,
specifying the respects in which Landlord's Statement is claimed to be
incorrect. If, after such inspection, Tenant disputes the amount of its
Proportionate Share of Operating Expenses or Taxes, Tenant shall be entitled to
retain an independent company or certified public accountant reasonably
acceptable to Landlord to review Landlord's records to determine the proper
amount of such Additional Rent. If such audit or review reveals that Landlord
has overcharged Tenant, then within thirty (30) days after the results of such
audit are made available to Landlord, Landlord shall reimburse Tenant the amount
of such overcharge. If the audit reveals that Tenant was undercharged, then
within thirty (30) days after the results of the audit are made available to
Tenant, Tenant shall reimburse Landlord the amount of such undercharge. If
Landlord desires to contest such audit results, Landlord may do so by submitting
the results of the audit to arbitration pursuant to Section 12.05 of the Lease
within thirty (30) days of receipt of the results of the audit, and the
arbitration shall be final and binding upon Landlord and Tenant. Tenant agrees
to pay the cost of such audit, however, should the audit determine that the
applicable Landlord's statement overcharged the Tenant by 15% or more, Landlord
shall pay all of Tenant's reasonable expenses, including accountant's and
attorney's fees, incurred in connection with the audit. Pending the
determination of such dispute as hereinafter provided, Tenant shall pay
Additional Rent in accordance with the applicable Landlord's Statement, and such
payment shall be without prejudice to Tenant's position. All inspections and
audits of Landlord's books and records and any arbitration shall be subject to a
confidentiality agreement reasonably acceptable to Landlord.
4.06 Additional Rent Adjustments. If the Term shall expire on a date
other than December 31st, any Additional Rent for the Lease Year in which the
expiration date shall occur shall be apportioned (based upon the immediately
preceding 12 month period) in that percentage which the number of days in the
period from January 1st of such Lease Year to such date of expiration, both
inclusive, shall bear to the total number of days in the calendar year in which
such expiration occurs.
ARTICLE 5. SERVICES AND UTILITIES
5.01 Services. Landlord shall provide the following services to the
Building and Premises (subject to Tenant's reimbursement and payment obligations
therefor in accordance with the operation of Article 5 hereof):
(a) Janitor services for the Common Areas excluding Saturdays,
Sundays and union and state and federal government holidays (the "Holidays").
(b) Heat and air-conditioning as required to maintain comfortable
temperature throughout the Premises (excluding specialized temperature and
humidity control for computers, printers and other equipment) daily from 8:00
a.m. to 7:00 p.m. Monday through Friday and Saturdays from 8:00 a.m. to 12:00
noon ("Normal Business Hours").
(c) Hot and cold running water for cleaning, landscaping, grounds
maintenance, fire protection, drinking, lavatory and toilet purposes drawn
through fixtures installed by Landlord or by Tenant with Landlord's written
consent. If Tenant's water use increases beyond customary office user levels,
Landlord shall have the right to install a water meter at Tenant's expense and
to charge Tenant as Additional Rent for its water consumption in the Premises in
accordance with readings from such meter.
(d) Electric current only, in amounts required for normal lighting
by building standard lighting overhead fixtures and for Tenant's normal business
operations, including without limitation, personal computers, copiers,
facsimilies and other ordinary business, subject, however, to Landlord's
approval of Tenant's final electrical plan for the Premises (but specifically
excluding electric current surge protection).
(e) Window washing of all windows in the Premises both inside and
out, weather permitting at intervals established by Landlord.
(f) Maintenance of the Common Areas so that they are clean and
free from accumulations of snow, debris, filth, rubbish and garbage.
(g) Access by Tenant to the Premises and use of designated
elevator service 24 hours per day, seven (7) days per week, 52 weeks per year,
subject to the operation of Landlord's computerized access system at the
Building's entrances and to Landlord's Rules and Regulations. Overtime HVAC and
other services shall be available as provided in Section 5.02 hereof, if
applicable.
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5.02 Additional Services. Landlord shall impose reasonable charges and
may establish reasonable rules and regulations for the following: (a) the use of
any heating, air-conditioning, ventilation, electric current or other utility
services or equipment by Tenant at any time other than during the hours set
forth in Section 5.01(b) above ("Overtime HVAC"); (b) the usage of any
additional or unusual janitorial services required because of any non-building
standard improvements in the Premises, the carelessness of Tenant, the nature of
Tenant's business (including the operation of Tenant's business other than
during the hours set forth in Section 5.01(b); and (c) the removal of any refuse
and rubbish left outside the Building or in the Common Areas. The expense
charged by Landlord to Tenant for any Overtime HVAC shall be based on Landlord's
actual cost for such utility services over and above the cost to Landlord for
the usual Building temperature maintained by Landlord after Normal Business
Hours as charged to Landlord by the utility companies providing such services.
This amount shall constitute Additional Rent and shall be payable in accordance
with Section 3.04.
5.03 Excessive Current. Tenant shall comply with the conditions of
occupancy and connected electrical load reasonably established by Landlord for
the Building and Tenant shall not use utilities or other services in excess of
the services described above in Section 5.01 or in a manner which exceeds or
interferes with any Building systems or Landlord's ability to provide services
to other tenants in the Building. To avoid possible adverse effects upon the
Building's electrical and mechanical systems, Tenant shall not, without
Landlord's prior consent in each instance (which shall not be unreasonably
withheld), connect air conditioning equipment, computers, (excluding personal
computers and printers and office copiers and facsimile machines), major
appliances (excluding coffee makers, microwave ovens and other similar food
preparation appliances) or heavy duty equipment ("High Usage Equipment") to the
Building's electrical system. Landlord may survey Tenant's use of services from
time to time. Tenant shall pay Landlord all costs arising out of any excess use
or other connection of High Usage Equipment, including the cost of all repairs
and alterations to the Building's mechanical and electrical systems (including
the installation of meters) and the cost of additional electricity made
available to Tenant, if any. Such costs shall constitute Additional Rent and
Tenant shall pay such costs pursuant to Section 3.04.
5.04 Maintenance of Common Areas. The manner in which the Common Areas
are maintained and operated and the expenditures therefor shall be at the sole
discretion of Landlord and in accordance with the standards of comparable first
class buildings in Fairfield County. Landlord reserves the right from time to
time to (a) make changes in the shape, size, location and appearance of the land
and improvements which constitute the Common Areas, provided that Landlord shall
not materially impair the Tenant's ability to operate its business, except
temporary impairments required by said changes; (b) make such improvements,
alterations and repairs to the Common Areas as may be required by governmental
authorities or by utility companies servicing the Building; (c) construct,
maintain and operate lighting and other facilities on all said areas and
improvements; and (d) to add or remove improvements and facilities to or from
the Common Areas. The use of the Common Areas shall be subject to such
reasonable regulations and changes therein as Landlord shall make from time to
time, including (but not by way of limitation) the right to close from time to
time, if necessary, all or any portion of the Common Areas to such extent as may
be legally sufficient, in the opinion of Landlord's counsel, to prevent a
dedication thereof or the accrual of rights of any person or of the public
therein; provided, however, Landlord shall do so at such times and in such
manner as shall minimize any disruption to Tenant to the extent reasonably
possible.
5.05 Access to Premises. Landlord shall have the right to enter the
Premises without abatement of Rent at all reasonable times upon twenty-four (24)
hours prior notice to Tenant (except in emergencies when no notice shall be
required), (i) to supply any service to be provided by Landlord to Tenant
hereunder, (ii) to show the Premises to Landlord's Mortgagee and to prospective
purchasers, mortgagees and tenants, and (iii) to inspect, alter, improve or
repair the Premises and any portion of the Building. For each of the purposes
stated above in this Section 5.05, Landlord shall at all times have and retain a
key with which to unlock all of the doors in, upon and about the Premises,
excluding Tenant's vaults and safes, or special security areas (designated in
advance), and Landlord shall have the right to use any and all means that
Landlord may deem necessary or proper to open said doors in an emergency, in
order to obtain entry to any portion of the Premises. Landlord and its agents
and representatives shall have the right to enter upon the Premises for any and
all of the purposes set forth in this Article and may exercise any and all of
the foregoing rights without being deemed guilty of a forcible or unlawful entry
into, or a detainer of, the Premises, or an eviction, actual or constructive of
Tenant from the Premises, or any portion thereof, if reasonably necessary to
comply with any governmental statute, ordinance or building, fire or other code.
5.06 Interruption of Services. There shall be no abatement of Rent and
Landlord shall not be liable in any respect whatsoever for the inadequacy,
stoppage, interruption, or discontinuance of any utility or service due to riot,
strike, labor dispute, government request or direction, breakdown, accident,
repair, or other cause. The foregoing notwithstanding, in the event of any
interruption or stoppage of any essential utility service which Landlord is
required to provide, if such interruption or stoppage is for more than five (5)
consecutive days or more than ten (10) days in any calendar year after written
notice by Tenant to Landlord, is of a nature which mutually interferes with
Tenant's using the Premises for the
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conduct of its business, is not rendered necessary by the negligence or
misconduct of Tenant or any Tenant Parties, and is within Landlord's reasonable
control, then the Rent shall be abated at the rate of one (1) day for each day
of interruption and stoppage after the fifth (5th) consecutive day or tenth
(10th) total day after notice by Tenant to Landlord of such interruption or
stoppage until such service is restored.
ARTICLE 6. CONDUCT OF BUSINESS BY TENANT
6.01 Permitted Use. The Premises shall be used and occupied for general
office purposes and ancillary uses related thereto. Tenant shall not use or
occupy, or permit the use or occupancy of, the Premises or any part thereof for
any use other than the sole use specifically set forth above or in any illegal
manner, or in any manner that, in Landlord's judgment, would adversely affect or
interfere with any services required to be furnished by Landlord to Tenant or to
any other tenant or occupant of the Building, or with the proper and economical
rendition of any such service, or with the use and enjoyment of any part of the
Building by any other tenant or occupant. Tenant agrees that it will not exceed
the maximum floor bearing capacity for the Premises.
6.02 Compliance with Laws.
(a) Tenant, at Tenant's expense, shall comply promptly with the
laws, ordinances, rules, regulations and orders of all governmental
authorities in effect from time to time during the Term that shall
impose any duty on Tenant with respect to the Premises or the use,
occupancy and operation thereof, including, without limitation, the
Americans with Disabilities Act ("ADA"), and all applicable zoning,
fire and health codes. Tenant will obtain and maintain in full force
and effect any and all licenses and permits necessary for its use.
Tenant shall make any Alterations in or to the Premises in order to
comply with the foregoing, which are necessitated or occasioned, in
whole or in part by the use or occupancy or manner of use, occupancy or
operation of the Premises by Tenant or any of its officers, employees,
agents, contractors, invitees, licensees or subtenants (the "Tenant
Parties").
(b) Landlord shall comply with all laws, ordinances, rules,
regulations and orders of all governmental authorities in effect from
time to time during the Term that shall impose any duty on Landlord
with respect to the Common Areas of the Building, and excluding any
matters that arise from the acts or omissions of Tenant or other
tenants of the Building or that are Tenant's responsibility under this
Lease or the responsibility of other tenants of the Building.
Notwithstanding anything to the contrary contained herein, Tenant shall
be responsible for legal compliance, including the requirements of the
ADA, with respect to (i) any and all requirements on account of
Tenant's use of or operations in the Premises, and (ii) all Alterations
designed or constructed by Tenant or its contractors or agents.
6.03 Landlord's Rules and Regulations. Tenant shall faithfully observe
and comply with the rules and regulations attached to this Lease as Exhibit C,
and all reasonable modifications thereof and additions thereto from time to time
put into effect by Landlord (the "Rules and Regulations"). Tenant shall not use
or permit the use of the Premises in any manner that will tend to create waste
or a nuisance, or which shall tend to unreasonably disturb other tenants of the
Building. Landlord shall not be responsible to Tenant for the nonperformance of
any of the Rules and Regulations by any other tenants or occupants on the
Building. Landlord shall use reasonable efforts to enforce the Rules and
Regulations in a fair and non-discriminatory manner. In the event of an express
and direct conflict between the terms, covenants, agreements and conditions of
this Lease and the terms, covenants, agreements and conditions of such rules and
regulations, as modified and amended from time to time by Landlord, this Lease
shall control.
6.04 No Liens. Tenant shall keep the Premises and Project free from any
liens or encumbrances arising out of any work performed, material furnished or
obligations incurred by or for Tenant or any person or entity claiming through
or under Tenant. Prior to Tenant performing any construction or other work on or
about the Premises for which a lien could be filed against the Premises or the
Project, Tenant shall obtain satisfactory lien waiver agreements with each
contractor who is to perform such work or furnish any material. Any claim to, or
lien upon, the Premises or the Building arising from any act or omission of
Tenant shall accrue only against the leasehold estate of Tenant and shall be
subject and subordinate to the paramount title and rights of Landlord in and to
the Premises and the Project. If any mechanics' or other lien shall be filed
against the Premises or the Project purporting to be for labor or material
furnished or to be furnished at the request of the Tenant, then Tenant shall at
its expense cause such lien to be discharged of record by payment, bond or
otherwise, within thirty (30) days after the filing thereof, or shall within
thirty (30) days after filing commence an action in the Superior Court to have
the lien discharged and diligently prosecute said action.
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6.05 Hazardous Substances.
(a) Tenant shall not generate, store (except for small quantities
of substances ordinarily stored and used in connection with general office use
if stored, used and disposed of, in accordance with all laws relating thereto),
dispose of or release, or permit the storage, use, disposal or release of, any
"Hazardous Substances" (as hereinafter defined), in, above, on or under the
Premises or the Project. Tenant shall remove, clean-up and remedy any Hazardous
Substance on the Premises or in accordance with applicable law, provided that
the presence of such Hazardous Substance resulted from the action or inaction of
Tenant, or any Tenant Parties and Tenant shall be obligated to continue to pay
Rent hereunder until such removal, clean-up or remedy is completed in accordance
with applicable laws, whether or not the Term shall terminate or expire.
(b) Tenant shall not take or permit any action that would cause
the Premises or Project to become an "establishment" (as defined in the
Connecticut Transfer Act, C.G.S. ss. 22a-134). Tenant hereby grants Landlord the
right to inspect the Premises on not less than twenty-four (24) hours notice to
Tenant (except in the event of an emergency in which case Landlord will use
reasonable efforts commensurate with the nature of the emergency condition to
give Tenant prior notice) throughout the Term, to determine that Tenant is in
compliance with applicable laws and Tenant agrees to provide Landlord with all
information necessary to ascertain that Tenant is in compliance with applicable
laws. Tenant shall cooperate with Landlord in satisfying any legal requirements
imposed upon Landlord relating to Tenant's operations, and, upon Landlord's
written request, shall furnish complete information to Landlord with regard to
its operations. In connection with any transfer of the Premises or Project,
Tenant shall comply with the Connecticut Transfer Act and any other applicable
laws relative to its operations.
(c) "Hazardous Substances" shall mean any petroleum, petroleum
products, fuel oil, waste oil, explosives, reactive materials, ignitable
materials, corrosive materials, hazardous chemicals, hazardous wastes, hazardous
substances, extremely hazardous substances, toxic substances, toxic chemicals,
radioactive materials, medical waste, pollutants, herbicides, fungicides,
rodenticides, insecticides, contaminant, or pesticides and including, but not
limited to any other element, compound, mixture, solution or substance which may
pose a present or potential hazard to human health or the environment. Tenant
shall comply with all laws applicable to the generation, storage, use, disposal
or release of Hazardous Substances, including but not limited to, obtaining and
maintaining any permits from, or making any filings or registrations with, by
any governmental authority as required under any applicable law.
(d) Tenant shall indemnify, defend with counsel reasonably
acceptable to Landlord, and hold Landlord fully harmless and any mortgagee of
the Project, from and against any and all liability, loss, suits, claims,
actions, causes of action, remediation orders, proceedings, demands, costs,
penalties, damages, fines and expenses, including, without limitation,
attorneys' fees, consultants' fees, laboratory fees and clean-up costs, and the
costs and expenses of investigating and defending any claims or proceedings,
resulting from, or attributable to, (i) the presence of any Hazardous Substance
on the Premises or the Project arising from the action, inaction or negligence
of Tenant, its officers, employees, contractors, agents, subtenants or invitees,
or arising out the generation, storage, treatment, handling, transportation,
disposal or release by Tenant of any Hazardous Substance at or near the Premises
or the Project, and (ii) any violation(s) by Tenant of any applicable law
regarding Hazardous Substances, and (iii) default of any of its agreements under
Section 6.05 of this Lease.
6.06 Tenant's Failure to Maintain. If Landlord gives Tenant written
notice of the necessity of any repairs or replacements required to be made under
Section 7.02 and Tenant fails to commence diligently to cure the same within
twenty (20) days thereafter (except that no notice will be required in case of
any emergency repair or replacement necessary to prevent substantial damage or
deterioration), Landlord, at its option and in addition to any other remedies,
may proceed to make such repairs or replacements and the expenses incurred by
Landlord in connection therewith plus 10% thereof for Landlord's supervision,
shall be due and payable from Tenant in accordance with Section 3.04 hereof, as
Additional Rent; provided, that Landlord's making any such repairs or
replacements shall not be deemed a waiver of Tenant's default in failing to make
the same.
6.07 Surrender. Upon the expiration or sooner termination of the Term,
Tenant will quietly and peacefully surrender to Landlord the Premises in as good
condition as when Tenant took possession, ordinary wear and tear excepted, and
otherwise as is required in Article 7. In addition, at such time Tenant shall
remove all Hazardous Substances stored, or disposed of, or generated by Tenant
in its use or operation of the Premises and all equipment and materials
contaminated or affected by such Hazardous Substances in conformity with the
Hazardous Substance laws. Tenant shall surrender the Premises to Landlord at the
end of the Term hereof, without notice of any kind, and Tenant waives all right
to any such
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ARTICLE 7. ALTERATIONS, IMPROVEMENTS AND SIGNAGE
7.01 Landlord's Obligations. Landlord will maintain all structural
components of the Building, including, without limitation, the roof, foundation,
exterior and load-bearing walls (including exterior windows and doors), the
structural floor slabs and all other structural elements of the Premises, as
well as the Common Areas of the Building, in good repair, reasonable wear and
use, casualty and condemnation excepted. Maintenance and repair expenses caused
by Tenant's willful misconduct or negligent acts or omissions shall be paid
directly to Landlord by Tenant in accordance with Section 3.04, and shall not
constitute an Operating Expense. Landlord shall not be liable for and there
shall be no abatement of Rent with respect to any injury to or interference with
Tenant's business arising from any repairs, maintenance, alteration or
improvement in or to any portion of the Project, including the Premises, or in
or to the fixtures, appurtenances and equipment therein, unless caused by the
intentional act or omission of Landlord, the Landlord parties or their
respective contractor, agents, servants and employees.
(a) Tenant's Obligations. Tenant shall take good care of the
Premises, and at Tenant's cost and expense, shall make all repairs and
replacements necessary to preserve the Premises in good working order and in a
clean, safe and sanitary condition, and will suffer no waste. Interior cleaning
of the Premises shall be contracted and paid for by Tenant. Tenant shall
maintain, at its own expense, in good order, condition and repair to Landlord's
reasonable satisfaction, all plumbing facilities and electrical fixtures and
devices (including replacement of all lamps, starters and ballasts) located
within the Premises. Tenant shall repair, at its cost, all deteriorations or
damages to the Project occasioned by its negligent acts or omissions or willful
misconduct. If Tenant does not make such repairs to the Building within twenty
(20) days following notice from Landlord, Landlord may, but need not, make such
repairs, and Tenant shall pay the cost thereof as provided in Section 6.06
hereof. All repairs and replacements made by or on behalf of Tenant shall be
made and performed in accordance with the "Construction Standards" (as defined
in Section 7.02(b).
7.02 Tenant's Alterations.
(a) Tenant shall not make or permit any improvements,
installations, alterations or additions ("Alterations") in or to the Premises,
the Building or the Project; provided, however, Tenant may, with Landlord's
advance written consent, which consent shall not be unreasonably withheld, make
Alterations to the Premises that do not involve or affect either structural
portions of the Premises or the Building or any of the Building's HVAC,
mechanical, electrical, plumbing or other systems or equipment (the "Building
Systems"). At the expiration of the Term, Landlord may require the removal of
any or all of said Alterations and the restoration of the Premises and the
Project to their prior condition, at Tenant's expense in accordance with Section
7.04.
(b) All Alterations permitted by Landlord and made by or on behalf
of Tenant shall be made and performed: (a) at Tenant's cost and expense and at
such time and in such manner as Landlord may designate, (b) by contractors or
mechanics approved by Landlord, who shall carry liability insurance of a type
and in such amounts as Landlord shall reasonably require, naming Landlord and
Tenant as additional insureds, (c) in a good and workmanlike manner, (d) so that
same shall be at least equal in quality, value, and utility to the original work
or installation, (e) in accordance with the Rules and Regulations for the
Building adopted by Landlord from time to time and in accordance with all
applicable Laws, and (f) pursuant to plans, drawings and specifications
("Tenant's Plans") which have been reviewed and approved by Landlord prior to
the commencement of the repairs or replacements and approved by, and filed with,
all applicable governmental authorities, and subject to all other terms and
conditions of this Lease, including, but not limited to, Section 6.05
(collectively the "Construction Standards"). All Alterations made by Tenant
shall become, upon installation, the property of Landlord and remain upon and be
surrendered with the Premises at the expiration of the Lease term, unless
Landlord requires their removal pursuant to Section 7.02(a). Landlord agrees not
to unreasonably withhold any approvals requested under this Section 7.02(b).
(c) Tenant's Communications Systems. Tenant shall be responsible
for the design, installation and construction of Tenant's data, telephone and
video systems and wiring and payment of all cost and expense related thereto.
Subject to the verification by Landlord's electrical engineer of Tenant's
required specifications and all related costs, Landlord shall provide one
conduit for the connection and installation by Tenant of Tenant's data cabling.
7.03 Tenant's Property. Any trade fixtures, furnishings, equipment and
personal property placed in the Premises that are removable without damage to
the Building or the Premises, whether the property of Tenant or leased by
Tenant, are herein sometimes called "Tenant's Property". Any of Tenant's
Property remaining on the Premises at the expiration of the Term shall be
removed by Tenant at Tenant's cost and expense, and Tenant shall, at its cost
and expense, repair any damage to the Premises or the Building caused by such
removal. Any of Tenant's Property not removed from the Premises prior to the
Expiration Date shall, at Landlord's option, become the property of Landlord or
Landlord may remove such Tenant's Property, and Tenant shall pay to Landlord,
Landlord's cost of removal and of any repairs in connection therewith in
accordance with Section 7.04.
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7.04 Ownership and Removal. All appurtenances, additions, fixtures and
improvements attached to or installed in or upon the Premises, whether placed
there by Tenant or by Landlord, shall be Landlord's property and shall remain
upon the Premises at the termination of this Lease by lapse of time or otherwise
without compensation or allowance or credit to Tenant. Landlord may require, in
its discretion, the removal by Tenant of any Tenant's Property or Alterations
which have been attached to or installed in the Premises (excluding the initial
Leasehold Improvements) unless Landlord consents to a written request from
Tenant at the time of its approval of the Tenant's Plans that an installation
need not be so removed. On or before the Expiration Date, or the sooner date of
termination of this Lease, Tenant shall pay to Landlord the cost of repairs of
any damage to the Premises or Building and losses caused by the removal of such
property.
7.05 Signage. Landlord shall provide building standard signage
identifying Tenant by name on the Building multi-tenant signage in the main
Building lobby directory and will also provide building standard entry signage
at the main entry to the Premises. Tenant has no right to any Tenant signage,
monuments, graphics or advertising on the exterior of the Premises or any other
location in or at the Project. Landlord shall have the absolute and exclusive
right to approve the content, design, size and location of any and all proposed
Tenant signage and monuments proposed to be erected and/or maintained at the
Premises or Project.
ARTICLE 8. INSURANCE
8.01 Tenant's Insurance. Tenant, at its own expense, shall provide and
keep in force with companies acceptable to Landlord during the Term: (a)
comprehensive general liability insurance insuring against liability for bodily
injury and property damage, including contractual liability, in the amount of
$2,000,000 maximum combined single limit; (b) "Special Form" property insurance,
including standard fire and extended coverage insurance, in amounts necessary to
provide replacement cost coverage, for Tenant's Property, trade fixtures,
machinery, equipment, furniture, furnishings and any Alterations in which Tenant
has an insurable property interest, including, without limitation, vandalism and
malicious mischief and sprinkler leakage coverage, and "all risk" Builder's Risk
insurance, completed value, non-reporting form at any time that Tenant has
commenced construction of any leasehold improvements or any Alterations, and at
any time any other construction activities are underway at the Premises; (c)
plate glass insurance for the Premises; (d) Workers' Compensation Insurance in
statutory limits as required by applicable law; and (e) any other insurance
reasonably required by Landlord.
8.02 Delivery of Policies. The aforesaid insurance shall be provided by
companies and in form, substance and amounts (where not above stated)
satisfactory to Landlord and to Landlord's Mortgagee by companies rated A-/VII
or better by A.M. Best Company. Such insurance shall name Landlord as an
additional insured, shall specifically include the liability assumed hereunder
by Tenant (provided that the amount of such insurance shall not be construed to
limit the liability of Tenant hereunder), and shall provide that it is primary
insurance, and not excess over or contributory with any other valid, existing
and applicable insurance in force for or on behalf of Landlord, and shall
provide that Landlord shall receive thirty (30) days' written notice from the
insurer prior to any cancellation or change of coverage. With respect to
Tenant's comprehensive general liability insurance, Landlord shall be named as
an additional insured with respect to its liability relative to this Lease and
the Building. Tenant shall deliver policies of such insurance or certificates
thereof to Landlord on or before the Commencement Date, and thereafter at least
thirty (30) days before the expiration dates of expiring policies; and, in the
event Tenant shall fail to procure such insurance, or to deliver such policies
or certificates, Landlord may, at its option, procure same for the account of
Tenant, and the cost thereof shall be paid to Landlord as Additional Rent within
five (5) days after delivery to Tenant of bills therefor. Tenant's compliance
with the provisions of this Article 8 shall in no way limit Tenant's liability
under any of the other provisions of this Lease.
8.03 Increased Insurance Risk. Tenant shall not do or permit anything
to be done, or keep or permit anything to be kept in the Premises, which would:
(a) be in violation of any governmental law, regulation or requirement, (b)
invalidate or be in conflict with the provision of any fire or other insurance
policies covering the Building or any property located therein, (c) result in a
refusal by fire insurance companies of good standing to insure the Building or
any such property in amounts required by Landlord's Mortgagee (as hereinafter
defined) or reasonably satisfactory to Landlord, (d) subject Landlord to any
liability or responsibility for injury to any person or property by reason of
any business operation being conducted in the Premises, or (e) cause any
increase in the fire insurance rates applicable to the Project or property
located therein at the beginning of the Term or at any time thereafter. Tenant,
at Tenant's expense, shall comply with all rules, orders, regulations or
requirements of the American Insurance Association (formerly the National Board
of Fire Underwriters) and with any similar body that shall hereafter perform the
function of such Association. In the event that any use of the Premises by
Tenant increases such cost of insurance, Landlord shall give Tenant written
notice of such increase and a reasonable opportunity to cure its use to prevent
such increase; provided, however, if Tenant fails to do so, Tenant shall pay
such increased cost to Landlord in accordance with Section 4.04 hereof.
Acceptance
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of such payment shall not be construed as consent by Landlord to Tenant's such
use or limit Landlord's remedies under this Lease.
8.04 Cross-Indemnification.
(a) Tenant agrees to protect, indemnify and save harmless
Landlord, from and against any and all loss, cost, liability, damage and expense
including, without limitation, claims, demands, penalties, causes of action,
costs and expenses and attorneys' fees imposed upon and incurred by or asserted
against Landlord from any cause in, on, or about the Premises, including,
without limitation, those relating to the following: (i) Tenant's default in its
observance or performance of any of the terms, covenants or conditions of this
Lease, (ii) the use or occupancy or manner of use or occupancy of the Premises
by Tenant or of any Tenant Parties, (iii) any acts, omissions or negligence of
Tenant or any Tenant Parties, in, on or about the Premises or the Project,
either prior to, during, or after the expiration of, the Term including, without
limitation, any acts, omissions or negligence in the making or performing of any
Alterations in or to the Premises, or (iv) for personal injury, including
without limitation, bodily injury, death or property damage, occasioned by any
use, occupancy, condition, occurrence, omission or negligence referred to in the
preceding clauses. In case any action, suit or proceeding is brought against
Landlord by reason of any such occurrence, Tenant will, at Tenant's expense,
resist and defend such action, suit or proceeding or cause the same to be
resisted or defended by counsel reasonably approved by Landlord.
(b) Landlord agrees to protect, indemnify and save harmless Tenant
from and against any and all loss, cost, liability, damage and expense
including, without limitation, claims, demands, penalties, causes of action,
costs and expenses and attorneys' fees imposed upon and incurred by or asserted
against Tenant that result from the conduct of Landlord or its employees, agents
or contractors (the "Landlord Parties") at, on or about the Project, including,
without limitation, those relating to the following: (a) for personal injury,
death or property damage arising from the negligence or willful misconduct of
Landlord or any Landlord Parties, (b) Landlord's default in its observance or
performance of any of the terms, covenants or conditions of this Lease or (c)
any acts, omissions or negligence of Landlord or any Landlord Parties, in, on or
about the Premises or the Project, either prior to, during, or after the
expiration of, the Term including, without limitation, any acts, omissions or
negligence in the construction of the Base Building Improvements, the Leasehold
Improvement or the making or performing of any repairs or capital improvements
in or to the Premises or the Project. In case any action, suit or proceeding is
brought against Tenant by reason of any such occurrence, Landlord will, at
Landlord's expense, resist and defend such action, suit or proceeding or cause
the same to be resisted or defended by counsel reasonably approved by Tenant.
8.05 Limitation on Landlord's Liability. Landlord shall not be
responsible or liable to Tenant for any loss or damage to Tenant, or its
business (including any loss of income therefrom) or its property occasioned by
or through the acts or omissions of persons occupying adjoining premises or any
part of the premises adjacent to or connected with the Premises or any part of
the Project, or for any loss or damage resulting to Tenant, or its business
(including any loss of income therefrom), or its property from smoke, fire,
electricity, steam, gas, vapor, water or rain, or other airborne contaminants,
or from the breakage, leakage, obstruction or other defects of pipes, wires,
appliances, plumbing, heating, air-conditioning or lighting fixtures, or from
any other cause, whether the said damage or injury results from conditions
arising from or upon Premises or upon other portions of the Project, or from
other sources or places, including theft, except to the extend that any such
damage or loss is occasioned by the intentional or negligent act or omission of
the Landlord or any Landlord Constituent Parties.
8.06 Waiver of Claims.
(a) Landlord and Tenant hereby agree and hereby waive any and all
rights of recovery against each other for loss or damage occurring to the
Premises or the Project or any of Landlord's or Tenant's Property contained
therein regardless of the cause of such loss or damage to the extent that the
loss or damage is covered by the injured party's insurance or the insurance the
injured party is required to carry under this Lease, whichever is greater
(without regard to any deductible provision in any policy). This waiver does not
apply to claims caused by a party's willful misconduct. This waiver also applies
to each party's directors, officers, employees, shareholders, and agents.
(b) Each party will assure that its insurance permits waiver of
liability and contains a waiver of subrogation. Each party shall secure an
appropriate clause in, or an endorsement to, each insurance policy obtained by
or required to be obtained by Landlord or Tenant, as the case may be, under this
Lease, pursuant to which the insurance company: (i) waives any right of
subrogation against Landlord or Tenant as the same may be applicable, or (ii)
permits Landlord or Tenant, prior to any loss to agree to waive any claim it
might have against the other without invalidating the coverage under the
insurance policy. If, at any time, the insurance carrier of either party refuses
to write (and no other insurance carrier licensed in Connecticut will write)
insurance policies which consent to or permit such release of liability,
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then such party shall notify the other party and upon the giving of such notice,
this Section shall be void and of no effect.
8.07 Landlord's Insurance. Landlord shall maintain and keep in effect
during the entire Term the following insurance coverage (together with such
other coverages as Landlord may reasonably elect to carry for the benefit of the
Project):
(a) Standard Commercial General Liability Insurance with a Broad
Form Comprehensive General Liability endorsement. The limits of liability of
such insurance shall be an amount not less than $2,000,000 per occurrence,
bodily injury including death, and $2,000,000 per occurrence, property damage
liability or $2,000,000 combined single limit for bodily injury and property
damage liability;
(b) "Special Form" fire and extended coverage insurance on the
Project insuring the guaranteed replacement value thereof, excluding Tenant's
Property and Tenant's Alterations. The insurance shall include, but not be
limited to, fire and extended coverage perils and shall be placed with companies
licensed to sell insurance in Connecticut.
ARTICLE 9. CASUALTY
9.01 Damage or Destruction. Tenant shall give prompt notice to Landlord
of any damage by fire or other casualty to the Premises or any portion thereof.
In the event that the Premises, or any part thereof, or access thereto, shall be
so damaged or destroyed by fire or other insured casualty (a "Casualty") that
the Tenant shall not have reasonably convenient access to the Premises or any
portion of the Premises shall thereby be otherwise rendered unfit for use and
occupancy by the Tenant for the purposes set forth in Section 7.01, and if in
the judgment of the Landlord the damage or destruction may be repaired within
one hundred and eighty (180) days with available insurance proceeds, then the
Landlord shall so notify the Tenant within sixty (60) days after the occurrence
of the damage or destruction (the "Notice Period") and shall repair such damage
or destruction (except damage or destruction to Tenant's Property or Tenant's
Alterations) with reasonable diligence. In the event that the Landlord shall not
complete such repairs within one hundred and eighty (180) days after the elapse
of the Notice Period, then the Tenant shall have the right to terminate the term
of this lease by giving written notice of such termination to the Landlord
within twenty (20) days after the end of such one hundred and eighty (180) day
period; provided, however, that in the event that the completion of repairs
shall be delayed by causes beyond the Landlord's control, including those events
described in Section 15.11 hereof, the time for completion shall be extended by
the period of such delay. If in the judgment of the Landlord the Premises, or
means of access thereto, cannot be repaired within one hundred and eighty twenty
(180) days after the elapse of the Notice Period with available insurance
proceeds and the Landlord does not deliver the Tenant notice of its decision to
repair such damage within sixty (60) days after the occurrence of the Casualty,
then either party shall have the right to terminate the term of this Lease by
giving written notice of such termination to the other party within the period
of sixty (60) to seventy-five (75) days after the occurrence of the Casualty.
9.02 Abatement of Rent. Annual Base Rent and Additional Rent shall not
be abated or suspended if, following any Casualty, Tenant shall continue to have
reasonably convenient access to the Premises and the Premises are not rendered
unfit for use and occupancy. If Tenant shall not have reasonably convenient
access to the entire Premises or any portion of the Premises shall be otherwise
rendered unfit for use and occupancy by the Tenant for the purposes set forth in
Section 6.01 by reason of such Casualty, then Rent shall be equitably suspended
or abated relative to the portion of the Premises that cannot be used by Tenant
for any of its business operations, effective as of the date of the Casualty
until Landlord has (i) substantially completed the repair of the Premises and
the means of access thereto, and (ii) has delivered notice thereof to Tenant. If
such damage or destruction was caused by the negligence or willful act or
omission of the Tenant or any of its officers, employees, contractors, agents or
invitees, then there shall be no abatement of Rent; an election by Landlord to
carry rental loss insurance shall not affect the provisions of this Article 9.
9.03 Events of Termination. In addition to the foregoing termination
rights provided in Section 9.01 hereof, in the event of a Casualty, the
following termination rights shall apply:
(a) If more than 25% of the gross rentable area of the Premises
shall be wholly or substantially damaged or destroyed by Casualty at any time
during the last six (6) months of the Term, either Landlord or Tenant may
terminate this Lease by delivery of written notice of such termination to the
other party within thirty (30) days after the occurrence of such damage.
(b) Notwithstanding the provisions of this Article 10, if, prior
to or during the Term the Building shall be so damaged by Casualty that, in
Landlord's reasonable estimate, the cost to repair the damage will be more than
25% of the replacement value of the Building immediately prior to the occurrence
of the Casualty (whether or not the Premises shall have been damaged or rendered
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untenantable), then, in any of such events, Landlord, at Landlord's option, and
with the written consent of Landlord's Mortgagee, may give to Tenant, within
ninety (90) days after such Casualty, a thirty (30) days' notice of the
termination of this Lease and, in the event such notice is given, this Lease and
the term shall terminate upon the expiration of such thirty (30) days with the
same effect as if such date were the Expiration Date; and the Rent shall be
apportioned as of such date and any prepaid portion of Rent for any period after
such date shall be refunded by Landlord to Tenant within thirty (30) days
following the Expiration Date.
9.04 Insurance Proceeds Upon Termination. If this Lease is terminated
pursuant to any right granted or reserved to Landlord under this Section, all
insurance proceeds payable with respect to the damage giving rise to such right
of termination shall be paid to Landlord, and Tenant shall have no claim
therefor. No damages, compensation or claim shall be payable by the Landlord to
Tenant, or any other person, by reason of inconvenience, loss of business or
annoyance arising from any damage or destruction, or any repair thereof, as is
referred to in this Article 9.
9.05 Scope of Landlord's Repairs. In the event Landlord elects or
shall be obligated to repair or restore any damage or destruction as aforesaid,
the scope of work shall be limited to the original Leasehold Improvements that
were constructed by Landlord at its expense, and Landlord shall have no
obligation to restore or replace Tenant's Property or Tenant's Alterations.
ARTICLE 10. CONDEMNATION
10.01 Entire Condemnation. In the event that the whole of the Premises
shall be taken under the power of eminent domain, this Lease and the term and
estate hereby granted shall automatically terminate as of the earlier of the
date of the vesting of title or the date of dispossession of Tenant as a result
of such taking.
10.02 Partial Condemnation.
(a) In the event that only a part of the Premises shall be taken
by Condemnation and Tenant shall have reasonable, convenient access to and from
the Premises, the Term shall expire as to that portion of the Premises condemned
effective as of the date of the vesting of title in the condemning authority,
and this Lease shall continue in full force and effect as to the part of the
Premises not so taken.
(b) In the event that a part of the Project shall be subject to
Condemnation (whether or not the Premises are affected), Landlord may, at its
option, terminate this Lease as of the date of such vesting of title, by
notifying Tenant in writing of such termination within ninety (90) days
following the date on which Landlord shall have received notice of the vesting
of title in the condemning authority if in Landlord's reasonable opinion: (i) a
substantial alteration or reconstruction of the Project (or any portion thereof)
shall be necessary or appropriate, or (ii) the portion of the Project so
condemned has the effect of rendering the remainder of the Project uneconomic to
maintain.
(c) In the event that this Lease is not terminated in accordance
with subsection (b) hereof, Landlord shall, upon receipt of the award in
condemnation, make all necessary repairs or alterations to the Building in which
the Premises are located so as to constitute the remaining Premises a complete
architectural unit to the extent feasible, but Landlord shall not be required to
spend for such work an amount in excess of the amount received by Landlord as
damages for the part of the Premises so taken. "Amount received by Landlord"
shall mean that part of the award in condemnation which is free and clear to
Landlord of any collection by mortgagees and after payment of all costs involved
in collection, including but not limited to attorney's fees. Tenant, at is own
cost and expense shall, restore all exterior signs, trade fixtures, equipment,
furniture, furnishings and other installations of personalty of Tenant which are
not taken to as near its former condition as the circumstances will permit. In
the event of a partial taking, all provisions of this Lease shall remain in full
force and effect.
10.03 Temporary Taking. If there is a taking of the Premises for
temporary use arising out of a temporary emergency or other temporary situation,
this Lease shall continue in full force and effect, and Tenant shall continue to
comply with Tenant's obligations under this Lease, except to the extent
compliance shall be rendered impossible or impracticable by reason of the
taking, and Tenant shall be entitled to the award for its interest.
10.04 Condemnation Awards. Except as provided in the preceding Section
10.03, Landlord shall be entitled to the entire award in any condemnation
proceeding or other proceeding for taking for public or quasi-public use,
including, without limitation, any award made for the value of the leasehold
estate created by this Lease. No award for any partial or entire taking shall be
apportioned, and Tenant hereby assigns to Landlord any award that may be made in
such condemnation or other taking, together with any and all rights of Tenant
now or hereafter arising in or to same or any part thereof; provided, however,
that nothing contained herein shall be deemed to give Landlord any interest in
or to require Tenant to assign to Landlord any award made to Tenant specifically
for its relocation expenses or the
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taking of Tenant's Property or the loss of Tenant's leasehold improvements
provided that such award does not diminish or reduce the amount of the award
payable to Landlord.
10.05 Proration. In the event of a partial condemnation or other taking
that does not result in a termination of this Lease as to the entire Premises,
then the Annual Base Rent and Tenant's Proportionate Share shall be adjusted in
proportion to that portion of the Premises taken by such condemnation or other
taking and Tenant's Proportionate Share.
ARTICLE 11. ASSIGNMENT AND SUBLETTING
11.01 Assignment and Subletting. Tenant shall not, without the prior
written consent of the Landlord, which consent shall not be unreasonably
withheld, assign, mortgage, encumber or otherwise transfer this Lease or any
interest herein directly or indirectly, by operation of law or otherwise, or
sublet the Premises or any part thereof, or permit the use or occupancy of the
Premises by any party other than Tenant (any such action, a "Transfer"). If at
any time or from time to time during the Term, when no Event of Default has
occurred and is continuing, Tenant desires to effect a Transfer, Tenant shall
deliver to Landlord written notice ("Transfer Notice") setting forth the terms
of the proposed Transfer and the identity of the proposed assignee, sublessee or
other transferee (each a "Transferee"). Tenant shall also deliver to Landlord
with the Transfer Notice an acceptable assumption agreement for Tenant's
obligations under this Lease together with all relevant information requested by
Landlord concerning the proposed Transferee to assist Landlord in making an
informed judgment regarding the financial responsibility, creditworthiness,
reputation, and business experience of the Transferee. Tenant shall reimburse
Landlord promptly for all reasonable out-of-pocket expenses incurred by Landlord
including reasonable attorneys' fees in connection with the review of Tenant's
request for Landlord's approval of any Transfer. The provisions of this Section
11.01 shall apply to a transfer (by one or more Transfers) of fifty percent
(50%) or more of the interest in the stock or partnership or membership
interests or other evidences of equity interests of Tenant as if such Transfer
were an assignment of this Lease; provided that if equity interests in Tenant at
any time are or become traded on a public stock exchange, the transfer of equity
interests in Tenant on a public stock exchange shall not be deemed an assignment
within the meaning of this Section.
11.02 Landlord's Options. Landlord shall have the option, exercisable
by written notice delivered to Tenant within thirty (30) days after Landlord's
receipt of a Transfer Notice accompanied by the other information described in
Section 11.01, to: (a) permit Tenant to Transfer the Premises; or (b) disapprove
the Tenant's Transfer of the Premises and to continue the Lease in full force
and effect as to the entire Premises; or (c) if the Tenant proposes to sublease
more than fifty (50%) percent of the rentable square footage, terminate the
Lease as to the portion of the Premises affected by the Transfer as of the date
set forth in Landlord's notice of exercise of such option, which date shall not
be less than thirty (30) days nor more than ninety (90) days following the
giving of such notice. If Landlord exercises its option to terminate this Lease
(or in the case of a partial sublet to release Tenant with respect to a portion
of the Premises), Tenant shall surrender possession of such Premises on the date
set forth in Landlord's notice, and thereafter neither Landlord nor Tenant shall
have any further liability with respect thereto. If this Lease shall be
terminated as to a portion of the Premises only, Rent and Tenant's parking
allocation shall be readjusted proportionately according to the ratio that the
number of square feet and the portion of the space surrendered compares to the
floor area of Tenant's Premises during the Term of the proposed sublet. The
provisions of this section shall not apply to a sublease or assignment of all or
any portion of the Premises to a entity affiliated with and under the common
control of Tenant ("Affiliated Entity").
11.03 Additional Conditions.
(a) Tenant shall not offer to make, or enter into negotiations
with respect to any Transfer to: (i) any tenant of the Building or Project or
any entity owned by, or under the common control of, whether directly or
indirectly, a tenant in the Building or Project unless there is no competing
space then available for leases therein; or (ii) any party with whom Landlord
(or its affiliate) is then negotiating with respect to other space in the
Building or Project unless there is no competing space then available for leases
therein; or (iii) any party which would be of such type, character, or condition
as to be inappropriate as a tenant for the Building. It shall not be
unreasonable for Landlord to disapprove any proposed assignment, sublet or
transfer to any of the foregoing entities.
(b) If Landlord approves of the proposed Transfer pursuant to
Section 11.01 above, Tenant may enter into the proposed Transfer with such
proposed Transferee subject to the following further conditions: (i) the
Transfer shall be on the same terms set forth in the Transfer Notice, and (ii)
no Transfer shall be valid and no Transferee shall take possession of the
Premises until an executed counterpart of the assignment, sublease or other
instrument effecting the Transfer (in the form approved by Landlord) has been
delivered to Landlord pursuant to which the Transferee shall expressly assume
all of Tenant's obligations under this Lease; and (iii) Tenant shall provide
Landlord with a written ratification agreement from each guarantor of this Lease
in form and substance satisfactory to Landlord.
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11.04 No Release. No Transfer shall be effective unless approved in
writing by Landlord. Landlord's consent to a Transfer shall not release Tenant
of Tenant's obligations under this Lease and this Lease and all of the
obligations of Tenant under this Lease shall continue in full force and effect
as the obligations of a principal (and not as the obligations of a guarantor or
surety). From and after any Transfer, the Lease obligations of the Transferee
and of the original Tenant named in this Lease shall be joint and several. No
acceptance of Rent by Landlord from or recognition in any way of the occupancy
of the Premises by a Transferee shall be deemed a consent to such Transfer, or a
release of Tenant from direct and primary liability for the further performance
of Tenant's covenants hereunder. The consent by Landlord to a particular
Transfer shall not relieve Tenant from the requirement of obtaining the consent
of Landlord to any further Transfer. Each violation of any of the covenants,
agreements, terms or conditions of this Lease, whether by act or omission, by
any of Tenant's permitted Transferees, shall constitute a violation thereof by
Tenant. In the event of default by any Transferee of Tenant or any successor of
Tenant in the performance of any of the terms hereof, Landlord may proceed
directly against Tenant without the necessity of exhausting remedies against
such Transferee or successor.
11.05 Transfer Profit. Fifty percent (50%) of any rent and other
economic consideration received by Tenant as a result of such Transfer to an
entity other than an Affiliated Entity in which case the Tenant shall keep all
excess, which exceeds, in the aggregate, (a) the total of the remaining rent
which Tenant is obligated to pay Landlord under this Lease (prorated to reflect
obligations allocable to any portion of the Premises subleased) plus (b) any
reasonable tenant fit-up costs, brokerage commissions and attorneys' fees
actually paid by Tenant in connection with such Transfer (specifically excluding
moving or relocation costs paid to the Transferee), shall be paid to Landlord on
a monthly basis within ten (10) days after receipt thereof as Additional Rent
under this Lease, without affecting or reducing any other obligations of Tenant
hereunder. Each such payment shall be sent with a detailed statement. Landlord
shall have the right to audit Tenant's books and records to verify the accuracy
of the detailed statement.
ARTICLE 12. DEFAULTS AND REMEDIES
12.01 Events of Default. The occurrence of any one or more of the
following events shall constitute an event of default (each an "Event of
Default") hereunder:
(a) Nonpayment of Annual Base Rent or Additional Rent. Failure by
Tenant to pay any installment of Annual Base Rent or Additional Rent due and
payable hereunder, upon the date when said payment is due; provided, however, on
two(2) occasions only during any Lease Year, Landlord shall permit Tenant a
5-day grace period from the date when said payment is due to cure such failure.
(b) Certain Obligations. Failure by Tenant to perform, observe or
comply with any obligation, agreement or covenant contained in Sections 6.05
("Hazardous Substances"), 7.02 ("Alterations"), Section 8.01 ("Tenant's
Insurance") and Article 11.01 ("Assignment and Subletting") of this Lease or
failure by Tenant to perform observe or comply with any obligation, agreement or
covenant contained in a certain Lease dated October 20, 1999 for approximately
20,058 rentable square feet at the Project by and between Wilton Executive
Campus Associates, as Landlord and Tenant ( the "Temporary Lease") and a
certain Lease dated October 20, 1999 for approximately 30,500 rentable square
feet at the Project by and between Wilton LLC and Tenant (the "Campus Properties
Lease").
(c) Other Obligations. Failure by Tenant to perform any
obligation, agreement or covenant under this Lease other than those matters
specified in subparagraph (a) or (b) of this Section 12.01, such failure
continuing for thirty (30) days after written notice by Landlord to Tenant of
such failure; provided, however, that if the nature of Tenant's obligation is
such that more than thirty (30) days are required for performance, then Tenant
shall not be in default if Tenant commences performance within such thirty (30)
day period and thereafter diligently and continuously prosecutes the same to
completion within sixty (60) days following the date of Landlord's written
notice with respect to such failure.
(d) Abandonment. Abandonment of the Premises by Tenant for a
continuous period in excess of twenty (20) business days.
(e) Assignment; Receivership; Attachment. (i) The making by
Tenant of any arrangement or assignment for the benefit of creditors; (ii) 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,
where possession is not restored to Tenant within thirty (30) days; or (iii) 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 such seizure is not discharged within thirty (30) days.
(f) Bankruptcy. The admission by Tenant or Tenant's guarantor (if
any) in writing of its inability to pay its debts as they become due, the filing
by Tenant or Tenant's guarantor (if any) of a petition in bankruptcy seeking any
reorganization, arrangement, composition, readjustment, liquidation,
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dissolution or similar relief under any present or future statute, law or
regulation, the filing by Tenant or Tenant's guarantor (if any) of an answer
admitting or failing timely to contest a material allegation of a petition filed
against Tenant or Tenant's guarantor (if any) in any such proceeding or, if
within forty-five (45) days after the commencement of any proceeding against
Tenant or Tenant's guarantor (if any) seeking any involuntary reorganization, or
arrangement, composition, readjustment, liquidation, dissolution or similar
relief under any present or future statute, law or regulation by any of Tenant's
creditors or such guarantor's creditors, such proceeding shall not have been
dismissed.
12.02 Remedies. Upon the occurrence of any Events of Default by Tenant
which is not cured by Tenant within the grace periods specified in Section 12.01
hereof, if any, Landlord shall have the following rights and remedies, in
addition to all other rights or remedies available to Landlord in law or equity:
(a) Landlord may give written notice to Tenant specifying such
Event of Default or Events of Default and stating that this Lease and the Term
hereby demised shall expire and terminate on the date specified in such notice,
and upon the date specified in such notice, this Lease and the Term hereby
demised, and all rights of Tenant under this Lease shall expire and terminate.
Upon any termination of this Lease, Tenant shall quit and peaceably surrender
the Premises and all portions thereof, to Landlord. Following any such
termination, Landlord may, without further notice, enter the Premises, and any
portions thereof, and take possession thereof by summary proceeding, ejectment
or otherwise, and may dispossess Tenant and remove Tenant and all other persons
and property from the Premises and Landlord shall have the right to receive all
rental and other income of and from the same.
(b) At Landlord's election, without terminating this Lease,
Landlord may, without re-entry, recover possession of the Premises in the manner
prescribed by any statute relating to summary process, and any demand for the
Rent, re-entry for condition broken, and any and all notices to quit, or other
formalities of any nature, to which Tenant may be entitled, are hereby
specifically waived. Landlord may relet the Premises for the account of Tenant.
No such termination of Tenant's right to possess the Premises under this Section
12.02(b) shall relieve Tenant of its liabilities and obligations under this
Lease (as if such right of possession had not been so terminated or expired),
and such liabilities and obligations shall survive any such termination of
Tenant's possessory interest. In the event of any such termination of this Lease
or Tenant's right of possession, whether or not the Premises, or any portion
thereof, shall have been relet, Tenant shall pay the Landlord a sum equal to the
Rent and any other charges required to be paid by Tenant up to the time of such
termination of such right of possession and thereafter Tenant, until the end of
the Term, shall be liable to Landlord for and shall pay to Landlord: (i) the
equivalent of the amount of the Rent payable under this Lease, less (ii) the net
proceeds of any reletting effected pursuant to the provisions hereof after
deducting all of Landlord's "Reletting Expenses" (as defined in Section
12.02(g). Tenant shall pay such amounts in accordance with the terms of this
Section 12.02(b) as set forth in a written statement thereof from Landlord to
Tenant (hereinafter, the "Deficiency") to Landlord in monthly installments on
the days on which the Annual Base Rent is payable under this Lease, and Landlord
shall be entitled to recover from Tenant each monthly installment of the
Deficiency as the same shall arise. Tenant shall also pay to Landlord upon
demand the costs incurred by Landlord in curing Tenant's defaults existing at or
prior to the date of such termination and the cost of recovering possession of
the Premises. Tenant agrees that Landlord may file suit to recover any sums that
become due under the terms of this Section from time to time, and all reasonable
costs and expenses of Landlord, including attorneys' fees and costs incurred in
connection with such suits shall be payable by Tenant on demand.
(c) At any time after an Event of Default and termination of the
Lease by Landlord, whether or not Landlord shall have collected any monthly
Deficiency as set forth in Section 12.02(b), Landlord shall be entitled to
recover from Tenant, and Tenant shall pay to Landlord, on demand, as and for
final damages for Tenant's default and in lieu of any subsequent Deficiency (but
without limitation of the provisions of subsection (f) hereof):
(i) all Rent and other sums due and payable by Tenant on
the date of termination; plus
(ii) the costs of curing Tenant's defaults existing at or
prior to the date of termination; plus
(iii) the cost of recovering possession of the Premises and
the Reletting Expenses; plus
(iv) an amount equal to the difference between the then
present worth of the aggregate of the Rent and any other charges to be
paid by Tenant hereunder for the then unexpired term of this Lease
(assuming this Lease had not been so terminated), and the then present
worth of the then aggregate fair market rent of the Premises for the
same period (taking into account rentals received by Landlord under a
replacement Lease of the Premises). In the
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computation of present worth, a discount at the then market discount
rate as reasonably determined by Landlord shall be employed.
(d) In connection with any reletting of the Premises following an
Event of Default, Landlord shall be entitled to grant such rental and economic
concessions and other incentives as may be customary for similar space in
eastern Fairfield County.
(e) Any and all property belonging to Tenant or to which Tenant
is or may be entitled which may be removed from the Premises by Landlord
pursuant to the authority of this Lease or applicable law, may be handled,
removed or stored in a commercial warehouse or otherwise by Landlord at Tenant's
risk and expense and Landlord shall in no event be responsible for the value,
preservation or safekeeping thereof. Tenant shall pay to Landlord, upon demand,
any and all expenses incurred in such removal and all storage charges for such
property so long as the same shall be in Landlord's possession or under
Landlord's control.
(f) Landlord shall have the right of injunction, in the event of
a breach or threatened breach by Tenant of any of the agreements, conditions,
covenants or terms hereof, to restrain the same and the right to invoke any
remedy allowed by law or in equity, whether or not other remedies, indemnity or
reimbursements are herein provided. The rights and remedies given to Landlord in
this Lease are distinct, separate and cumulative remedies; and no one of them,
whether or not exercised by Landlord, shall be deemed exclusive of any of the
others.
(g) For purposes of this Section 12.02, "Reletting Alterations"
shall mean all repairsmade by Landlord in or to the Premises to the extent
deemed reasonably necessary by Landlord to prepare the Premises for the
re-leasing following an Event of Default; and "Reletting Expenses" shall mean
the reasonable expenses paid or incurred by Landlord in connection with any
re-leasing of the Premises following an Event of Default, including, without
limitation, marketing expenses, brokerage commissions, management fees,
attorneys' fees, the costs of Reletting Alterations, operating expenses and rent
and other economic concessions reasonable and customary in Fairfield County
provided to the new tenant.
12.03 Landlord's Right to Cure Defaults. If the Tenant shall default in
the observance or performance of any condition or covenant on Tenant's part to
be observed or performed under or by virtue of any of the provisions of this
Lease, and such default continues beyond any applicable notice and cure period
or Landlord reasonably determines that an emergency exists, the Landlord,
without being under any obligation to do so and without thereby waiving such
default, may remedy such default for the account and at the expense of the
Tenant. If the Landlord makes any expenditures or incurs any obligations for the
payment of money in connection therewith, including but not limited to
reasonable attorney's fees in instituting, prosecuting or defending any action
or proceeding, such sums paid or obligation incurred and costs, shall be paid
upon demand to the Landlord by the Tenant as Additional Rent pursuant to Section
4.04 hereof and if not so paid with interest from its due date until paid at the
lesser of eighteen (18%) percent per annum or the maximum legal rate that
Landlord may charge Tenant.
12.04 No Accord and Satisfaction. Landlord may collect and receive any
rent due from Tenant, and the payment thereof shall not constitute a waiver of
or affect any notice or demand given, suit instituted or judgment obtained by
Landlord, or be held to waive, affect, change, modify or alter the rights or
remedies that Landlord has against Tenant in equity, at law, or by virtue of
this Lease. No receipt or acceptance by Landlord from Tenant of less than the
monthly rent herein stipulated shall be deemed to be other than a partial
payment on account for any due and unpaid stipulated rent; no endorsement or
statement on any check or any letter or other writing accompanying any check or
payment of rent to Landlord shall be deemed an accord and satisfaction, and
Landlord may accept and negotiate such check or payment without prejudice to
Landlord's rights to (i) recover the remaining balance of such unpaid rent, or
(ii) pursue any other remedy provided in this Lease.
12.05 Arbitration. Any dispute arising out of or relating to Article 5
of this Lease (with respect to the issues expressly stated therein) shall be
submitted to and determined in binding arbitration under the Commercial
Arbitration Rules of the American Arbitration Association. The arbitration shall
be conducted before and by a single arbitrator selected by the parties. If the
parties have not selected an arbitrator within 30 days of written demand for
arbitration, the arbitrator shall be selected by the American Arbitration
Association pursuant to the then current rules of that Association on
application by either party. The arbitrator shall have authority to fashion such
just, equitable and legal relief as he, in his sole discretion, may determine.
The parties agree that the arbitration hearing shall be held within thirty (30)
business days following notification to the parties of the appointment of such
arbitration, and that the arbitration proceedings shall be concluded within
thirty (30) business days following the first scheduled arbitration hearing.
Each party shall bear all its own expenses of arbitration and shall bear equally
the costs and expenses of the arbitrator. All arbitration proceedings shall be
conducted in the City of Stamford, State of Connecticut. Landlord and Tenant
further agree that they will faithfully observe this agreement and rules, and
that they will abide by and perform any award rendered by the arbitrator and
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that a judgment of the court having jurisdiction may be entered upon the award.
The duty to arbitrate shall survive the cancellation or termination of this
Lease. Landlord and Tenant further agree that in addition to the discovery
rights available to them under the Commercial Arbitration Rules they shall have
all rights of discovery available to litigants pursuant to the Connecticut Rules
of Court then appertaining.
12.06.
12.07 Waivers. TENANT HEREBY REPRESENTS, COVENANTS AND AGREES THAT IT
IS ENGAGED PRIMARILY IN COMMERCIAL PURSUITS, AND THAT THE LEASE IS A "COMMERCIAL
TRANSACTION" WITHIN THE MEANING OF SECTION 52-278a(a) OF THE CONNECTICUT GENERAL
STATUTES (REV. 1958), AS AMENDED. TENANT HEREBY WAIVES ALL RIGHTS TO NOTICE,
PRIOR JUDICIAL HEARING OR COURT ORDER UNDER SECTION 52-278a ET SEQ. OF THE
CONNECTICUT GENERAL STATUTES (REV. 1958) AS AMENDED OR UNDER ANY OTHER STATE OR
FEDERAL LAW WITH RESPECT TO ANY PREJUDGMENT REMEDIES THE LANDLORD MAY EMPLOY TO
ENFORCE ITS RIGHTS AND REMEDIES HEREUNDER.
12.08 Claims in Bankruptcy. Nothing herein shall limit or prejudice the
right of Landlord to prove for and obtain in proceedings for bankruptcy or
insolvency by reason of any such termination, an amount equal to the maximum
allowed by any statute or rule of law in effect at the time when, and governing
the proceedings in which, the damages are to be proved, whether or not the
amount be greater, equal to or less than the amount of the loss or damage
referred to above. Without limiting any of the provisions of this Article 12, if
pursuant to the Bankruptcy Code, as the same may be amended, Tenant is permitted
to assign this Lease in disregard of the restrictions contained in Article 11,
Tenant agrees that adequate assurance of future performance by the assignee
permitted under the Bankruptcy Code shall mean the deposit of cash security with
Landlord in any amount equal to all Rent payable under this Lease for the
calendar year preceding the year in which such assignment is intended to become
effective, which deposit shall be held by Landlord, without interest, for the
balance of the term as security for the full and faithful performance of all of
the obligations under this Lease on the part of Tenant yet to be performed. If
Tenant receives or is to receive any valuable consideration for such an
assignment of this Lease, such consideration, after deducting therefrom (a) the
brokerage commissions, if any, and other expenses reasonably designated by the
assignee as paid for the purchase of Tenant's property in the Premises, shall be
and become the sole exclusive property of Landlord and shall be paid over to
Landlord directly by such assignee. In addition, adequate assurance shall mean
that any such assignee of this Lease shall have a net worth indicating said
assignee's reasonable ability to pay the Rent, and abide by the terms of this
Lease for the remaining portion thereof applying commercially reasonable
standards.
ARTICLE 13. NONDISTURBANCE AND RIGHTS OF MORTGAGE HOLDERS
13.01 Subordination.
(a) Subject to the provisions of this Section 13.01, without the
necessity of any additional document being executed by Tenant for the purpose of
effecting a subordination, Tenant agrees that this Lease and Tenant's tenancy
hereunder are and shall be automatically subject and subordinate at all times to
(a) the lien (and the terms and conditions) of any mortgage that may now exist
or hereafter be executed in any amount for which the Building, or Landlord's
interest or estate in any of said items is specified as security; and (b)
renewals, modifications, consolidations, replacements, and extensions of any of
the foregoing.
(b) In the event that any such first mortgage is foreclosed or a
conveyance in lieu of foreclosure is made for any reason, Tenant shall, at the
option of Landlord's Mortgagee or the grantee or purchaser in foreclosure,
notwithstanding any subordination of any such lien to this Lease, attorn to and
become the Tenant of the successor in interest to Landlord at the option of such
successor in interest. Tenant covenants and agrees to execute and deliver,
within ten (10) days following delivery of request by Landlord, Landlord's
Mortgagee, or by Landlord's successor in interest and in the form requested by
Landlord, Landlord's Mortgagee, or by Landlord's successor in interest, any
additional documents evidencing the priority or subordination of this Lease with
respect to the lien of any such first mortgage, which additional documents shall
be satisfactory to Landlord, Landlord's Mortgagee, and Landlord's successors in
interest.
(c) If Landlord's Mortgagee shall succeed to the interest of
Landlord under this Lease, Landlord's Mortgagee shall assume and perform
Landlord's obligations under this Lease only while it is the fee owner of the
Building and shall not be (i) liable for any breach, act or omission of any
prior landlord, including Landlord; (ii) subject to offsets, claims or defenses
which Tenant might have against prior landlords; (iii) bound by the payment of
Annual Base Rent or Additional Rent or other payment in lieu of rent which
Tenant may have paid to any prior landlord for more than thirty (30) days in
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advance of its due date; (iv) bound by any assignment, surrender, termination,
waiver, lease amendment or modification of or affecting this Lease made without
its consent; or (v) bound by any of the construction obligations of Landlord
under this Lease.
13.02 Notices. If Tenant is given written notice of the identity and
address of Landlord's Mortgagee, then Tenant shall give to such Landlord's
Mortgagee written notice of any default by Landlord under the terms of this
Lease by registered or certified mail, and such Landlord's Mortgagee shall be
given the opportunity to cure Landlord's default within the thirty (30) days
following such written notice; provided, however, that said thirty (30) day
period shall be extended so long as within said thirty (30) day period such
party has commenced to cure the default and such party is proceeding with due
diligence (including the exercise of its remedies against Landlord if necessary
to obtain possession of the Premises) to effect such cure.
13.03 Estoppel Certificates. Tenant shall at any time, and from time to
time, upon not less than five (5) days prior written notice from Landlord
execute, acknowledge and deliver to Landlord, to any prospective purchaser, or
Landlord's Mortgagee, a written certificate of Tenant in form and substance
reasonably satisfactory to Landlord, or Landlord's Mortgagee stating, in part:
(a) whether Tenant has accepted the Premises and the commencement date and
termination date of this Lease; (b) that this Lease is unmodified and in full
force and effect (or if there have been modifications, that the same is in full
force and effect as modified and stating the modifications), and has not been
assigned; (c) that there are not, to Tenant's best knowledge, any uncured
defaults on the part of the Landlord or Tenant hereunder, or specifying any
defaults that may exist; (d) whether or not there are then existing any defenses
against the enforcement of any of the obligations of Tenant under this Lease
(and, if so, specifying same); (e) whether Tenant has received all required
contributions from Landlord on account of Tenant's improvements; (f) the dates,
if any, to which the Annual Base Rent and Additional Rent and other charges
under this Lease have been paid and the amounts of said Annual Base Rent and
Additional Rent, and that no Annual Base Rent, Additional Rent, or security
deposit has been paid in advance of its due date, and (g) any other information
that may reasonably be required by any of such persons. It is intended that any
such certificate of Tenant delivered pursuant to this Section 13.03 may be
relied upon by Landlord and any prospective purchaser or Landlord's Mortgagee of
any part of the Building.
13.04 Quiet Enjoyment. Upon Tenant paying the Annual Base Rent and
Additional Rent and performing all of Tenant's obligations under this Lease,
Tenant may peacefully and quietly enjoy the Premises during the Term as against
all persons or entities lawfully claiming by or through Landlord; subject,
however, to the provisions of this Lease and to the rights of Landlord's
Mortgagee.
ARTICLE 14. NOTICES
14.01 Manner of Notice.
(a) All notices, demands and other communications ("notices")
permitted or required to be given under this Lease shall be in writing and sent
by personal service, telecopy transmission (if a copy thereof is also sent on
the same day by a nationally recognized overnight courier service), certified
mail (postage prepaid) return receipt requested or by a nationally recognized
overnight courier service, (a) to Tenant (i) at 274 Riverside Avenue, Westport,
Connecticut 06880, if sent prior to Tenant's taking possession of the Premises,
or (ii) at the Building if sent subsequent to Tenant's taking possession of the
Premises, or (iii) at any place where Tenant or any agent or employee of Tenant
may be found if sent subsequent to Tenant's vacating, abandoning or surrendering
the Premises, with a copy of all notices to be sent to Jonathan A. Flatow, Esq.,
Wake, See, Dimes & Bryncizka, 27 Imperial Ave., Westport, CT 06880 and (b) to
Landlord at P.O. Box 703, Westport, Connecticut 06881 or (c) to such other
address as either Landlord or Tenant may designate as its new address for such
purpose by notice given to the other in accordance with the provisions of this
Section 14.01.
(b) Notices shall be deemed to have been given (i) when hand
delivered (provided that delivery shall be evidenced by a receipt executed by or
on behalf of the addressee if delivered by personal service) if personal service
is used, (ii) on the date of transmission if sent before 4:00 p.m. (Hartford
time) on a business day when telecopy transmission is used, (iii) the sooner of
the date of receipt or the date that is three (3) days after the date of mailing
thereof if sent by postage pre-paid registered or certified mail, return receipt
requested, and (iv) one (1) day after being sent by Federal Express or other
reputable overnight courier service (with delivery evidenced by written receipt)
if overnight courier service is used.
ARTICLE 15. MISCELLANEOUS
15.01 Brokers. Landlord and Tenant warrant to each other that they have
had no dealings with any broker, agent or finder in connection with this Lease
except Reliance Property Group and Cushman & Wakefield of CT. Landlord agrees to
pay the commissions due to such brokerage companies pursuant to separate
agreements. Both parties hereto agree to protect, indemnify and hold harmless
the other from
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and against any final judgment related to commissions and charges claimed by any
other broker, agent or finder not identified above with respect to this Lease or
the negotiation thereof that is made by reason of any action or agreement by
such party.
15.02 Attorney's Fees. If on account of any default by Tenant in
Tenant's obligations under the terms of this Lease, it becomes necessary or
appropriate for Landlord to employ attorneys or other persons to enforce any of
Landlord's rights or remedies hereunder, Tenant shall pay upon demand as
Additional Rent hereunder all reasonable fees of such attorneys and other
persons and all other costs of any kind so incurred.
15.03 Site Development. Landlord reserves the right to design, develop
and operate an additional building and related improvements adjacent to the
Building. Landlord reserves the right to enter into agreements necessary for
shared parking and other shared amenities . Landlord shall use all reasonable
efforts to avoid disturbing or impairing Tenant's right to quite possession by
virtue of any site development reserved hereunder.
15.04 No Merger. There shall be no merger of this Lease or of the
leasehold estate hereby created with the fee estate in the Premises or any part
thereof by reason of the fact that the same person may acquire or hold, directly
or indirectly, this Lease or the leasehold estate hereby created or any interest
in this Lease or in such leasehold estate as well as the fee estate in the
leasehold Premises or any interest in such fee estate.
15.05 Easements. Landlord reserves the right, from time to time, to
grant easements and rights, make dedications, agree to restrictions and record
maps affecting the Project as Landlord may deem necessary or desirable, so long
as such easements, rights, dedications, restrictions, and maps do not
unreasonably interfere with the use of the Premises by Tenant; and this Lease
shall be subordinate to such instruments.
15.06 Severability. If any provision of this Lease or the application
thereof to any person or circumstance shall, to any extent, be invalid or
unenforceable, the remainder of this Lease, or the application of such provision
to persons or circumstances other than those as to which it is invalid or
unenforceable, shall not be affected thereby, and each provision of this Lease
shall be valid and enforceable to the full extent permitted by law. No remedy or
election hereunder shall be deemed exclusive, but shall wherever possible, be
cumulative with all other remedies at law or in equity. Neither this Lease nor
any term or provision hereof may be changed, waived, discharged or terminated
orally, and no breach thereof shall be waived, altered or modified, except by a
written instrument signed by the party against which the enforcement of the
change, waiver, discharge or termination is sought. Any right to change, waive,
discharge, alter or modify, or terminate this Lease shall be subject to the
prior express written consent of Landlord's Mortgagee.
15.07 No Waiver. No waiver of any provision hereof shall be deemed a
waiver of any other provision hereof or of any subsequent breach of the same or
any other provision. No waiver of any breach shall affect or alter this Lease,
but each and every term, covenant and condition of this Lease shall continue in
full force and effect with respect to any other then existing or subsequent
breach thereof. No reference to any specific right or remedy shall preclude the
exercise of any other right or remedy permitted hereunder or that may be
available at law or in equity. No failure by Landlord to insist upon the strict
performance of any agreement, term, covenant or condition hereof, or to exercise
any right or remedy consequent upon a breach thereof, and no acceptance of full
or partial rent during the continuance of any such breach, shall constitute a
waiver of any such breach, agreement, term, covenant or condition.
15.08 Bind and Inure. The terms, provisions, covenants and conditions
contained in this Lease shall bind and inure to the benefit of Landlord and
Tenant, and, except as otherwise provided herein, their respective heirs, legal
representatives, successors and assigns.
15.09 Landlord's Liability.
(a) The term "Landlord" as used herein and throughout the Lease
shall mean only the owner or owners at the time in question of Landlord's
interest in this Lease. Upon any transfer of such interest, from and after the
date of such transfer, Landlord herein named (and in case of any subsequent
transfers the then transferor) and each of its partners, principals,
shareholders, beneficiaries or co-tenants, as the case may be, ("Landlord's
Constituent Parties") shall be relieved of all liability for the performance of
any obligations on the part of the Landlord contained in this Lease, provided
that any monies in the hands of Landlord or the then transferor at the time of
such transfer, in which Tenant has an interest, shall be delivered to the
transferee.
(b) The obligations contained in this Lease to be performed by
Landlord shall be binding on Landlord's successors and assigns, only during
their respective periods of ownership, provided, however, that Landlord and each
of Landlord's Constituent Parties shall be under no personal
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liability with respect to any of the provisions, covenants or agreements of this
Lease. If Landlord becomes obligated to pay Tenant a money judgment arising out
of any failure by Landlord to perform any of its obligations under this Lease,
Tenant shall be limited for the satisfaction of the money judgment solely to
Landlord's interest in the Building and no other property or assets of Landlord
or Landlord's Constituent Parties shall be subject to levy, execution or other
enforcement procedure whatsoever for the satisfaction of the money judgment.
15.10 Interpretation. The words "Landlord" and "Tenant" as used herein
shall include the plural as well as the singular. The words used in neuter
gender include the masculine and feminine. If there is more than one Tenant, the
obligations under this Lease imposed on Tenant shall be joint and several. The
captions preceding the articles of this Lease have been inserted solely as a
matter of convenience and such captions in no way define or limit the scope or
intent of any provision of this Lease.
15.11 Force Majeure. Landlord shall be excused for the period of any
delay in the performance of any obligations hereunder, when prevented from so
doing by cause or causes beyond Landlord's control including, without
limitation, civil commotion, war, labor disputes or strikes, governmental
regulations or controls, inspection delays by governmental authorities, delays
in obtaining governmental permits, inability to obtain any material or services,
casualty, acts of God, or the elements. Tenant shall similarly be excused for
delay in the performance of obligations hereunder provided: (a) nothing
contained in this Section or elsewhere in this Lease shall be deemed to excuse
or permit any delay in the payment of any sums of money required hereunder, or
any delay in the cure of any default which may be cured by the payment of money;
(b) no reliance by Tenant upon this Section shall limit or restrict in any way
Landlord's right of self-help as provided in this Lease; and (c) Tenant shall
not be entitled to rely upon this Section unless it shall advise Landlord in
writing, of the existence of any force majeure preventing the performance of an
obligation of Tenant promptly after the commencement of the force majeure.
15.12 Joint and Several. If two or more individuals, corporations,
partnerships or other business associations (or any combination of two or more
thereof) shall sign this Lease as Tenant, the liability of each such individual,
corporation, partnership or other business association to pay Rent and perform
all other obligations hereunder shall be deemed to be joint and several.
15.13 Entire Agreement. This Lease, including the Exhibits hereto,
which are made part of this Lease, contain the entire agreement of the parties
and all prior negotiations and agreements are merged herein. Neither Landlord
nor Landlord's agents have made any representations or warranties with respect
to the Premises, the Building or this Lease except as expressly set forth
herein, and no rights, easements or licenses are or shall be acquired by Tenant
by implication or otherwise unless expressly set forth herein. Tenant covenants
and agrees that no diminution of light, air or view by any structure that may
hereafter be erected (whether or not by Landlord) shall entitle Tenant to any
reduction of Annual Base Rent or Additional Rent under this Lease, result in any
liability of Landlord or Tenant, or in any other way affect this Lease or
Tenant's obligations hereunder. Landlord covenants that it has good leasehold
title to the land upon which the Building is located and it has good and lawful
right and authority to make this Lease.
15.14 Authority. If Tenant signs as a corporation or a partnership,
each person executing this Lease on behalf of Tenant hereby covenants and
warrants that Tenant is a duly authorized and existing entity, that Tenant is
duly qualified to do business in Connecticut, that Tenant has full right and
authority to enter into this Lease, and that each person signing on behalf of
Tenant is duly authorized to do so and that no other signatures are necessary.
Upon Landlord's request, Tenant shall provide Landlord with evidence reasonably
satisfactory to Landlord confirming the foregoing covenants and warranties.
15.15 Governing Law. This Lease and the rights and obligations of the
parties hereunder shall be construed and enforced in accordance with the laws of
the State of Connecticut.
15.16 Survival. All agreements, covenants and indemnifications
contained herein or made in writing pursuant to the terms of this Lease by or on
behalf of Tenant shall be deemed material and shall survive expiration or sooner
termination of this Lease.
15.17 Building Name. The Building and the Project may be known by such
name as Landlord, in its sole discretion, may elect, and Landlord shall have the
right from time to time to change such designation or name without Tenant's
consent upon thirty (30) days prior written notice to Tenant.
15.18 Submission. Submission of this instrument for examination does
not constitute a reservation of or option for lease of the Premises, and it is
not effective as a lease or otherwise until this Lease has been executed by both
Landlord and Tenant and a fully executed copy has been delivered to each.
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ARTICLE 16. OPTION TO RENEW
16.01 Option (a) In the event, but only in the event, that a) Tenant
complies with all provisions of this entire Article as and when required, and b)
at the time of the expiration of the then current term ("current term"), 1)
Tenant has not been in material default of the terms and provisions of this
Lease during the last 18 months of the current term, and 2) this Lease shall
then be in full force and effect, and 3) Tenant shall have timely elected its
option to extend the term of the Permanent Lease, Tenant shall have the option
to extend the term of this Lease for two (2) successive five (5) year terms
(each an "option term") commencing at midnight on the date on which the then
current term terminates. In the event Tenant elects to exercise its option,
Tenant shall so notify Landlord by giving Landlord written notice ("Notice to
Landlord") received by Landlord no later than nine (9) months prior to the
expiration of the then current term. Each option term shall be on the same
terms, covenants and conditions as the initial term except for the amount of the
Annual Base Rent and further except that there shall be absolutely no option
whatsoever to extend the term of this Lease beyond such option terms.
(b) The Annual Base Rent payable during each Lease Year of each
option term shall be equal to the prevailing market rental rate for office space
located within Landlord's buildings at the Project or within the local market at
the time of commencement of each option term, as determined by agreement between
Landlord and Tenant. If Tenant exercises its option as provided above, it shall
specify in such notice its evaluation of the fair rental value of the Demised
Premises ("Tenant's Rent") for the option term . Within one (1) month
thereafter, Landlord shall send to Tenant a notice stating either (i) Landlord's
agreement with Tenant's Rent, in which event such amount shall be fixed as the
rent payable by Tenant for the option term or (ii) Landlord's evaluation of such
fair rental value ("Landlord's Rent"). If Landlord and Tenant are unable to
agree upon such fair rental value within three months from the date of sending
the notice described in (ii)) above, the matter shall be determined by
arbitration under this Lease. The arbitrator's determination of the fair rental
value of the Demised Premises for the option term may not, in any event, be less
than Tenant's Rent nor more the Landlord's Rent. In no event, however, shall the
Annual Base Rent due and payable during each option term be less than the Annual
Base Rent payable for the immediately preceding Lease Year. Tenant shall
continue to pay Landlord the Annual Base Rent (and any Additional Rent) due
under this Lease at the rate being paid during the immediately preceding Lease
Year until such time as the Annual Base Rent for the option term has been
determined pursuant to this Section. All adjustments to said Annual Base Rent
shall be due and payable in full on the first day of the month following such
determination.
ARTICLE 17. RIGHT TO CANCEL
17.01 Cancellation. In the event, but only in the event that (a) Tenant
complies with all provisions of this entire Article, as and when required, and
at the time of Tenant's exercise of its right to cancel Tenant is not in default
of all terms and/or provisions of this Lease, Tenant is hereby granted the right
to cancel this Lease at any time and for any reason after the end of the 84th
month after the Commencement Date of this Lease provided that:
(a) Tenant shall have notified Landlord by giving Landlord
written notice ("Termination Notice") received by Landlord no later
than nine (9) months prior to the date Tenant proposes to surrender the
Premises to the Landlord (the "Termination Date");
(b) Tenant actually surrenders the Premises on the Termination
Date; and
(c) Tenant pays to Landlord at the time Tenant delivers the
Termination Notice to Landlord a Termination Fee equal to one hundred
percent (100%) of the Landlord's unamortized costs defined herein. The
term "unamortized costs" shall mean Costs incurred by the Landlord,
amortized on a nine year schedule beginning on the Commencement Date
and assuming equal monthly payments of principal and interest, with
interest at a rate equal to one percent (1%) over the prime rate of
Citibank, N.A. on the Commencement Date. The Term "Costs" shall mean
and refer to all actual expenditures of the Landlord, for alterations
and improvements in connection with this Lease and the Permanent Lease
(the "Leases"), all leasing commissions paid by Landlord, legal fees
actually paid by Landlord in connection with the preparation, execution
and delivery of the Leases and any documents or instruments delivered
to Landlord or Tenant in connection with the Leases, architectural
fees, and all other fees and expenses of whatever kind or nature
related to the entering into, the execution and delivery of these
Leases and the performance of Landlord's obligations pursuant to the
Leases which do not and did not constitute Additional Rent and which
were not otherwise paid by Tenant or others.
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IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease the
day and year first above written.
WITNESSESS LANDLORD:
WILTON EXECUTIVE CAMPUS ASSOCIATES
/s/
- --------------------------------
William M. Petroccio
/s/ By /s/
- -------------------------------- --------------------------------
Jonathan A. Flatow
TENANT:
GREENFIELD ONLINE, INC.
/s/
- --------------------------------
Jonathan A. Flatow
/s/ By: /s/
- -------------------------------- --------------------------------
Susan Rosovsky Name: Rudy Nadilo
Title: Pres + CEO
24
<PAGE>
STATE OF CONNECTICUT )
) ss. Fairfield
COUNTY OF FAIRFIELD
On this the 20th day of October, 1999, before me, William M. Petroccio,
the undersigned officer, personally appeared Stephen J. Saft, known to me (or
satisfactorily proven) to be the person whose name is subscribed to the within
instrument, and acknowledged himself/herself to be a general manager of , Wilton
Executive Campus Associates a general partnership, and that he/she, as such
general manager, being authorized so to do, executed the foregoing instrument as
the free act and deed of the company for the purposes contained therein by
signing the name of the company by himself/herself as such manager.
IN WITNESS WHEREOF, I hereunto set my hand.
/s/
-----------------------------------
Commissioner of the Superior Court/
Notary Public
[Affix Notarial Seal] My Commission Expires:
STATE OF CONNECTICUT)
) ss. Westport
COUNTY OF FAIRFIELD)
On this the 20 day of October, 1999, before me, Jonathan A. Flatow, the
undersigned officer, personally appeared Rudy Nadilo, who acknowledged himself
to be the President of Greenfield OnLine, Inc., a corporation, and that he, as
such President, being authorized so to do, executed the foregoing instrument as
his free act and deed and the free act and deed of the corporation for the
purposes contained therein by signing the name of the corporation by himself as
such officer.
IN WITNESS WHEREOF, I hereunto set my hand.
/s/
-----------------------------------
Commissioner of the Superior Court
25
<PAGE>
EXHIBIT B
Legal Description
<PAGE>
EXHIBIT C
Rules and Regulations Attached to
and Made a Part of this Lease
1. Tenant shall not display, inscribe, print, paint, maintain or affix
on any place or in or about the Building any sign, notice, legend, direction,
figure or advertisement, except on the doors of the Premises and on the
Directory Boards, and then only such name or names and matter, and in such
color, size, style, place and materials, as shall first have been approved in
writing by Landlord.
2. Tenant shall not advertise the business, profession or activities of
Tenant conducted in the Building in any manner which violates the letter or
spirit of any code of ethics adopted by any recognized association or
organization pertaining to such business, profession or activities or, which in
Landlord's reasonable judgment, tends to impair the reputation of the Building
or its desirability as a building for offices, and shall not use the name of the
Building for any purpose other than as the business address of Tenant, and
Tenant shall not use any picture or likeness of the Building in any circulars,
notices, advertisements or correspondence without Landlord's prior written
consent.
3. Tenant shall not use the Premises for housing accommodations or
lodging or sleeping purposes, or do any cooking therein (except any convenience
kitchen), or use any illumination other than electric light, or use or permit to
be brought into the Building any flammable oils or fluids such as gasoline,
kerosene, naptha, and benzine, or any explosives, radioactive materials or other
articles deemed hazardous to life, limb or property.
4. Tenant shall not contract for any work or service which might
involve the employment of labor incompatible with the Building employees or
employees of contractors doing work or performing services by or on behalf of
Landlord or with the terms and conditions of any collective bargaining agreement
to which Landlord or Landlord's agents or contractors may be a party.
5. Tenant shall not place anything or allow anything to be placed near
the glass of any window, door, partition or wall which may appear unsightly from
outside the Premises, and Tenant shall not cover or obstruct the sashes, sash
doors, skylights, windows and doors that reflect or admit light and air into the
public places in the Building.
6. No Tenant shall have any property stored outside, except with the
prior consent of Landlord.
7. All sidewalks, halls, passages, exits, entrances, elevators, lobbies
and stairways of the Building, if any, shall not be obstructed by any Tenant or
used by him for any purpose other than for ingress to and egress from his
respective Premises no shall any door be locked during normal business hours. No
Tenant and no employees or invitees of Tenant shall go upon the roof of the
Building.
8. Tenant shall not alter any lock nor install any new or additional
locks or any bolts on any door of the Premises, except with the prior consent of
Landlord, which consent shall not be unreasonably withheld.
9. Tenant shall not overload the floor of the Premises or mark, drive
nails, screw or drill into the partitions, woodwork or plaster or in any way
deface the Premises or any part thereof.
<PAGE>
10. 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 therein, nor
shall any animals, fish or birds, bicycles or other vehicles be brought in or
kept in or about the Premises or the Building. All bicycles shall be parked in
areas designated by Landlord at the Building.
11. Tenant shall not use or keep in the Premises or the Building any
kerosene, gasoline or inflammable or combustible fluid or material, or use any
method of heating or air-conditioning other than that supplied by Landlord.
12. Landlord will direct Tenant as to where and how telephone and
telegraph wire are to be introduced. No boring or cutting for wires will be
allowed without the consent of Landlord. The location of telephones, call boxes
and other office equipment affixed to the Premises shall be subject to the
approval of Landlord.
13. Each Tenant, upon the termination of his tenancy, shall deliver to
Landlord the card access keys for entrance to the Building as well as keys to
offices, rooms and toilet rooms which shall have been furnished Tenant or which
Tenant shall have had made, and in the event of loss of any keys or card access
keys so furnished, shall pay the Landlord therefor.
14. Landlord reserves the right to exclude or expel from the Building
any person who, in the judgment of Landlord, is intoxicated or under the
influence of liquor or drugs, or who shall in any manner do any act in violation
of any of the Rules and Regulations of the Building.
15. No vending machine or machines of any description shall be
installed, maintained or operated outside the Premises without the written
consent of Landlord. Should tenants desire vending machines of any type within
their Premises, such vending machines shall be provided, maintained and serviced
by Landlord or Landlord's designee.
16. Tenant shall not disturb, solicit, or canvass any occupant of the
Building and shall cooperate to prevent same.
17. Any permitted corrosive, flammable or other special wastes shall be
handled for disposal as directed by Landlord and strictly in accordance with all
applicable law.
18. Tenant's use of the Common Areas shall be limited to access and
parking purposes and under no circumstances shall Tenant be permitted to store
any goods or equipment, conduct any operations or construct or place any
improvements, barriers or obstructions in the Common Areas, or otherwise
adversely affect the appearance thereof, without the prior consent of Landlord.
19. Tenant agrees to handle and dispose of all rubbish, garbage, and
waste from Tenant's operations in accordance with regulations established by
Landlord and not permit the accumulation or burning of any rubbish or garbage
in, or about any part of the Building.
20. Tenant shall not change (whether by alteration, replacement,
rebuilding or otherwise) the exterior color and/or architectural treatment of
the Premises or of the Building in which the same are located, or any part
thereof.
<PAGE>
21. Tenant shall not use the plumbing facilities for any purpose other
than for which they were constructed, or dispose of any garbage or other foreign
substance therein, whether through the utilization of so-called "disposal" or
similar units, or otherwise.
22. Tenant shall not subject any fixtures, furnishings or equipment in
or on the Premises and affixed to the realty, to any mortgages, liens,
conditional sales agreements or encumbrances.
23. Tenant shall not install any awnings or curtains, blinds, shades or
screens in, on or outside the Premises, which are visible to public view outside
the Premises.
24. Tenant shall not permit window cleaning or other exterior
maintenance and janitorial services in and for the Premises to be performed
except by such person(s) as shall be approved by Landlord and except during
reasonable hours designated for such purposes by Landlord.
25. Tenant shall not install, operate or maintain in the Premises any
electrical equipment which will overload the electrical system therein, or any
part thereof, beyond its reasonable capacity for proper and safe operation as
determined by Landlord in light of the over-all system and requirements therefor
in the Building, or which does not bear underwriters' approval.
26. Landlord reserves the right to make such other and further
nondiscriminatory Rules and Regulations as in its judgment may be necessary or
desirable for the safety, care and cleanliness of the Premises and the Building
and for the preservation of good order therein. Tenant agrees to abide by all
such Rules and Regulations hereinabove stated and any additional Rules and
Regulations which are adopted.
27. Heating, lighting and plumbing: The Landlord or his agent should be
notified at once of any trouble with heating, lighting or plumbing fixtures.
Tenants must not leave doors of the Premises unlocked at night.
28. All freight, furniture, etc. must be received and delivered through
entrances to the Building designated for such purpose unless otherwise
authorized by the Landlord, and only during such hours and in such elevators as
Landlord may reasonably determine from time to time.
29. Nothing shall be thrown from or taken in through the windows, nor
shall anything be left outside the building on the windowsills of the Premises.
30. No person shall loiter in the halls, corridors or lavatories.
31. The Landlord, its agents and employees shall have access at
reasonable times to perform their duties in the maintenance and operation of the
Premises.
32. No Tenant shall use any method of heating other than that provided
for in the Tenant's lease without the consent of the Landlord.
33. Any damage caused to the Building or the Premises or to any person
or party herein as a result of any breach of any of the rules and regulations by
the Tenant shall be borne by the Tenant.
34. Landlord reserves the right to inspect all objects and matter to be
brought into the Building and to exclude from the Building all objects and
matter which violate any of these Rules and
<PAGE>
Regulations or the Lease. Landlord may require any person leaving the Building
with any package or other object or matter to submit a pass, listing such
package or object or matter, from the tenant from whose premises the package or
object or matter is being removed, but the establishment and enforcement of such
requirement shall not impose any responsibility on Landlord for the protection
of any tenant against the removal of property from the premises of such tenant.
Landlord shall in no way be liable to Tenant for damages or loss arising from
the admission, exclusion or ejection of any person to or from the Premises or
the Building under the provisions of this Rule or the following Rule.
35. Tenant shall not occupy or permit any portion of the Premises to be
occupied as an office for a public stenographer or public typist, or for the
warehousing, manufacture or sale to the general public of beer, wine, liquor, or
drugs; for rendition of medical, dental or other diagnostic or therapeutic
services; as a barber, beauty or manicure shop; as an employment bureau; or for
the preparation, dispensing or consumption of food and beverages in any manner
not consistent with office use, unless specifically approved and agreed to in
writing by Landlord and only for the exclusive use of Tenant, its employees and
visitors. Tenant shall not use the Premises or any part thereof, or permit the
Premises or any part thereof to be used, for sale at retail or auction of
merchandise, goods or property of any kind, except for promotional purposes, or
for manufacturing, printing or electronic data processing, except for the
operation of normal business office reproducing or printing equipment and other
business machines for Tenant's own requirements at the Premises; provided that
such use shall not exceed that portion of the mechanical or electrical
capabilities of the Building equipment allocable to the Premises.
36. Tenant shall not take or permit any action which would impair or
interfere with any of the Building services or the proper and economic heating,
cleaning, air conditioning or other servicing of the Building or the Demised
Premises, or impair or interfere with or tend to impair or interfere with the
use of any of the other areas of the Building by occasion or discomfort,
annoyance or inconvenience to, Landlord or any other tenants or occupants of the
Building. Tenant shall cooperate with Landlord in obtaining maximum
effectiveness of the cooling system and if requested by Landlord shall lower and
close drapes and curtains when the sun's rays fall directly on the windows of
the Premises.
37. Tenant shall comply with such rules and regulations governing
parking as may be promulgated from time to time by Landlord, including, without
limitation, rules and regulations requiring the parking of vehicles in
designated spaces or areas or regarding the exclusion of other spaces or areas.
38. If any governmental license or permit shall be required for the
property and lawful conduct of Tenant's business in the Premises, or any part
thereof, and if failure to secure such license or permit would in any affect
Landlord, then Tenant, at its expense, shall duly procure and thereafter
maintain such license or permit and submit the same inspection by Landlord.
Tenant shall at all times comply with the terms and conditions of each such
license or permit, and failure to procure and maintain same by Tenant shall not
affect Tenant's obligations hereunder.
39. Business machines and mechanical equipment shall be placed and
maintained by Tenant at Tenant's expense, in such a manner as shall be
sufficient in Landlord's judgment to absorb and prevent vibration, noise and
annoyance.
40. In the moving, delivery of receipt of safes, freight, furniture,
packages, boxes, crates, paper, office material, or any other matter or thing,
Tenant shall use and shall cause its employees and contractors and any others
making deliveries to the Premises to use hand trucks equipped with rubber tires,
side guards and such other safeguards as Landlord shall reasonably require.
<PAGE>
41. Landlord shall have the right to prohibit any advertising by any
Tenant which, in Landlord's opinion, tends to impair the reputation of the
building or its desirability as a building for offices, and upon written notice
from Landlord, Tenant shall refrain from or discontinue such advertising. Tenant
shall not use the name of the building or its owner in any advertising without
the express prior written consent of the Landlord.
Landlord's Initials: Tenant's Initials:
------------ ------------
<PAGE>
Basic Lease Information
116 New Montgomery Street
The following is a summary of Basic Lease Information. To the extent
there is any conflict between the provisions of this Summary and. any more
specific provision of the Lease, such more specific provision, shall control.
LEASE DATE: January 9, 1998
LANDLORD: 116 NEW MONTGOMERY ASSOCIATES, LLC, a
California limited liability company
ADDRESS OF LANDLORD: c/o CAC Real Estate Management Company, Inc.
255 California Street, Suite 200
San Francisco, CA 94111
TENANT: GREENFIELD ONLINE, a Connecticut corporation
ADDRESS OF TENANT: 274 Riverside Avenue
Westport, Connecticut 06880
with a copy to:
Kestenbaum, Dannenberg & Klein, LLP
655 Third Avenue, Suite 900
New York, New York 10017
Attention: Michael H. Klein
PREMISES: Rentable
Suite Square Footage
----- --------------
220 803
116 New Montgomery Street
San Francisco, CA 94105
LEASE TERM: Two (2) years
RENT: $1,739.83 per month
SCHEDULED COMMENCEMENT DATE: January 9, 1998
EXPIRATION DATE: December 31, 1999
BASE EXPENSE YEAR: 1998
<PAGE>
BASE TAX YEAR: 1998
USE: General office use and sales (excluding retail)
TENANT'S PERCENTAGE SHARE: 0.7%
INITIAL SECURITY DEPOSIT: $1,739.83
LANDLORD'S BROKER: Peter Sullivan Associates, Inc.
TENANT'S BROKER: Grubb and Ellis Company
ATTACHMENTS: Exhibit A - Floor Plan
Exhibit B - Operating Expenses and Taxes
Exhibit C - Rules and Regulations
-2-
<PAGE>
TABLE OF CONTENTS
Page
1. PARTIES................................................................4
2. PREMISES...............................................................4
3. TERM...................................................................4
4. DELIVERY OF POSSESSION.................................................5
5. RENT...................................................................6
6. USE....................................................................7
7. ESCALATION.............................................................8
8. RULES AND REGULATIONS.................................................10
9. ASSIGNMENT AND SUBLETTING.............................................10
10. SALE..................................................................12
11. MAINTENANCE AND REPAIRS...............................................13
12. SERVICES..............................................................14
13. ALTERATIONS...........................................................15
14. INDEMNIFICATION, EXCULPATION AND INSURANCE............................16
15. DESTRUCTION...........................................................18
16. ENTRY.................................................................19
17. EVENTS OF DEFAULT.....................................................19
18. TERMINATION UPON DEFAULT..............................................20
19. CONTINUATION AFTER DEFAULT............................................20
20. OTHER RELIEF..........................................................21
21. LANDLORD'S RIGHT TO CURE DEFAULT......................................21
22. ATTORNEY'S FEES.......................................................21
23. NO WAIVER.............................................................22
24. NOTICES...............................................................22
25. EMINENT DOMAIN........................................................22
26. LATE CHARGE...........................................................23
27. SECURITY DEPOSIT......................................................23
28. RELOCATION............................................................23
29. ESTOPPEL CERTIFICATE..................................................24
30. SURRENDER.............................................................24
31. HOLDING OVER..........................................................24
32. FLOOR LOAD AND NOISE..................................................25
33. SUBORDINATION.........................................................25
34. INABILITY TO PERFORM..................................................25
35. CORPORATE AUTHORITY...................................................25
36. MISCELLANEOUS.........................................................26
37. BROKER................................................................27
38. NO OFFER..............................................................27
-3-
<PAGE>
1. PARTIES.
THIS LEASE (this "Lease") is made as of the 9th day of January, 1998,
between 116 NEW MONTGOMERY ASSOCIATES, LLC, a California limited liability
company ("Landlord"), and GREENFIELD ONLINE, a Connecticut corporation
("Tenant").
2. PREMISES.
(a) Landlord does hereby lease to Tenant, and Tenant does hereby lease
from Landlord, for the term and subject to the covenants and conditions
hereinafter set forth, to all of which Landlord and Tenant agree, those certain
premises ("Premises") identified in the Basic Lease Information, and located in
that certain building owned by Landlord ("Building") located at 116 New
Montgomery Street, San Francisco, California. The Premises are as shown
cross-hatched on Exhibit A attached to this Lease and hereby made a part hereof.
Tenant shall have the right to use, in common with others, the entrances,
lobbies, corridors, stairs and elevators of the Building (the "Common Areas")
for access to the Premises. All of the outside decks, balconies and exterior
walls of the Building and any space in the Premises used for shafts, stacks,
pipes, conduits, ducts, electric or other utilities, or other Building
facilities, and the use thereof and access thereto through the Premises for the
purposes of operation, maintenance and repairs, are reserved to Landlord.
(b) The rentable square footage of the Premises has been determined in
accordance with BOMA's Standard Method of Measuring Floor Area in Office
Buildings (ANSI/BOMA Z.65.1-1996), as modified by Landlord for uniform use in
the Building. The square footage figures contained in this Lease shall be final
and binding on the parties.
3. TERM.
(a) The term of this Lease ("Term") shall be for two (2) years. The Term
shall commence on the later of (i) the Scheduled Commencement Date, and (ii) if
Landlord is constructing any improvements in and to the Premises prior to the
Scheduled Commencement Date in accordance with the terms of this Lease, on such
date as such improvements are substantially complete (subject to punchlist
items), and shall end on the Expiration Date.
(b) If the Premises are substantially complete and ready for occupancy
by Tenant prior to the Scheduled Commencement Date, Tenant may, with the prior
approval of Landlord, accept delivery of the Premises and take early occupancy
thereof prior to the Scheduled Commencement Date. Such occupancy shall be on all
of the terms and conditions of this Lease (notwithstanding any contrary
reference herein to such obligation being binding on Tenant during the Term of
this Lease); provided, however (but subject to the foregoing parenthetical
condition), the Term of this Lease shall not commence until the Scheduled
Commencement Date.
(c) The "Commencement Date" shall be the actual date the Term of this
Lease commences in accordance with this Paragraph 3. If the Commencement Dare is
other than the Scheduled Commencement Dace, Landlord and Tenant each shall,
promptly after the
-4-
<PAGE>
Commencement Date has been determined, execute and deliver to the other an
amendment to this Lease which sets forth the Commencement Date of this Lease,
but the term of this Lease shall commence on the Commencement Date and end on
the Expiration Dace whet. her or not such amendment is executed.
(d) Notwithstanding anything to the contrary in this Lease, Landlord
acknowledges that Tenant is entering into this Lease in reliance on the ability
of Tenant to contract with a telecommunications provider for high-speed
telecommunications services to the Premises. Tenant acknowledges that Landlord
is presently negotiating with Winstar Wireless, Inc. for certain
telecommunications services that Tenant agrees would sago its requirements. If,
on or before February 1, 1998, Landlord does not enter into a binding agreement
with Winstar or such other telecommunications provider for high-speed Internet
access and "T-I" service capable of providing interconnection co the Premises,
Tenant, at any time during the month of February, 1998, shall have the right, as
its sole and exclusive remedy, upon ten (10), days' prior written notice given
to Landlord, to terminate this Lease, unless prior to the expiration of said ten
(10) day period, Landlord is able co provide the telecommunications services
hereinabove described. Tenant's failure co timely exercise such right of
termination tall constitute a full and complete waiver thereof.
4. DELIVERY OF POSSESSION.
(a) In the event of the inability of Landlord co deliver possession of
the Premises ac the rime of the commencement of the Term for any reason
whatsoever, neither Landlord nor its agents shall be liable for any damage
Caused thereby, nor shall this Lease r. hereby become void or voidable, nor
shall the Term be in any way extended, but in such event Tenant shall not be
liable for any rent until such time as Landlord can deliver possession.
Notwithstanding anything in the foregoing to the contrary, if Landlord does not
deliver possession of the Premises to Tenant on or before the February 10, 1998,
for any reason ocher than due co the act or omission of Tenant, Tenant, as its
sole and exclusive remedy, shall have the right to terminate this Lease, without
penalty to Tenant or to Landlord, and Landlord shall return to Tenant all monies
previously paid by Tenant hereunder.
(b) Landlord shall deliver possession of the Premises to Tenant, and
Tenant shall accept the same, in its "AS IS" condition. Tenant agrees that
Landlord has no obligation and has made no promise to alter, remodel, improve,
or repair the Premises or any part thereof or to repair, bring into compliance
with applicable laws, or improve any condition existing in the Premises as of
the Commencement Dare. Tenant agrees that neither Landlord nor any of Landlord's
employees or agents has made any representation or warranty as to the present or
future suitability of the Premises for the conduct of Tenant's business therein,
ocher than the representation herein given by Landlord that the certificate of
occupancy or ocher final governmental approval for occupancy of the Building
authorizes general office use in the Building. Any improvements or personal
property located in the Premises are delivered without any representation or
warranty from Landlord, either express or implied, of any kind, including
merchantability or suitability for a particular purpose.
-5-
<PAGE>
(c) Prior to the Commencement Date, Landlord will shampoo the existing
carpeting, and wash all interior walls, in the Premises.
5. RENT.
(a) Tenant shall pay to Landlord the following amounts as rent for the
Premises:
(i) During the Term, Tenant shall pay to Landlord, as base monthly
rent, the respective mounts of monthly rent specified in the Basic Lease
Information (the "Base Rent"). If the Commencement Date should occur on a day
other than the first day of a calendar month, or if the Expiration Date should
occur on a day other than the last day of a calendar month, then the Base Rent
for such fractional month shall be prorated upon a daily basis based upon a
thirty (30) day month. Base Rent is, due and payable monthly, in advance, on the
first day of each calendar month.
(ii) During each calendar year or part thereof during the Term
subsequent to the Base Expense Year specified in the Basic Lease Information
(the "Base Expense Year"), Tenant shall pay to Landlord, as additional monthly
rent, Tenant's Percentage Share (as hereinafter defined) of the total dollar
increase, if any, in all Operating Expenses (as hereinafter defined) paid or
incurred by Landlord in such calendar year or part thereof over Operating
Expenses paid or incurred by Landlord in the Base Expense Year. Payments on
account of Tenant's Percentage Share of Operating Expenses, determined in
accordance with Paragraph 7(a), are due and payable monthly together with the
payment of Base Rent.
(iii) Daring each tax year (July I through June 30) or part thereof
during the term of this Lease subsequent to the base tax year ending June 30 of
the Base Tax Year specified in the Basic Lease Information (the "Base Tax
Year"), Tenant shall pay to Landlord, as additional monthly rent, Tenant's
Percentage Share of the total dollar increase, if any, in all Property Taxes (as
hereinafter defined) paid or incurred by Landlord in such tax year or part
thereof over the Progeny Taxes paid or incurred by Landlord in the Base Tax
Year. Payments on account of Tenant's Percentage Share of Property Taxes,
determined in accordance with Paragraph 7(a), are due :and payable month/y
together with the payment of Base Rent.
(iv) Throughout the Term, Tenant shall pay, as additional rent, all
other mounts of money and charges required to be paid by Tenant under this
Lease, whether or not such. amounts of money or charges are designated
"additional rent." As used in this Lease, "rent" shall mean and include all Base
Rent, additional monthly rent as described in Paragraphs 5(a)(ii) and (iii)
above, and any other additional rent payable by Tenant in accordance with this
Lease.
(b) Kent shall be paid in lawful money of the United States of America
at the office of Landlord, c/o CAC Real Estate Management, 255 California
Street, Suite 200, San Francisco, CA 94111, or at such other place as Landlord
may designate in writing in advance, free from all claims, demands, or set-offs
against Landlord of any kind or character whatsoever.
-6-
<PAGE>
6. USE.
(a) The Premises shall be used for general office and sales (excluding;
retail) purposes only and, subject to the terms of this Lease, uses incidental
thereto, and all be used for no other purpose without the prior written consent
of Landlord. The use of an existing kitchen facility located in the Premises,
subject to the terms of this Lease, is deemed an incidental use.
(b) Tenant shall in no way obstruct or interfere with the rights of
other tenants of the Building, or injure or annoy them, or use, or allow the
Premises to be used for any unlawful or objectionable purpose. Tenant may not
use any part or all of the Premises for any retail operations; a medical or
dental office; an office providing any type of psychological, parole, drug or
employment counseling; telemarketing operations (for sales of third party
products at retail); consulate, foreign mission or trade office; government or
regulatory agency office or similar uses. Solicitations or promotions by Tenant
to other tenants in the Building are prohibited.
(c) Tenant shall not use the Premises or permit anything to be done in
or about the Premises or the Building `which will in any way conflict with any
present or future law, statute, ordinance, code, rule regulation, requirement,
license, permit, certificate, judgment, decree, order or direction of any
present or future governmental or quasi-governmental authority, agency,
department, board, pane;[ or court (singularly and collectively "Laws'). Tenant
shall, at its expense, promptly comply with all Laws (including, without
limitation, the Federal Americans with. Disabilities Act (the "ADA") as it
affects Tenant's operations within the Premises and any Hazardous Materials Laws
(as Hereinafter defined)), and with the requirements of any board of fire
insurance underwriters or other similar bodies now or hereafter constituted,
relating to or affecting the condition, use or occupancy of the Premises. It is
the intent of the parries to allocate to Tenant the costs of compliance of any
and all Laws, regardless of the existing condition of the Premises, the cost of
compliance or the foreseeability of the enactment or application of the Laws to
the Premises. Notwithstanding the foregoing, Tenant shall not be required to (i)
make structural changes to the Premises timeless they arise or are required
because of or in connection with Tenant's specific use of the Premises, or e
type of business conducted by Tenant in the Premises, or Tenant's Alterations,
or Tenant's acts or omissions, or (ii) pay for any improvements or alterations
in and to the Premises required to comply with Laws (other than Hazardous
Materials Laws and the ADA), unless they arise or are required because of or in
connection with Tenant's use or occupancy of the Premises for other than general
office use and sales (excluding retail) or for other than in the existing "AS
IS" condition of the Premises, or (iii) comply with any Laws relating to the
common area restroom located on the floor on which the Premises are located.
Tenant shall obtain and maintain in effect during the Term all licenses and
permits required for the proper and lawful conduct of Tenant's business in the
Premises, and shall at all times comply with such licenses and permits.
(d) Supplementing the provisions of Paragraph 6(c) above, Tenant shall
not use the Premises or the Building in violation of any federal, state, or
local law, ordinance, or regulation relating to the environment, health, or
safety. Tenant shall not use, generate, manufacture or sore in or about the
Premises or the Building or transport to or from the Premises or the Building
any flammable explosives, radioactive materials, hazardous materials, hazardous
wastes, asbestos, PCB transformers, toxic substances or related materials
(collectively "Hazardous Materials"),
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other than the use and storage in the Premises of small quantities of such
substances when found in commonly used household cleansers, office supplies and
general office equipment, and any such Substances shall be used, kept, stored
and disposed of in strict accordance with all applicable federal, state and
local laws now in force or which may hereafter be in force relating to the
protection of human health or the environment from Hazardous Materials,
including all requirements pertaining to reporting, licensing, permitting,
investigation and remediation of emissions, discharges, storage, disposal or
releases of Hazardous Materials and all requirements pertaining to the
protection of the health and safety of employees or the public with respect to
Hazardous Materials (collectively, Hazardous Materials Laws"). Hazardous
Materials shall include,-without limitation, substances defined as "hazardous
substances", hazardous materials", toxic substances", hazardous waste" or
"waste" in the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended, 42 U.S.C. Sec. 9601 et seq.; the Hazardous Materials
Transportation Act, 49 U.S.C. Sec. 1801 et seq.; the Resource Conservation and
Recovery Act, 42 U.S.C. Sec. 6901 et seq.; and those substances defined as
"hazardous wastes" in Section 25117 of the California Health & Safety Code or as
=hazardous substances" in subdivision (f) of Section 25281, and Section 25316,
of the California Health & Safety Code; and any waste" as defined in subdivision
(d) of Section 13050 of the Water Code; and in the regulations adopted and
publications promulgated pursuant to any of the aforementioned said laws; and in
any revised or successor code thereto; and any other chemical, material or
substance at levels for which exposure is prohibited, limited or regulated by
any governmental authority.
(e) By its execution of this Lease, Tenant acknowledges that Landlord
has previously delivered to Tenant copies of that certain (i) Phase I Site
Assessment dated August 6, 1996, prepared by Hillmann Environmental Company, and
(ii) Asbestos Survey dated December 6, 1994, prepared by CST Environmental, Inc.
7. ESCALATION.
The additional monthly rent payable pursuant to Paragraphs 5(a)(ii) and
(iii) hereof shall be calculated and paid in accordance with the following
procedures'
(a) On or before the first day of each calendar year during the Term, or
as soon thereafter as practicable, Landlord shall give Tenant written notice of
Landlord's reasonable estimate of the amounts payable by Tenant under Paragraphs
5(a)(ii) and (iii) hereof for the ensuing calendar year. On or before the first
day of each month during such ensuing calendar year, Tenant shall pay to
Landlord one-twelfth of such estimated amounts. If such notice is not given for
any calendar year, Tenant shall continue to pay on the basis of the prior year's
estimate until the month after such notice is given, and subsequent payments by
Tenant shall be based on Landlord's current estimate. If at any time it appears
to Landlord teat the amounts payable under Paragraphs 5(a)(ii) and (iii) hereof
for the current calendar year will vary from Landlord's estimate, Landlord may,
by giving written notice to Tenant, revise Landlord's estimate for such year,
and subsequent payments by Tenant for such year shall be based on such revised
estimate.
(b) Within one hundred twenty (120) days after the end of each calendar
year, Landlord shall give Tenant a written statement of the amounts payable
under Paragraphs 5(a)(ii) and (iii) hereof for such calendar year certified by
Landlord. If such statement shows an amount
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owing by Tenant that is less than the estimated payments for such calendar year
previously made by Tenant, Landlord shall refund the excess to Tenant within
thirty (30) days of the date of such statement. If such statement shows an
amount owing by Tenant that is more than the estimated payments for such
calendar year previously made by Tenant, Tenant shall pay the deficiency to
Landlord within thirty (30) days after delivery of such statement. Failure by
Landlord to give any notice or statement to Tenant under this Paragraph 8 shall
not waive Landlord's right to receive, or Tenant's obligation to pay, the
amounts payable by Tenant under Paragraphs 5(a)(ii) and (iii) hereof.
(c) If the Term ends on a day other than the last day of a calendar
year, the amounts payable by Tenant under Paragraphs 5(a)(ii) and (iii) hereof
applicable to the calendar year in which such Term ends shall be prorated
according to the ratio which the number of days in such calendar year to and
including the end of the Term bears to three hundred sixty (360). Termination of
this Lease shall not affect the obligation of Tenant pursuant to paragraph (b)
hereof to be performed after such termination.
(d) Tenant or Tenant's authorized agent or representative shall have the
right, at its sole cost and expense, to inspect the books of Landlord directly
relating to Operating Expenses and Property Taxes, after giving reasonable prior
written notice to Landlord, within ninety (90) days of Landlord's statement, and
during the business hours of Landlord at Landlord's office in the Building or at
such other location as Landlord may designate, for the purpose of verifying the
information in such statement. Landlord's statement shall be deemed final and
binding on Tenant, absent such a request by Tenant. If Tenant shall have availed
itself of its right to inspect the books and records, and whether or not Tenant
disputes the accuracy of the information set forth in such books and records,
Tenant shall nevertheless pay the amount set forth in Landlord's statement and
continue to pay the amounts required by the provisions of Paragraph 7(b),
pending resolution of said dispute. Any default in the payment of such charges
by Tenant shall be deemed an Event of Default (as hereinafter defined) under
this Lease. Landlord's retention policy for books and records relating to
Operating Expenses shall provide for the retention of relevant books and records
for such periods that are not less than the period maintained by Landlord for
the retention of books and records for income tax audit purposes.
(e) If Tenant timely objects to Landlord's statement, Tenant shall have
the right, upon reasonable prior written notice to Landlord, to inspect (at
Landlord's office where said books and records are maintained) the books and
records of Landlord directly relevant to its operation, maintenance and repair
of the Building for the specific calendar year in question and for the Base
Expense Year, and cause an audit of said books and records to be performed by or
under the direct supervision of a certified public accountant ("Certified
Accountant") to determine if the foregoing final statement is accurate and
correct. The Certified Accountant shall be a certified public accounting firm
designated by Tenant and reasonably acceptable to Landlord. Without limiting the
generality of the foregoing, the Certified Accountant shall be paid a fixed fee
for its services and shall represent only Tenant in its audio. The Certified
Accountant shall certify the results of the audio in a manner reasonably
satisfactory to Landlord. Such audit shall in all cases be paid for by Tenant
unless the audit discloses an overpayment of Operating Expenses by Tenant in
excess of ten percent (10%), in which case Landlord shall pay for the audit up
to a cost not co exceed $5,000. If the audio discloses an overpayment or
underpayment of Operating
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Expenses by Tenant, the amounts due, if any, by Tenant pursuant to Paragraph
7(b) shall be adjusted accordingly. In making any inspection or audit, Tenant
agrees, and shall cause the Certified Accountant to agree, to keep confidential
(i) any and all information contained in inch books and records and (ii) the
circumstances and details pertaining to such examination and any dispute or
settlement between Landlord and Tenant arising out of such examination. Any
credit due Tenant for overpayment of Tenant's Percentage Share of any increases
in the Operating Expenses shall be credited again the installments of rent next
coming due.
8. RULES AND REGULATIONS.
Tenant shall faithfully observe and comply with the Rules and Regulations
attached to this Lease as Exhibit "C" and made a part hereof, and such. other
reasonable rules and regulations as Landlord may from trine to time adopt for
the safety, care and cleanliness of the Building, the facilities thereof, or the
preservation of good order therein (collectively, the "Building Rules").
Landlord reserves the right from time to time in its sole discretion to make all
reasonable additions and modifications to the Building Rules. Any additions and
modifications to the Building Rules shall be binding on Tenant when delivered to
Tenant. Landlord shall not be liable to Tenant for violation of any such
Building Rules, or for the breach of any covenant or condition in any lease, by
any other tenant in the Building. In the event of any conflict between this
Lease and the Rules and Regulations, the terms of this Lease shall govern. A
waiver by Landlord of any rule or regulation for any other tenant shall not
constitute nor be deemed a waiver of the role or regulation for this Tenant.
9. ASSIGNMENT AND SUBLETTING.
(a) Tenant will not assign, mortgage or hypothecate this Lease, or any
interest therein, or permit the use of the Premises by any person or persons
other than the Tenant, or sublet the Premises, or any part thereof, without the
prior written consent of Landlord, which consent, subject to the provisions of
this Paragraph 9, shall not be unreasonably withheld or delayed. Consent to any
such assignment or sublease shall not operate as a waiver of the necessity for a
consent to any subsequent assignment or sublease, and the terms of such consent
shall be binding upon any person holding by, under or through Tenant.
(b) If Tenant desires to assign its interest in this Lease or to
sublease all or any part of the Premises, Tenant shall notify Landlord in
writing at lease thirty (30) days in advance of the proposed transaction. This
notice shill be accompanied by: (i) a statement setting forth the name and
business of the proposed assignee or subtenant; (ii) a copy of the proposed form
of assignment or sublease (and any collateral agreements) setting forth all of
the material terms and the financial details of the sublease or assignment
(including, without limitation, the term, the rent and any security deposit,
"key money, and amounts payable for Tenant's Property and the common use of :any
personnel or equipment); (iii) financial statements and other information
requested by Landlord relating to the proposed assignee or subtenant; and (iv)
any other information concerning the proposed assignment or sublease which
Landlord may reasonably request. If Tenant proposes to assign this Lease or
sublet all or substantially all of the Premises, Landlord shall have the right,
in its sole and absolute discretion, to terminate this Lease on written notice
to Tenant within thirty (30) days after receipt of Tenant's notice and the
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information described above or the receipt of any additional information
requested by Landlord. If Landlord elects to terminate this Lease, this Lease
shall terminate as of the effective date of the proposed assignment or
commencement of the term of the proposed sublease as set forth in Tenant's
notice, and Landlord shall have the right (but no obligation) to enter into a
direct lease with the proposed assignee or subtenant. Tenant shall have no
liability under this Lease as to any lease for space Landlord enters into with
any assignee or subtenant following Landlord's election to terminate this Lease.
Tenant may withdraw its request for Landlord's consent at any time prior to, but
not after, Landlord delivers a written notice of termination.
(c) If Landlord elects not to terminate this Lease pursuant to Paragraph
9(b) above, or if a proposed sublease is for less than substantially all of the
Premises, Landlord shall not unreasonably withhold its consent to an assignment
or subletting. (For purposes of this Paragraph 9, an assignment shall not
include an assignment for security purposes, which shall only be permitted with
the prior consent of Landlord in its sole and absolute discretion). Tenant
agrees that the withholding of Landlord's consent shall be deemed reasonable if
all of the following conditions :are not satisfied:
(i) The proposed assignee or subtenant shall use the Premises only
for the Permitted Use, and the business of the proposed assignee or subtenant is
consistent with the other uses and the standards of the Building, in Landlord's
reasonable judgment.
(ii) The proposed assignee or subtenant is reputable and has a net
worth not less than the net worth of Tenant on the execution of this Lease, has
a credit rating reasonably acceptable to Landlord, and otherwise has sufficient
financial capabilities to perform all of its obligations under this Lease or the
proposed sublease, in Landlord's reasonable judgment.
(iii) Neither the proposed assignee or subtenant nor any person or
entity that directly or indirectly controls, is controlled by, or is under
common control with, the proposed assignee or subtenant is a party (including,
without limitation, an existing occupant of any part of the Building) to whom
Landlord has, during the six (6) month period prior to the delivery of Tenant's
written notice, marketed space in the Building that would generally fit such
party's leasing requirements.
(iv) Tenant is not in default and has not committed acts or
omissions which with the running of time or the giving of notice or both would
constitute a default under this Lease.
(v) All of the other terms of this Paragraph 9 are complied
with.
The conditions described above are not exclusive and shall not limit or prevent
Landlord from considering additional factors in determining if it should
reasonably withhold its consent.
(d) Each permitted assignee, transferee or subtenant, other than
Landlord, shall assume and be deemed to have assumed this Lease and shall be and
remain liable jointly and severally with Tenant for the payment of the rent and
for the due performance or satisfaction of all of the provision, covenants,
conditions and agreements herein contained on Tenant's part to
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be performed or satisfied. Regardless of Landlord's consent, no subletting or
assignment shall release or alter Tenant's obligation or primary liability to
pay the rent and perform all other obligations under this Lease. No permitted
assignment or sublease shall be binding on Landlord unless such assignee,
subtenant or Tenant shall deliver to Landlord a counterpart of such assignment
or sublease which contains a covenant of assumption by the assignee or
subtenant, but the failure or refusal of the assignee or subtenant to execute
such instrument of assumption shall not release or discharge the assignee or
subtenant from its liability as set forth above.
(e) If Tenant is a partnership, a transfer of the interest of any
general partner, a withdrawal of one or more general partner(s) from the
partnership, or the dissolution of the partnership, shall be deemed to be an
assignment of this Lease. If Tenant is currently a partnership (either general
or limited), joint venture, co-tenancy, joint tenancy or an individual, the
conversion of the Tenant entity or person into any type of entity which
possesses the characteristics of limited liability such as, by way of example
only, a corporation, a limited liability company, limited liability partnership,
or limited liability limited partnership, shall be deemed an assignment for
purposes of this Lease. If Tenant is a corporation or limited liability company,
unless Tenant is a public corporation, that is to say, a corporation whose stock
is regularly traded on a national stock exchange, or is regularly traded in the
over-the-counter market and quoted on NASDAQ, any merger, consolidation, or
other reorganization of Tenant, or the sale or other transfer of any of the
voting stock of Tenant in one or more transactions that in the aggregate results
in a transfer of forty-five percent (45%) or more of the voting equity interest
in Tenant, or the sale or other transfer of substantially all of the assets of
Tenant, shall be deemed to be an assignment of this Lease.
(f) Any notice by Tenant to Landlord pursuant to this Paragraph 9 of a
proposed assignment or sublease shall be accompanied by a payment of $750 as a
non-refundable fee for the processing of Tenant's request for Landlord's
consent. In addition to said fee, Tenant shall reimburse Landlord for reasonable
attorneys' fees incurred by Landlord in connection with such review and the
preparation of documents in connection therewith. Tenant shall pay to Landlord
monthly on or before the first (1st) of each month one-half (1/2) of the rent or
other consideration received from such assignee(s) or subtenant(s) over and
above the concurrent underlying rent payable by Tenant to Landlord for that
portion of the Premises being assigned or sublet after deduction for the
amortized portion of the reasonable expenses actually paid by Tenant to
unrelated third parties for brokerage commissions, legal fees, tenant
improvements to the Premises, or design fees incurred as a direct consequence of
the assignment or sublease. Tenant shall furnish Landlord with a true signed
copy of such assignment(s) or sublease(s) and any supplementary agreements or
amendments thereto, within five (5) days after their respective execution.
10. SALE.
If Landlord sells or conveys the Building containing the Premises and the
successor-in-interest of Landlord assumes the terms, covenants and conditions of
this Lease, Landlord shall be released thereby from any liability arising after
the date of such transfer upon any of said terms, covenants and conditions, and
Tenant agrees to look solely to such successor-in-interest of Landlord.
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11. MAINTENANCE AND REPAIRS.
(a) Landlord shall maintain and repair the public and common areas of
the Building, such as plazas, lobbies, stairs, corridors and restrooms, the roof
and exterior elements of the Building, and the elevator, mechanical and
electrical systems of the Building and keep such areas, elements and systems in
good order and condition, consistent with the standards of other comparable
Class B buildings in the South of Market/Yerba Buena Gardens district. Any
damage in or to any such areas, elements or systems caused by Tenant or any
agent, officer, employee, contractor or licensee of Tenant shall be repaired by
Landlord at Tenant's expense and Tenant shall pay to Landlord, upon billing by
Landlord, as additional rent, the cost of such repairs incurred by Landlord.
(b) Tenant shall, at all times during the Term of this Lease and at
Tenant's sole cost and expense, maintain the Premises and every part thereof and
all equipment (including, without limitation, any air conditioning units
exclusively serving Tenant and located in the Premises ("Supplemental HVAC")),
fixtures and improvements therein, and keep all of the foregoing clean and in
good order and operating condition, ordinary wear and tear and damage thereto by
fire or other casualty excepted. Tenant shall not be obligated to replace any
equipment, fixtures or improvements that become dilapidated or inoperable other
than due to the act of Tenant or any employee, contractor or licensee of Tenant.
Tenant hereby waives all rights under California Civil Code Section 1941 and all
rights to make repairs at the expense of Landlord or in lieu thereof to vacate
the Premises as provided by California Civil Code Section 1942 or any other law,
statute or ordinance now or hereafter in effect. Tenant shall, at the end of the
Term of this Lease, surrender to Landlord the Premises and all alterations,
additions, fixtures and improvements therein or thereto in the same condition as
when received, ordinary wear and tear and damage thereto by fire or other
casualty excepted.
(c) [Intentionally Omitted.]
(d) Tenant shall not alter, modify, add to or disturb any
telecommunications wiring or cabling in the Premises or elsewhere in the
Building without Landlord's prior written consent. Landlord shall provide and
maintain, at no expense to Tenant (other than as an item of Operating Expenses),
telephone riser space in the Building core adequate to accommodate the
telecommunications needs of a general office tenant, and lines and conduit in
Building risers or pathways that provide a continuous connection of
intrabuilding telecommunications cabling from a telephone closet located on the
floor of the Premises ("Tenant's Telephone Closet") to the main telephone closet
located in the ground or basement level floors of the Building. Subject to such
reasonable rules and regulations as may be adopted by Landlord for uniform
application to all tenants in the Building, Landlord shall permit Tenant
reasonable access to Tenant's Telephone Closet and the Building's intrabuilding
telecommunications cabling for the purposes permitted hereunder and agrees that
Tenant may install, remove and maintain in the Premises such voice and data
telecommunications equipment as is generally utilized by office tenants and, in
connection therewith, to connect the same to the distribution frames located in
Tenant's Telephone Closet. Tenant shall be liable to Landlord for any damage to
the telecommunications cabling and wiring in the Building due to the act
(negligent or otherwise) of Tenant or any
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employee, agent or contractor of Tenant. Landlord makes no representation to
Tenant regarding the condition, security, availability or suitability for
Tenant's purposes of existing intrabuilding network cabling or any
telecommunications services presently located within the Building, and Tenant
hereby waives any claim against Landlord for any damages if Tenant's
telecommunications services in any way are interrupted, damaged or otherwise
interfered with, except to the extent caused by the gross negligence or willful
or criminal misconduct of Landlord, its agents or employees, provided that in no
event shall any such interruption, damage or interference entitle Tenant to any
consequential damages (including damages for loss of business) or relieve Tenant
of any of its obligations under this Lease. Tenant shall maintain and repair all
telecommunications cabling and wiring within or exclusively serving the
Premises.
(e) Tenant's installation of telephone lines, cables, and other
electronic telecommunications services and equipment shall be subject to the
terms and conditions of Paragraph 14 of this Lease. Upon the expiration or
earlier termination of this Lease, Tenant shall remove, at its sole cost and
expense, all of Tenant's telecommunications lines and cabling designated by
Landlord for removal.
12. SERVICES.
(a) Landlord agrees to furnish to the Premises at all times (subject to
interruption as provided in this Lease) electricity for lighting and the
operation of desktop office equipment of low electrical consumption, water as
may be required for the comfortable occupation of the Premises and non-attended
automatic elevator service; provided, however, that Landlord shall provide
electric current sufficient to maintain an electrical load not to exceed 4 watts
per square foot of rentable area of the Premises. In addition, subject to the
Building Rules, and during the business hours established thereunder by
Landlord, Landlord will supply heat as may be required for the comfortable
occupation of the Premises and janitorial service. Tenant shall pay (as
additional rent) all costs attributable to Tenant's use of Building services and
utilities outside of the Building's business hours promptly upon receipt of
Landlord's invoice therefor. Landlord, however, shall not be liable for failure
to furnish any of the foregoing when such failure is caused by accidents or
conditions beyond the control of Landlord, or by repairs, labor disturbances or
labor disputes of any character, whether resulting from or caused by acts of
Landlord or otherwise, nor shall Landlord be liable under any circumstances for
loss of or injury to property, however occurring, through or in connection with
or incidental to the furnishing of any of the foregoing, nor shall any such
failure relieve Tenant from the duty to pay the full amount of rent herein
reserved, or constitute or be construed as a constructive or other eviction of
Tenant.
(b) Subject to Paragraph 34 hereof, Landlord shall provide passenger
elevator service (which may be unmanned) on a 24 hour per day, 365 days per year
basis, and freight elevator service as reasonably required by Tenant.
(c) Subject to Paragraph 34, Tenant shall have access to the Building on
a 24 hour per day, 365 days per year basis; provided, however, access to the
Building during other than normal business hours shall be subject to the
Building Rules.
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13. ALTERATIONS.
(a) Tenant shall make no alterations, improvements or additions in or to
the Premises or any part thereof (individually and collectively, "Alterations")
without giving Landlord prior notice of the proposed Alterations and obtaining
Landlord's prior written consent thereto, which consent, except as hereinafter
provided, shall not be unreasonably withheld or delayed; provided, however,
Landlord may withhold its consent in its sole discretion if any proposed
Alterations would adversely affect any of the structural elements of the
Building, the Building's electrical, plumbing, heating, telecommunications,
mechanical or life safety systems. Any and all work by Tenant shall be performed
only by contractors approved by Landlord and, where the prior consent of
Landlord is required, upon the approval by Landlord of fully detailed and
dimensioned plans and specifications pertaining to the work in question, to be
prepared and submitted by Tenant at its sole cost and expense. The contractor or
person selected to make such Alterations shall at all times be subject to
Landlord's control while in the Building. Upon substantial completion of any
Alterations, Tenant shall deliver to Landlord three (3) sets of "as built" plan
covering said Alterations and a copy of the final building permit for the work
signed off as approved by the appropriate building inspector.
(b) Tenant shall at its sole cost and expense obtain all necessary
approvals and permits pertaining to any Alterations. Tenant shall be responsible
for any additional alterations and improvements required by law to be made by
Landlord to or in the Building as a result of any alterations, additions or
improvements to the Premises made by or for Tenant. All alterations, additions,
fixtures (other than trade fixtures) and improvements, including, but not
limited to carpeting, other floor coverings, built-in shelving, bookcases,
paneling and built-in security systems (excluding any leased system) made in or
upon the Premises either by or for Tenant and affixed to or forming a part of
the Premises, shall immediately upon installation become Landlord's property
free and clear of all liens and encumbrances. If requested by Landlord at the
time Landlord approves of the installation or construction of said alteration,
addition or improvement, upon the expiration or any sooner termination of this
Lease, Tenant shall, remove or cause to be removed at its expense any and all
alterations, additions, and improvements made in or upon the Premises during the
term of this Lease by or for Tenant.
(c) Tenant shall keep the Premises and the Building free from any
mechanics' liens, vendors liens or any other liens arising out of any work
performed, materials furnished or obligations incurred by Tenant, and agrees to
defend, indemnify and hold harmless Landlord from and against any such lien or
claim or action thereon, together with costs of suit and reasonable attorneys'
fees incurred by Landlord in connection with any such claim or action. Before
commencing any work or alteration, addition or improvement to the Premises which
requires Landlord's consent, Tenant shall give Landlord at least ten (10)
business days' written notice of the proposed commencement of work (to afford
Landlord an opportunity to post appropriate notices of non-responsibility). In
the event that there shall be recorded against the Premises or the Building or
the property of which the Premises is a part any claim or lien arising out of
any such work performed, materials furnished or obligations incurred by Tenant
and such claim or lien shall not be removed, bonded over or discharged by Tenant
within ten (10) days of written notice from Landlord, Landlord shall have the
right but not the obligation to pay and discharge said lien by bond or otherwise
without regard to whether such lien shall be lawful or
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correct. Any reasonable costs, including attorney's fees incurred by Landlord,
shall be paid by Tenant within ten (10) days after demand by Landlord.
(d) Before any Alterations or construction with respect thereto are
undertaken by or on behalf of Tenant, Tenant shall provide Landlord with
certificates of insurance evidencing the maintenance in effect by Tenant (or
Tenant shall require any contractor performing work on the Premises to carry and
maintain, at no expense to Landlord) of workers' compensation insurance as
required by the jurisdiction in which the Building is located, All Risk
Builder's Risk insurance in the amount of the replacement cost of any
alterations, additions or improvements (or such other amount reasonably required
by Landlord) and Commercial General Liability insurance (including, without
limitation, Contractor's Liability coverage, Contractual Liability coverage and
Completed Operations coverage) written on an occurrence basis with a minimum
combined single limit of Two Million Dollars ($2,000,000.00) and adding the
"Owner(s) of the Building and its (or their) respective members, principals,
beneficiaries, partners, officers, directors, employees, agents (and their
respective members and principals) and mortgagee(s)" (and any other designees of
Landlord as the interest of such designees shall appear) as additional insureds.
(e) Certain materials in the Building, including but not limited to the
sprayed-on fireproofing materials applied to certain structural members in the
Building, contain asbestos containing materials ("ACM"). In order to prevent
exposure to ACM, Landlord has established rules and regulations governing the
manner in which Alterations are to be undertaken. Tenant must comply with all
Building Rules established by Landlord. Tenant shall, at its sole cost and
expense, comply with any and all statutes, ordinances, codes or regulations, or
mandatory or voluntary controls or guidelines with respect to ACM, in the
performance of any Alterations. Such compliance, including the removal of all or
a portion of ACM, whether in the Premises (by Tenant) or elsewhere in the
Building (by Landlord), shall not, in any event, (i) entitle the Tenant to
damages, (ii) relieve Tenant of the obligation to pay any sums due hereunder,
(iii) constitute or be construed as a constructive or other eviction of Tenant,
or (iv) constitute or be construed as a breach of Tenant's quiet enjoyment.
(f) Tenant shall pay to Landlord a project administration fee equal to
five percent (5%) of the cost of any Alterations to compensate Landlord for the
administrative costs incurred and the Building services provided by Landlord in
the supervision and coordination of the work.
14. INDEMNIFICATION, EXCULPATION AND INSURANCE.
(a) Landlord shall not be liable to Tenant, and Tenant hereby waives all
claims against Landlord, for any damage to or loss or theft of any property or
for any bodily Or personal injury, illness or death of any person in, on or
about the Premises or the Building arising at any time and from any cause
whatsoever, except to the extent caused by the gross negligence or willful
misconduct of Landlord. In no event shall Landlord be liable for any
consequential or punitive damages (including, but not limited to, damage or
injury to persons, property and the conduct of Tenant's business and any loss of
revenue therefrom).
(b) Tenant shall indemnify and defend Landlord against and hold Landlord
harmless from all claims, demands, liabilities, damages, losses, costs and
expenses, including reasonable
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attorneys' fees and disbursements, arising from or related to any use or
occupancy of the Premises, or any condition of the Premises, or any default in
the performance of Tenant's obligations, or any damage to any property
(including property of employees and invitees of Tenant) or any bodily or
personal injury, illness or death of any person (including employees and
invitees of Tenant) occurring in, on or about the Premises or any part thereof
arising at any time and from any cause whatsoever (except to the extent caused
by the gross negligence or willful misconduct of Landlord) or occurring in, on
or about any part of the Building other than the Premises when such damage,
bodily or personal injury, illness or death is caused by any act or omission of
Tenant or its agents, officers, employees, contractors, invitees or licensees.
This Paragraph 14(b) shall survive the termination of this Lease with respect to
any damage, bodily or personal injury, illness or death occurring prior to such
termination.
(c) Tenant shall, at all times during the Term of this Lease and at
Tenant's sole cost and expense, obtain and keep in force workers' compensation
insurance as required by law, including an employers' liability endorsement;
business interruption insurance in an amount equal to all rent payable under
this Lease for a period of twelve (12) months (at the then current rent
charged); and commercial general liability insurance, including contractual
liability (specifically covering this Lease), fire, legal liability, and
premises operations, with a minimum combined single limit of One Million Dollars
($1,000,000) per occurrence for bodily or personal injury to, illness of, or
death of persons and damage to property occurring in, on or about the Premises
or the Building. Tenant shall, at Tenant's sole cost and expense, be responsible
for insuring Tenant's furniture, equipment, fixtures, computers, office machines
and personal property ("Tenant's Property").
(d) All insurance required under this Paragraph 14 and all renewals
thereof shall be issued by financially responsible and reputable insurance
companies, qualified to do business in the State of California and reasonably
acceptable to Landlord. Liability amounts in excess of One Million Dollars
($1,000,000) may be carried under umbrella coverage policies. Each policy shall
have a deductible or deductibles, if any, which do not exceed Ten Thousand
Dollars ($10,000) per occurrence. Each policy shall expressly provide that the
policy shall not be canceled or altered without thirty (30) days' prior written
notice to Landlord and shall remain in effect notwithstanding any such
cancellation or alteration until such notice shall have been given to Landlord
and such period of thirty (30) days shall have expired. All liability insurance
under `this Paragraph 14 shall name Landlord and any other parties designated by
Landlord as an additional insured, shall be primary and noncontributing with any
insurance which may be carried by Landlord, shall afford coverage for all claims
based on any act, omission, event or condition that occurred or arose (or the
onset of which occurred or arose) during the policy period, and shall expressly
provide that Landlord, although named as an insured, shall nevertheless be
entitled to recover under the policy for any loss, injury or damage to Landlord.
Upon the issuance thereof, Tenant shall deliver each such policy or a certified
copy and a certificate thereof to Landlord for retention by Landlord. If Tenant
fails to insure or fails to furnish to Landlord upon notice to do so any such
policy or certified copy and certificate thereof as required, Landlord shall
have the right from time to time to effect such insurance for the benefit of
Tenant or Landlord or both of them and all premiums paid by Landlord shall be
payable by Tenant as additional rent on demand.
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(e) Tenant waives on behalf of all insurers under all policies of
property, liability and other insurance (excluding workers' compensation) now or
hereafter carried by Tenant insuring or covering the Premises, or any portion or
any contents thereof, or any operations therein, all rights of subrogation which
any insurer might otherwise, if at all, have to any claims of Tenant against
Landlord. Landlord waives on behalf of all insurers under all policies of
property, liability and other insurance (excluding workers' compensation) now or
hereafter carried by Landlord insuring or covering the Building or any portion
or any contents thereof, or any operations therein, all rights of subrogation
which any insurer might otherwise, if at all, have to any claims of Landlord
against Tenant. Tenant shall, prior to or immediately after the date of this
Lease, procure from each of the insurers under all policies of property,
liability and other insurance (excluding workers' compensation) now or hereafter
carried by Tenant insuring or covering the Premises, or any portion or any
contents thereof, or any operations therein, a waiver of all rights of
subrogation which the insurer might otherwise, if at all, have to any claims of
Tenant against Landlord as required by this Paragraph 14.
15. DESTRUCTION.
(a) In the event of a partial destruction of the Premises during the
Term from any cause, Landlord shall forthwith repair the same (except as
otherwise provided in this Paragraph 15 as to a casualty occurring during the
last twelve (12) months of the Term), provided such repairs can be made within
ninety (90) days under the laws and regulations of State, county, federal or
municipal authorities, but such partial destruction shall nor annul or void this
Lease, except that Tenant shall be entitled to a proportional abatement in rent
while such repairs are being made, such proportionate abatement to be based upon
the amount of square footage in the Premises damaged and the length of time said
area is not either actually being used by Tenant for business purposes or is not
in a condition habitable for general office use. If such repairs cannot be made
within ninety (90) days of such casualty, or if the casualty occurs during the
last twelve (12) months of the Term and would result in any rent abatement for a
period greater than thirty (30) days, Landlord may, at its option, elect to make
such repairs within a reasonable time, this Lease continuing in full force and
effect and the rent to be proportionately abated as provided hereinabove. In the
event that Landlord does not so elect to make such repairs which cannot be made
in ninety (90) days or which results from a casualty occurring during the last
twelve months of the term, within a reasonable time following the casualty (but
in no event not less than sixty days), this Lease may be terminated at the
option of either party. In respect to any partial destruction which Landlord is
obligated to repair or may elect to repair under the terms of this Paragraph,
Tenant waives the provisions of California Civil Code Sections 1932(2) and
1933(4). In the event that any portion of the Building other than the Premises
is destroyed to the extent of twenty percent (20%) or more of the replacement
cost of the Building, Landlord may elect to terminate this Lease, whether the
Premises be injured or not. A total destruction of the Building shall terminate
this Lease.
(b) If the Premises are to be repaired or restored by Landlord under
this Paragraph 15, Landlord shall repair or restore, at Landlord's cost, the
Premises itself and any and all permanently affixed improvements in the Premises
constructed or provided by Landlord as of the commencement of the Term, together
with any permanently affixed Alterations approved by Landlord (unless at the
time of construction Landlord informs Tenant that Tenant will be
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required to remove the same at the end of the Term). In no event shall Landlord
repair, replace or restore any of Tenant's Property.
16. ENTRY.
(a) Tenant will permit Landlord and its agents to enter into and upon
the Premises at all reasonable times for the purpose of inspecting the same, or
for the purpose of protecting owners' reversion, or to make alterations or
additions to the Premises or to any other portion of the Building, or for
maintaining any service provided by Landlord to Tenant hereunder, including
engineering maintenance, window cleaning and janitorial service, without any
rebate of rent to Tenant: for any loss of occupancy or quiet enjoyment of the
Premises, or damage, injury or inconvenience thereby occasioned, and will permit
Landlord at any time to bring upon the Premises, for purposes of inspection or
display, prospective tenants thereof.
(b) Except for entry to the Premises in the event of an emergency or to
provide regularly scheduled Building services, Landlord shall give Tenant
reasonable advance notice of Landlord's intent to enter the Premises, and shall,
as a general matter, limit its entry to the Premises to normal business hours.
Except in the case of an emergency, Landlord's employees (including, without
limitation, Landlord's agents and contractors) entering the Premises shall be
prepared to provide proper identification and, upon request by Tenant, shall
enter only in the presence of and accompanied by a Tenant representative.
17. EVENTS OF DEFAULT.
The occurrence of any one or more of the following events (each, an "Event
of Default") shall constitute a breach of this Lease by Tenant: (i) if Tenant
shall default in its obligation to pay any rent or other payment(s) due
hereunder as and when due and payable, provided, however, with respect to the
first such delinquency in payment of rent during any twelve (12) month period,
such delinquency in payment of rent shall not, in and of itself, be deemed to be
an Event of Default until the failure of payment continues for a period of ten
(10) days after written notice thereof from Landlord to Tenant; or (ii) if
Tenant shall fail to perform or observe any other term hereof (except as
otherwise provided in this Paragraph) or of the Building Rules described in
Paragraph 8 hereof to be performed or observed by Tenant, such failure shall
continue for more than ten (10) days after notice thereof from Landlord, and
Tenant shall not within such period commence with due diligence and dispatch the
curing of such default, or, having so commenced, thereafter shall fail or
neglect to prosecute or complete with due diligence the curing of such default;
or (iii) any assignment or subletting in violation of the terms of this Lease;
or (iv) if Tenant shall make a general assignment for the benefit of creditors,
or shall admit in writing its inability to pay its debts as they become due or
shall file a petition in bankruptcy, or shall be adjudicated as bankrupt or
insolvent or shall file a petition seeking any reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar relief under any
present or future statute, law or regulation, or shall file an answer admitting
or shall fail timely to contest the material allegations of a petition filed
against it in any such proceeding, or shall seek or consent to or acquiesce in
the appointment of any trustee, receiver or liquidator of Tenant or any material
part of its property; or (v) the taking of any action leading to, or the actual
dissolution or liquidation of Tenant, if Tenant is other than an individual; or
(vi) if within
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sixty (60) days after the commencement of any proceeding against Tenant seeking
any reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any present or future statue, law or
regulation, such proceeding shall not have been dismissed as if, within ninety
(90) days after the appointment without the consent or acquiescent of Tenant, of
any trustee, receiver or liquidator of Tenant or of any material part of its
properties, such appointment shall not have been vacated; or (vii) if this Lease
or any estate of Tenant hereunder shall be levied upon under any attachment or
execution and such attachment or execution is not vacated within thirty (30)
days.
18. TERMINATION UPON DEFAULT.
In any notice given pursuant to any one or more Events of Default,
Landlord in its sole discretion may elect to declare a forfeiture of this Lease
as provided in Section 1161 of the California Code of Civil Procedure, and
provided that Landlord's notice states such an election, Tenant's right to
possession shall terminate and this Lease shall terminate, unless on or before
the date specified in such notice all arrears of rent and all other sums payable
by Tenant under this Lease, and all costs and expenses incurred by or on behalf
of Landlord hereunder, including reasonable attorneys' fees, incurred in
connection with such default, shall have been paid by Tenant and all other
breaches of this Lease by Tenant at the time existing shall have been fully
remedied to the reasonable satisfaction of Landlord. Upon such termination,
Landlord may recover from Tenant (a) the worth at the time of award of the
unpaid rent which had been earned at the time of termination; (b) the worth at
the time of award of the amount by which the unpaid rent which would have been
earned after termination until the time of award exceeds the mount of such rent
loss that Tenant proves could reasonably have been avoided; (c) the worth at the
time of award of the amount by which the unpaid rent for the balance of the Term
after the time of award exceeds the mount of such rent loss that Tenant proves
could be reasonably avoided; and (d) 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 therefrom. The "worth at the time of award" of the amount
referred to in clauses (a) and (b) above is computed by allowing interest at the
discount rate of the Federal Reserve Bank of San Francisco plus 5% per annum at
date of termination, but in no event in excess of the maximum rate of interest
permitted by law. The worth at the time of award of the amount referred to in
clause (c) above is computed by discounting such amount at the discount rate of
the Federal Reserve Bank of San Francisco at the time of award plus 1%. For the
purpose of determining unpaid rent under clause (c) above, the monthly rent
reserved in this Lease shall be deemed to be the sum of the Base Rent and the
mounts last payable by Tenant as reimbursement of expenses pursuant to
Paragraphs 5(a)(ii) and (iii) hereof for the calendar year in which Landlord
terminated this Lease as provided herein.
19. CONTINUATION AFTER DEFAULT.
Even though Tenant has breached this Lease and/or abandoned the Premises,
this Lease shall continue in effect for so long as Landlord does not terminate
Tenant's right to possession as provided in Paragraph 18 hereof, and Landlord
may enforce all its rights and remedies under this Lease, including the right to
recover rent as it becomes due under this Lease. In such event, Landlord may
exercise all of the rights and remedies of a landlord under Section 1951.4 of
the
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California Civil Code (which provides that a landlord may continue a lease
in effect after a tenant's breach and abandonment and recover rent as it becomes
due, if the tenant has the right to sublet or assign, subject only to reasonable
limitations), or any successor statute. Acts of maintenance or preservation or
efforts to relet the Premises or the appointment of a receiver upon initiative
of Landlord to protect Landlord's interest under this Lease shall not constitute
a termination of Tenant's right to possession.
20. OTHER RELIEF.
In the event of re-entry or taking possession of the Premises, Landlord
shall have the right but not the obligation to remove all or any part of the
trade fixtures, furnishings, equipment and personal property located in the
Premises and to place the same in storage at a public warehouse at the expense
and risk of Tenant or to sell such property in accordance with applicable law.
The remedies provided for in this Lease are in addition to any other remedies
available to Landlord at law or in equity, by statute or otherwise.
21. LANDLORD'S RIGHT TO CURE DEFAULT.
All agreements and provisions to be performed by Tenant under any of the
terms of this Lease shall be at its sole cost and expense and without abatement
of rent. If Tenant shall fail to pay any sum of money, other than rent, required
to be paid by it hereunder or shall fail to perform any other act on its part to
be performed hereunder and such failure shall not be cured, Landlord may, but
shall not be obligated to so do, and without waiving or releasing Tenant from
any obligations of Tenant, make any such payment or perform any such other act
on Tenant's part to be made or performed as provided in this Lease. All sums so
paid by Landlord and all necessary incidental costs, shall be deemed additional
rent hereunder and shall be payable to Landlord on demand.
22. ATTORNEY'S FEES.
If as a result of any breach or default on the part of Tenant under this
Lease Landlord uses the services of an attorney in order to secure compliance
with this Lease, Tenant shall reimburse Landlord upon demand as additional rent
for any and all reasonable attorneys' fees and expenses incurred by Landlord,
whether or not formal legal proceedings are instituted. Should either party
bring an action against the other party, by reason of or alleging the failure of
the other party to comply with any or all of its obligations hereunder, whether
for declaratory or other relief, then the party which prevails in such action
shall be entitled to its reasonable attorneys' fees and expenses related to such
action, in addition to all other recovery or relief. A party shall be deemed to
have prevailed in any such action (without limiting the generality of the
foregoing) if such action is dismissed upon the payment by the other party of
the sums allegedly due or the performance of obligations allegedly not complied
with, or if such party obtains substantially the relief sought by it in the
actions, irrespective of whether such action is prosecuted to judgment.
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23. NO WAIVER.
Landlord's failure to take advantage of any default or breach of covenant
on the part of Tenant shall not be, or be: construed as a waiver thereof, nor
shall any custom or practice which may grow up between the parties in the course
of administering this instrument be construed to waive or to lessen the right of
Landlord to insist upon the performance by Tenant of any term, covenant or
condition hereof, or to exercise any rights given him on account of any such
default. A waiver of a particular breach or default shall not be deemed to be a
waiver of the same or any other subsequent breach or default. The acceptance of
rent hereunder shall not be, nor be construed to be, a waiver of any breach of
any term, covenant or condition of this Lease.
24. NOTICES.
All approvals, consents and other notices given by Landlord or Tenant
under this Lease shall be properly given only if made in writing and either
deposited in the United States mail, postage prepaid, certified with return
receipt requested, or delivered by hand (which may be through a messenger or
recognized delivery, courier or air express service) and addressed to Landlord
at the address of Landlord specified in the Basic Lease Information or at such
other place as Landlord may from time to time designate in a written notice to
Tenant, at the address of Tenant specified in the Basic Lease Information and,
after the Commencement Date, at the Premises, together with a copy to such other
address as Tenant may from time to time designate in a written notice to
Landlord. Such approvals, consents and other notices shall be effective on the
date of receipt (evidenced by the certified mail receipt), if mailed, or on the
date of hand delivery, if hand delivered. If any such approval, consent or other
notice is not received or cannot be delivered due to a change in the address of
the receiving party of which notice was not previously given to the sending
party or due to a refusal to accept by the receiving party, such request,
approval, consent, notice or other communication shall be effective on the date
delivery is attempted. Any approval, consent or other notice under this Lease
may be given on behalf of a party by the attorney for :such party. Tenant hereby
appoints as its agent to receive the service of all default notices and notice
of commencement of unlawful detainer proceedings the person in charge of or
apparently in charge of or occupying the Premises at the time, and, if there is
not such person, then such service may be made by attaching the same on the
maintenance of the Premises and such service shall be effective for all purposes
under this Lease.
25. EMINENT DOMAIN.
If all or any part of the Premises shall be taken as a result of the
exercise of the power of eminent domain or agreement in lieu thereof, this Lease
shall terminate as to the part so taken as of the date of taking, and, in the
case of a partial taking, Landlord shall have the right to terminate this Lease
as to the balance of the Premises by giving written notice to Tenant within
sixty (60) days after such date. Tenant waives the provisions of California Code
of Civil Procedure Section 1265.] [30 relating to a lease termination from a
partial taking. In the event of any taking, Landlord shall be entitled to any
and all compensation, damages, income, rent, awards, or interest therein which
may be paid or made in connection therewith, and Tenant shall have no claim
against Landlord for the value of any unexpired Term of this Lease or otherwise.
In the event of a partial taking of the Premises which does not result in a
termination of this
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Lease, the Base Rent thereafter to be paid shall be equitably reduced. If all or
any part of the Building shall be taken as a result of the exercise of the power
of eminent domain, Landlord shall have the right to terminate this Lease by
giving written notice to Tenant within sixty (60) days after the date of taking.
26. LATE CHARGE.
Rent or other payments due under this Lease which remain unpaid when due
shall bear interest at the discount rate of the Federal Reserve Bank of San
Francisco plus 5% per annum, as it may be from time to time, on the balance due,
but in no event in excess of the maximum rate of interest permitted by law.
Tenant acknowledges that late payment by Tenant to Landlord of such rent or
other payments will cause Landlord to incur costs not contemplated by this
Lease, the exact amount of such costs being extremely difficult and
impracticable to fix. Therefore, if any installment of rent or other payment due
from Tenant is not received by Landlord by the fifth (5th) day of the month when
due, Tenant shall pay to Landlord an additional sum of ten percent (10%) of the
overdue mount as a late charge. Said late charge shall be due as of the sixth
(6th) day of the month in question. The foregoing notwithstanding, a late charge
shall not be imposed on the first late payment made during the Term of this
Lease, provided that payment is actually received by Landlord not later than
five days after written notice of such delinquency. The parties agree that this
late charge represents a fair and reasonable estimate of Landlord's costs to be
incurred by reason of Tenant's late payment. This Paragraph does not relieve
Tenant from its obligation to pay rent or other payments when due. Acceptance of
any late charge shall not constitute a waiver of-Tenant's default with respect
to the overdue amount, nor prevent Landlord from exercising any of the other
rights and remedies available to Landlord.
27. SECURITY DEPOSIT.
Upon signing this Lease, Tenant shall pay to Landlord the amount of the
Security Deposit specified in the Basic Lease Information. The Security Deposit
shall be held by Landlord as security for the performance by Tenant of all of
the covenants of this Lease to be performed by Tenant, including, without
limitation, defaults by Tenant in the payment of rent, the repair of damage to
the Premises caused by Tenant, and the cleaning of the Premises upon termination
of the tenancy created hereby, and Tenant shall not be entitled to interest
thereon. If Landlord uses or applies the Security Deposit or any portion
thereof, Tenant shall, within ten (10) days after demand deposit cash with
Landlord in an mount sufficient to restore the Security Deposit to the full
mount, and Tenant's failure to do so shall be deemed a material breach of this
Lease.
28. RELOCATION.
Landlord shall have the right, one time, during Term of this Lease, to
relocate Tenant to another location in the Building, provided (i) Landlord shall
give Tenant at least three (3) months' written notice prior to the effective
date of such relocation, (ii) the new Premises shall be substantially equivalent
in size and character to the existing Premises, (iii) there shall be no increase
in rent due to such relocation, and (iv) Landlord shall pay all reasonable
out-of-pocket costs of physically relocating Tenant to the new Premises,
including, without limitation, reimbursement of moving costs and communication
line relocation, and installation of leasehold
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improvements of substantially the same condition and appearance as of the date
of relocation. If Tenant is relocated during the Term of this Lease, Landlord
and Tenant agree to execute an amendment to this Lease reflecting the relocation
of Tenant to substitute Premises.
29. ESTOPPEL CERTIFICATE.
Within ten (10) days after notice from Landlord, Tenant shall execute and
deliver to Landlord, in recordable form, a certificate stating (i)that this
Lease is unmodified and in full force and effect (or, if there have been
modifications, that this Lease is in full force and effect, as modified, and
stating the date and nature of each modification), (i) the date, if any, to
which rental and other sums payable hereunder have been paid, (iii) that no
notice has been received by Tenant of any default which has not been cured,
except as to defaults specified in said certificate and (iv) such other matters
as may be reasonably requested by Landlord. Failure to deliver such certificate
within such ten (10) day period shall be conclusive upon Tenant for the benefit
of Landlord and any successor to Landlord, that this Lease is in full force and
effect and has not been modified except as may be represented by Landlord.
30. SURRENDER.
Tenant shall surrender the Premises at the termination of the tenancy
herein created broom clean, and in the same condition as herein agreed they have
been received, reasonable use and wear thereof and damage by casualty, the act
of God or by the elements excepted. The voluntary or other surrender of this
Lease by Tenant, or a mutual cancellation thereof, shall not work a merger and
shall at the option of Landlord, terminate all of any existing subleases or
subtenancies, or may, at the option of Landlord, operate as an assignment to it
of any or all such subleases or subtenancies. At the expiration or sooner
termination of this Lease, Tenant shall remove or cause to be removed at its
sole expense all of Tenant's personal property, furniture and equipment,
including telephone and data processing lines, and all Alterations required by
Landlord in accordance with Paragraph 13 hereof. Tenant shall repair at its
expense all damage to the Premises and the Building caused by the removal of any
of the items provided herein. Tenant obligations under this Paragraph shall
survive the termination of this Lease.
31. HOLDING OVER.
If, without objection by Landlord, Tenant holds possession of the Premises
after expiration of the Term of this Lease, Tenant shall become a tenant from
month to month upon the terms herein specified but at a Base Rent equal to two
hundred percent (200%) of the Base Rent in effect at the expiration of the Term
of this Lease, payable in advance on or before the first day of each month. Such
month to month tenancy may be terminated by either Landlord or Tenant by giving
thirty (30) days' written notice of termination to the other at any time. If
Tenant fails to surrender the Premises upon the expiration or termination of
this Lease except as hereinabove provided, Tenant hereby indemnifies and agrees
to hold Landlord harmless from all costs, loss, expense or liability, including
without limitation, costs, real estate brokers claims and attorneys' fees,
arising out of or in connection with any delay by Tenant in surrendering and
vacating the Premises, including, without limitation, any claims made by any
succeeding tenant based on any delay and any liabilities arising out of or in
connection with these claims. Nothing
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in this Paragraph 31 shall be deemed to permit Tenant to retain possession of
the Premises after the expiration or sooner termination of the Lease Term.
32. FLOOR LOAD AND NOISE.
(a) Tenant shall not place a load upon any floor of the Premises which
exceeds the floor load per square foot which such floor was designed to carry.
Landlord reserves the right to prescribe the weight and position of all safes
and heavy installations which Tenant wishes to place in the Premises so as to
properly distribute the weight thereof.
(b) Business machines and mechanical equipment belonging to Tenant which
cause noise and/or vibration that may be transmitted to the structure of the
Building or to any leased space to such a degree as to be objectionable to
Landlord or to any tenants in the Building shall be placed and maintained by
Tenant, at Tenant's expense, in settings of cork, rubber or spring-type noise
and/or vibration eliminators sufficient to eliminate vibration and/or noise.
33. SUBORDINATION.
This Lease shall be subordinate to any ground lease, mortgage, deed of
trust, or any other hypothecation for security now or later placed upon the
Building and to any advances made on the security of it or Landlord's interest
in it, and to all renewals, modifications, consolidations, replacements, and
extensions of it. However, if any mortgagee, trustee, or ground lessor elects to
have this Lease prior to the lien of its mortgage or deed of trust or prior to
its ground lease, and gives notice of that to Tenant, this Lease shall be deemed
prior to the mortgage, deed of trust or ground lease, whether this Lease is
dated prior or subsequent to the date of the mortgage, deed of trust, or ground
lease, or the date of recording of it. In the event any mortgage or deed of
trust to which this Lease is subordinate is foreclosed or a deed in lieu of
foreclosure is given to the mortgagee or beneficiary, Tenant shall at-tom to the
purchaser at the foreclosure sale or to the grantee under the deed in lieu of
foreclosure. In the event of termination of any ground lease to which this Lease
is subordinate, Tenant shall attorn to the ground lessor. Tenant agrees to
execute any documents, in form and substance reasonably acceptable to Tenant,
required to effectuate the subordination, to make this Lease prior to the lien
of any mortgage or deed of trust or ground lease, or to evidence the attornment.
34. INABILITY TO PERFORM.
Landlord shall not be in default hereunder nor shall Landlord be liable to
Tenant for any loss or damages if Landlord is unable to fulfill any of its
obligations, or is delayed in doing so, if the inability or delay is caused by
reason of accidents, strike, labor troubles, acts of God, or any other cause,
whether similar or dissimilar, which is beyond the reasonable control of
Landlord.
35. CORPORATE AUTHORITY.
If Tenant is a corporation or limited liability company, Tenant and each
person executing this Lease on behalf of Tenant represents and warrants to
Landlord that (a) Tenant is duly incorporated or formed, as the case may be and
validly existing under the laws of its state of
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incorporation or formation, (b) on or before sixty (60) days from the date of
this Lease, Tenant shall be qualified to do business in California, (c) Tenant
has the full right, power and authority to enter into this Lease and to perform
all of Tenant's obligations hereunder, and (d) each person signing this Lease on
behalf of the corporation or company is duly and validly authorized to do so. If
Tenant is a partnership (whether a general or limited partnership), each person
executing this Lease on behalf of Tenant represents and warrants to Landlord
that (i) he/she is a general partner of Tenant, (ii) he/she is duly authorized
to execute and deliver this Lease on behalf of Tenant, (iii) this Lease is
binding on Tenant (and each general partner of Tenant) in accordance with its
terms, and (iv) each general partner of Tenant is personally liable for the
obligations of Tenant under this Lease.
36. MISCELLANEOUS.
(a) The words "Landlord" and "Tenant" as used herein shall include the
plural as well as the singular. Words used in masculine gender include the
feminine and neuter. If there be more than one Tenant, the obligations hereunder
imposed on Tenant shall be joint and several. Subject to the provisions hereof
relating to assignment and subletting, this Lease is intended to and does bind
the heirs, executors, administrators, successors and assigns of any and all of
the parties hereto. Time is of the essence of this Lease.
(b) There are no oral agreements between Landlord and Tenant affecting
this Lease, and this Lease supersedes and cancels any and all previous
negotiations, arrangements, brochures, agreements and understandings, if any,
between Landlord and Tenant or displayed by Landlord to Tenant with respect to
the subject matter of this Lease or the Building. There are no representations
between Landlord and Tenant other than those contained in this Lease and all
reliance with respect to any representations is based solely upon the terms of
this Lease.
(c) Tenant shall not use the name of the Building for any purpose other
than as an address of the business to be conducted by Tenant in the Premises.
(d) Any provision of this Lease which shall be held invalid, void or
illegal shall in no way affect, impair or invalidate any of the other provisions
hereof and such other provisions shall remain in full force and effect.
(e) Tenant hereby waives trial by jury in any action, proceeding or
counterclaim brought by either of the parties hereto on any matters whatsoever
arising out of or in anyway connected with this Lease.
(f) No right, remedy or election hereunder or at law or in equity shall
be deemed exclusive but shall, wherever possible, be cumulative with all other
rights, remedies or elections.
(g) This Lease shall be governed by the laws of the State of California
applicable to transactions to be performed wholly therein.
-26-
<PAGE>
37. BROKER.
Tenant represents and warrants to Landlord that Tenant has had no dealings
with any broker, finder, or similar person who is or might be entitled to a
commission or other fee in connection with the execution of this Lease, except
for Landlord's Broker and Tenant's Broker. Landlord shall pay the commission due
Landlord's Broker and Tenant's Broker pursuant to a separate agreement between
Landlord and Landlord's Broker. Landlord and Tenant shall each indemnify, defend
and hold the other harmless from and against any and all claims and damages and
for any and all costs and expenses (including reasonable attorneys' fees and
costs) resulting from claims that may be asserted against the other party by any
broker, agent or finder not disclosed herein. It is hereby disclosed, and all
parties agree and accept, that Peter Sullivan Associates, Inc. is acting as both
Landlord's broker and principal in this transaction.
38. NO OFFER.
No contractual or other rights shall exist between Landlord and Tenant
with respect to the Premises until both have executed and delivered this Lease,
notwithstanding that rental deposits have been received by Landlord and
notwithstanding that Landlord has delivered to Tenant an unexecuted copy of this
Lease. The submission of this Lease to Tenant shall be for examination purposes
only, and does not and shall not constitute a reservation of or any option for
the Tenant to lease, or otherwise create any interest by Tenant in the Premises
or any other Premises situated in the Building. Execution of this Lease by
Tenant and 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.
-27-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Lease as of the
date first above written.
LANDLORD: TENANT:
116 NEW MONTGOMERY ASSOCIATES, GREENFIELD ONLINE, a Connecticut
LLC, a limited liability company corporation
By Peter Sullivan Associates, Inc., By /s/ Rudy Nadilo
Co-General Manager --------------------
Its President
--------------------
By /s/
----------------------------
Peter Sullivan
President
By BEI Management, LLC, Co-General
Manager
By /s/
----------------------------
James Brennan
Managing Member
-28-
<PAGE>
EXHIBIT A
DIAGRAM OF RIALTO BUILDING
See Attached.
A-1
<PAGE>
EXHIBIT B
116 NEW MONTGOMERY STREET ESCALATIONS
A. As used in this Lease, "Operating Expenses" shall mean, without
duplication, all costs and expenses paid or incurred by Landlord in connection
with the ownership, management, operation, maintenance and repair of the
Building, and in providing services in accordance with this Lease, including the
following: salaries, wages, other compensation, taxes and benefits (including
payroll, social security, workers' compensation, unemployment, disability and
similar taxes and payments) for all personnel engaged in the management,
operation, maintenance or repair of the Building; uniforms provided to such
personnel; premiums and other charges for all property, earthquake, rental
value, liability and other insurance carried by Landlord. together with the
amount of any deductible under such policy; water and sewer charges or fees;
license, permit and inspection fees; electricity, chilled water, air
conditioning, gas, fuel, steam, heat, light, power and other utilities; sales,
use and excise taxes on goods and services purchased by Landlord; telephone,
delivery, postage, stationery supplies and other expenses; management fees and
expenses, provided that the cost of such services if provided by Landlord or an
affiliate of Landlord shall not exceed the fees that would customarily be paid
to an independent management company; equipment lease payments; repairs to and
maintenance of the Building, including Building systems and accessories thereto
and repair and replacement of worn out or broken equipment, facilities, parts
and installations, but excluding the replacement of major Building systems;
janitorial, window cleaning, security, guard, extermination, water treatment,
garbage and waste disposal, rubbish removal, plumbing and other services;
inspection or service contracts for elevator, electrical, mechanical and other
Building equipment and systems; supplies, tools, materials and equipment;
accounting, legal and other professional fees and expenses (excluding legal
fees, accounting, and other professional fees and expenses incurred by Landlord
relating to disputes with specific tenants or the negotiation, interpretation or
enforcement of specific leases); painting the exterior or the public or common
areas of the Building and the cost of maintaining the sidewalks, landscaping and
other common areas of the Building; the cost, amortized over the useful life as
reasonably determined by Landlord, according to generally accepted accounting
principles, of all furniture, fixtures, draperies, carpeting and personal
property furnished by Landlord in common areas or public corridors of the
Building or in the Building office; all costs and expenses resulting from
compliance with any laws, ordinances, rules, regulations or orders applicable to
the Building; Building office rent or rental value for office space reasonably
necessary for the proper management and operation of the Building; all costs and
expenses of contesting by appropriate legal proceedings any matter concerning
managing, operating, maintaining or repairing the Building, or the validity or
applicability of any law, ordinance, rule, regulation or order relating to the
Building, or the amount or validity of any Property Taxes; reasonable
depreciation as determined by Landlord according to generally accepted
accounting principles on all machinery, fixtures and equipment (including window
washing machinery) used in the management, operation, maintenance or repair of
the Building and on window coverings provided by Landlord; the cost, reasonably
amortized as determined by Landlord, according to generally accepted accounting
principles, of all capital improvements made to the Building or capital assets
acquired by Landlord that are designed or intended to be a labor-saving or
energy-saving device, or to improve economy or efficiency in the management,
operation, maintenance or repair of the Building, or to reduce any
B-1
<PAGE>
item of Operating Expenses, or that are reasonably necessary to comply with any
conservation program or required by any law, ordinance, rule, regulation or
order unless caused by Landlord's deliberate or negligent violation of such law,
rule or regulation; and such other usual costs and expenses which are paid by
other landlords for the on-site operation, servicing, maintenance and repair of
comparable office buildings in the San Francisco Bay Area. Notwithstanding
anything contained in the Lease or the foregoing list of Operating Expenses, no
expenses incurred for the following shall be included in Operating Expenses for
any Expense Year: Property Taxes, depreciation on the Building (except as
described above), costs of tenants' improvements (including permit, license and
inspection fees), real estate brokers' commissions, interest, payments of loan
principal and expenses related to a financing or refinancing of the Building,
the cost of any asbestos abatement or removal activities other than conducted in
connection with the installation of capital improvements that are otherwise a
permitted Operating Expense or other than in the course of ordinary maintenance
and repair, capital items (except as described above), the cost of services
provided to tenants materially in excess of services customarily provided to
Tenant, whether or not Landlord is entitled to reimbursement therefor, or
Landlord's legal costs and expenses in connection with any lease dispute, or
litigation with any tenant.
B. Actual Operating Expenses for the Base Expense Year and each
subsequent calendar year shall be adjusted, if necessary, to equal Landlord's
reasonable estimate of Operating Expenses for a full calendar year with the
total area of the Building occupied during such full calendar year; provided,
however, Landlord shall not in any year collect in excess of one hundred percent
(100%) of the actual Operating Expenses paid or incurred by Landlord in any
calendar year.
C. Landlord reserves the right to, in good faith, establish
classifications for the equitable allocation of Operating Expenses that are
incurred for the direct benefit of specific types of tenants or users in the
Building ("Cost Pools"). Such Cost Pools may include, but shall not be limited
to, office, ground floor retail, and lower level basement, tenants of the
Building. Landlord's determination of such allocations in a manner consistent
with the terms and conditions of this section shall be final and binding on
Tenant. Tenant acknowledges that the allocation of Operating Expenses among Cost
Pools does not affect all Operating Expenses, and is limited to specific items
that are incurred or provided to tenants of Cost Pools which Landlord
determines, in good faith, it would be inequitable to share, in whole or in
part, among tenants of other Cost Pools in the Building.
D. As used in this Lease, "Property Taxes" shall mean all taxes,
assessments, excises, levies, fees and charges (and any tax, assessment, excise,
levy, fee or charge levied wholly or partly in lieu thereof or as a substitute
therefor or as an addition thereto) of every kind and description, general or
special, ordinary or extraordinary, foreseen or unforeseen, secured or
unsecured, that are levied, assessed, charged, confirmed or imposed by any
public or government authority on or against, or otherwise with respect to, the
Building or any part thereof or any personal property used in connection with
the Building. If the Building is not assessed on a fully completed basis for all
or any part of the Base Tax Year, until it is so assessed, Property Taxes for
the Base Tax Year shall be established by multiplying Landlord's reasonable
estimate of such assessed valuation by the applicable, tax rates for the Base
Tax Year. Property Taxes shall not include net income (measured by the income of
Landlord from all sources or from sources other
B-2
<PAGE>
than solely rent), franchise, documentary transfer, inheritance or capital stock
taxes of Landlord, unless levied or assessed against Landlord in whole or in
part in lieu of, as a substitute for, or as an addition to any Property Taxes.
Property Taxes shall not include any tax, assessment, excise, levy, fee or
charge paid by Tenant pursuant to Paragraph E hereof.
E. In addition to all rent and other charges to be paid by Tenant under
the Lease, Tenant shall reimburse Landlord upon demand for all taxes,
assessments, excises, levies, fees and charges including all payments related to
the cost of providing facilities or services, whether or not now customary or
within the contemplation of Landlord and Tenant, that are payable by Landlord
and levied, assessed, charged, confirmed or imposed by any public or government
authority upon, or measured by, or reasonably attributable to (i) the cost or
value of Tenant's equipment, furniture, fixtures and other personal property
located in the Premises or the cost or value of any leasehold improvements made
in or to the Premises by or for Tenant, regardless of whether title to such
improvements is vested in Tenant or Landlord, (ii) any rent payable under this
Lease, including any gross income tax or excise tax levied by any public or
government authority with respect to the receipt of any such rent, (iii) the
possession, leasing, operation, management, maintenance, alteration, repair, use
or occupancy by Tenant of the Premises, or (iv) this transaction or any document
to which Tenant is a party creating or transferring an interest or an estate in
the Premises. Such taxes, assessments, excises, levies, fees and charges shall
not include net income (measured by the income of Landlord from all sources or
from sources other than solely rent), franchise, documentary transfer,
inheritance or capital stock taxes of Landlord, unless levied or assessed
against Landlord in whole or in part in lieu of, as a substitute for, or as an
addition to any such taxes, assessments, excises, levies, fees and charges.
F. All taxes, assessments, excises; levies, fees and charges payable by
Tenant under this Exhibit shall be deemed to be, and shall be paid as,
additional rent.
B-3
<PAGE>
EXHIBIT C
RULES AND REGULATIONS OF THE
116 NEW MONTGOMERY STREET BUILDING
COMMON, AREAS
The sidewalks, halls, passages, exits, entrances, elevators and stairways
of the Building shall not be obstructed by `Tenant or used for any purpose other
than for ingress to and egress from the Premises. The halls, passages, exits,
entrances, elevators and stairways are not for the general public and Landlord
shall in all cases have the right to control and prevent access thereto of all
persons (including, without limitation, messengers or delivery personnel not
wearing uniforms) whose presence in the judgment of Landlord would be
prejudicial to the safety, character, reputation or interests of the Building
and its tenants. Neither Tenant nor any agent, employee, contractor, invitee or
licensee of Tenant shall go upon the roof of the Building. Landlord shall have
the right at any time, without the same constituting an actual or constructive
eviction and without incurring any liability to Tenant therefor, to change the
arrangement or location of entrances or passageways, doors or doorways,
corridors, elevators, stairs, toilets and common areas of the Building.
SIGNS
No sign, placard, picture, name, advertisement or notice visible from the
exterior of the Premises shall be inscribed, painted, affixed or otherwise
displayed by Tenant on any part of the Building or the Premises without the
prior written consent of Landlord. Landlord will adopt and furnish to tenants
general guidelines relating to signs inside the Building. Tenant agrees to
conform to such guidelines. All approved signs or lettering shall be printed,
painted, affixed or inscribed at the expense of Tenant by a person approved by
Landlord. Material visible from outside the Building will not be permitted.
PROHIBITED USES
The Premises shall not be used for the storage of merchandise held for
sale to the general public or for lodging. No cooking shall be done or permitted
on the Premises except that private use by Tenant of microwave ovens and/or
Underwriters' Laboratory approved equipment for brewing coffee, tea, hot
chocolate and similar beverages will be permitted, provided that such use is in
accordance with all applicable federal, state and municipal laws, codes,
ordinances, rules and regulations. Tenant shall not use electricity for
lighting, machines or equipment in excess of five (5) watts per square foot.
JANITORIAL SERVICE
Tenant shall not employ any person other than the janitor of Landlord for
the purpose of cleaning the Premises unless otherwise agreed to by Landlord in
writing. Except with the written consent of Landlord, no persons other than
those approved by Landlord shall be permitted to enter the Building for the
purpose of cleaning the Premises.
C-1
<PAGE>
KEYS
Landlord will furnish Tenant without charge with two (2) keys to each door
lock provided in the Premises by Landlord. Landlord may make a reasonable charge
for any additional keys. Tenant shall not have any such keys copied or any keys
made. Tenant shall not alter any lock or install a new or additional lock or any
bolt on any door of the Premises. Tenant, upon the termination of this Lease,
shall deliver to Landlord all keys to doors in the Building.
MOVING PROCEDURES
Landlord shall designate appropriate entrances for deliveries or other
movement to or from the Premises of equipment, materials, supplies, furniture or
other property, and Tenant shall not use any other entrances for such purposes.
All moves shall be scheduled and carried out during non-business hours of the
Building. All persons employed and means or methods used to move equipment,
materials, supplies, furniture or other property in or out of the Building must
be approved by Landlord prior to any such movement. Landlord shall have the
right to prescribe the maximum weight, size and position of all equipment,
materials, furniture or other property brought into the Building. Heavy objects
shall, if considered necessary by Landlord, stand on a platform of such
thickness as is necessary properly to distribute the weight. Landlord will not
be responsible for loss of or damage to any such property from any cause, and
all damage done to the Building by moving or maintaining such property shall be
repaired at the expense of Tenant.
NO NUISANCES
Tenant shall not use or keep in the Premises or the Building any kerosene,
gasoline or inflammable or combustible fluid or material other than limited
quantities thereof reasonably necessary for the operation or maintenance of
office equipment. Tenant shall not use any method of heating or air conditioning
other than that supplied by Landlord. Tenant shall not use or 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 or vibrations, or interfere in any way with other tenants or those having
business in the Building, nor shall any animals be brought or kept in the
Premises or the Building.
CHANGE OF ADDRESS
Landlord shall have the right, exercisable without notice and without
liability to Tenant, to change the name or street address of the Building or the
room or suite number of the Premises.
BUSINESS HOURS
Landlord establishes the hours of 7:00 a.m. to 6:00 p.m., Monday through
Friday, except union holidays and legal holidays, as reasonable and usual
business hours for the purposes of this Lease.
C-2
<PAGE>
ACCESS TO BUILDING
Landlord reserves the right to exclude from the Building during the
evening, night and early morning hours beginning at 6:00 p.m. and ending at 7:00
a.m. Monday through Friday, and at all hours on Saturdays, Sundays, union
holidays and legal holidays, all persons who do not present identification
acceptable to Landlord. Tenant shall provide Landlord with a list of all persons
authorized by Tenant to enter the Premises and shall be liable to Landlord for
all acts of such persons. Landlord shall in no case be liable for damages for
any error with regard to the admission to or exclusion from the Building of any
person. In the case of invasion, mob, riot, public excitement or other
circumstances rendering such action advisable in Landlord's opinion, Landlord
reserves the right to prevent access to the Building during the continuance of
the same by such action as Landlord may deem appropriate, including closing
doors.
BUILDING DIRECTORY
The directory of the Building will be provided for the display of the name
and location of Tenant. Landlord reserves the right to restrict the mount of
directory space utilized by Tenant. Landlord may make a reasonable charge for
the replacement of directory slots/panels requested by Tenant.
WINDOW COVERINGS
No curtains, draperies, blinds, shutters, shades, screens or other
coverings, hangings or decorations shall be attached to, hung or placed in, or
used in connection with any window of the Building without the prior written
consent of Landlord. In any event, with the prior written consent of Landlord,
such items shall be installed on the office side of Landlord's standard window
covering and shall in no way be visible from the exterior of the Building.
Tenant shall keep window coverings closed when the effect of sunlight (or the
lack thereof) would impose unnecessary loads on the Building's air conditioning
systems.
FOOD AND BEVERAGES
Tenant shall not obtain for use in the Premises ice, drinking water, food,
beverage, towel or other similar services:, except at such reasonable hours and
under such reasonable regulations as may be established by Landlord.
PROCEDURES WHEN LEAVING
Tenant shall ensure that the doors of the Premises are closed and locked
and that all water faucets, water apparatus and utilities are shut off before
Tenant and its employees leave the Premises so as to prevent waste or damage.
For any default or carelessness in this regard, Tenant shall be liable and pay
for all damage and injuries sustained by Landlord or other tenants or occupants
of the Building. On multiple-tenancy floors, Tenant shall keep the doors to the
Building corridors closed at all times except for ingress and egress.
C-3
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BATHROOMS
The toilet rooms, toilets, urinals, wash bowls and other apparatus shall
not be used for any purpose other than that for which they were constructed, no
foreign substance of any kind whatsoever shall be thrown therein, and the
expense of any breakage, stoppage or damage resulting from the violation of this
rule shall be paid by Tenant if caused by Tenant or its agents, employees,
contractors, invitees or licensees.
NO ANTENNA
Tenant shall not install any radio or television antenna, loudspeaker, or
other device on the roof or exterior wails of the Building. No television or
radio or recorder shall be played in such a manner as to cause a nuisance to any
other tenant.
BICYCLES, VEHICLES
There shall not be used in any space, or in the public halls of the
Building, either by Tenant or others, any hand trucks except those equipped with
rubber tires and side guards or such other material handling equipment as
Landlord approves. No other vehicles of any kind, including bicycles, shall be
brought by Tenant into the Building or kept in or about the Premises.
TRASH REMOVAL
Tenant shall store all its trash and garbage within the Premises. No
material shall be placed in the trash boxes or receptacles if such material is
of such nature that it may not be disposed of in the ordinary and customary
manner of removing and disposing of office building trash and garbage in the
city or county in which the Building is located without being in violation of
any law or ordinance governing such disposal. All garbage and refuse disposal
shall be made only through entryways and elevators provided for such purposes
and at such times as Landlord shall designate, Tenant shall crush and flatten
all boxes, cartons and containers. Tenant shall pay extra charges for any
unusual trash disposal.
NO SOLICITING
Canvassing, soliciting, distribution of handbills or any other written
material and peddling in the Building are prohibited, and Tenant shall cooperate
to prevent the same.
NO SMOKING
In accordance with Section 1, Part II, Chapter V of the San Francisco
Municipal Code (Health Code), Article 19E, Section 1009.5(a), there shall be NO
SMOKING in the Building.
C-4
<PAGE>
SERVICES
The requirements of Tenant will be attended to only upon application in
writing at the office of the Building. Personnel of Landlord shall not perform
any work or do anything outside of their regular duties unless under special
instructions from Landlord.
WAIVER
Landlord may waive any one or more of these Rules and Regulations for the
benefit of any particular tenant or tenants, but no such waiver by Landlord
shall be construed as a waiver of such Rules and Regulations in favor of any
other tenant or tenants, nor prevent Landlord from thereafter enforcing any such
Rules and Regulations against any or all of the tenants of the Building.
SUPPLEMENTAL TO LEASE
These Rules and Regulations are in addition to, and shall not be construed
to in any way modify or amend, in whole or in part, the covenants of this Lease.
C-5
<PAGE>
EXHIBIT D
FIRST AMENDMENT TO OFFICE LEASE
116 New Montgomery Street
THIS FIRST AMENDMENT TO OFFICE LEASE (this "First Amendment"), dated as of
the ___ day of November, 1999, is entered into by and between 116 HCT LLC, a
California limited liability company ("Landlord"), as successor in interest to
116 New Montgomery Associates, LLC, a California limited liability company ("116
NMA"), and GREENFIELD ONLINE, a Connecticut corporation ("Tenant"). Capitalized
terms used in this Fourth Amendment without definition shall have the meanings
ascribed to such terms in the Lease (as hereinafter defined).
THE PARTIES enter this First Amendment on the basis of the following
facts, understandings and intentions:
A. Landlord (as successor in interest to 116 NMA), as landlord, and
Tenant as tenant, are parties to that certain Lease dated January 9, 1998 (the
"Original Lease"), whereby Landlord leased to Tenant and Tenant leased from
Landlord certain premises more particularly described in the Lease, and located
in the building owned by Landlord at 116 New Montgomery Street, San Francisco,
California (the "Building").
B. Landlord and Tenant also wish to extend the term of the Lease and
change other terms of the Lease to reflect the increase in areas occupied by the
Tenant.
C. Landlord and Tenant wish to expand their leased premises to include
Suites 224, 600, and 605. Tenant shall be given occupancy and commence paying
additional rent on Suites 224, 600 and 605 according to the terms set forth in
the Lease Amendment.
D. Landlord and Tenant agree the existing deposit will be increased by
$60,129.17, totaling $61,869 representing six months of base rent for Suites
220, 224 and 605.
NOW, THEREFORE, based on the foregoing and for other good and valuable
consideration, the receipt and adequacy of which is hereby acknowledged, the
parties agree as follows:
1. Extension of Lease Term. Landlord and Tenant agree that the Term
of the Lease is hereby extended through December 1, 2004, and that such date
shall be deemed the "Expiration Date" for all purposes of the Lease (including,
without limitation, the expansion space added to the Premises pursuant to this
First Amendment to Office Lease).
2. Expansion.
(a) Effective December 1, 1999, Landlord and Tenant agree to
add to their leased premises Suite 224, approximately 975 rentable square feet
at a rate of $37 per square foot.
D-1
<PAGE>
(b) Effective December 1, 1999, Landlord and Tenant agree to
add to the leased premises Suite 605, approximately 1,805 rentable square feet
for a term of five years at a rate of $37.00 for years 1-3 and $38.00 for years
4 and 5.
3. Relocation. Landlord and Tenant agree that Tenant will
relocate on a date designated by Landlord on or after September 30, 2000 and
before October 31, 2000, Tenant will relocate from Suite 200 and 224 to Suite
600, approximately 1,811 square feet, at a rate of $37.00 per square foot. The
term of the lease for Suite 600 shall be coterminous with Suite 605 on December
1, 2004.
The failure by Landlord to deliver possession of Suite 600 on the
scheduled delivery date or a delay in doing so, whether because of a failure of
an existing tenant or occupant to surrender possession in a timely fashion or
for any other reason whatsoever, shall not be a default by Landlord under the
Lease, and Landlord shall have no liability to Tenant for any loss or damage
resulting from such failure. The failure of Landlord to deliver possession of
Suite 600 on the October 31, 2000 ("Early Termination") without penalty and to
return, without offset, of the funds held by the Landlord in the form of a
security deposit, the return of which Tenant would otherwise have been entitled
to had there been no Early Termination. If Tenant desires Early Termination, it
shall deliver written notice to Landlord at any time after the scheduled
delivery date specifying a termination date not less than thirty (30) days after
deliver of the notice.
4. Adjustment to Base Rent.
-----------------------
(a) Effective December 1, 1999, Monthly Base Rent payable
under the Lease shall increase to $10,311.50 as outlined below.
Suites: Monthly Base Rent
220 $1,739.83
224 $3,006.25
605 $5,565.42 (years 1-3), $5,715.83 (years
--------- 4-5)
Total: $10,311.50
(b) Effective October 1, 1999, Monthly Base Rent payable under
the Lease will be adjusted to $11,149.34 and on October 1, 2002 will be adjusted
to $11,299.75 as outlined below.
Suites: Monthly Base Rent
600 $5,583.92
605 $5,565.42 (years 1-3), $5,715.83 (years
--------- 4-5)
Total: $11,194.34
(c) The Tenant's Percentage Share on occupancy of Suite 224
shall be changed to 1.45%, upon occupancy of Suite 605 to 1.49% and upon
occupancy of Suite 600 to 3.00%.
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(d) The Basic Lease Information sheet of the Lease is hereby
amendment to incorporate the terms of this Paragraph 4, and from and after the
mutual execution of this First Amendment, all references in the Lease to
information contained in the Basic Lease Information shall be to the Basic Lease
Information as amended by this First Amendment.
5. No Default. Tenant hereby represents and warrants, to its
knowledge, that there exists no defense or offset by Tenant to enforcement of
the Lease by Landlord, and that Landlord is not, as of the date of execution of
this Amendment, in default in the performance of any obligation of Landlord
under the Lease, nor, to the knowledge of Tenant, has any event occurred which,
with the passage of time, or the giving of notice, or both, would constitute a
default or breach of the Lease by Landlord.
6. Full Force and Effect. Except as amended hereby, the Lease
remains unamended, and as amended hereby the Lease is in full force and effect.
IN WITNESS WHEREOF, the undersigned have executed this Fourth Amendment as
of the day and year first herein above set forth.
"Landlord" 116 HCT LLC, a California limited liability
company
By: HCT (116 NEW MONTGOMERY), INC.,
a California corporation,
General Manager
By: /s/
---------------------------
James J. Hunter
President
"Tenant" GREENFIELD ONLINE,
a Connecticut Corporation
By: /s/ Ron Bergami
---------------------------------
Its: VP Controller
-------------------------------
D-3
<PAGE>
Exhibit 10.37
GREENFIELD ONLINE, INC.
AMENDED AND RESTATED 1999 STOCK OPTION PLAN
ADOPTED: May 12, 1999, Amended March 3, 2000
1. INTRODUCTIONS AND DEFINITIONS
1.1 The Plan
This 1999 Stock Option Plan (hereinafter, this "Plan") establishes the
right of and procedures for Greenfield Online, Inc. (the "Company") to grant
stock options to its employees and/or consultants. This Plan provides for the
granting of two types of options, namely (1) Incentive Stock Options, as defined
and governed by Section 422 of the Internal Revenue Code of 1986, as amended,
and (2) Nonqualified Stock Options. This Plan sets forth provisions applicable
to both types of options, to Incentive Stock Options only, and to Nonqualified
Stock Options only.
1.2 Definitions
Capitalized terms used in this Plan shall have the following meanings:
"Act" means the Securities Act of 1933.
"Board" means the Board of Directors of the Company.
"Change of Control Event" means a merger, consolidation, tender offer,
takeover bid, or sale of assets, as the case may be and as described in
Subsections (1) through (3) of Section 2.5(a).
"Code" means the Internal Revenue Code of 1986, as amended.
"Committee" means a committee appointed by the Board, pursuant to
Section 2.3 hereof, to administer the provisions of this Plan, and in the
absence of any such committee, references to the Committee shall mean the Board.
"Company" means Greenfield Online, Inc.
"Consultant" means any person engaged by the Company or any current or
future subsidiary of the Company to perform services as a non-employee service
provider, advisor or consultant pursuant to the terms of a written plan or
contract. "Consultants" is the plural of Consultant.
"Employee" means, for purposes of this Plan, persons continuously
employed by the Company or by any current or future foreign or domestic
subsidiary of the Company on a regular basis, whether full-time or part-time, at
any time during the duration hereof. "Employees" is the plural of Employee.
"Exchange Act" means the Securities Exchange Act of 1934, as from time
to time amended, or any replacement act or legislation.
"Fair Market Value" of the Company's equity Securities shall be
determined by the Board or, in the event the Company's Securities are listed on
any national exchange, over-the-counter, or other stock trading market, then as
of any time based upon the prevailing bid price of the Company's common stock as
of such time.
"Incentive Stock Option" means an option issued by the Company to
purchase shares of stock of the Company that meets the definition of "incentive
stock option" contained in Section 422 of the Internal Revenue Code of 1986, as
amended, and that is issued by the Company to be an Incentive Stock Option.
"Incentive Stock Options" is the plural of Incentive Stock Option.
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"Nonqualified Stock Option" means an option issued by the Company to
purchase shares of stock of the Company that is not an Incentive Stock Option.
"Nonqualified Stock Options" is the plural of Nonqualified Stock Option.
"Optioned Shares" means Shares subject to a Stock Option.
"Optionee" means the recipient of a Stock Option pursuant to a Stock
Option Agreement. "Optionees" is the plural of Optionee.
"Plan" means this Greenfield Online, Inc. 1999 Stock Option Plan, which
also may be referred to as the "Greenfield Online Stock Option Plan."
"Plan Guidelines" shall mean the guidelines, rules, policies,
regulations, forms of notice, and forms of agreements and instruments, if any,
adopted and amended by the Board from time to time with respect to this Plan
pursuant to Section 2.3.
"Reload Options" means reload rights for the purchase, at the time of
the exercise of any Stock Option, of a number of shares equal to the number of
shares purchased by such exercise, as described in Section 5.
"Shares" shall mean the Shares of the Company reserved for issuance
under this Plan as further defined in Section 2.2.
"Stock Option" means an agreement entered into by the Company granting
the recipient the right to purchase shares of stock of the Company, at certain
times, and under certain conditions, subject to certain obligations and
responsibilities as defined in this Plan and in the written Stock Option
Agreement, whether an Incentive Stock Option or a Nonqualified Stock Option.
"Stock Options" is the plural of Stock Option.
"Stock Option Agreement" means the written contract by which a Stock
Option is granted by the Company to an Optionee. "Stock Option Agreements" is
the plural of Stock Option Agreement.
2. GENERAL PROVISIONS APPLICABLE TO BOTH NONQUALIFIED STOCK OPTIONS AND
INCENTIVE STOCK OPTIONS GRANTED BY THE COMPANY.
2.1 Objectives of this Plan
The purpose of this Plan is to encourage ownership of common stock of
the Company by Employees and to provide a means of granting Stock Options to
Consultants. This Plan is intended to provide an incentive to Employees for
maximum effort in the successful operation of the Company and is expected to
benefit the shareholders by enabling the Company to attract and retain personnel
of the best available talent through the opportunity to share in the increased
value of the Company's shares to which such personnel have contributed. The
benefits of this Plan are not a substitute for compensation otherwise payable to
Employees pursuant to the terms of their employment. This Plan may be referred
to as the Greenfield Online Stock Option Plan.
2.2 Stock Reserved for this Plan
The stock initially reserved by the Board for issue upon the exercise
of Stock Options granted under this Plan shall be 6,252,550 shares of the common
stock of the Company (the "Shares") which Shares shall be reserved from the
Company's authorized and unissued shares. Shares subject to any Stock Option
under this Plan which are not exercised in full or Shares as to which the right
to purchase is forfeited through default or otherwise, shall remain available
for other Stock Options under this Plan. The aggregate number of Shares subject
to Stock Options under this Plan or reserved for issuance by the Board shall not
exceed the number approved by the shareholders at the time of adoption hereof
unless such increase is approved by the Company's shareholders. Such approval
shall be by the affirmative vote of shareholders holding a majority of the
issued and outstanding shares of common stock of the Company entitled to vote at
a meeting called to approve said increase.
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2.3 Administration of this Plan
This Plan shall be administered by the Board, provided the Board may
appoint a Board committee ( the "Committee") to administer this Plan in the name
of the Board. At all times during which the Company is subject to the periodic
reporting requirements of the Exchange Act, each member of the Board or the
Committee who participates in administration must be a "non-employee director"
as that term is defined in Rule 16b-3 promulgated pursuant to the Exchange Act
and the transactions contemplated hereunder shall be structured to satisfy the
requirements for exemption under Rule 16b-3. To the extent that the Board
determines it to be desirable to qualify Stock Options granted hereunder as
"performance-based compensation" within the meaning of Section 162(m) of the
Code, the Plan shall be administered by a Committee of two or more "outside
directors" within the meaning of Section 162(m). The Board or the Committee so
appointed shall have full power and authority to administer and interpret this
Plan and to adopt, from time to time, such guidelines, rules, policies,
regulations, forms of notice, and forms of agreements and instruments for the
administration of this Plan (collectively, "Plan Guidelines") as the Board or
such Committee, as the case may be, deems necessary or advisable. Such powers
include, but are not limited to (subject to the specific limitations described
herein), authority to determine the Employees and Consultants to be granted
Stock Options under this Plan, to determine the size, type, and applicable terms
and conditions of grants to be made to such Employees and Consultants, to
determine a time when Stock Options will be granted, and to authorize grants to
eligible Employees and Consultants.
The Board's interpretations of this Plan and all Stock Option
Agreements, including the definitions of terms used herein and in Stock Option
Agreements, and all actions taken and determinations made by the Board
concerning any matter arising under or with respect to this Plan or any Stock
Options granted pursuant to this Plan, shall be final, binding, and conclusive
on all interested parties, including the Company, its shareholders, and all
former, present, and future Employees and Consultants of the Company. So long as
the Company is not subject to the reporting requirements of the Exchange Act,
the Board may delegate some or all of its power and authority hereunder to the
duly elected officers of the Company, such delegation to be subject to such
terms and conditions as the Board in its discretion shall determine. Such
delegation of authority may be contained in the Plan Guidelines. The Board may,
as to questions of accounting, rely conclusively upon any determinations made by
independent public accountants of the Company.
2.4 Eligibility; Facts to be Considered in Granting Stock Options
The Board shall have the authority to determine the persons eligible to
receive a Stock Option, the time or times at which the Optioned Shares may be
purchased and whether all of the Stock Options may be exercised at one time or
in increments.
2.5 Rights of Optionee in Change of Control Events--Merger,
Consolidation, Tender Offer, Takeover Bid, Sale of Assets--or on Dissolution
(a) In the event of a merger of the Company with or into another
corporation, or the sale of substantially all of the assets of the Company, each
outstanding Stock Option shall be assumed or an equivalent option or right
substituted by the successor corporation or a parent or subsidiary of the
successor corporation. The Board shall have the authority to provide in any
Stock Option Agreement that, notwithstanding anything in this Plan to the
contrary, in the event that the successor corporation or a parent or subsidiary
of the successor corporation does not agree to assume the Stock Option or grant
an equivalent option or substitute right, Optionee may purchase the full amount
of Optioned Shares for which Stock Options have been granted to the Optionee and
for which the Stock Options have not been exercised under the following
conditions:
(1) The Optionee may conditionally purchase any or all
Optioned Shares during the period commencing twenty-seven (27) days and ending
seven (7) days prior to the scheduled effective date of a merger or
consolidation (as such effective date may be delayed from time to time) wherein
the Company is not to be the surviving corporation, which merger or
consolidation is not between or among the Company and other corporations related
to or affiliated with the Company;
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(2) The Optionee may conditionally purchase any or all
Optioned Shares during the period commencing on the initial date of a tender
offer or takeover bid for the Shares (other than a tender offer by the Company)
subject to the Securities Exchange Act of 1934 and the rules promulgated
thereunder and ending on the day preceding the scheduled termination date of
acceptance of tenders of Shares by the offeror under any such tender offer or
takeover bid (as such termination date may be extended by such offeror);
(3) The Optionee may conditionally purchase any or all
Optioned Shares during the period commencing the date the shareholders of the
Company approve a sale of substantially all the assets of the Company and ending
seven (7) days prior to the scheduled closing date of such sale (as such closing
date may be delayed from time to time); and
(4) The Optionee may conditionally purchase any or all
Optioned Shares during the period commencing the date the shareholders of the
Company approve the dissolution of the Company and ending seven (7) days prior
to the date of filing its Articles of Dissolution.
(b) If the merger, consolidation, tender offer, takeover bid, sale of
assets (collectively, a "Change of Control Event"), or dissolution, as the case
may be and as described in subsections (1) through (4) of Section 2.5(a), once
commenced, is canceled or revoked, the conditional purchase of Shares for which
the option to purchase would not have otherwise been exercisable at the time of
said cancellation or revocation, but for the operation of this Section 2.5,
shall be rescinded. With respect to all other Shares conditionally purchased,
the Optionee may rescind such purchase at Optionee's option.
(c) If the Change of Control Event does occur or Articles of
Dissolution are filed, as the case may be and as described in subsections (1)
through (4) of Section 2.5(a), and the Optionee has not conditionally purchased
all Optioned Shares, all unexercised options shall terminate on the effective,
termination, closing, or filing date, as the case may be.
(d) If the Company shall be the surviving corporation in any merger or
is a party to a merger or consolidation which is between or among the Company
and other corporations related to or affiliated with the Company, any Stock
Option granted hereunder shall pertain and apply to the securities to which a
holder of the number of Shares of common stock subject to the Stock Option would
have been entitled.
(e) Nothing herein shall allow the Optionee to purchase Optioned
Shares, the options for which have expired.
2.6 Stock Option Agreements; Terms and Expiration of Stock Options
Each Stock Option granted under this Plan shall be pursuant to a
written Stock Option Agreement, shall be subject to such amendment or
modification from time to time as the Board shall deem necessary or appropriate
to comply with or take advantage of applicable laws or regulations and shall
contain provisions as to the following effect, together with such other
provisions as the Board shall from time to time approve:
(a) that, subject to the provisions of Section 2.6(b) below, the Stock
Option, as to the whole or any part thereof, may be exercised only by the
Optionee or Optionee's personal representative;
(b) that neither the whole nor any part of the Stock Option shall be
transferable by the Optionee or by operation of law other than by will of, or by
the laws of descent and distribution applicable to, a deceased Optionee and that
the Stock Option and any and all rights granted to the Optionee thereunder and
not theretofore effectively and completely exercised shall automatically
terminate and expire upon any sale, transfer, or hypothecation or any attempted
sale, transfer, or hypothecation of such rights or upon the bankruptcy or
insolvency of the Optionee or Optionee's estate;
(c) that subject to the foregoing provisions, a Stock Option may be
exercised at different times for portions of the total number of Shares for
which the right to purchase shall have vested provided that such portions
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are in multiples of ten (10) shares if the Optionee holds vested Stock Options
for ninety-nine (99) or fewer shares and otherwise in multiples of one hundred
(100) shares;
(d) that no Optionee shall have the right to receive any dividend on or
to vote or exercise any right in respect to any Shares unless and until the
certificates for such Shares have been issued to such Optionee;
(e) that the Stock Option shall expire at the earliest of the
following:
(1) The date specified in the Stock Option Agreement;
(2) With respect to Employees, ninety (90) days after
voluntary or involuntary termination of Optionee's employment other than
termination as described in Paragraphs (3) or (4) below;
(3) With respect to Employees, immediately upon the discharge
of Optionee for misconduct, willfully or wantonly harmful to the Company;
(4) With respect to Employees, twelve (12) months after
Optionee's death or disability; or
(5) In the event of a Change of Control Event, or the filing
of Articles of Dissolution, as the case may be and as described in subsections
(1) through (4) of Section 2.5(a), on the date specified in Section 2.5(c).
However, if the Change of Control Event does not occur or if Articles of
Dissolution are not filed, as the case may be and as described in Subsections
(1) through (4) of Section 2.5(a), all Stock Options which are terminated
pursuant to this Subsection (e)(5) shall be reinstated as if no action with
respect to any of said events had been contemplated or taken by any party
thereto and all Optionees shall be returned to their respective positions on the
date of termination;
(f) that, to the extent a Stock Option Agreement provides for the
vesting of the right to purchase in increments, such vesting shall cease as of
the date of the Optionee's death, disability, or voluntary or involuntary
termination of Optionee's employment with the Company;
(g) that the terms of the Stock Option Agreement shall be a contract
between the Company and the Optionee; and the specific terms of any Stock Option
Agreement shall govern over the more general terms hereof; and
(f) With respect to Employees, subject to the Plan Guidelines, the
Stock Option Agreement shall not be affected by any changes of duties or
position so long as the Optionee shall continue to be an Employee, and, subject
to the terms hereof.
2.7 Notice of Intent to Exercise Stock Option
The Optionee (or other person or persons, if any, entitled hereunder)
desiring to exercise a Stock Option as to all or part of the Shares covered
thereby shall in writing notify the Company at its principal office in the state
of Connecticut, specifying the number of Stock Option Shares to be purchased
and, if required by the Company, representing in form satisfactory to the
Company that the Shares are being purchased for investment and not with a view
to resale or distribution. The Company from time to time may issue or specify to
Optionees a written form for use in connection with any such exercise. With
respect to any Shares conditionally purchased pursuant to Section 2.5(a) above
and for which such purchase has not been voluntarily or otherwise rescinded
pursuant to Section 2.5(b), the Optionee shall be deemed to have given to the
Company the notice of exercise required by this Section 2.7 as of ten (10) days
prior to the closing or effective date of the Change of Control Event or the
filing of Articles of Dissolution, as the case may be and as described in
Subsections (1) through (4) of Section 2.5(a).
2.8 Method of Exercise of Stock Option
Within ten (10) days after receipt by the Company of the notice
provided in Section 2.7, but not later than the expiration date specified in
Section 2.5(e), the Stock Option shall be exercised as to the number of Shares
specified in the notice by payment by the Optionee to the Company of the amount
specified below in Section 3.2.
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Payment of such purchase price shall be made in cash, or in accordance with
procedures for a "cashless exercise" as the same may have been established from
time to time by the Company and the brokerage firm, if any, designated by the
Company to facilitate exercises of Stock Options and sales of shares under this
Plan. Payment in shares of the Company's common stock shall be deemed to be the
equivalent of payment in cash at the Fair Market Value of those shares. For
purposes of the preceding sentence, Fair Market Value shall be determined by the
Board in the same manner as utilized in determining the Fair Market Value at the
time other Stock Options are granted.
2.9 Recapitalization
The aggregate number of Shares for which Stock Options may be granted
hereunder, the number of Shares covered by each outstanding Stock Option, and
the price per Share thereof in each such Stock Option Agreement shall be
proportionately adjusted for an increase or decrease in the number of
outstanding shares of common stock of the Company resulting from a stock split
or reverse split of shares or any other capital adjustment or the payment of a
stock dividend or other increase or decrease in such shares effected without
receipt of consideration by the Company excluding any decrease resulting from a
redemption of shares by the Company. If the adjustment would result in a
fractional Share the Optionee shall be entitled to one (1) additional Share,
provided that the total number of Shares to be granted under this Plan shall not
be increased above the equivalent number of Shares initially allocated or later
increased by approved amendment to this Plan.
2.10 Substitutions and Assumptions
The Board shall have the right to substitute, replace, or assume
options in connection with mergers, reorganizations, separations, or other
"corporate transactions" as that term is defined in and said substitutions and
assumptions are permitted by Section 425 of the Code and the regulations
promulgated thereunder. The number of Shares reserved pursuant to Section 2.2
may be increased by the corresponding number of options assumed and, in the case
of a substitution, by the net increase in the number of Shares subject to
options before and after the substitution.
2.11 Terminal Date of Plan
This Plan shall not extend beyond a date ten (10) years from the date
of adoption hereof by the Board, provided that any Stock Option to purchase
shares duly granted hereunder prior to such date shall be exercisable pursuant
to its terms and the terms hereof until expiration or earlier termination of
such Stock Option.
2.12 Granting of Stock Options
The granting of any Stock Option pursuant to this Plan shall be
entirely in the discretion of the Board and nothing herein contained shall be
construed to give any Employee any right to participate under this Plan or to
receive any Stock Option under it.
The granting of a Stock Option pursuant to this Plan shall not
constitute any agreement or an understanding, express or implied on the part of
the Company or a Subsidiary to employ the Optionee for any specified period.
2.13 Withdrawal
An Optionee may at any time elect in writing to abandon a Stock Option
with respect to the number of Shares as to which the Stock Option shall not have
been exercised.
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2.14 Government Regulations
This Plan and the granting and exercise of any Stock Option hereunder
and the obligations of the Company to sell and deliver Shares under any such
Stock Option shall be subject to all applicable laws, rules, and regulations and
to such approvals by any governmental agencies as may be required.
2.15 Proceeds from Sale of Stock
Proceeds of the purchase of Optioned Shares by an Optionee shall be
used for the general business purposes of the Company.
2.16 Shareholder Approval
This Plan shall be submitted to the shareholders for their approval
within twelve (12) months from the date hereof. The Company may grant Stock
Options prior to such approval which shall be conditioned upon subsequent
shareholder approval.
2.17 Compliance with Securities Laws
The Board shall have the right to:
(a) require an Optionee to execute, as a condition of exercise of a
Stock Option, a letter evidencing Optionee's intent to acquire the Shares for
investment and not with a view to the resale or distribution thereof;
(b) place appropriate legends upon the certificate or certificates for
the Shares; and
(c) take such other acts as it deems necessary in order to cause the
issuance of Optioned Shares to comply with applicable provisions of state and
federal securities laws.
In furtherance of the foregoing, and not by way of limitation thereof,
no Stock Option shall be exercisable unless such Stock Option and the Shares to
be issued pursuant thereto shall be registered under appropriate federal and
state securities laws, or shall be exempt therefrom, in the opinion of the Board
upon advice of counsel to the Company. Each Stock Option Agreement shall contain
adequate provisions to assure that there will be no violation of such laws. This
provision shall in no way obligate the Company to undertake registration of
Stock Options or Shares hereunder. Issue, transfer or delivery of certificates
for Shares pursuant to the exercise of Stock Options may be delayed, at the
discretion of the Board until the Board is satisfied that the applicable
requirements of the federal and state securities laws have been met.
The dollar value and number of Stock Options granted under this Plan
are limited pursuant to Rule 701 promulgated by the Securities and Exchange
Commission which provides an exemption from the registration requirements under
the Act. Any guidelines adopted pursuant to this Plan shall contain the current
limitations specified in said Rule 701 until the Company is registered under the
Act.
3. PROVISIONS APPLICABLE SOLELY TO NONQUALIFIED STOCK OPTIONS
In addition to the provisions of Section 2 above, the following
paragraphs shall apply to any Stock Options granted under this Plan which are
not Incentive Stock Options.
3.1 Option Price
The option, or purchase, price of each Share optioned as a Nonqualified
Stock Option under this Plan shall be determined by the Board and set forth in
the Stock Option Agreement.
3.2 Method of Exercise of Stock Option
The amount to be paid by the Optionee upon exercise of a Nonqualified
Option shall be the exercise price provided for in the Stock Option Agreement,
together with the amount of federal, state, and local income and FICA
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taxes required to be withheld by the Company. An Optionee may elect to pay
Optionee's federal, state, or local income and FICA withholding tax by having
the Company withhold shares of Company common stock having a value equal to the
amount required to be withheld. The value of the shares to be withheld is deemed
to equal the fair market value of the shares on the day the option is exercised.
An election by an Optionee to have shares withheld for this purpose will be
subject to the following restrictions:
(a) If an Optionee has received multiple Stock Option grants, a
separate election must be made for each grant;
(b) The election must be made prior to the day the Stock Option is
exercised;
(c) The election will be irrevocable;
(d) The election will be subject to the disapproval of the Board;
(e) If the Optionee is an "officer" of the Company within the meaning
of Section 16 of the Exchange Act ("Section 16") as defined in Rule 16a-1
promulgated by the Securities Exchange Commission, the election may not be made
within six (6) months following the grant of the Stock Option; and
(f) If the Optionee is an "officer" of the Company within the meaning
of Section 16 as so defined, the election must be made either six (6) months
prior to the day the Stock Option is exercised or during the period beginning on
the third business day following the date of release of the Company's quarterly
or annual summary statement of sales and earnings and ending on the twelfth
business day following such date.
3.3 Assignment
The Company may allow limited assignment rights for the gifting by
Optionee of rights hereunder to vested Nonqualified Stock Options, on terms to
be determined by the Board from time to time.
4. PROVISIONS APPLICABLE SOLELY TO INCENTIVE STOCK OPTIONS
In addition to the provisions of Section 2 above, the following
paragraphs shall apply to any Stock Options granted under this Plan which are
Incentive Stock Options.
4.1 Conformance with Internal Revenue Code
Stock Options granted under this Plan which are "Incentive Stock
Options" shall conform to, be governed by, and be interpreted in accordance with
Section 422 of the Code and any regulations promulgated thereunder and
amendments to the Code and Regulations. Only Employees may be granted Incentive
Stock Options hereunder--Consultants may not receive Incentive Stock Options
hereunder.
4.2 Option Price
The option, or purchase, price of each Share optioned as an Incentive
Stock Option under this Plan shall be determined by the Board at the time of the
action for the granting of the Stock Option and set forth in the Stock Option
Agreement, but shall not, in any event, be less than the fair market value of
the Company's common stock on the date of grant.
4.3 Limitation on Amount of Incentive Stock Option
The aggregate fair market value of the Optioned Shares, as determined
on the date of grant, vesting in any one calendar year with respect to which an
Employee has the right to purchase (under this Plan or any other plan of the
Company which authorizes Incentive Stock Options) shall not exceed $100,000; and
to the extent any Stock Option purporting to be an Incentive Stock Option grants
an Employee the right to purchase Optioned Shares with an
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aggregate fair market value vesting in any one calendar year in excess of
$100,000, as so determined (under this Plan or any other plan of the Company
which authorizes Incentive Stock Options), shall be deemed a Nonqualified Stock
Option for such excess amount.
4.4 Limitation on Grants to Substantial Shareholders
It is the Company's intent that in the case of any Employee who,
immediately prior to the grant of a Stock Option hereunder, owns stock in the
Company representing more than ten percent (10%) of the voting power of all
classes of stock of the Company, will not be granted Incentive Stock Options
unless the per share option price specified by the Board for the Incentive Stock
Options granted such an Employee is at least one hundred ten percent (110%) of
the fair market value of the Company's stock on the date of grant and such Stock
Option, by its terms, is not exercisable after the expiration of five (5) years
from the date such Stock Option is granted. Any Stock Option that by its terms
purports to be an Incentive Stock Option that is issued to an Employee who owns
stock in the Company representing more than ten percent (10%) of the voting
power of all classes of stock of the Company that does not have an exercise
price of at least one hundred ten percent (110%) of the fair market value of the
Company's stock on the date of grant or that is, by its terms, exercisable after
the expiration of five (5) years from the date such Stock Option is granted,
shall be deemed a Nonqualified Stock Option.
4.5 Method of Exercise of Stock Option
The amount to be paid by the Optionee upon exercise of an Incentive
Stock Option shall be the purchase price per share provided for in the Stock
Option Agreement.
5. RELOAD OPTIONS
In accordance with the procedures described below, the Company may,
concurrently with the grant of any Stock Options, grant reload rights ("Reload
Options") for the purchase, at the time of the exercise of any Stock Option, of
a number of shares equal to the number of shares purchased by such exercise. The
number of Reload Options shall equal:
(i) the number of shares of Common Stock used to exercise the
underlying Incentive Stock Options or Nonqualified Stock
Options, and
(ii) to the extent authorized by the Committee, the number of
shares of Common Stock used to satisfy any tax withholding
requirement incident to the exercise of the underlying
Incentive Stock Options or Nonqualified Stock Options. The
grant of a Reload Option will become effective upon the
exercise of underlying Incentive Stock Options, Nonqualified
Stock Options, or Reload Options through the use of shares of
Common Stock held by the Optionee for at least twelve (12)
months. Notwithstanding the fact that the underlying Stock
Option may be an Incentive Stock Option, a Reload Option is to
be treated as Nonqualified Stock Option, and is not intended
to qualify as an "incentive stock option" under Section 422 of
the Internal Revenue Code of 1986.
5.1 Reload Option Amendment
Each Incentive Stock Option Agreement and Nonqualified Stock Option
Agreement shall state whether the Committee has authorized Reload Options with
respect to such Stock Options. Upon the exercise of an underlying Incentive
Stock Option, Nonqualified Stock Option, or other Reload Option, the Reload
Option, if granted, will be evidenced by an amendment to the underlying Stock
Option Agreement.
5.2 Reload Option Price
The option price per share of Common Stock deliverable upon the
exercise of a Reload Option shall be the fair market value of a share of Common
Stock on the date the grant of the Reload Option becomes effective.
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5.3 Term and Exercise.
Each Reload Option is fully exercisable beginning six (6) months from
the effective date of grant. The term of each Reload Option shall be equal to
the remaining Stock Option term set forth in the Stock Option Agreement.
5.4 Termination of Employment
No additional Reload Options shall be granted to an Optionee when Stock
Options, Incentive Stock Options and/or Reload Options are exercised pursuant to
the terms of this Plan following termination of such Optionee's employment.
5.5 Applicability of Stock Option Sections
All terms of this Plan, except Section 4 and this Section 5, shall
apply to granted Reload Options, and for all purposes Reload Options shall be
treated as Nonqualified Stock Options.
6. AMENDMENT
This Plan, the Plan Guidelines, and all rules and regulations adopted
in respect hereof may be terminated, suspended, or amended at any time by a
majority vote of the Board, provided that no such action shall adversely affect
any material rights of Optionees granted under this Plan prior to such action.
The Board may amend the terms and conditions of outstanding Stock Options,
provided, however, that (i) no such amendment would be adverse to the holders of
such Stock Options, (ii) no such amendment shall extend the period for exercise
of a Stock Option, and (iii) the amended terms of a Stock Option would be
permitted under this Plan.
7. FOREIGN EMPLOYEES
Without amending this Plan, the Board may grant Stock Options to
eligible Employees who are foreign nationals on such terms and conditions
different from those specified in this Plan as may in the judgment of the Board
be necessary or desirable to foster and promote achievement of the purposes of
this Plan, and, in furtherance of such purposes the Board may make such
modifications, amendments, procedures, subplans, and the like as may be
necessary or advisable to comply with the provisions of the laws in other
countries in which the Company operates or has Employees.
8. REGISTRATION, LISTING, AND QUALIFICATION OF SHARES
Each Stock Option shall be subject to the requirement that if at any
time the Board shall determine that the registration, listing, or qualification
of the shares covered thereby upon any securities exchange or under any foreign,
federal, state, or local law, or the consent or approval of any governmental
regulatory body, is necessary or desirable as a condition of, or in connection
with, the granting of such Stock Option or the purchase of shares thereunder, no
such Stock Option may be exercised unless and until such registration, listing,
qualification, consent, or approval shall have been effected or obtained free of
any condition not acceptable to the Board. Any person exercising a Stock Option
shall make such representations and agreements and furnish such information as
the Board may request to assure compliance with the foregoing or any other
applicable legal requirements.
9. NO RIGHTS TO STOCK OPTIONS OR EMPLOYMENT; NO RESTRICTIONS; NO
DAMAGES
No Employee or other person shall have any claim or right to be granted
a Stock Option under this Plan. Having received a Stock Option under this Plan
shall not give an Employee any right to receive any other grant or Stock Option
under this Plan. Optionee agrees that continuation of the engagement of each
Employee or Consultant of the Company is, in the absence of any written and
signed contract to the contrary, terminable at the will of the Company. An
Optionee shall have no rights to or interest in any Stock Option except as set
forth herein. Neither this Plan nor any action taken hereunder shall be
construed as giving any Employee any right to be retained in the employ of the
Company. Neither this Plan nor any action taken hereunder shall be construed as
giving any
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Consultant any right to be retained or engaged by the Company. Nothing in this
Plan shall restrict the Company's rights to adopt other option plans pertaining
to any or all of the Employees or Consultants covered under this Plan or other
Employees or Consultants not covered under this Plan. Unless otherwise
specifically provided by the Board, each Optionee shall be required to
specifically acknowledge and agree that their engagement by the Company as
Employee or Consultant is at will, is not for any fixed or minimum time period,
is subject to the mutual consent of the Company and the Optionee, and may be
terminated at any time, with or without cause or notice, for any reason or no
reason, and without any kind of pre- or post-termination warning, discipline or
procedure.
Each Stock Option granted hereunder may be affected, with regard to
both vesting schedule and termination, by leaves of absence, a reduction in the
number of hours worked, partial disability, and other changes in Optionee's
Employee or Consultant status, as the case may be. The Company's policies in
such matters shall be contained in the Plan Guidelines adopted by the Board. The
Plan Guidelines and the guidelines, rules, policies and regulations contained
therein may be amended at any time and from time to time by the Board or the
Committee, in its sole discretion and with or without notice. Optionee's rights
hereunder or under any Stock Option granted hereunder at any time shall be
governed by the Plan Guidelines in effect at the time of any change in
Optionee's employment status as contemplated above.
Each Optionee must acknowledge and agree that, regardless of whether
Optionee's engagement as an employment or Consultant is terminated with or
without cause or notice, or with or without any kind of pre- or post-termination
warning, discipline or procedure, that Optionee has no right to, will not bring,
and specifically waives any legal claim or action against the Company or any
officer, Employee, or director thereof for any damages or losses arising from
having to exercise any vested portion of any Stock Option during any defined
period after termination or any cancellation of any unvested portion of any
Stock Option, or of any vested by unexercised portion of any Stock Option.
10. COSTS AND EXPENSES
Except as provided herein with respect to the payment of taxes, all
costs and expenses of administering this Plan shall be borne by the Company and
shall not be charged to any grant or any Employee receiving a grant.
11. PLAN UNFUNDED
This Plan shall be unfunded. Except for the Board's reservation of a
sufficient number of authorized shares to the extent required by law to meet the
requirements of this Plan, the Company shall not be required to establish any
special or separate fund or to make any other segregation of assets to assure
payment of any grant under this Plan.
12. GOVERNING LAW
This Plan shall be governed by and construed in accordance with the
laws of the state of Delaware.
13. SEVERABILITY
If, for any reason, any provision of this Plan is not fully enforceable
in accordance with its terms, the remainder of the Plan shall nevertheless be
enforceable to the extent permitted by law.
11
<PAGE>
Greenfield Online, Inc.
(the "Company")
STOCK OPTION AGREEMENT FOR PURCHASE OF STOCK
We are pleased to inform you that the Company has granted to you, as
the individual named below (the "Optionee"), this Stock Option. This Stock
Option Agreement is a contract between you and the Company. It grants to you
certain defined rights, at certain times, and under certain conditions, to
purchase shares of the Company's common stock, and in exchange you accept
certain obligations and responsibilities, as described below and in the
Company's 1999 Stock Option Plan (the "Plan") and the attached Terms and
Conditions.
FOR VALUABLE CONSIDERATION, the Company does hereby grant to the
Optionee, as of the Date of Option Grant specified below, the right and option
to purchase the Number of Option Shares of common stock of the Company specified
below (the "Option Shares") for the Exercise Price Per Share specified below,
and the right to purchase the Option Shares under this Stock Option Agreement
shall accrue and vest according to the Vesting Schedule specified below:
- --------------------------------------------------------------------------------
Name of Optionee:
- --------------------------------------------------------------------------------
Type of Option: |_| Employee Incentive Stock Option
|_| Employee Nonqualified Stock Option
|_| Consultant Nonqualified Stock Option
- --------------------------------------------------------------------------------
Number of Option Shares:
- --------------------------------------------------------------------------------
Exercise Price Per Share:
- --------------------------------------------------------------------------------
Date of Option Grant:
- --------------------------------------------------------------------------------
Reload Rights: |_| Yes |_| No
- --------------------------------------------------------------------------------
Term of Option: __ Years from Date of Option Grant
- --------------------------------------------------------------------------------
Vesting Schedule:
- --------------------------------------------------------------------------------
EXECUTED as of the Date of Option Grant.
Greenfield Online, Inc.
By
-----------------------------------------------
Its
-----------------------------------------------
By signing below and entering into this Stock Option
Agreement, Optionee agrees to the terms hereof, and all
obligations and responsibilities as described in Plan and the
attached Terms and Conditions.
OPTIONEE
By
-----------------------------------------------
, as Optionee
<PAGE>
TERMS AND CONDITIONS OF STOCK OPTION AGREEMENT
Stock Options are subject to the terms hereof and of the
Company's 1999 Stock Option Plan ("Plan"). Capitalized
Terms used in this Stock Option Agreement (this "Agreement"),
if not otherwise defined, have the meanings given them in the Plan.
1. a. Any Option Shares which become purchasable ("vest") but are not
purchased on a vesting date or anniversary date, as the case may be, may be
purchased on any subsequent date, provided all options for the purchase of
Option Shares must be exercised within the time periods specified in Section 2
below.
b. Optionees shall have conditional purchase rights in the event of
any Change of Control Event as described in the Plan.
2. If Optionee is or becomes an Employee, all unvested options shall
expire upon any termination of Optionee's employment with the Company, whether
voluntary or involuntary, or upon the death or disability of Optionee.
Subject to the terms hereof, all vested options (i.e., options for
which the right to purchase has accrued) shall expire at the earliest of the
following:
a. The earlier of the end of the Term of Option specified on the
first page of this Agreement or Ten (10) years from the Date of Option Grant
specified on the first page of this Agreement;
b. If Optionee is or becomes an Employee, ninety (90) days after
voluntary or involuntary termination of Optionee's employment other than
termination as described in Paragraphs (c) or (d) below;
c. If Optionee is or becomes an Employee, upon discharge of Optionee
for misconduct, willfully or wantonly harmful to the Company;
d. If Optionee is or becomes an Employee, Twelve (12) months after
Optionee's death or disability; or
[e. In the event of a Change of Control Event as described the Plan.
However, if the Change of Control Event, as the case may be, and as described in
the Plan, is not finalized, all options which are terminated pursuant to this
Subsection (e) shall be reinstated as described in the Plan. ]
3. This Stock Option may be exercised at different times for portions
of the total number of Option Shares for which the right to purchase shall have
accrued and vested hereunder, provided that such portions are in multiples of
ten (10) shares if the Optionee holds vested portions for ninety-nine (99) or
fewer shares and otherwise in multiples of one hundred (100) shares.
4. This Stock Option shall be adjusted for recapitalizations, stock
splits, stock dividends, and the like as described in the Plan.
5. This is not an employment contract and while the benefits, if any,
of this Stock Option may be an incident of the Optionee's employment with the
Company, the terms and conditions of such employment are otherwise wholly
independent hereof.
6. Neither this Stock Option nor any right under this Agreement is
assignable, and rights under this Agreement may be exercised only by the
Optionee or a person to whom the rights under this Agreement shall pass by will
or the laws of descent and distribution.
7. The Optionee shall indicate Optionee's intention to exercise this
Stock Option with respect to vested Option Shares by notifying the Company in
writing of such intention, indicating the number of Option Shares Optionee
intends to purchase, and, within ten (10) days thereafter, paying to the Company
an amount sufficient to cover the total option price of such Option Shares.
Payment of the Exercise Price Per Share specified on the first page of this
Agreement shall be made in cash or in accordance with such procedures for a
"cashless exercise" as may be established from time to time by the Company and
the brokerage firm, if any, designated by the Company to facilitate exercises of
Stock Options and sales of Optioned Shares under the Plan.
8. If the Optionee, immediately prior to the grant of an Incentive
Stock Option hereunder, owns stock in the Company representing more than ten
percent (10%) of the voting power of all classes of stock of the Company, the
Exercise Price Per Share specified on the first page of this Agreement for
Incentive Stock Options granted hereunder shall be not less than one hundred ten
percent (110%) of the fair market value of the Company's common stock on the
Date of Option Grant specified on the first page of this Agreement, and such
Incentive Stock Option shall not be exercisable after the expiration of five (5)
years from said Date of Option Grant, and notwithstanding any pricing or vesting
terms hereof which appear at variance with the foregoing, all pricing and
vesting terms hereof shall be deemed hereby to conform with the foregoing
limitations. In lieu of the foregoing, the Optionee may elect to have a Stock
Option that purports to be an Incentive Stock Option treated as a Non-Qualified
Stock Option pursuant to the original terms of this Agreement.
9. Notwithstanding the foregoing, no Stock Option shall be exercisable,
and rights under this Agreement are not enforceable, unless and until all
requirements imposed by or pursuant to Section 2.17 of the Plan are satisfied.
SECTION 2.17 of Plan DESCRIBES CERTAIN IMPORTANT CONDITIONS RELATING TO
FEDERAL AND STATE SECURITIES LAWS THAT MUST BE SATISFIED BEFORE THIS OPTION CAN
BE EXERCISED AND BEFORE THE COMPANY CAN ISSUE ANY OPTION SHARES TO THE OPTIONEE.
AT THE PRESENT TIME THE PLAN IS NOT REGISTERED AND, ALTHOUGH SHARES MAY BE
ISSUED UPON EXERCISE, THE SHARES SO ISSUED ARE NOT FREELY TRADABLE.
THERE CAN BE NO ASSURANCE THAT THE EXEMPTION(S) ALLOWING ISSUANCE OF
THE SHARES UPON EXERCISE WILL REMAIN AVAILALBLE, NOR IS THERE ASSURANCE THAT
ISSUED SHARES WILL BE REGISTERED OR THAT ONCE REGISTERED THE REGISTRATION WILL
BE MAINTAINED. IF THE SHARES ARE NOT REGISTERED OR IF THE REGISTRATION IS NOT
MAINTAINED, THE OPTIONEE WILL NOT BE ABLE TO TRADE SHARES OBTAINED UPON EXERCISE
OF THIS
<PAGE>
STOCK OPTION UNLESS AN EXEMPTION FROM REGISTRATION IS AVAILABLE. AT THE PRESENT
TIME, EXEMPTIONS FROM REGISTRATION UNDER FEDERAL AND STATE SECURITIES LAWS ARE
VERY LIMITED AND MIGHT BE UNAVAILABLE TO THE OPTIONEE PRIOR TO THE EXPIRATION OF
THIS OPTION. AS A CONSEQUENCE OF THE FOREGOING, THE OPTIONEE MIGHT NOT HAVE AN
OPPORTUNITY TO EXERCISE THIS OPTION AND TO RECEIVE OPTION SHARES UPON SUCH
EXERCISE, AND, IF THE OPTIONEE IS ABLE TO EXERCISE THIS OPTION AND TO RECEIVE
OPTION SHARES UPON SUCH EXERCISE, THE OPTIONEE MIGHT NOT HAVE THE OPPORTUNITY TO
TRADE SUCH OPTION SHARES.
10. NO RIGHTS TO STOCK OPTIONS OR EMPLOYMENT; NO RESTRICTIONS; NO
DAMAGES
Neither Optionee nor any other person shall have any claim or right to
be granted a Stock Option under the Plan. Having received a Stock Option under
the Plan shall not give Optionee any right to receive any other grant or option
under the Plan. Optionee agrees that continuation of the engagement of Optionee
as an Employee or Consultant of the Company, as the case may be, is, in the
absence of any written and signed contract to the contrary, terminable at the
will of the Company. Optionee shall have no rights to or interest in any Option
except as set forth herein, in the Plan, or in another Option specifically
granted by the Company to Optionee. Neither this Option, the Plan, nor any
action taken hereunder or under the Plan shall be construed as giving any
Employee or Consultant any right to be retained in the employ of, or be engaged
as a Consultant to, the Company, as the case may be. Nothing in the Plan
restricts the Company's rights to adopt other option plans pertaining to any or
all of the Employees or Consultants covered under the Plan or other Employees or
Consultants not covered under the Plan.
Optionee specifically acknowledges and agrees that, unless otherwise
agreed to in writing by the Company, Optionee's engagement by the Company as an
Employee or Consultant is "at will", is not for any fixed or minimum time
period, is subject to the mutual consent of the Company and the Optionee, and
may be terminated by the Company at any time, with or without cause or notice,
for any reason or no reason, and without any kind of pre- or post-termination
warning, discipline or procedure.
This Agreement and the Stock Option represented hereby may be affected,
with regard to both vesting schedule and termination, by leaves of absence, a
reduction in the number of hours worked, partial disability, and other changes
in Optionee's Employee or Consultant status, as the case may be. The Company's
policies in such matters, if any, shall be contained in the Plan Guidelines
adopted by the Board. The Plan Guidelines and the guidelines, rules, policies
and regulations contained therein may be amended at any time and from time to
time by the Board of Directors of the Company, or the Committee appointed by
such Board, in its sole discretion and with or without notice. Optionee's rights
hereunder or under the Plan at any time shall be governed by the Plan Guidelines
in effect at the time of any change in Optionee's employment status as
contemplated above.
11. This Agreement and the Stock Option represented hereby is granted
pursuant to and is controlled by the Plan and by the Plan Guidelines, if any, as
adopted by the Board and amended from time to time. Optionee, by execution
hereof, acknowledges receipt of the Plan and the Plan Guidelines as they
currently exist and acceptance of the terms and conditions of the Plan, the Plan
Guidelines and of this Agreement. If, for any reason, any provision of this
Stock Option is not fully enforceable in accordance with its terms, the
remainder of the Stock Option shall nevertheless be enforceable to the extent
permitted by law.
<PAGE>
GREENFIELD ONLINE, INC.
2000 DIRECTORS STOCK OPTION PLAN
As Adopted March 3, 2000
1. PURPOSE.
This 2000 Directors Stock Option Plan (this "Plan") is established to
provide equity incentives for certain nonemployee members of the Board of
Directors of Greenfield Online, Inc. (the "Company"), who are described in
Section 6.1 below, by granting such persons op22tions to purchase shares of
stock of the Company.
2. ADOPTION AND STOCKHOLDER APPROVAL.
After this Plan is adopted by the Board of Directors of the Company
(the "Board"), this Plan will become effective on the time and date (the
"Effective Date") on which the registration statement filed by the Company with
the Securities and Exchange Commission ("SEC") under the Securities Act of 1933,
as amended (the "Securities Act"), to register the initial public offering of
the Company's Common Stock is declared effective by the SEC. This Plan shall be
approved by the stockholders of the Company, consistent with applicable laws,
within twelve (12) months after the date this Plan is adopted by the Board.
3. TYPES OF OPTIONS AND SHARES.
Options granted under this Plan shall be non-qualified stock options
("NQSOS"). The shares of stock that may be purchased upon exercise of Options
granted under this Plan (the "Shares") are shares of the Common Stock of the
Company.
4. NUMBER OF SHARES.
The maximum number of Shares that may be issued pursuant to Options
granted under this Plan (the "Maximum Number") is 150,000 Shares, subject to
adjustment as provided in this Plan. If any Option is terminated for any reason
without being exercised in whole or in part, the Shares thereby released from
such Option shall be available for purchase under other Options subsequently
granted under this Plan. At all times during the term of this Plan, the Company
shall reserve and keep available such number of Shares as shall be required to
satisfy the requirements of outstanding Options granted under this Plan;
provided, however that if the aggregate number of Shares subject to outstanding
Options granted under this Plan plus the aggregate number of Shares previously
issued by the Company pursuant to the exercise of Options granted under this
Plan equals or exceeds the Maximum Number, then notwithstanding anything herein
to the contrary, no further Options may be granted under this Plan until the
Maximum Number is increased or the aggregate number of Shares subject to
outstanding Options granted under this Plan plus the aggregate number of Shares
previously issued by the Company pursuant to the exercise of Options granted
under this Plan is less than the Maximum Number.
5. ADMINISTRATION.
This Plan shall be administered by the Board or by a committee of not
less than two members of the Board appointed to administer this Plan (the
"Committee"). As used in this Plan, references to the Committee shall mean
either such Committee or the Board if no Committee has been established. The
interpretation by the Committee of any of the provisions of this Plan or any
Option granted under this Plan shall be final and binding upon the Company and
all persons having an interest in any Option or any Shares purchased pursuant to
an Option.
6. ELIGIBILITY AND AWARD FORMULA.
6.1 Eligibility. Options shall be granted only to directors of the
Company who are not employees of the Company or any Parent, Subsidiary or
Affiliate of the Company, as those terms are defined in Section 17 below (each
such person referred to as an "Optionee").
1
<PAGE>
6.2 Initial Grant. Each Optionee who first becomes a member of the
Board on or after the Effective Date will automatically be granted an Option for
20,000 (an "Initial Grant") on the later of the Effective Date or on the date
such Optionee first becomes a member of the Board.
6.3 Succeeding Grants. At each Annual Meeting of the Company, each
Optionee will automatically be granted an Option for 4,000 Shares (a "Succeeding
Grant"), provided the Optionee is a member of the Board on such date and has
served continuously as a member of the Board since the date of such Optionee's
Initial Grant or, if such Optionee was ineligible to receive an Initial Grant,
since the Effective Date.
7. TERMS AND CONDITIONS OF OPTIONS.
Subject to the following and to Section 6 above:
7.1 Form of Option Grant. Each Option granted under this Plan shall be
evidenced by a written Stock Option Grant ("Grant") in such form (which need not
be the same for each Optionee) as the Committee shall from time to time approve,
which Grant shall comply with and be subject to the terms and conditions of this
Plan.
7.2 Vesting. The date an Optionee receives an Initial Grant or a
Succeeding Grant is referred to in this Plan as the "Start Date" for such
Option. (a) Initial Grants. Each Initial Grant will vest as to fifty percent
(50%) of the Shares on the first anniversary of the Start Date for such Initial
Grant, and as to twenty five (25%) of the Shares on the each subsequent
anniversary of the Start Date, so long as the Optionee continuously remains a
director or a consultant of the Company. (b) Succeeding Grants. Each Succeeding
Grant will vest as to fifty percent (50%) of the Shares on the first anniversary
of the Start Date for such Succeeding Grant, and as to twenty five (25%) of the
Shares on each subsequent anniversary of the Start Date, so long as the Optionee
continuously remains a director or a consultant of the Company.
7.3 Exercise Price. The exercise price of an Option shall be the Fair
Market Value (as defined in Section 17.4) of the Shares, at the time that the
Option is granted.
7.4 Termination of Option. Except as provided below in this Section,
each Option shall expire ten (10) years after its Start Date (the "Expiration
Date"). The Option shall cease to vest when the Optionee ceases to be a member
of the Board or a consultant of the Company. The date on which the Optionee
ceases to be a member of the Board or a consultant of the Company shall be
referred to as the "Termination Date".
An Option may be exercised after the Termination Date only as set forth
below:
(a) Termination Generally. If the Optionee ceases to be a
member of the Board or a consultant of the Company for any reason
except death of the Optionee or disability of the Optionee (whether
temporary or permanent, partial or total, as determined by the
Committee), then each Option then held by such Optionee, to the extent
(and only to the extent) that it would have been exercisable by the
Optionee on the Termination Date, may be exercised by the Optionee no
later than twenty-four (24) months after the Termination Date, but in
no event later than the Expiration Date.
(b) Death or Disability. If the Optionee ceases to be a member
of the Board or a consultant of the Company because of the death of the
Optionee or the disability of the Optionee (whether temporary or
permanent, partial or total, as determined by the Committee), then each
Option then held by such Optionee to the extent (and only to the
extent) that it would have been exercisable by the Optionee on the
Termination Date, may be exercised by the Optionee (or the Optionee's
legal representative) no later than twelve (12) months after the
Termination Date, but in no event later than the Expiration Date.
8. EXERCISE OF OPTIONS.
8.1 Exercise Period. Subject to the provisions of Section 8.5 below,
Options shall be exercisable as they vest; provided that the Committee may
provide that such Options shall be immediately exercisable subject to repurchase
in accordance with the vesting schedule set forth in Section 7.
2
<PAGE>
8.2 Notice. Options may be exercised only by delivery to the Company of
an exercise agreement in a form approved by the Committee stating the number of
Shares being purchased, the restrictions imposed on the Shares and such
representations and agreements regarding the Optionee's investment intent and
access to information as may be required by the Company to comply with
applicable securities laws, together with payment in full of the exercise price
for the number of Shares being purchased.
8.3 Payment. Payment for the Shares purchased upon exercise of an
Option may be made:
(a) in cash or by check;
(b) by surrender of shares of Common Stock of the Company that have
been owned by the Optionee for more than six (6) months (and which have been
paid for within the meaning of SEC Rule 144 and, if such shares were purchased
from the Company by use of a promissory note, such note has been fully paid with
respect to such shares) or were obtained by the Optionee in the open public
market, having a Fair Market Value equal to the exercise price of the Option;
(c) by waiver of compensation due or accrued to the Optionee for
services rendered;
(d) provided that a public market for the Company's stock exists,
through a "same day sale" commitment from the Optionee and a broker-dealer that
is a member of the National Association of Securities Dealers (an "NASD DEALER")
whereby the Optionee irrevocably elects to exercise the Option and to sell a
portion of the Shares so purchased to pay for the exercise price and whereby the
NASD Dealer irrevocably commits upon receipt of such Shares to forward the
exercise price directly to the Company;
(e) provided that a public market for the Company's stock exists,
through a "margin" commitment from the Optionee and an NASD Dealer whereby the
Optionee irrevocably elects to exercise the Option and to pledge the Shares so
purchased to the NASD Dealer in a margin account as security for a loan from the
NASD Dealer in the amount of the exercise price, and whereby the NASD Dealer
irrevocably commits upon receipt of such Shares to forward the exercise price
directly to the Company; or
(f) by any combination of the foregoing.
8.4 Withholding Taxes. Prior to issuance of the Shares upon exercise of
an Option, the Optionee shall pay or make adequate provision for any federal or
state withholding obligations of the Company, if applicable.
8.5 Limitations on Exercise. Notwithstanding the exercise periods set
forth in the Grant, exercise of an Option shall always be subject to the
following limitations:
(a) An Option shall not be exercisable unless such exercise is in
compliance with the Securities Act and all applicable state securities laws, as
they are in effect on the date of exercise.
(b) The Committee may specify a reasonable minimum number of Shares
that may be purchased upon any exercise of an Option, provided that such minimum
number will not prevent the Optionee from exercising the full number of Shares
as to which the Option is then exercisable.
9. NONTRANSFERABILITY OF OPTIONS.
During the lifetime of the Optionee, an Option shall be exercisable
only by the Optionee or by the Optionee's guardian or legal representative,
unless otherwise determined by the Committee. No Option may be sold, pledged,
assigned, hypothecated, transferred or disposed of in any manner other than by
will or by the laws of descent and distribution, unless otherwise determined by
the Committee.
10. PRIVILEGES OF STOCK OWNERSHIP.
No Optionee shall have any of the rights of a stockholder with respect
to any Shares subject to an Option until the Option has been validly exercised.
No adjustment shall be made for dividends or distributions or other
3
<PAGE>
rights for which the record date is prior to the date of exercise, except as
provided in this Plan. The Company shall provide to each Optionee a copy of the
annual financial statements of Company at such time after the close of each
fiscal year of the Company as they are released by the Company to its
stockholders.
11. ADJUSTMENT OF OPTION SHARES.
In the event that the number of outstanding shares of Common Stock of
the Company is changed by a stock dividend, stock split, reverse stock split,
combination, reclassification or similar change in the capital structure of the
Company without consideration, the number of Shares available under this Plan
and the number of Shares subject to outstanding Options and the exercise price
per share of such outstanding Options shall be proportionately adjusted, subject
to any required action by the Board or stockholders of the Company and
compliance with applicable securities laws; provided, however, that no
fractional shares shall be issued upon exercise of any Option and any resulting
fractions of a Share shall be rounded up to the nearest whole Share.
12. NO OBLIGATION TO CONTINUE AS DIRECTOR.
Nothing in this Plan or any Option granted under this Plan shall confer
on any Optionee any right to continue as a director of the Company.
13. COMPLIANCE WITH LAWS.
The grant of Options and the issuance of Shares upon exercise of any
Options shall be subject to and conditioned upon compliance with all applicable
requirements of law, including without limitation compliance with the Securities
Act, compliance with all other applicable state securities laws and compliance
with the requirements of any stock exchange or national market system on which
the Shares may be listed. The Company shall be under no obligation to register
the Shares with the SEC or to effect compliance with the registration or
qualification requirement of any state securities laws, stock exchange or
national market system.
14. ACCELERATION OF OPTIONS ON CERTAIN CORPORATE TRANSACTIONS.
In the event of:
(a) a dissolution or liquidation of the Company,
(b) a merger or consolidation in which the Company is not the surviving
corporation (other than a merger or consolidation with a wholly-owned
subsidiary, a reincorporation of the Company in a different jurisdiction, or
other transaction in which there is no substantial change in the stockholders of
the Company or their relative stock holdings and the Options granted under this
Plan are assumed, converted or replaced by the successor corporation, which
assumption, conversion or replacement will be binding on all Optionees),
(c) a merger in which the Company is the surviving corporation but
after which the stockholders of the Company (other than any stockholder which
merges (or which owns or controls another corporation which merges) with the
Company in such merger) cease to own their shares or other equity interests in
the Company,
(d) the sale of substantially all of the assets of the Company, or
(e) the acquisition, sale or transfer of more than 50% of the
outstanding shares of the Company by tender offer or similar transaction,
the vesting of all options granted pursuant to this Plan will accelerate and the
options will become exercisable in full prior to the consummation of such event
at such times and on such conditions as the Committee determines, and must be
exercised, if at all, within seven months of the consummation of said event. Any
options not exercised within such seven-month period shall expire.
4
<PAGE>
15. AMENDMENT OR TERMINATION OF PLAN.
The Board may at any time terminate or amend this Plan or any
outstanding option, provided that the Board may not terminate or amend the terms
of any outstanding option without the consent of the Optionee. In any case, no
amendment of this Plan may adversely affect any then outstanding Options or any
unexercised portions thereof without the written consent of the Optionee.
16. TERM OF PLAN.
Options may be granted pursuant to this Plan from time to time within a
period of ten (10) years from the Effective Date.
17. CERTAIN DEFINITIONS.
As used in this Plan, the following terms shall have the following
meanings:
(a) "Parent" means any corporation (other than the Company) in an
unbroken chain of corporations ending with the Company if each of such
corporations other than the Company owns stock possessing 50% or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain. -4- Greenfield Online, Inc. 2000 Directors Stock
Option Plan
(b) "Subsidiary" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company if each of the
corporations other than the last corporation in the unbroken chain owns stock
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain.
(c) "Affiliate" means any corporation that directly, or indirectly
through one or more intermediaries, controls or is controlled by, or is under
common control with, another corporation, where "control" (including the terms
"controlled by" and "under common control with") means the possession, direct or
indirect, of the power to cause the direction of the management and policies of
the corporation, whether through the ownership of voting securities, by contract
or otherwise.
(d) "Fair market Value" means, as of any date, the value of a share of
the Company's Common Stock determined as follows:
o if such Common Stock is then quoted on the Nasdaq National
Market, its closing price on the Nasdaq National Market on the date of
determination as reported in The Wall Street Journal;
o if such Common Stock is publicly traded and is then listed
on a national securities exchange, its closing price on the date of
determination on the principal national securities exchange on which
the Common Stock is listed or admitted to trading as reported in The
Wall Street Journal;
o if such Common Stock is publicly traded but is not quoted on
the Nasdaq National Market nor listed or admitted to trading on a
national securities exchange, the average of the closing bid and asked
prices on the date of determination as reported in The Wall Street
Journal;
o in the case of an Option granted on the Effective Date, the
price per share at which shares of the Company's Common Stock are
initially offered for sale to the public by the Company's underwriters
in the initial public offering of the Company's Common Stock pursuant
to a registration statement filed with the SEC under the Securities
Act; or
o if none of the foregoing is applicable, by the Committee in
good faith.
5
<PAGE>
GREENFIELD ONLINE, INC.
2000 EMPLOYEE STOCK PURCHASE PLAN
As approved by the Board of Directors
on March 3, 2000 and Greenfield Online's
Shareholders on March 6, 2000
Greenfield Online, Inc. (the "Company") does hereby establish its 2000
Employee Stock Purchase Plan as follows:
1. Purpose of the Plan. The purpose of this Plan is to provide eligible
employees who wish to become shareholders in the Company a convenient method of
doing so. It is believed that employee participation in the ownership of the
business will be to the mutual benefit of both the employees and the Company.
2. Definitions.
2.1 "Base pay" means regular straight time earnings, plus
review cycle bonuses and overtime payments, payments for incentive compensation,
and other special payments except to the extent that any such item is
specifically excluded by the Board of Directors of the Company (the "Board").
2.2 "Account" shall mean the funds accumulated with respect to
an individual employee as a result of deductions from his paycheck for the
purpose of purchasing stock under this Plan. The funds allocated to an
employee's account shall remain the property of the respective employee at all
times but may be commingled with the general funds of the Company.
3. Employees Eligible to Participate. Any employee of the Company or
any of its subsidiaries who is in the employ of the Company or subsidiary on an
offering commencement date is eligible to participate in that offering, except
(a) employees whose customary employment is less than 20 hours per week, and (b)
employees whose customary employment is for not more than five months in any
calendar year.
4. Offerings. There will be twelve separate consecutive offerings
pursuant to the Plan. The first offering shall commence on the date that is
ninety (90) days after the date on which the Company's registration statement
for the registration under the Securities Act of 1933, as amended, of shares of
the common stock of the Company becomes effective, and shall continue through
December 31, 2000. Thereafter, offerings shall commence on each subsequent
January 1 and July 1 and shall last for a period of six months, and the final
offering under this Plan shall commence on January 1, 2006 and terminate on June
30, 2006. In order to become eligible to purchase shares, an employee must sign
an Enrollment Agreement, and any other necessary papers on or before the
commencement date (January 1 or July 1) of the particular offering in which he
wishes to participate. Participation in one offering under the Plan shall
neither limit, nor require, participation in any other offering.
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5. Price. The purchase price per share shall be the lesser of (1) 85%
of the fair market value of the stock on the offering date; or (2) 85% of the
fair market value of the stock on the last business day of the offering. Fair
market value shall mean the closing bid price as reported on the National
Association of Securities Dealers Automated Quotation System or, if the stock is
traded on a stock exchange, the closing price for the stock on the principal
such exchange.
6. Offering Date. The "offering date" as used in this Plan shall be the
commencement date of the offering, if such date is a regular business day, or
the first regular business day following such commencement date. A different
date may be set by resolution of the Board.
7. Number of Shares to be Offered. The maximum number of shares that
will be offered under the Plan is 200,000 shares. The shares to be sold to
participants under the Plan will be common stock of the Company. If the total
number of shares for which options are to be granted on any date in accordance
with Section 10 exceeds the number of shares then available under the Plan
(after deduction of all shares for which options have been exercised or are then
outstanding), the Company shall make a pro rata allocation of the shares
remaining available in as nearly a uniform manner as shall be practicable and as
it shall determine to be equitable. In such event, the payroll deductions to be
made pursuant to the authorizations therefor shall be reduced accordingly and
the Company shall give written notice of such reduction to each employee
affected thereby.
8. Participation.
8.1 An eligible employee may become a participant by
completing an Enrollment Agreement provided by the Company and filing it with
Shareholder Services prior to the Commencement of the offering to which it
relates.
8.2 Payroll deductions for a participant shall commence on the
offering date, and shall end on the termination date of such offering unless
earlier terminated by the employee as provided in Paragraph 14.
9. Payroll Deductions.
9.1 At the time a participant files his authorization for a
payroll deduction, he shall elect to have deductions made from his pay on each
payday during the time he is a participant in an offering at the rate of 2%, 4%,
6%, 8%, or 10% of his base pay.
9.2 All payroll deductions made for a participant shall be
credited to his account under the Plan. A participant may not make any separate
cash payment into such account nor may payment for shares be made other than by
payroll deduction.
9.3 A participant may discontinue his participation in the
Plan as provided in Section 14, but no other change can be made during an
offering and, specifically, a participant may not alter the rate of his payroll
deductions for that offering.
10. Granting of Option. On the offering date, this Plan shall be deemed
to have granted to the participant an option for as many full shares as he will
be able to purchase with the payroll deductions credited to his account during
his participation in that offering.
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11. Exercise of Option. Each employee who continues to be a participant
in an offering on the last business day of that offering shall be deemed to have
exercised his option on such date and shall be deemed to have purchased from the
Company such number of full shares of common stock reserved for the purpose of
the Plan as his accumulated payroll deductions on such date will pay for at the
option price.
12. Employee's Rights as a Shareholder. No participating employee shall
have any right as a shareholder with respect to any shares until the shares have
been purchased in accordance with Section 11 above and the stock has been issued
by the Company.
13. Evidence of Stock Ownership.
13.1 Promptly following the end of each offering, the number
of shares of common stock purchased by each participant shall be deposited into
an account established in the participant's name at a stock brokerage or other
financial services firm designated by the Company (the "ESPP Broker").
13.2 The participant may direct, by written notice to the
Company at the time of his enrollment in the Plan, that his ESPP Broker account
be established in the names of the participant and one other person designated
by the participant, as joint tenants with right of survivorship, tenants in
common, or community property, to the extent and in the manner permitted by
applicable law.
13.3 A participant shall be free to undertake a disposition
(as that term is defined in Section 424(c) of the Code) of the shares in his
account at any time, whether by sale, exchange, gift, or other transfer of legal
title, but in the absence of such a disposition of the shares, the shares must
remain in the participant's account at the ESPP Broker until the holding period
set forth in Section 423(a) of the Code has been satisfied. With respect to
shares for which the Section 423(a) holding period has been satisfied, the
participant may move those shares to another brokerage account of participant's
choosing or request that a stock certificate be issued and delivered to him.
13.4 A participant who is not subject to payment of U.S.
income taxes may move his shares to another brokerage account of his choosing or
request that a stock certificate be issued and delivered to him at any time,
without regard to the satisfaction of the Section 423(a) holding period.
14. Withdrawal.
14.1 An employee may withdraw from an offering, in whole but
not in part, at any time prior to the last business day of such offering by
delivering a Withdrawal Notice to the Company, in which event the Company will
refund the entire balance of his deductions as soon as practicable thereafter.
14.2 To re-enter the Plan, an employee who has previously
withdrawn must file a new Enrollment Agreement in accordance with Section 8.1.
The employee's re-entry into the Plan will not become effective before the
beginning of the next offering following his withdrawal, and if the withdrawing
employee is an officer of the Company within the meaning of Section 16 of the
Securities
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Exchange Act of 1934 he may not re-enter the Plan before the beginning of the
second offering following his withdrawal.
15. Carryover of Account. At the termination of each offering the
Company shall automatically re-enroll the employee in the next offering, and the
balance in the employee's account shall be used for option exercises in the new
offering, unless the employee has advised the Company otherwise. Upon
termination of the Plan, the balance of each employee's account shall be
refunded to him.
16. Interest. No interest will be paid or allowed on any money in the
accounts of participating employees.
17. Rights Not Transferable. No employee shall be permitted to sell,
assign, transfer, pledge, or otherwise dispose of or encumber either the payroll
deductions credited to his account or any rights with regard to the exercise of
an option or to receive shares under the Plan other than by will or the laws of
descent and distribution, and such right and interest shall not be liable for,
or subject to, the debts, contracts, or liabilities of the employee. If any such
action is taken by the employee, or any claim is asserted by any other party in
respect of such right and interest whether by garnishment, levy, attachment or
otherwise, such action or claim will be treated as an election to withdraw funds
in accordance with Section 14.
18. Termination of Employment. Upon termination of employment for any
reason whatsoever, including but not limited to death or retirement, the balance
in the account of a participating employee shall be paid to the employee or his
estate.
19. Amendment or Discontinuance of the Plan. The Board shall have the
right to amend, modify, or terminate the Plan at any time without notice,
provided that no employee's existing rights under any offering already made
under Section 4 hereof may be adversely affected thereby, and provided further
that no such amendment of the Plan shall, except as provided in Section 20,
increase above 200,000 shares the total number of shares to be offered unless
shareholder approval is obtained therefor.
20. Changes in Capitalization. In the event of reorganization,
recapitalization, stock split, stock dividend, combination of shares, merger,
consolidation, offerings of rights, or any other change in the structure of the
common shares of the Company, the Board may make such adjustment, if any, as it
may deem appropriate in the number, kind, and the price of shares available for
purchase under the Plan, and in the number of shares which an employee is
entitled to purchase.
21. Share Ownership. Notwithstanding anything herein to the contrary,
no employee shall be permitted to subscribe for any shares under the Plan if
such employee, immediately after such subscription, owns shares (including all
shares which may be purchased under outstanding subscriptions under the Plan)
possessing 5% or more of the total combined voting power or value of all classes
of shares of the Company or of its parent or subsidiary corporations. For the
foregoing purposes the rules of Section 425(d) of the Internal Revenue Code of
1986 shall apply in determining share ownership. In addition, no employee shall
be allowed to subscribe for any shares under the Plan which permits his rights
to purchase shares under all "employee stock purchase plans" of the Company and
its subsidiary corporations to accrue at a rate which exceeds $25,000 of the
fair market value of such shares
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(determined at the time such right to subscribe is granted) for each calendar
year in which such right to subscribe is outstanding at any time.
22. Administration. The Plan shall be administered by the Board. The
Board may delegate any or all of its authority hereunder to such committee of
the Board or officer of the Company as it may designate. The administrator shall
be vested with full authority to make, administer, and interpret such rules and
regulations as it deems necessary to administer the Plan, and any determination,
decision, or action of the administrator in connection with the construction,
interpretation, administration, or application of the Plan shall be final,
conclusive, and binding upon all participants and any and all persons claiming
under or through any participant.
23. Notices. All notices or other communications by a participant to
the Company under or in connection with the Plan shall be deemed to have been
duly given when received by Shareholder Services of the Company or when received
in the form specified by the Company at the location, or by the person,
designated by the Company for the receipt thereof.
24. Termination of the Plan. This Plan shall terminate at the earliest
of the following:
24.1 June 30, 2006.
24.2 The date of the filing of a Statement of Intent to
Dissolve by the Company or the effective date of a merger or consolidation
wherein the Company is not to be the surviving corporation, which merger or
consolidation is not between or among corporations related to the Company. Prior
to the occurrence of either of such events, on such date as the Company may
determine, the Company may permit a participating employee to exercise the
option to purchase shares for as many full shares as the balance of his account
will allow at the price set forth in accordance with Section 5. If the employee
elects to purchase shares, the remaining balance of his account will be refunded
to him after such purchase.
24.3 The date the Board acts to terminate the Plan in
accordance with Section 19 above.
24.4 The date when all shares reserved under the Plan have
been purchased.
25. Limitations on Sale of Stock Purchased Under the Plan. The Plan is
intended to provide common stock for investment and not for resale. The Company
does not, however, intend to restrict or influence any employee in the conduct
of his own affairs. An employee, therefore, may sell stock purchased under the
Plan at any time he chooses, subject to compliance with any applicable Federal
or state securities laws. THE EMPLOYEE ASSUMES THE RISK OF ANY MARKET
FLUCTUATIONS IN THE PRICE OF THE STOCK.
26. Governmental Regulation. The Company's obligation to sell and
deliver shares of the Company's common stock under this Plan is subject to the
approval of any governmental authority required in connection with the
authorization, issuance, or sale of such shares.
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================================================================================
EMPLOYMENT AGREEMENT
BETWEEN
GREENFIELD ONLINE, INC.
AND
SUSAN ROSOVSKY
JULY 1, 1999
================================================================================
<PAGE>
EMPLOYMENT AGREEMENT
dated as of July 1, 1999, between
GREENFIELD ONLINE, INC., a
Connecticut corporation (the
"Company"), and SUSAN ROSOVSKY (the
"Executive").
The Company is engaged in the business (the "Subject
Business") of providing customized and syndicated marketing research services
over the Internet. The Executive is, and prior to the date hereof has been,
employed by the Company as Vice President, Client Service, is and has been a key
member of the Company's management team and as such has substantial experience
that is valuable to the Subject Business and the Company.
The Executive and the Company desire to enter into this
Employment Agreement to set forth the terms governing the Executive's continuing
employment as well as to provide adequate and reasonable protection for the
Company's reasonable business interest of safeguarding its tradesecrets,
confidential information, customer and employee relationships
NOW, THEREFORE, in consideration of the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
Section 1. Consideration.
Executive recognizes and agrees that immediately prior to the execution of this
Agreement he/she was an employee-at-will and did not have a contractual
relationship with the company, express or implied granting the Executive
employment for a definite term or employment that was terminable by the Company
only for cause. Executive agrees that good and valuable consideration exists to
support the execution and enforcement of this Agreement including his/her
continued employment with Company and the Notice and Severance payment provided
herein.
Section 2. Employment.
The Company shall employ the Executive, and the Executive
accepts employment with the Company, as an employee-at-will upon the terms and
conditions set forth in this Agreement for the period beginning on the Effective
Date (as defined in Section 15(j)) and ending on the Termination Date determined
pursuant to Section 5(a) (the "Employment Period"). This is not a contract of
employment. Executive is an employee-at-will and may be terminated by Company at
any time with or without cause.
Section 3. Base Salary, Bonus and Benefits.
(a) During the Employment Period, the Executive's base salary
shall be $110,000.00 per annum or such other rate as the Compensation Committee
of the Board (excluding the Executive if he should be a member of the Board or
the Compensation Committee at the time of such determination) may designate from
time to time (the "Base Salary"), which
<PAGE>
salary shall be reviewed by the Compensation Committee on an annual basis and
payable in such installments as is customary for other senior executives of the
Company. In addition, during the Employment Period, the Executive shall be
entitled to (i) participate in all employee benefit programs and published bonus
programs for which other senior executives of the Company are generally
eligible, (ii) be eligible to participate in all insurance plans available
generally to other senior executives of the Company, (iii) to participate in the
Company's Non-Qualified Employee Stock Option Plan as amended, revised or
terminated from time to time by the Board of Directors, and (iv) take 4 weeks of
paid vacation annually. In the case of any partial month during the Employment
Period, reimbursements, payments and other entitlements pursuant to this Section
3 shall be made or provided to the Executive on a per diem basis.
(b) In addition to the Base Salary and benefits set forth in
paragraph (a) above, during the Employment Period the Executive shall be
entitled to participate in the Management Committee Bonus Plan as published by
the Company and amended from time to time. The amount of the bonus, if any, to
be paid shall be reviewed by the Compensation Committee on an annual basis.
(c) The Company shall reimburse the Executive for all
reasonable expenses incurred by him in the course of performing his duties under
this Agreement which are consistent with the Company's policies in effect from
time to time with respect to travel, entertainment and other business expenses,
subject to the Company's requirements with respect to reporting and
documentation of such expenses.
(d) The Company shall deduct from any payments to be made by
it to the Executive under this Agreement any amounts required to be withheld in
respect of any Federal, state or local income or other taxes.
Section 4. Position and Duties.
(a) During the Employment Period, the Executive shall
initially serve as Vice President, Client Service of the Company, and shall
report to Rudy Nadilo, President and CEO. The Executive acknowledges and agrees
that he owes a fiduciary duty of loyalty to the Company to discharge his duties
and otherwise act in a manner consistent with the best interests of the Company
and its Subsidiaries.
(b) During the Employment Period, the Executive shall devote
his best efforts and full working time, attention and energies to the
performance of his duties and responsibilities under this Agreement (except for
vacations to which he is entitled pursuant to Section 3(a) and except for
illness or incapacity). During the Employment Period, the Executive shall not
engage in any business activity which, in the reasonable judgment of the Board
(excluding the Executive if he should be a member of the Board at the time of
such determination), conflicts with the duties of the Executive hereunder,
whether or not such activity is pursued for gain, profit or other pecuniary
advantage.
Section 5. Termination.
(a) Termination Date. The Executive's employment under this
Agreement shall terminate upon the earliest to occur (the date of such
occurrence being the "Termination Date")
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of (i) the effective date of the Executive's resignation (a "Resignation"), (ii)
the Executive's death or Disability (an "Involuntary Termination"), (iv) the
effective date of a termination of the Executive's employment for Cause by the
Board or the President of the Company (a "Termination for Cause"), and (v) the
effective date of a termination of the Executive's employment by the Board for
reasons that do not constitute Cause (a "Termination Without Cause"). The
effective date of a Resignation shall be as determined under Section 5(b); the
effective date of an Involuntary Termination shall be the date of death or, in
the event of a Disability, the date specified in a notice delivered to the
Executive by the Company; and the effective date of a Termination for Cause or a
Termination Without Cause shall be the date specified in a notice delivered to
the Executive by the Company of such termination.
(b) Resignation. The Executive shall give the Company at least
30 days' prior written notice of a Resignation, with the effective date of such
Resignation specified therein. The Company may, in its discretion, accelerate
the effective date of the Resignation.
Section 6. Effect of Termination; Severance.
(a) In the event of a Termination Without Cause, the Executive
or his beneficiaries or estate shall have the right to receive the following:
(i) the unpaid portion of the Base Salary, computed
on a pro rata basis to the Termination Date;
(ii) the unpaid portion of the Base Salary for the
period beginning on the Termination Date and ending thirty
(30) days from the Termination Date., payable in the same
amounts and at the same intervals as the Base Salary was paid
immediately prior to the Termination Date; provided, however,
that in the event of a breach by the Executive of Section 7,
8, 9 or 10 on or after the Termination Date, the provisions of
Section 12 shall apply;
(iii) reimbursement for any expenses for which the
Executive shall not have been previously reimbursed, as
provided in Section 3(c); and
(iv) the portion of any bonus payable in accordance
with Section 3(b) for the calendar year in which such
termination occurs, pro rated through the date of such
termination on a per diem basis.
(b) In the event of a Termination for Cause, an Involuntary
Termination or a Resignation, the Executive or his beneficiaries or estate shall
have the right to receive the following:
(i) the unpaid portion of the Base Salary, computed
on a pro rata basis to the Termination Date; and
(ii) reimbursement for any expenses for which the
Executive shall not have been previously reimbursed, as
provided in Section 3(c).
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<PAGE>
(c) Upon any termination, neither the Executive nor his
beneficiaries or estate shall have any further rights under this Agreement or
any rights arising out of this Agreement other than as provided in Sections 6(a)
and (b) above.
Section 7. Nondisclosure and Nonuse of Confidential Information.
The Executive will not disclose or use at any time, either
during the Employment Period and for a period of five years thereafter, any
Confidential Information of which the Executive is or becomes aware, whether or
not such information is developed by him, except to the extent that such
disclosure or use is directly related to and required by the Executive's
performance of duties assigned to the Executive by the Company.
Section 8. Inventions and Patents.
The Executive agrees that all Work Product belongs to the
Company. The Executive will promptly disclose such Work Product to the Board and
perform all actions reasonably requested by the Board (whether during or after
the Employment Period) to establish and confirm such ownership (including,
without limitation, the execution and delivery of assignments, consents, powers
of attorney and other instruments) and to provide reasonable assistance to the
Company in connection with the prosecution of any applications for patents,
trademarks, trade names, service marks or reissues thereof or in the prosecution
or defense of interferences relating to any Work Product.
Section 9. Non-Compete, Non-Solicitation, Non-Disparagement.
The Executive acknowledges and agrees with the Company that,
during the course of the Executive's employment with the Company, the Executive
has had and will continue to have the opportunity to develop relationships with
existing employees, customers and other business associates of the Company and
its Subsidiaries which relationships constitute goodwill of the Company, and the
Company would be irreparably damaged if the Executive were to take actions that
would damage or misappropriate such goodwill. Accordingly, the Executive agrees
as follows:
(a) The Executive acknowledges that the Company currently
conducts the Subject Business throughout the world (the "Territory").
Accordingly, during the term hereof and until the first anniversary of the
Termination Date (the "Non-Compete Period"), the Executive shall not, directly
or indirectly, enter into, engage in, assist, give or lend funds to or otherwise
finance, be employed by or consult with, or have a financial or other interest
in, any business which competes or could, in the reasonable judgment of the
Board, be deemed to be in competition with, at the time in question, the Company
within the Territory, whether for or by himself or as an independent contractor,
agent, stockholder, partner or joint venturer for any other Person. To the
extent that the covenant provided for in this Section 9(a) may later be deemed
by a court to be too broad to be enforced with respect to its duration or with
respect to any particular activity or geographic area, the court making such
determination shall have the power to reduce the duration or scope of the
provision, and to add or delete specific words or phrases to or from the
provision. The provision as modified shall then be enforced.
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<PAGE>
(b) Notwithstanding the foregoing, the aggregate ownership by
the Executive of no more than two percent (on a fully-diluted basis) of the
outstanding equity securities of any Person, which securities are traded on a
national or foreign securities exchange, quoted on the NASDAQ stock market or
other automated quotation system, and which Person competes with the Company (or
any part thereof) within the Territory, shall not be deemed to be a violation of
Section 9(a). In the event that any Person in which the Executive has any
financial or other interest directly or indirectly enters into a business during
the Non-Compete Period that competes with the Company within the Territory, the
Executive shall divest all of his interest (other than as permitted to be held
pursuant to the first sentence of this Section 8(b)) in such Person within 15
days after such Person enters into such business that competes with the Company
within the Territory.
(c) The Executive covenants and agrees that, during the period
commencing with the Effective Date and ending on the first anniversary of the
date on which the Executive ceases to be employed by the Company for any reason
whatsoever, the Executive will not, directly or indirectly, either for himself
or for any other Person (A) solicit any employee of the Company or any of its
Subsidiaries to terminate his or her employment with the Company or any of its
Subsidiaries or employ any such individual during his or her employment with the
Company or any of its Subsidiaries and for a period of one year after such
individual terminates his or her employment with the Company or any of its
Subsidiaries, (B) solicit any customer of the Company or any of its Subsidiaries
to purchase or distribute information, products or services of or on behalf of
the Executive or such other Person that are competitive with the information,
products or services provided by the Company or any of its Subsidiaries, or (c)
take any action that may cause injury to the relationships between the Company
or any of its Subsidiaries or any of their employees and any lessor, lessee,
vendor, supplier, customer, distributor, employee, consultant or other business
associate of the Company or any of its Subsidiaries as such relationship relates
to the Company's or any of its Subsidiaries' conduct of their business.
(d) The Executive understands that the foregoing restrictions
may limit his ability to earn a livelihood in a business which is competitive
with the business of the Company and any of its Subsidiaries, but he
nevertheless believes that he has received and will receive sufficient
consideration and other benefits as an employee of the Company and as otherwise
provided hereunder or as described in the recitals hereto to clearly justify
such restrictions which, in any event (given his education, skills and ability),
the Executive does not believe would prevent him from otherwise earning a
living.
Section 10. Delivery of Materials Upon Termination of Employment.
The Executive shall deliver to the Company at the termination
of the Employment Period or at any time the Company may request all memoranda,
notes, plans, records, reports, computer tapes and software and other documents
and data (and copies thereof) relating to the Confidential Information, Work
Product or the Subject Business which he may then possess or have under his
control regardless of the location or form of such material and, if requested by
the Company, will provide the Company with written confirmation that all such
materials have been delivered to the Company.
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<PAGE>
Section 11. Insurance.
The Company may, for its own benefit, maintain "keyman" life
and disability insurance policies covering the Executive. The Executive will
cooperate with the Company and provide such information or other assistance as
the Company may reasonably request in connection with the Company obtaining and
maintaining such policies.
Section 12. Enforcement.
Because the Executive's services are unique and because the
Executive has access to Confidential Information and Work Product, the parties
hereto agree that money damages would be an inadequate remedy for any breach of
this Agreement. Therefore, in the event of a breach or threatened breach of this
Agreement, the Company or its successors or assigns may, in addition to other
rights and remedies existing in their favor, apply to any court of competent
jurisdiction for specific performance and/or injunctive or other relief in order
to enforce, or prevent any violations of, the provisions hereof (without posting
a bond or other security). In addition to the foregoing, and not in any way in
limitation thereof, or in limitation of any right or remedy otherwise available
to the Company, if the Executive violates any provision of the foregoing
Sections 7, 8, 9 or 10, any payments then or thereafter due from the Company to
the Executive pursuant to Section 6(a)(ii) shall be terminated forthwith and the
Company's obligation to pay and the Executive's right to receive such payments
shall terminate and be of no further force or effect, in each case without
limiting or affecting the Executive's obligations under such Sections 7, 8, 9 or
10or the Company's other rights and remedies available at law or equity.
Section 13. Representations.
Each party hereby represents and warrants to the other party
that (a) the execution, delivery and performance of this Agreement by such party
does not and will not conflict with, breach, violate or cause a default under
any agreement, contract or instrument to which such party is a party or any
judgment, order or decree to which such party is subject, and (b) upon the
execution and delivery of this Agreement by such party, this Agreement will be a
valid and binding obligation of such party, enforceable in accordance with its
terms, except as enforcement hereof may be limited by any applicable bankruptcy,
reorganization, insolvency or other laws affecting creditors rights generally or
by general principles of equity. In addition, the Executive represents and
warrants to the Company that the Executive is not a party to or bound by any
employment agreement, consulting agreement, non-compete agreement,
confidentiality agreement or similar agreement with any other Person. The
Company and the Executive hereby terminate all existing employment or consulting
agreements between them, if any, to the extent such agreements may be in effect
after the date hereof.
Section 14. Definitions.
"Board" shall mean the board of directors of the Company.
"Business Day" shall mean any day that is not a Saturday,
Sunday, or a day on which banking institutions in New York are not required to
be open.
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<PAGE>
"Cause" shall mean (i) the Executive's material breach of any
of the terms of this Agreement; (ii) the conviction of a crime involving fraud,
theft or dishonesty by the Executive; (iii) the Executive's willful and
continuing disregard of lawful instructions of the Board or superiors (if any);
(iv) the continued use of alcohol or drugs by the Executive to an extent that,
in the good faith determination of the Board, such use interferes in any manner
with the performance of the Executive's duties and responsibilities; or (v) the
conviction of the Executive for violating any Law constituting a felony
(including the Foreign Corrupt Practices Act of 1977).
"Confidential Information" means information that is not
generally known to the public and that is used, developed or obtained by the
Company or any of its Subsidiaries in connection with the Subject Business,
including, but not limited to, (i) information, observations, procedures and
data obtained by the Executive while employed by the Company (including those
obtained prior to the date of this Agreement) concerning the business or affairs
of the Company or any of its Subsidiaries, (ii) products or services, (iii)
costs and pricing structures, (iv) analyses, (v) drawings, photographs and
reports, (vi) computer software, including operating systems, applications and
program listings, (vii) flow charts, manuals and documentation, (viii) data
bases, (ix) accounting and business methods, (x) inventions, devices, new
developments, methods and processes, whether patentable or unpatentable and
whether or not reduced to practice, (xi) customers and customer lists, (xii)
other copyrightable works, (xiii) all production methods, processes, technology
and trade secrets, and (xiv) all similar and related information in whatever
form. Confidential Information will not include any information that has been
published in a form generally available to the public prior to the date the
Executive proposes to disclose or use such information. Confidential Information
will not be deemed to have been published merely because individual portions of
the information have been separately published, but only if all material
features comprising such information have been published in combination.
"Disability" shall mean the physical or mental inability of
the Executive (i) to substantially perform all of his duties under this
Agreement for a period of 90 consecutive days or longer or for any 90 days in
any period of 365 consecutive days, or (ii) that, in the opinion of a physician
selected by the Board (excluding the Executive if the Executive is a member of
the Board at such time) is likely to prevent the Executive from substantially
performing all of his duties under this Agreement for more than 90 days in any
period of 365 consecutive days.
"Subsidiary" of the Company means and includes (i) any
corporation more than 50% of whose stock of any class or classes having by the
terms thereof ordinary voting power to elect a majority of the directors of such
corporation (irrespective of whether or not at the time stock of any class or
classes of such corporation shall have or might have voting power by reason of
the happening of any contingency) is at the time owned by the Company or
indirectly through Subsidiaries and (ii) any partnership, association, joint
venture or other entity (other than a corporation) in which the Company directly
or indirectly through Subsidiaries, has more than a 50% equity interest at the
time.
"Work Product" shall mean all inventions, innovations,
improvements, technical information, systems, software developments, methods,
designs, analyses, drawings, reports, service marks, trademarks, tradenames,
logos and all similar or related information (whether
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<PAGE>
patentable or unpatentable) which relates to the Company's or any of its
Subsidiaries' actual or anticipated business, research and development or
existing or future products or services and which are conceived, developed or
made by the Executive in connection with or relating to (whether or not during
usual business hours and whether or not alone or in conjunction with any other
Person) the Executive's position and duties while employed by the Company
(including those conceived, developed or made prior to the date of this
Agreement) together with all patent applications, letters patent, trademark,
tradename and service mark applications or registrations, copyrights and
reissues thereof that may be granted for or upon any of the foregoing.
Section 15. General Provisions.
(a) Severability. It is the desire and intent of the Parties
hereto that the provisions of this Agreement be enforced to the fullest extent
permissible under the laws and public policies applied in each jurisdiction in
which enforcement is sought. Accordingly, if any particular provision of this
Agreement shall be adjudicated by a court of competent jurisdiction to be
invalid, prohibited or unenforceable for any reason, such provision, as to such
jurisdiction, shall be ineffective, without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of this
Agreement or affecting the validity or enforceability of such provision in any
other jurisdiction. Notwithstanding the foregoing, if such provision could be
more narrowly drawn so as not to be invalid, prohibited or unenforceable in such
jurisdiction, it shall, as to such jurisdiction, be so narrowly drawn, without
invalidating the remaining provisions of this Agreement or affecting the
validity or enforceability of such provision in any other jurisdiction.
(b) Notices. All notices, requests, demands, claims and other
communications hereunder shall be in writing and sufficient if (i) delivered
personally, (ii) delivered by certified United States Post Office mail, return
receipt requested, (iii) telecopied or (iv) sent to the recipient by a
nationally-recognized overnight courier service (charges prepaid) and addressed
to the intended recipient as set forth below:
(a) if to the Executive, to:
with a copy to:
(b) if to the Company, to:
Greenfield Online, Inc.
274 Riverside Avenue
Westport, Connecticut 06880
Attention: Rudy Nadilo President and CEO
Telecopier: (203) 221-0791
with copies to:
Wake, See, Dimes & Bryniczka
27 Imperial Avenue
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P.O. Box 777
Westport, CT 06881
Attention: Jonathan A. Flatow
Telecopier: (203) 226-1641
or such other address as the recipient party to whom notice is to be given may
have furnished to the other party in writing in accordance herewith. Any such
communication shall deemed to have been delivered and received (a) in the case
of personal delivery, on the date of such delivery, (b) in the case of delivery
by mail, on the third Business Day following such mailing, (c) if telecopied, on
the date telecopied, and (d) in the case of delivery by nationally-recognized,
overnight courier, on the Business Day following dispatch.
(c) Entire Agreement. This Agreement and the documents
expressly referred to herein embody the complete agreement and understanding
among the parties and supersede and preempt any prior understandings, agreements
or representations by or among the parties, written or oral, which may have
related to the subject matter hereof in any way.
(d) Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
(e) Successors and Assigns. Except as otherwise provided
herein, this Agreement shall bind and inure to the benefit of and be enforceable
by the Executive and the Company and their respective successors, assigns,
heirs, representatives and estate, as the case may be; provided, however, that
the obligations of the Executive under this Agreement shall not be assigned
without the prior written consent of the Company.
(f) Amendment and Waiver. The provisions of this Agreement may
be amended and waived only with the prior written consent of the Company and the
Executive, and no course of conduct or failure or delay in enforcing the
provisions of this Agreement shall affect the validity, binding effect or
enforceability of this Agreement or any provision hereof.
(g) Governing Law/Venue. This Agreement shall be governed by
and construed in accordance with the domestic laws of the State of Connecticut
without giving effect to any choice or conflict of law provision or rule that
would cause the application of the laws of any jurisdiction other than the State
of Connecticut. The parties agree that any action to enforce the terms of this
Agreement shall be brought in State of Federal Court located in Fairfield County
Connecticut.
(h) Descriptive Headings; Nouns and Pronouns. Descriptive
headings are for convenience only and shall not control or affect the meaning or
construction of any provision of this Agreement. Whenever the context may
require, any pronouns used herein shall include the corresponding masculine,
feminine or neuter forms, and the singular form of nouns and pronouns shall
include the plural and vice-versa.
(i) Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
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PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT.
(j) Effectiveness. This Agreement shall become effective when
executed by both parties (the "Effective Date"). * * * * *
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Employment Agreement as of the date first written above.
GREENFIELD ONLINE, INC.
By: /s/
----------------------------
Name: Rudy Nadilo
Title: Pres + CEO
EXECUTIVE
/s/
--------------------------------
Susan Rosovsky
<PAGE>
================================================================================
EMPLOYMENT AGREEMENT
BETWEEN
GREENFIELD ONLINE, INC.
AND
LEIGH-BRIDELAND BELL
JULY 1, 1999
================================================================================
<PAGE>
EMPLOYMENT AGREEMENT
dated as of July 1, 1999, between GREENFIELD
ONLINE, INC., a Connecticut corporation (the
"Company"), and LEIGH-BRINDELAND BELL
(the "Executive").
The Company is engaged in the business (the "Subject
Business") of providing customized and syndicated marketing research services
over the Internet. The Executive is, and prior to the date hereof has been,
employed by the Company as Vice President, Business Development, is and has been
a key member of the Company's management team and as such has substantial
experience that is valuable to the Subject Business and the Company.
The Executive and the Company desire to enter into this
Employment Agreement to set forth the terms governing the Executive's continuing
employment as well as to provide adequate and reasonable protection for the
Company's reasonable business interest of safeguarding its tradesecrets,
confidential information, customer and employee relationships
NOW, THEREFORE, in consideration of the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
Section 1. Consideration.
Executive recognizes and agrees that immediately prior to the execution of this
Agreement he/she was an employee-at-will and did not have a contractual
relationship with the company, express or implied granting the Executive
employment for a definite term or employment that was terminable by the Company
only for cause. Executive agrees that good and valuable consideration exists to
support the execution and enforcement of this Agreement including his/her
continued employment with Company and the Notice and Severance payment provided
herein.
Section 2. Employment.
The Company shall employ the Executive, and the Executive
accepts employment with the Company, as an employee-at-will upon the terms and
conditions set forth in this Agreement for the period beginning on the Effective
Date (as defined in Section 15(j)) and ending on the Termination Date determined
pursuant to Section 5(a) (the "Employment Period"). This is not a contract of
employment. Executive is an employee-at-will and may be terminated by Company at
any time with or without cause.
Section 3. Base Salary, Bonus and Benefits.
(a) During the Employment Period, the Executive's base salary shall be
$110,000.00 per annum or such other rate as the Compensation Committee of the
Board (excluding the Executive if he should be a member of the Board or the
Compensation Committee at the time of such determination) may designate from
time to time (the "Base Salary"), which
<PAGE>
salary shall be reviewed by the Compensation Committee on an annual basis and
payable in such installments as is customary for other senior executives of the
Company. In addition, during the Employment Period, the Executive shall be
entitled to (i) participate in all employee benefit programs and published bonus
programs for which other senior executives of the Company are generally
eligible, (ii) be eligible to participate in all insurance plans available
generally to other senior executives of the Company, (iii) to participate in the
Company's Non-Qualified Employee Stock Option Plan as amended, revised or
terminated from time to time by the Board of Directors, and (iv) take 4 weeks of
paid vacation annually. In the case of any partial month during the Employment
Period, reimbursements, payments and other entitlements pursuant to this Section
3 shall be made or provided to the Executive on a per diem basis.
(b) In addition to the Base Salary and benefits set forth in
paragraph (a) above, during the Employment Period the Executive shall be
entitled to participate in the Management Committee Bonus Plan as published by
the Company and amended from time to time. The amount of the bonus, if any, to
be paid shall be reviewed by the Compensation Committee on an annual basis.
(c) The Company shall reimburse the Executive for all
reasonable expenses incurred by him in the course of performing his duties under
this Agreement which are consistent with the Company's policies in effect from
time to time with respect to travel, entertainment and other business expenses,
subject to the Company's requirements with respect to reporting and
documentation of such expenses.
(d) The Company shall deduct from any payments to be made by
it to the Executive under this Agreement any amounts required to be withheld in
respect of any Federal, state or local income or other taxes.
Section 4. Position and Duties.
(a) During the Employment Period, the Executive shall
initially serve as Vice President, Business Development of the Company, and
shall report to Rudy Nadilo, President and CEO. The Executive acknowledges and
agrees that he owes a fiduciary duty of loyalty to the Company to discharge his
duties and otherwise act in a manner consistent with the best interests of the
Company and its Subsidiaries.
(b) During the Employment Period, the Executive shall devote
his best efforts and full working time, attention and energies to the
performance of his duties and responsibilities under this Agreement (except for
vacations to which he is entitled pursuant to Section 3(a) and except for
illness or incapacity). During the Employment Period, the Executive shall not
engage in any business activity which, in the reasonable judgment of the Board
(excluding the Executive if he should be a member of the Board at the time of
such determination), conflicts with the duties of the Executive hereunder,
whether or not such activity is pursued for gain, profit or other pecuniary
advantage.
Section 5. Termination.
(a) Termination Date. The Executive's employment under this Agreement shall
terminate upon the earliest to occur (the date of such occurrence being the
"Termination Date")
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of (i) the effective date of the Executive's resignation (a "Resignation"), (ii)
the Executive's death or Disability (an "Involuntary Termination"), (iv) the
effective date of a termination of the Executive's employment for Cause by the
Board or the President of the Company (a "Termination for Cause"), and (v) the
effective date of a termination of the Executive's employment by the Board for
reasons that do not constitute Cause (a "Termination Without Cause"). The
effective date of a Resignation shall be as determined under Section 5(b); the
effective date of an Involuntary Termination shall be the date of death or, in
the event of a Disability, the date specified in a notice delivered to the
Executive by the Company; and the effective date of a Termination for Cause or a
Termination Without Cause shall be the date specified in a notice delivered to
the Executive by the Company of such termination.
(b) Resignation. The Executive shall give the Company at least
30 days' prior written notice of a Resignation, with the effective date of such
Resignation specified therein. The Company may, in its discretion, accelerate
the effective date of the Resignation.
Section 6. Effect of Termination; Severance.
(a) In the event of a Termination Without Cause, the Executive
or his beneficiaries or estate shall have the right to receive the following:
(i) the unpaid portion of the Base Salary, computed
on a pro rata basis to the Termination Date;
(ii) the unpaid portion of the Base Salary for the
period beginning on the Termination Date and ending thirty
(30) days from the Termination Date., payable in the same
amounts and at the same intervals as the Base Salary was paid
immediately prior to the Termination Date; provided, however,
that in the event of a breach by the Executive of Section 7,
8, 9 or 10 on or after the Termination Date, the provisions of
Section 12 shall apply;
(iii) reimbursement for any expenses for which the
Executive shall not have been previously reimbursed, as
provided in Section 3(c); and
(iv) the portion of any bonus payable in accordance
with Section 3(b) for the calendar year in which such
termination occurs, pro rated through the date of such
termination on a per diem basis.
(b) In the event of a Termination for Cause, an Involuntary
Termination or a Resignation, the Executive or his beneficiaries or estate shall
have the right to receive the following:
(i) the unpaid portion of the Base Salary, computed
on a pro rata basis to the Termination Date; and
(ii) reimbursement for any expenses for which the
Executive shall not have been previously reimbursed, as
provided in Section 3(c).
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<PAGE>
(c) Upon any termination, neither the Executive nor his
beneficiaries or estate shall have any further rights under this Agreement or
any rights arising out of this Agreement other than as provided in Sections 6(a)
and (b) above.
Section 7. Nondisclosure and Nonuse of Confidential Information.
The Executive will not disclose or use at any time, either
during the Employment Period and for a period of five years thereafter, any
Confidential Information of which the Executive is or becomes aware, whether or
not such information is developed by him, except to the extent that such
disclosure or use is directly related to and required by the Executive's
performance of duties assigned to the Executive by the Company.
Section 8. Inventions and Patents.
The Executive agrees that all Work Product belongs to the
Company. The Executive will promptly disclose such Work Product to the Board and
perform all actions reasonably requested by the Board (whether during or after
the Employment Period) to establish and confirm such ownership (including,
without limitation, the execution and delivery of assignments, consents, powers
of attorney and other instruments) and to provide reasonable assistance to the
Company in connection with the prosecution of any applications for patents,
trademarks, trade names, service marks or reissues thereof or in the prosecution
or defense of interferences relating to any Work Product.
Section 9. Non-Compete, Non-Solicitation, Non-Disparagement.
The Executive acknowledges and agrees with the Company that,
during the course of the Executive's employment with the Company, the Executive
has had and will continue to have the opportunity to develop relationships with
existing employees, customers and other business associates of the Company and
its Subsidiaries which relationships constitute goodwill of the Company, and the
Company would be irreparably damaged if the Executive were to take actions that
would damage or misappropriate such goodwill. Accordingly, the Executive agrees
as follows:
(a) The Executive acknowledges that the Company currently
conducts the Subject Business throughout the world (the "Territory").
Accordingly, during the term hereof and until the first anniversary of the
Termination Date (the "Non-Compete Period"), the Executive shall not, directly
or indirectly, enter into, engage in, assist, give or lend funds to or otherwise
finance, be employed by or consult with, or have a financial or other interest
in, any business which competes or could, in the reasonable judgment of the
Board, be deemed to be in competition with, at the time in question, the Company
within the Territory, whether for or by himself or as an independent contractor,
agent, stockholder, partner or joint venturer for any other Person. To the
extent that the covenant provided for in this Section 9(a) may later be deemed
by a court to be too broad to be enforced with respect to its duration or with
respect to any particular activity or geographic area, the court making such
determination shall have the power to reduce the duration or scope of the
provision, and to add or delete specific words or phrases to or from the
provision. The provision as modified shall then be enforced.
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<PAGE>
(b) Notwithstanding the foregoing, the aggregate ownership by
the Executive of no more than two percent (on a fully-diluted basis) of the
outstanding equity securities of any Person, which securities are traded on a
national or foreign securities exchange, quoted on the NASDAQ stock market or
other automated quotation system, and which Person competes with the Company (or
any part thereof) within the Territory, shall not be deemed to be a violation of
Section 9(a). In the event that any Person in which the Executive has any
financial or other interest directly or indirectly enters into a business during
the Non-Compete Period that competes with the Company within the Territory, the
Executive shall divest all of his interest (other than as permitted to be held
pursuant to the first sentence of this Section 8(b)) in such Person within 15
days after such Person enters into such business that competes with the Company
within the Territory.
(c) The Executive covenants and agrees that, during the period
commencing with the Effective Date and ending on the first anniversary of the
date on which the Executive ceases to be employed by the Company for any reason
whatsoever, the Executive will not, directly or indirectly, either for himself
or for any other Person (A) solicit any employee of the Company or any of its
Subsidiaries to terminate his or her employment with the Company or any of its
Subsidiaries or employ any such individual during his or her employment with the
Company or any of its Subsidiaries and for a period of one year after such
individual terminates his or her employment with the Company or any of its
Subsidiaries, (B) solicit any customer of the Company or any of its Subsidiaries
to purchase or distribute information, products or services of or on behalf of
the Executive or such other Person that are competitive with the information,
products or services provided by the Company or any of its Subsidiaries, or (c)
take any action that may cause injury to the relationships between the Company
or any of its Subsidiaries or any of their employees and any lessor, lessee,
vendor, supplier, customer, distributor, employee, consultant or other business
associate of the Company or any of its Subsidiaries as such relationship relates
to the Company's or any of its Subsidiaries' conduct of their business.
(d) The Executive understands that the foregoing restrictions
may limit his ability to earn a livelihood in a business which is competitive
with the business of the Company and any of its Subsidiaries, but he
nevertheless believes that he has received and will receive sufficient
consideration and other benefits as an employee of the Company and as otherwise
provided hereunder or as described in the recitals hereto to clearly justify
such restrictions which, in any event (given his education, skills and ability),
the Executive does not believe would prevent him from otherwise earning a
living.
Section 10. Delivery of Materials Upon Termination of Employment.
The Executive shall deliver to the Company at the termination
of the Employment Period or at any time the Company may request all memoranda,
notes, plans, records, reports, computer tapes and software and other documents
and data (and copies thereof) relating to the Confidential Information, Work
Product or the Subject Business which he may then possess or have under his
control regardless of the location or form of such material and, if requested by
the Company, will provide the Company with written confirmation that all such
materials have been delivered to the Company.
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<PAGE>
Section 11. Insurance.
The Company may, for its own benefit, maintain "keyman" life
and disability insurance policies covering the Executive. The Executive will
cooperate with the Company and provide such information or other assistance as
the Company may reasonably request in connection with the Company obtaining and
maintaining such policies.
Section 12. Enforcement.
Because the Executive's services are unique and because the
Executive has access to Confidential Information and Work Product, the parties
hereto agree that money damages would be an inadequate remedy for any breach of
this Agreement. Therefore, in the event of a breach or threatened breach of this
Agreement, the Company or its successors or assigns may, in addition to other
rights and remedies existing in their favor, apply to any court of competent
jurisdiction for specific performance and/or injunctive or other relief in order
to enforce, or prevent any violations of, the provisions hereof (without posting
a bond or other security). In addition to the foregoing, and not in any way in
limitation thereof, or in limitation of any right or remedy otherwise available
to the Company, if the Executive violates any provision of the foregoing
Sections 7, 8, 9 or 10, any payments then or thereafter due from the Company to
the Executive pursuant to Section 6(a)(ii) shall be terminated forthwith and the
Company's obligation to pay and the Executive's right to receive such payments
shall terminate and be of no further force or effect, in each case without
limiting or affecting the Executive's obligations under such Sections 7, 8, 9 or
10or the Company's other rights and remedies available at law or equity.
Section 13. Representations.
Each party hereby represents and warrants to the other party
that (a) the execution, delivery and performance of this Agreement by such party
does not and will not conflict with, breach, violate or cause a default under
any agreement, contract or instrument to which such party is a party or any
judgment, order or decree to which such party is subject, and (b) upon the
execution and delivery of this Agreement by such party, this Agreement will be a
valid and binding obligation of such party, enforceable in accordance with its
terms, except as enforcement hereof may be limited by any applicable bankruptcy,
reorganization, insolvency or other laws affecting creditors rights generally or
by general principles of equity. In addition, the Executive represents and
warrants to the Company that the Executive is not a party to or bound by any
employment agreement, consulting agreement, non-compete agreement,
confidentiality agreement or similar agreement with any other Person. The
Company and the Executive hereby terminate all existing employment or consulting
agreements between them, if any, to the extent such agreements may be in effect
after the date hereof.
Section 14. Definitions.
"Board" shall mean the board of directors of the Company.
"Business Day" shall mean any day that is not a Saturday,
Sunday, or a day on which banking institutions in New York are not required to
be open.
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<PAGE>
"Cause" shall mean (i) the Executive's material breach of any
of the terms of this Agreement; (ii) the conviction of a crime involving fraud,
theft or dishonesty by the Executive; (iii) the Executive's willful and
continuing disregard of lawful instructions of the Board or superiors (if any);
(iv) the continued use of alcohol or drugs by the Executive to an extent that,
in the good faith determination of the Board, such use interferes in any manner
with the performance of the Executive's duties and responsibilities; or (v) the
conviction of the Executive for violating any Law constituting a felony
(including the Foreign Corrupt Practices Act of 1977).
"Confidential Information" means information that is not
generally known to the public and that is used, developed or obtained by the
Company or any of its Subsidiaries in connection with the Subject Business,
including, but not limited to, (i) information, observations, procedures and
data obtained by the Executive while employed by the Company (including those
obtained prior to the date of this Agreement) concerning the business or affairs
of the Company or any of its Subsidiaries, (ii) products or services, (iii)
costs and pricing structures, (iv) analyses, (v) drawings, photographs and
reports, (vi) computer software, including operating systems, applications and
program listings, (vii) flow charts, manuals and documentation, (viii) data
bases, (ix) accounting and business methods, (x) inventions, devices, new
developments, methods and processes, whether patentable or unpatentable and
whether or not reduced to practice, (xi) customers and customer lists, (xii)
other copyrightable works, (xiii) all production methods, processes, technology
and trade secrets, and (xiv) all similar and related information in whatever
form. Confidential Information will not include any information that has been
published in a form generally available to the public prior to the date the
Executive proposes to disclose or use such information. Confidential Information
will not be deemed to have been published merely because individual portions of
the information have been separately published, but only if all material
features comprising such information have been published in combination.
"Disability" shall mean the physical or mental inability of
the Executive (i) to substantially perform all of his duties under this
Agreement for a period of 90 consecutive days or longer or for any 90 days in
any period of 365 consecutive days, or (ii) that, in the opinion of a physician
selected by the Board (excluding the Executive if the Executive is a member of
the Board at such time) is likely to prevent the Executive from substantially
performing all of his duties under this Agreement for more than 90 days in any
period of 365 consecutive days.
"Subsidiary" of the Company means and includes (i) any
corporation more than 50% of whose stock of any class or classes having by the
terms thereof ordinary voting power to elect a majority of the directors of such
corporation (irrespective of whether or not at the time stock of any class or
classes of such corporation shall have or might have voting power by reason of
the happening of any contingency) is at the time owned by the Company or
indirectly through Subsidiaries and (ii) any partnership, association, joint
venture or other entity (other than a corporation) in which the Company directly
or indirectly through Subsidiaries, has more than a 50% equity interest at the
time.
"Work Product" shall mean all inventions, innovations,
improvements, technical information, systems, software developments, methods,
designs, analyses, drawings, reports, service marks, trademarks, tradenames,
logos and all similar or related information (whether
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<PAGE>
patentable or unpatentable) which relates to the Company's or any of its
Subsidiaries' actual or anticipated business, research and development or
existing or future products or services and which are conceived, developed or
made by the Executive in connection with or relating to (whether or not during
usual business hours and whether or not alone or in conjunction with any other
Person) the Executive's position and duties while employed by the Company
(including those conceived, developed or made prior to the date of this
Agreement) together with all patent applications, letters patent, trademark,
tradename and service mark applications or registrations, copyrights and
reissues thereof that may be granted for or upon any of the foregoing.
Section 15. General Provisions.
(a) Severability. It is the desire and intent of the Parties
hereto that the provisions of this Agreement be enforced to the fullest extent
permissible under the laws and public policies applied in each jurisdiction in
which enforcement is sought. Accordingly, if any particular provision of this
Agreement shall be adjudicated by a court of competent jurisdiction to be
invalid, prohibited or unenforceable for any reason, such provision, as to such
jurisdiction, shall be ineffective, without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of this
Agreement or affecting the validity or enforceability of such provision in any
other jurisdiction. Notwithstanding the foregoing, if such provision could be
more narrowly drawn so as not to be invalid, prohibited or unenforceable in such
jurisdiction, it shall, as to such jurisdiction, be so narrowly drawn, without
invalidating the remaining provisions of this Agreement or affecting the
validity or enforceability of such provision in any other jurisdiction.
(b) Notices. All notices, requests, demands, claims and other
communications hereunder shall be in writing and sufficient if (i) delivered
personally, (ii) delivered by certified United States Post Office mail, return
receipt requested, (iii) telecopied or (iv) sent to the recipient by a
nationally-recognized overnight courier service (charges prepaid) and addressed
to the intended recipient as set forth below:
(a) if to the Executive, to:
with a copy to:
(b) if to the Company, to:
Greenfield Online, Inc.
274 Riverside Avenue
Westport, Connecticut 06880
Attention: Rudy Nadilo President and CEO
Telecopier: (203) 221-0791
with copies to:
Wake, See, Dimes & Bryniczka
27 Imperial Avenue
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<PAGE>
P.O. Box 777
Westport, CT 06881
Attention: Jonathan A. Flatow
Telecopier: (203) 226-1641
or such other address as the recipient party to whom notice is to be given may
have furnished to the other party in writing in accordance herewith. Any such
communication shall deemed to have been delivered and received (a) in the case
of personal delivery, on the date of such delivery, (b) in the case of delivery
by mail, on the third Business Day following such mailing, (c) if telecopied, on
the date telecopied, and (d) in the case of delivery by nationally-recognized,
overnight courier, on the Business Day following dispatch.
(c) Entire Agreement. This Agreement and the documents
expressly referred to herein embody the complete agreement and understanding
among the parties and supersede and preempt any prior understandings, agreements
or representations by or among the parties, written or oral, which may have
related to the subject matter hereof in any way.
(d) Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
(e) Successors and Assigns. Except as otherwise provided
herein, this Agreement shall bind and inure to the benefit of and be enforceable
by the Executive and the Company and their respective successors, assigns,
heirs, representatives and estate, as the case may be; provided, however, that
the obligations of the Executive under this Agreement shall not be assigned
without the prior written consent of the Company.
(f) Amendment and Waiver. The provisions of this Agreement may
be amended and waived only with the prior written consent of the Company and the
Executive, and no course of conduct or failure or delay in enforcing the
provisions of this Agreement shall affect the validity, binding effect or
enforceability of this Agreement or any provision hereof.
(g) Governing Law/Venue. This Agreement shall be governed by
and construed in accordance with the domestic laws of the State of Connecticut
without giving effect to any choice or conflict of law provision or rule that
would cause the application of the laws of any jurisdiction other than the State
of Connecticut. The parties agree that any action to enforce the terms of this
Agreement shall be brought in State of Federal Court located in Fairfield County
Connecticut.
(h) Descriptive Headings; Nouns and Pronouns. Descriptive
headings are for convenience only and shall not control or affect the meaning or
construction of any provision of this Agreement. Whenever the context may
require, any pronouns used herein shall include the corresponding masculine,
feminine or neuter forms, and the singular form of nouns and pronouns shall
include the plural and vice-versa.
(i) Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
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<PAGE>
PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT.
(j) Effectiveness. This Agreement shall become effective when
executed by both parties (the "Effective Date"). * * * * *
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Employment Agreement as of the date first written above.
GREENFIELD ONLINE, INC.
By: /s/
----------------------------------------
Name: Rudy Nadilo
Title: Pres + CEO
EXECUTIVE
/s/
--------------------------------------------
Leigh-Brindeland Bell
<PAGE>
================================================================================
EMPLOYMENT AGREEMENT
BETWEEN
GREENFIELD ONLINE, INC.
AND
STEVE COOK
JULY 1, 1999
================================================================================
<PAGE>
EMPLOYMENT AGREEMENT
dated as of July 1, 1999, between GREENFIELD
ONLINE, INC., a Connecticut corporation (the
"Company"), and STEVE COOK (the "Executive").
The Company is engaged in the business (the "Subject
Business") of providing customized and syndicated marketing research services
over the Internet. The Executive is, and prior to the date hereof has been,
employed by the Company as Senior Vice President, Client Development, is and has
been a key member of the Company's management team and as such has substantial
experience that is valuable to the Subject Business and the Company.
The Executive and the Company desire to enter into this
Employment Agreement to set forth the terms governing the Executive's continuing
employment as well as to provide adequate and reasonable protection for the
Company's legitimate business interest of safeguarding its tradesecrets,
confidential information, customer and employee relationships
NOW, THEREFORE, in consideration of the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
Section 1. Consideration.
Executive recognizes and agrees that immediately prior to the execution of this
Agreement he/she was an employee-at-will and did not have a contractual
relationship with the company, express or implied granting the Executive
employment for a definite term or employment that was terminable by the Company
only for cause. Executive agrees that good and valuable consideration exists to
support the execution and enforcement of this Agreement including, but not
limited to his/her continued employment with Company and the Severance payment
provided herein.
Section 2. Employment.
The Company shall employ the Executive, and the Executive
accepts employment with the Company, as an employee-at-will upon the terms and
conditions set forth in this Agreement for the period beginning on the Effective
Date (as defined in Section 15(j)) and ending on the Termination Date determined
pursuant to Section 5(a) (the "Employment Period"). This is not a contract of
employment. Executive is an employee-at-will and may be terminated by Company at
any time with or without cause.
Section 3. Base Salary, Bonus and Benefits.
(a) During the Employment Period, the Executive's base salary
shall be $125,000.00 per annum or such other rate as the Compensation Committee
of the Board (excluding the Executive if he should be a member of the Board or
the Compensation Committee at the time of such determination) may designate from
time to time (the "Base Salary"), which
<PAGE>
salary shall be reviewed by the Compensation Committee on an annual basis and
payable in such installments as is customary for other senior executives of the
Company. In addition, during the Employment Period, the Executive shall be
entitled to (i) participate in all employee benefit programs and published bonus
programs for which other senior executives of the Company are generally
eligible, (ii) be eligible to participate in all insurance plans available
generally to other senior executives of the Company, (iii) to participate in the
Company's Non-Qualified Employee Stock Option Plan as amended, revised or
terminated from time to time by the Board of Directors, and (iv) take 4 weeks of
paid vacation annually. In the case of any partial month during the Employment
Period, reimbursements, payments and other entitlements pursuant to this Section
3 shall be made or provided to the Executive on a per diem basis.
(b) In addition to the Base Salary and benefits set forth in
paragraph (a) above, during the Employment Period the Executive shall be
entitled to participate in the Management Committee Bonus Plan as published by
the Company and amended from time to time. The amount of the bonus, if any, to
be paid shall be reviewed by the Compensation Committee on an annual basis.
(c) In addition to the Base Salary and benefits set forth in
paragraph (a) above, during the employment period the Executive shall receive
commissions on sales of the Company's products and services made by the Employee
and all commissioned sales personnel who report directly or indirectly to the
Employee (including qualitative research project manager(s)), in the amount
established by the President of the Company, and for the first year of
employment set at 1.25%. All commissions shall be subject to the terms and
provisions of the Company's Commission Policy as amended from time to time.
Commissions will not be payable on sales of new products or services made to
charter NetReach clients during a new product's launch period.
(d) The Company shall reimburse the Executive for all
reasonable expenses incurred by him in the course of performing his duties under
this Agreement which are consistent with the Company's policies in effect from
time to time with respect to travel, entertainment and other business expenses,
subject to the Company's requirements with respect to reporting and
documentation of such expenses.
(e) The Company shall deduct from any payments to be made by
it to the Executive under this Agreement any amounts required to be withheld in
respect of any Federal, state or local income or other taxes.
Section 4. Position and Duties.
(a) During the Employment Period, the Executive shall
initially serve as Senior Vice President, Client Development of the Company, and
shall report to Rudy Nadilo, President and CEO. The Executive acknowledges and
agrees that he owes a fiduciary duty of loyalty to the Company to discharge his
duties and otherwise act in a manner consistent with the best interests of the
Company and its Subsidiaries.
(b) During the Employment Period, the Executive shall devote
his best efforts and full working time, attention and energies to the
performance of his duties and responsibilities
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<PAGE>
under this Agreement (except for vacations to which he is entitled pursuant to
Section 2(a) and except for illness or incapacity). During the Employment
Period, the Executive shall not engage in any business activity which, in the
reasonable judgment of the Board (excluding the Executive if he should be a
member of the Board at the time of such determination), conflicts with the
duties of the Executive hereunder, whether or not such activity is pursued for
gain, profit or other pecuniary advantage.
Section 5. Termination.
(a) Termination Date. The Executive's employment under this
Agreement shall terminate upon the earliest to occur (the date of such
occurrence being the "Termination Date") of (i) the effective date of the
Executive's resignation (a "Resignation"), (ii) the Executive's death or
Disability (an "Involuntary Termination"), (iv) the effective date of a
termination of the Executive's employment for Cause by the Board or the
President of the Company (a "Termination for Cause"), and (v) the effective date
of a termination of the Executive's employment by the Board for reasons that do
not constitute Cause (a "Termination Without Cause"). The effective date of a
Resignation shall be as determined under Section 5(b); the effective date of an
Involuntary Termination shall be the date of death or, in the event of a
Disability, the date specified in a notice delivered to the Executive by the
Company; and the effective date of a Termination for Cause or a Termination
Without Cause shall be the date specified in a notice delivered to the Executive
by the Company of such termination.
(b) Resignation. The Executive shall give the Company at least
30 days' prior written notice of a Resignation, with the effective date of such
Resignation specified therein. The Company may, in its discretion, accelerate
the effective date of the Resignation.
Section 6. Effect of Termination; Severance.
(a) In the event of a Termination Without Cause, the Executive
or his beneficiaries or estate shall have the right to receive the following:
(i) the unpaid portion of the Base Salary, computed
on a pro rata basis to the Termination Date;
(ii) the unpaid portion of the Base Salary for the
period beginning on the Termination Date and ending on the
earlier of (A) the six (6) month anniversary of the
Termination Date and (B) the date on which the Executive
obtains subsequent employment (as an employee, consultant,
independent contractor or otherwise), payable in the same
amounts and at the same intervals as the Base Salary was paid
immediately prior to the Termination Date; provided, however,
that in the event of a breach by the Executive of Section 7,
8, 9 or 10on or after the Termination Date, the provisions of
Section 12 shall apply;
(iii) Future commissions as per the Company's
Commission Policy;
(iv) reimbursement for any expenses for which the
Executive shall not have been previously reimbursed, as
provided in Section 3(c); and
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<PAGE>
(v) the portion of any bonus payable in accordance
with Section 3(b) for the calendar year in which such
termination occurs, pro rated through the date of such
termination on a per diem basis.
(b) In the event of a Termination for Cause, an Involuntary
Termination or a Resignation, the Executive or his beneficiaries or estate shall
have the right to receive the following:
(i) the unpaid portion of the Base Salary, computed
on a pro rata basis to the Termination Date; and
(ii) reimbursement for any expenses for which the
Executive shall not have been previously reimbursed, as
provided in Section 3(c).
(c) Upon any termination, neither the Executive nor his
beneficiaries or estate shall have any further rights under this Agreement or
any rights arising out of this Agreement other than as provided in Sections 6(a)
and (b) above.
Section 7. Nondisclosure and Nonuse of Confidential Information.
The Executive will not disclose or use at any time, either
during the Employment Period and for a period of five years thereafter, any
Confidential Information of which the Executive is or becomes aware, whether or
not such information is developed by him, except to the extent that such
disclosure or use is directly related to and required by the Executive's
performance of duties assigned to the Executive by the Company.
Section 8. Inventions and Patents.
The Executive agrees that all Work Product belongs to the
Company. The Executive will promptly disclose such Work Product to the Board and
perform all actions reasonably requested by the Board (whether during or after
the Employment Period) to establish and confirm such ownership (including,
without limitation, the execution and delivery of assignments, consents, powers
of attorney and other instruments) and to provide reasonable assistance to the
Company in connection with the prosecution of any applications for patents,
trademarks, trade names, service marks or reissues thereof or in the prosecution
or defense of interferences relating to any Work Product.
Section 9. Non-Compete, Non-Solicitation, Non-Disparagement.
The Executive acknowledges and agrees with the Company that,
during the course of the Executive's employment with the Company, the Executive
has had and will continue to have the opportunity to develop relationships with
existing employees, customers and other business associates of the Company and
its Subsidiaries which relationships constitute goodwill of the Company, and the
Company would be irreparably damaged if the Executive were to take actions that
would damage or misappropriate such goodwill.
Accordingly, the Executive agrees as follows:
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<PAGE>
(a) The Executive acknowledges that the Company currently
conducts the Subject Business throughout the world (the "Territory").
Accordingly, during the term hereof and until the first anniversary of the
Termination Date (the "Non-Compete Period"), the Executive shall not, directly
or indirectly, enter into, engage in, assist, give or lend funds to or otherwise
finance, be employed by or consult with, or have a financial or other interest
in, any business which competes or could, in the reasonable judgment of the
Board, be deemed to be in competition with, at the time in question, the Company
within the Territory, whether for or by himself or as an independent contractor,
agent, stockholder, partner or joint venturer for any other Person. To the
extent that the covenant provided for in this Section 9(a) may later be deemed
by a court to be too broad to be enforced with respect to its duration or with
respect to any particular activity or geographic area, the court making such
determination shall have the power to reduce the duration or scope of the
provision, and to add or delete specific words or phrases to or from the
provision so as to create the broadest and most comprehensive restrictions then
allowed under law. The provision as modified shall then be enforced.
(b) Notwithstanding the foregoing, the aggregate ownership by
the Executive of no more than two percent (on a fully-diluted basis) of the
outstanding equity securities of any Person, which securities are traded on a
national or foreign securities exchange, quoted on the NASDAQ stock market or
other automated quotation system, and which Person competes with the Company (or
any part thereof) within the Territory, shall not be deemed to be a violation of
Section 8(a). In the event that any Person in which the Executive has any
financial or other interest directly or indirectly enters into a business during
the Non-Compete Period that competes with the Company within the Territory, the
Executive shall divest all of his interest (other than as permitted to be held
pursuant to the first sentence of this Section 8(b)) in such Person within 15
days after such Person enters into such business that competes with the Company
within the Territory.
(c) The Executive covenants and agrees that, during the period
commencing with the Effective Date and ending on the first anniversary of the
date on which the Executive ceases to be employed by the Company for any reason
whatsoever, the Executive will not, directly or indirectly, either for himself
or for any other Person (A) solicit any employee of the Company or any of its
Subsidiaries to terminate his or her employment with the Company or any of its
Subsidiaries or employ any such individual during his or her employment with the
Company or any of its Subsidiaries and for a period of one year after such
individual terminates his or her employment with the Company or any of its
Subsidiaries, (B) solicit any customer of the Company or any of its Subsidiaries
to purchase or distribute information, products or services of or on behalf of
the Executive or such other Person that are competitive with the information,
products or services provided by the Company or any of its Subsidiaries, or (C)
take any action that may cause injury to the relationships between the Company
or any of its Subsidiaries or any of their employees and any lessor, lessee,
vendor, supplier, customer, distributor, employee, consultant or other business
associate of the Company or any of its Subsidiaries as such relationship relates
to the Company's or any of its Subsidiaries' conduct of their business.
(d) The Executive understands that the foregoing restrictions
may limit his ability to earn a livelihood in a business which is competitive
with the business of the Company and any of its Subsidiaries, but he
nevertheless believes that he has received and will receive sufficient
consideration and other benefits as an employee of the Company and as otherwise
provided
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<PAGE>
hereunder or as described in the recitals hereto to clearly justify such
restrictions which, in any event (given his education, skills and ability), the
Executive does not believe would prevent him from otherwise earning a living.
Section 10. Delivery of Materials Upon Termination of Employment.
The Executive shall deliver to the Company at the termination
of the Employment Period or at any time the Company may request all memoranda,
notes, plans, records, reports, computer tapes and software and other documents
and data (and copies thereof) relating to the Confidential Information, Work
Product or the Subject Business which he may then possess or have under his
control regardless of the location or form of such material and, if requested by
the Company, will provide the Company with written confirmation that all such
materials have been delivered to the Company.
Section 11. Insurance.
The Company may, for its own benefit, maintain "keyman" life
and disability insurance policies covering the Executive. The Executive will
cooperate with the Company and provide such information or other assistance as
the Company may reasonably request in connection with the Company obtaining and
maintaining such policies.
Section 12. Enforcement.
Because the Executive's services are unique and because the
Executive has access to Confidential Information and Work Product, the parties
hereto agree that money damages would be an inadequate remedy for any breach of
this Agreement. Therefore, in the event of a breach or threatened breach of this
Agreement, the Company or its successors or assigns may, in addition to other
rights and remedies existing in their favor, apply to any court of competent
jurisdiction for specific performance and/or injunctive or other relief in order
to enforce, or prevent any violations of, the provisions hereof (without posting
a bond or other security). In addition to the foregoing, and not in any way in
limitation thereof, or in limitation of any right or remedy otherwise available
to the Company, if the Executive violates any provision of the foregoing
Sections 7, 8, 9 or 10, any payments then or thereafter due from the Company to
the Executive pursuant to Section 6(a)(ii) shall be terminated forthwith and the
Company's obligation to pay and the Executive's right to receive such payments
shall terminate and be of no further force or effect, in each case without
limiting or affecting the Executive's obligations under such Sections 7, 8, 9
and 10 or the Company's other rights and remedies available at law or equity.
Section 13. Representations.
Each party hereby represents and warrants to the other party
that (a) the execution, delivery and performance of this Agreement by such party
does not and will not conflict with, breach, violate or cause a default under
any agreement, contract or instrument to which such party is a party or any
judgment, order or decree to which such party is subject, and (b) upon the
execution and delivery of this Agreement by such party, this Agreement will be a
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<PAGE>
valid and binding obligation of such party, enforceable in accordance with its
terms, except as enforcement hereof may be limited by any applicable bankruptcy,
reorganization, insolvency or other laws affecting creditors rights generally or
by general principles of equity. In addition, the Executive represents and
warrants to the Company that the Executive is not a party to or bound by any
employment agreement, consulting agreement, non-compete agreement,
confidentiality agreement or similar agreement with any other Person. The
Company and the Executive hereby terminate all existing employment or consulting
agreements between them, if any, to the extent such agreements may be in effect
after the date hereof.
Section 14. Definitions.
"Board" shall mean the board of directors of the Company.
"Business Day" shall mean any day that is not a Saturday,
Sunday, or a day on which banking institutions in New York are not required to
be open.
"Cause" shall mean (i) the Executive's material breach of any
of the terms of this Agreement; (ii) the conviction of a crime involving fraud,
theft or dishonesty by the Executive; (iii) the Executive's willful and
continuing disregard of lawful instructions of the Board or superiors (if any);
(iv) the continued use of alcohol or drugs by the Executive to an extent that,
in the good faith determination of the Board, such use interferes in any manner
with the performance of the Executive's duties and responsibilities; or (v) the
conviction of the Executive for violating any Law constituting a felony
(including the Foreign Corrupt Practices Act of 1977).
"Confidential Information" means information that is not
generally known to the public and that is used, developed or obtained by the
Company or any of its Subsidiaries in connection with the Subject Business,
including, but not limited to, (i) information, observations, procedures and
data obtained by the Executive while employed by the Company (including those
obtained prior to the date of this Agreement) concerning the business or affairs
of the Company or any of its Subsidiaries, (ii) products or services, (iii)
costs and pricing structures, (iv) analyses, (v) drawings, photographs and
reports, (vi) computer software, including operating systems, applications and
program listings, (vii) flow charts, manuals and documentation, (viii) data
bases, (ix) accounting and business methods, (x) inventions, devices, new
developments, methods and processes, whether patentable or unpatentable and
whether or not reduced to practice, (xi) customers and customer lists, (xii)
other copyrightable works, (xiii) all production methods, processes, technology
and trade secrets, and (xiv) all similar and related information in whatever
form. Confidential Information will not include any information that has been
published in a form generally available to the public prior to the date the
Executive proposes to disclose or use such information. Confidential Information
will not be deemed to have been published merely because individual portions of
the information have been separately published, but only if all material
features comprising such information have been published in combination.
"Disability" shall mean the physical or mental inability of
the Executive (i) to substantially perform all of his duties under this
Agreement for a period of 90 consecutive days or longer or for any 90 days in
any period of 365 consecutive days, or (ii) that, in the opinion of a
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<PAGE>
physician selected by the Board (excluding the Executive if the Executive is a
member of the Board at such time) is likely to prevent the Executive from
substantially performing all of his duties under this Agreement for more than 90
days in any period of 365 consecutive days.
"Subsidiary" of the Company means and includes (i) any
corporation more than 50% of whose stock of any class or classes having by the
terms thereof ordinary voting power to elect a majority of the directors of such
corporation (irrespective of whether or not at the time stock of any class or
classes of such corporation shall have or might have voting power by reason of
the happening of any contingency) is at the time owned by the Company or
indirectly through Subsidiaries and (ii) any partnership, association, joint
venture or other entity (other than a corporation) in which the Company directly
or indirectly through Subsidiaries, has more than a 50% equity interest at the
time.
"Work Product" shall mean all inventions, innovations,
improvements, technical information, systems, software developments, methods,
designs, analyses, drawings, reports, service marks, trademarks, tradenames,
logos and all similar or related information (whether patentable or
unpatentable) which relates to the Company's or any of its Subsidiaries' actual
or anticipated business, research and development or existing or future products
or services and which are conceived, developed or made by the Executive in
connection with or relating to (whether or not during usual business hours and
whether or not alone or in conjunction with any other Person) the Executive's
position and duties while employed by the Company (including those conceived,
developed or made prior to the date of this Agreement) together with all patent
applications, letters patent, trademark, tradename and service mark applications
or registrations, copyrights and reissues thereof that may be granted for or
upon any of the foregoing.
Section 15. General Provisions.
(a) Severability. It is the desire and intent of the Parties
hereto that the provisions of this Agreement be enforced to the fullest extent
permissible under the laws and public policies applied in each jurisdiction in
which enforcement is sought. Accordingly, if any particular provision of this
Agreement shall be adjudicated by a court of competent jurisdiction to be
invalid, prohibited or unenforceable for any reason, such provision, as to such
jurisdiction, shall be ineffective, without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of this
Agreement or affecting the validity or enforceability of such provision in any
other jurisdiction. Notwithstanding the foregoing, if such provision could be
more narrowly drawn so as not to be invalid, prohibited or unenforceable in such
jurisdiction, it shall, as to such jurisdiction, be so narrowly drawn, without
invalidating the remaining provisions of this Agreement or affecting the
validity or enforceability of such provision in any other jurisdiction.
(b) Notices. All notices, requests, demands, claims and other
communications hereunder shall be in writing and sufficient if (i) delivered
personally, (ii) delivered by certified United States Post Office mail, return
receipt requested, (iii) telecopied or (iv) sent to the recipient by a
nationally-recognized overnight courier service (charges prepaid) and addressed
to the intended recipient as set forth below:
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<PAGE>
(a) if to the Executive, to: Steve Cook
40 Chestnut Ridge Road
Armonk, NY 10504
with a copy to: Ben Raphan
Tenzer Greenblatt LLC
405 Lexington Ave.
New York, NY 10174
(b) if to the Company, to:
Greenfield Online, Inc.
274 Riverside Avenue
Westport, Connecticut 06880
Attention: Rudy Nadilo President and CEO
Telecopier: (203) 221-0791
with copies to:
Wake, See, Dimes & Bryniczka
27 Imperial Avenue
P.O. Box 777
Westport, CT 06881
Attention: Jonathan A. Flatow
Telecopier: (203) 226-1641
or such other address as the recipient party to whom notice is to be given may
have furnished to the other party in writing in accordance herewith. Any such
communication shall deemed to have been delivered and received (a) in the case
of personal delivery, on the date of such delivery, (b) in the case of delivery
by mail, on the third Business Day following such mailing, (c) if telecopied, on
the date telecopied, and (d) in the case of delivery by nationally-recognized,
overnight courier, on the Business Day following dispatch.
(c) Entire Agreement. This Agreement and the documents
expressly referred to herein embody the complete agreement and understanding
among the parties and supersede and preempt any prior understandings, agreements
or representations by or among the parties, written or oral, which may have
related to the subject matter hereof in any way.
(d) Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
(e) Successors and Assigns. Except as otherwise provided
herein, this Agreement shall bind and inure to the benefit of and be enforceable
by the Executive and the Company and their respective successors, assigns,
heirs, representatives and estate, as the case may be; provided, however, that
the obligations of the Executive under this Agreement shall not be assigned
without the prior written consent of the Company.
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<PAGE>
(f) Amendment and Waiver. The provisions of this Agreement may
be amended and waived only with the prior written consent of the Company and the
Executive, and no course of conduct or failure or delay in enforcing the
provisions of this Agreement shall affect the validity, binding effect or
enforceability of this Agreement or any provision hereof.
(g) Governing Law/Venue. This Agreement shall be governed by
and construed in accordance with the domestic laws of the State of Connecticut
without giving effect to any choice or conflict of law provision or rule that
would cause the application of the laws of any jurisdiction other than the State
of Connecticut. The parties agree that any action to enforce the terms of this
Agreement shall be brought in State or Federal Court located in Fairfield County
Connecticut.
(h) Descriptive Headings; Nouns and Pronouns. Descriptive
headings are for convenience only and shall not control or affect the meaning or
construction of any provision of this Agreement. Whenever the context may
require, any pronouns used herein shall include the corresponding masculine,
feminine or neuter forms, and the singular form of nouns and pronouns shall
include the plural and vice-versa.
(i) Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT.
(j) Effectiveness. This Agreement shall become effective when
executed by both parties (the "Effective Date"). * * * * *
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Employment Agreement as of the date first written above.
GREENFIELD ONLINE, INC.
By: /s/
-------------------------------
Name: Rudy Nadilo
Title: President + CEO
EXECUTIVE
/s/ 9/9/99
-----------------------------------
Steve Cook
<PAGE>
================================================================================
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
BETWEEN
GREENFIELD ONLINE, INC.
AND
ROBERT E. BIES
MARCH 3, 2000
================================================================================
<PAGE>
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT dated as of
March 3, 2000, between GREENFIELD
ONLINE, INC., a Connecticut corporation (the
"Company"), and ROBERT E. BIES (the "Executive").
The Company is engaged in the business (the "Subject
Business") of providing customized and syndicated marketing research services
over the Internet. The Executive has experience as a corporate financial officer
which experience is valuable to the Subject Business and the Company and the
Company desires to employ and the Executive desires to be employed as the
Company's Chief Financial Officer.
The Executive and the Company entered into an Employment
Agreement dated October 3, 2000, and now desire to enter into this Amended and
Restated Employment Agreement to set forth the terms governing the Executive's
employment as well as to provide adequate and reasonable protection for the
Company's legitimate business interest of safeguarding its tradesecrets,
confidential information, customer and employee relationships
NOW, THEREFORE, in consideration of the mutual covenants
contained herein and in the Purchase Agreement and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
Section 1. Employment.
The Company shall employ the Executive, and the Executive
accepts employment with the Company, upon the terms and conditions set forth in
this Agreement for the period beginning on the Effective Date (as defined in
Section 14(j)) and ending on the Termination Date determined pursuant to Section
4(a) (the "Employment Period"). This is not a contract of employment. Executive
is an employee-at-will and may be terminated by Company at any time with or
without cause.
Section 2. Base Salary, Bonus and Benefits.
(a) During the Employment Period, the Executive's base salary
shall be $175,000 per annum or such other rate as the Compensation Committee of
the Board (excluding the Executive if he should be a member of the Board or the
Compensation Committee at the time of such determination) may designate from
time to time (the "Base Salary"), which salary shall be reviewed by the
Compensation Committee on an annual basis and payable in such installments as is
customary for other senior executives of the Company. In addition, during the
Employment Period, the Executive shall be entitled to (i) participate in all
employee benefit programs for which other senior executives of the Company are
generally eligible, (ii) be eligible to participate in all insurance plans
available generally to other senior executives of the Company, and (iii) take 3
weeks of paid vacation annually. In the case of any partial month during the
Employment Period, reimbursements, payments and other entitlements pursuant to
this Section 2 shall be made or provided to the Executive on a per diem basis.
<PAGE>
(b) In addition to the Base Salary and benefits set forth in
paragraph (a) above, during the Employment Period the Executive shall be
entitled to receive a bonus, if any, with respect to each full calendar year
occurring during the Employment Period, commencing with the calendar year ending
December 31, 1999, such bonus, if any, to be paid in a lump sum following the
end of the calendar year with respect to which such bonus is payable (such bonus
to be paid at the same time bonuses are to be paid to other senior executives of
the Company). The bonus for any full calendar year of the Employment Period
shall be in an amount not to exceed 35% of the Base Salary for such calendar
year, subject to and based upon the achievement by the Company and the Executive
of certain performance targets and/or criteria to be specified by the Board. The
performance targets and/or criteria for 1999 shall be disclosed to the Executive
within 30 days of the Effective Date, and for each succeeding year of this
Agreement shall be disclosed during the first quarter of each such year. The
amount of the bonus, if any, to be paid shall be reviewed by the Compensation
Committee on an annual basis.
(c) The Company shall reimburse the Executive for (i) all
reasonable expenses incurred by him in the course of performing his duties under
this Agreement which are consistent with the Company's policies in effect from
time to time with respect to travel, entertainment and other business expenses,
subject to the Company's requirements with respect to reporting and
documentation of such expenses; and, (ii) all reasonable expenses up to the
total amount of $35,000 actually incurred and paid for by Executive in
connection with his relocation from New Jersey to Connecticut, including
realtor's commissions for the sale of Executive's residence in New Jersey,
moving expenses, temporary housing, storage expenses, travel related to "house
hunting" and other reasonable expenses.
(d) The Company shall deduct from any payments to be made by
it to the Executive under this Agreement any amounts required to be withheld in
respect of any Federal, state or local income or other taxes.
(e) Subject to the approval of the Board of Directors, the
Company will grant the Executive options (the "Options") to purchase 100,000
shares of Class A Common Stock, $.01 par value (the "Class A Common"), of the
Company pursuant to the Company's 1999 Stock Option Plan (the "Option Plan"),
with an exercise price of $1.03 per share. The Options will be evidenced by a
Stock Option Agreement between the Executive and the Company. The Option Plan
and the Stock Option Agreement will contain all of the terms and conditions of
the Executive's Options. As a condition to the issuance of the Options
referenced herein, the Executive will be required to sign a Joinder to the
Company's Shareholder Agreement.
Section 3. Position and Duties.
(a) During the Employment Period, the Executive shall
initially serve as Chief Financial Officer of the Company, and shall report to
Rudy Nadilo, President and CEO. The Executive acknowledges and agrees that he
owes a fiduciary duty of loyalty to the Company to discharge his duties and
otherwise act in a manner consistent with the best interests of the Company and
its Subsidiaries.
(b) During the Employment Period, the Executive shall devote
his best efforts and full working time, attention and energies to the
performance of his duties and responsibilities
- 2 -
<PAGE>
under this Agreement (except for vacations to which he is entitled pursuant to
Section 2(a) and except for illness or incapacity). During the Employment
Period, the Executive shall not engage in any business activity which, in the
reasonable judgment of the Board (excluding the Executive if he should be a
member of the Board at the time of such determination), conflicts with the
duties of the Executive hereunder, whether or not such activity is pursued for
gain, profit or other pecuniary advantage.
Section 4. Termination.
(a) Termination Date. The Executive's employment under this
Agreement shall terminate upon the earliest to occur (the date of such
occurrence being the "Termination Date") of (i) the effective date of the
Executive's resignation (a "Resignation"), (ii) the Executive's death or
Disability (an "Involuntary Termination"), (iii) the effective date of a
termination of the Executive's employment for Cause by the Board (a "Termination
for Cause"), and (iv) the effective date of a termination of the Executive's
employment by the Board for reasons that do not constitute Cause or as a result
of the Company's election not to renew this Agreement pursuant to Section 1 (a
"Termination Without Cause"). The effective date of a Resignation shall be as
determined under Section 4(b); the effective date of an Involuntary Termination
shall be the date of death or, in the event of a Disability, the date specified
in a notice delivered to the Executive by the Company; and the effective date of
a Termination for Cause or a Termination Without Cause shall be the date
specified in a notice delivered to the Executive by the Company of such
termination.
(b) Resignation. The Executive shall give the Company and the
Board at least 90 days' prior written notice of a Resignation, with the
effective date of such Resignation specified therein. The Board may, in its
discretion, accelerate the effective date of the Resignation.
Section 5. Effect of Termination; Severance.
(a) In the event of a Termination Without Cause, the Executive
or his beneficiaries or estate shall have the right to receive the following:
(i) the unpaid portion of the Base Salary, computed
on a pro rata basis to the Termination Date;
(ii) either six (6) months of Base Salary, or, one
month of Base Salary for each full year of Executive's service
with the Company, whichever amount is greater, payable in the
same amounts and at the same intervals as the Base Salary was
paid immediately prior to the Termination Date; ; provided,
however, that should the Executive obtain subsequent
employment (as an employee, consultant, independent contractor
or otherwise) such payments to the Executive by the Company
shall immediately cease. In the event of a breach by the
Executive of Section 6, 7, 8, or 9 on or after the Termination
Date, the provisions of Section 11 shall apply;
(iii) reimbursement for any expenses for which the
Executive shall not have been previously reimbursed, as
provided in Section 2(c); and
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<PAGE>
(iv) the portion of any bonus payable in accordance
with Section 2(b) for the calendar year in which such
termination occurs, pro rated through the date of such
termination on a per diem basis.
(b) In the event of a Termination for Cause, an Involuntary
Termination or a Resignation, the Executive or his beneficiaries or estate shall
have the right to receive the following:
(i) the unpaid portion of the Base Salary, computed
on a pro rata basis to the Termination Date; and
(ii) reimbursement for any expenses for which the
Executive shall not have been previously reimbursed, as
provided in Section 2(c).
(c) Upon any termination, neither the Executive nor his
beneficiaries or estate shall have any further rights under this Agreement or
any rights arising out of this Agreement other than as provided in Sections 5(a)
and (b) above.
Section 6. Nondisclosure and Nonuse of Confidential Information.
The Executive will not disclose or use at any time, either
during the Employment Period and for a period of five years thereafter, any
Confidential Information of which the Executive is or becomes aware, whether or
not such information is developed by him, except to the extent that such
disclosure or use is directly related to and required by the Executive's
performance of duties assigned to the Executive by the Company.
Section 7. Inventions and Patents.
The Executive agrees that all Work Product belongs to the
Company. The Executive will promptly disclose such Work Product to the Board and
perform all actions reasonably requested by the Board (whether during or after
the Employment Period) to establish and confirm such ownership (including,
without limitation, the execution and delivery of assignments, consents, powers
of attorney and other instruments) and to provide reasonable assistance to the
Company in connection with the prosecution of any applications for patents,
trademarks, trade names, service marks or reissues thereof or in the prosecution
or defense of interferences relating to any Work Product.
Section 8. Non-Compete, Non-Solicitation, Non-Disparagement.
The Executive acknowledges and agrees with the Company that,
during the course of the Executive's employment with the Company, the Executive
has had and will continue to have the opportunity to develop relationships with
existing employees, customers and other business associates of the Company and
its Subsidiaries which relationships constitute goodwill of the Company, and the
Company would be irreparably damaged if the Executive were to take actions that
would damage or misappropriate such goodwill.
Accordingly, the Executive agrees as follows:
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<PAGE>
(a) The Executive acknowledges that the Company currently
conducts the Subject Business throughout the world (the "Territory").
Accordingly, during the term hereof and until the first anniversary of the
Termination Date (the "Non-Compete Period"), the Executive shall not, directly
or indirectly, enter into, engage in, assist, give or lend funds to or otherwise
finance, be employed by or consult with, or have a financial or other interest
in, any business which competes or could, in the reasonable judgment of the
Board, be deemed to be in competition with, at the time in question, the Company
within the Territory, whether for or by himself or as an independent contractor,
agent, stockholder, partner or joint venturer for any other Person. To the
extent that the covenant provided for in this Section 8(a) may later be deemed
by a court to be too broad to be enforced with respect to its duration or with
respect to any particular activity or geographic area, the court making such
determination shall have the power to reduce the duration or scope of the
provision, and to add or delete specific words or phrases to or from the
provision. The provision as modified shall then be enforced.
(b) Notwithstanding the foregoing, the aggregate ownership by
the Executive of no more than two percent (on a fully-diluted basis) of the
outstanding equity securities of any Person, which securities are traded on a
national or foreign securities exchange, quoted on the NASDAQ stock market or
other automated quotation system, and which Person competes with the Company (or
any part thereof) within the Territory, shall not be deemed to be a violation of
Section 8(a). In the event that any Person in which the Executive has any
financial or other interest directly or indirectly enters into a business during
the Non-Compete Period that competes with the Company within the Territory, the
Executive shall divest all of his interest (other than as permitted to be held
pursuant to the first sentence of this Section 8(b)) in such Person within 15
days after such Person enters into such business that competes with the Company
within the Territory.
(c) The Executive covenants and agrees that, during the period
commencing with the Effective Date and ending on the first anniversary of the
date on which the Executive ceases to be employed by the Company for any reason
whatsoever, the Executive will not, directly or indirectly, either for himself
or for any other Person (A) solicit any employee of the Company or any of its
Subsidiaries to terminate his or her employment with the Company or any of its
Subsidiaries or employ any such individual during his or her employment with the
Company or any of its Subsidiaries and for a period of one year after such
individual terminates his or her employment with the Company or any of its
Subsidiaries, (B) solicit any customer of the Company or any of its Subsidiaries
to purchase or distribute information, products or services of or on behalf of
the Executive or such other Person that are competitive with the information,
products or services provided by the Company or any of its Subsidiaries, or (c)
take any action that may cause injury to the relationships between the Company
or any of its Subsidiaries or any of their employees and any lessor, lessee,
vendor, supplier, customer, distributor, employee, consultant or other business
associate of the Company or any of its Subsidiaries as such relationship relates
to the Company's or any of its Subsidiaries' conduct of their business.
(d) The Executive understands that the foregoing restrictions
may limit his ability to earn a livelihood in a business which is competitive
with the business of the Company and any of its Subsidiaries, but he
nevertheless believes that he has received and will receive sufficient
consideration and other benefits as an employee of the Company and as otherwise
provided hereunder or as described in the recitals hereto to clearly justify
such restrictions which, in any
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<PAGE>
event (given his education, skills and ability), the Executive does not believe
would prevent him from otherwise earning a living.
(e) The foregoing non-compete restrictions shall not apply in
the event that the Executive is forced to terminate his employment with the
Company as a result of a material breach by the Company of any of its
obligations to the Executive under this Agreement, the Shareholders' Agreement
between the Company, the Executive and the other shareholders of the Company, to
be entered into in connection with the Closing under the Purchase Agreement, and
Stock Option Agreements entered into between the Company and the Executive.
Section 9. Delivery of Materials Upon Termination of Employment.
The Executive shall deliver to the Company at the termination
of the Employment Period or at any time the Company may request all memoranda,
notes, plans, records, reports, computer tapes and software and other documents
and data (and copies thereof) relating to the Confidential Information, Work
Product or the Subject Business which he may then possess or have under his
control regardless of the location or form of such material and, if requested by
the Company, will provide the Company with written confirmation that all such
materials have been delivered to the Company.
Section 10. Insurance.
The Company may, for its own benefit, maintain "keyman" life
and disability insurance policies covering the Executive. The Executive will
cooperate with the Company and provide such information or other assistance as
the Company may reasonably request in connection with the Company obtaining and
maintaining such policies.
Section 11. Enforcement.
Because the Executive's services are unique and because the
Executive has access to Confidential Information and Work Product, the parties
hereto agree that money damages would be an inadequate remedy for any breach of
this Agreement. Therefore, in the event of a breach or threatened breach of this
Agreement, the Company or its successors or assigns may, in addition to other
rights and remedies existing in their favor, apply to any court of competent
jurisdiction for specific performance and/or injunctive or other relief in order
to enforce, or prevent any violations of, the provisions hereof (without posting
a bond or other security). In addition to the foregoing, and not in any way in
limitation thereof, or in limitation of any right or remedy otherwise available
to the Company, if the Executive violates any provision of the foregoing
Sections 6, 7, 8 or 9, any payments then or thereafter due from the Company to
the Executive pursuant to Section 5(a)(ii) shall be terminated forthwith and the
Company's obligation to pay and the Executive's right to receive such payments
shall terminate and be of no further force or effect, in each case without
limiting or affecting the Executive's obligations under such Sections 6, 7, 8
and 9 or the Company's other rights and remedies available at law or equity.
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<PAGE>
Section 12. Representations.
Each party hereby represents and warrants to the other party
that (a) the execution, delivery and performance of this Agreement by such party
does not and will not conflict with, breach, violate or cause a default under
any agreement, contract or instrument to which such party is a party or any
judgment, order or decree to which such party is subject, and (b) upon the
execution and delivery of this Agreement by such party, this Agreement will be a
valid and binding obligation of such party, enforceable in accordance with its
terms, except as enforcement hereof may be limited by any applicable bankruptcy,
reorganization, insolvency or other laws affecting creditors rights generally or
by general principles of equity. In addition, the Executive represents and
warrants to the Company that the Executive is not a party to or bound by any
employment agreement, consulting agreement, non-compete agreement,
confidentiality agreement or similar agreement with any other Person. The
Company and the Executive hereby terminate all existing employment or consulting
agreements between them, if any, to the extent such agreements may be in effect
after the date hereof.
Section 13. Definitions.
"Board" shall mean the board of directors of the Company.
"Business Day" shall mean any day that is not a Saturday,
Sunday, or a day on which banking institutions in New York are not required to
be open.
"Cause" shall mean (i) the Executive's material breach of any
of the terms of this Agreement; (ii) the conviction of a crime involving fraud,
theft or dishonesty by the Executive; (iii) the Executive's willful and
continuing disregard of lawful instructions of the Board or superiors (if any);
(iv) the continued use of alcohol or drugs by the Executive to an extent that,
in the good faith determination of the Board, such use interferes in any manner
with the performance of the Executive's duties and responsibilities; or (v) the
conviction of the Executive for violating any Law constituting a felony
(including the Foreign Corrupt Practices Act of 1977).
"Confidential Information" means information that is not
generally known to the public and that is used, developed or obtained by the
Company or any of its Subsidiaries in connection with the Subject Business,
including, but not limited to, (i) information, observations, procedures and
data obtained by the Executive while employed by the Company (including those
obtained prior to the date of this Agreement) concerning the business or affairs
of the Company or any of its Subsidiaries, (ii) products or services, (iii)
costs and pricing structures, (iv) analyses, (v) drawings, photographs and
reports, (vi) computer software, including operating systems, applications and
program listings, (vii) flow charts, manuals and documentation, (viii) data
bases, (ix) accounting and business methods, (x) inventions, devices, new
developments, methods and processes, whether patentable or unpatentable and
whether or not reduced to practice, (xi) customers and customer lists, (xii)
other copyrightable works, (xiii) all production methods, processes, technology
and trade secrets, and (xiv) all similar and related information in whatever
form. Confidential Information will not include any information that has been
published in a form generally available to the public prior to the date the
Executive proposes to disclose or use such information. Confidential Information
will not be deemed to have been published merely because individual portions of
the information have been separately published,
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<PAGE>
but only if all material features comprising such information have been
published in combination.
"Disability" shall mean the physical or mental inability of
the Executive (i) to substantially perform all of his duties under this
Agreement for a period of 90 consecutive days or longer or for any 90 days in
any period of 365 consecutive days, or (ii) that, in the opinion of a physician
selected by the Board (excluding the Executive if the Executive is a member of
the Board at such time) is likely to prevent the Executive from substantially
performing all of his duties under this Agreement for more than 90 days in any
period of 365 consecutive days.
"Subsidiary" of the Company means and includes (i) any
corporation more than 50% of whose stock of any class or classes having by the
terms thereof ordinary voting power to elect a majority of the directors of such
corporation (irrespective of whether or not at the time stock of any class or
classes of such corporation shall have or might have voting power by reason of
the happening of any contingency) is at the time owned by the Company or
indirectly through Subsidiaries and (ii) any partnership, association, joint
venture or other entity (other than a corporation) in which the Company directly
or indirectly through Subsidiaries, has more than a 50% equity interest at the
time.
"Work Product" shall mean all inventions, innovations,
improvements, technical information, systems, software developments, methods,
designs, analyses, drawings, reports, service marks, trademarks, tradenames,
logos and all similar or related information (whether patentable or
unpatentable) which relates to the Company's or any of its Subsidiaries' actual
or anticipated business, research and development or existing or future products
or services and which are conceived, developed or made by the Executive in
connection with or relating to (whether or not during usual business hours and
whether or not alone or in conjunction with any other Person) the Executive's
position and duties while employed by the Company (including those conceived,
developed or made prior to the date of this Agreement) together with all patent
applications, letters patent, trademark, tradename and service mark applications
or registrations, copyrights and reissues thereof that may be granted for or
upon any of the foregoing.
Section 14. General Provisions.
(a) Severability. It is the desire and intent of the Parties
hereto that the provisions of this Agreement be enforced to the fullest extent
permissible under the laws and public policies applied in each jurisdiction in
which enforcement is sought. Accordingly, if any particular provision of this
Agreement shall be adjudicated by a court of competent jurisdiction to be
invalid, prohibited or unenforceable for any reason, such provision, as to such
jurisdiction, shall be ineffective, without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of this
Agreement or affecting the validity or enforceability of such provision in any
other jurisdiction. Notwithstanding the foregoing, if such provision could be
more narrowly drawn so as not to be invalid, prohibited or unenforceable in such
jurisdiction, it shall, as to such jurisdiction, be so narrowly drawn, without
invalidating the remaining provisions of this Agreement or affecting the
validity or enforceability of such provision in any other jurisdiction.
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<PAGE>
(b) Notices. All notices, requests, demands, claims and other
communications hereunder shall be in writing and sufficient if (i) delivered
personally, (ii) delivered by certified United States Post Office mail, return
receipt requested, (iii) telecopied or (iv) sent to the recipient by a
nationally-recognized overnight courier service (charges prepaid) and addressed
to the intended recipient as set forth below:
(a) if to the Executive, to:
with a copy to:
(b) if to the Company, to:
Greenfield Online, Inc.
15 River Road, Suite 310
Wilton, CT 06897
Attention: General Counsel
Telecopier: (203) 846-5700
with copies to:
Wake, See, Dimes & Bryniczka
27 Imperial Avenue
P.O. Box 777
Westport, CT 06881
Attention: Jacob P. Bryniczka
Telecopier: (203) 226-1641
or such other address as the recipient party to whom notice is to be given may
have furnished to the other party in writing in accordance herewith. Any such
communication shall deemed to have been delivered and received (a) in the case
of personal delivery, on the date of such delivery, (b) in the case of delivery
by mail, on the third Business Day following such mailing, (c) if telecopied, on
the date telecopied, and (d) in the case of delivery by nationally-recognized,
overnight courier, on the Business Day following dispatch.
(c) Entire Agreement. This Agreement and the documents
expressly referred to herein embody the complete agreement and understanding
among the parties and supersede and preempt any prior understandings, agreements
or representations by or among the parties, written or oral, which may have
related to the subject matter hereof in any way.
(d) Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
(e) Successors and Assigns. Except as otherwise provided
herein, this Agreement shall bind and inure to the benefit of and be enforceable
by the Executive and the Company and their respective successors, assigns,
heirs, representatives and estate, as the case may be;
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<PAGE>
provided, however, that the obligations of the Executive under this Agreement
shall not be assigned without the prior written consent of the Company.
(f) Amendment and Waiver. The provisions of this Agreement may
be amended and waived only with the prior written consent of the Company and the
Executive, and no course of conduct or failure or delay in enforcing the
provisions of this Agreement shall affect the validity, binding effect or
enforceability of this Agreement or any provision hereof.
(g) Governing Law. This Agreement shall be governed by and
construed in accordance with the domestic laws of the State of Connecticut
without giving effect to any choice or conflict of law provision or rule that
would cause the application of the laws of any jurisdiction other than the State
of Connecticut.
(h) Descriptive Headings; Nouns and Pronouns. Descriptive
headings are for convenience only and shall not control or affect the meaning or
construction of any provision of this Agreement. Whenever the context may
require, any pronouns used herein shall include the corresponding masculine,
feminine or neuter forms, and the singular form of nouns and pronouns shall
include the plural and vice-versa.
(i) Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT.
This Amended and Restated Employment Agreement shall be effective as of the date
first written.
* * * * *
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Employment Agreement
as of the date first written above.
GREENFIELD ONLINE, INC.
By: /s/
-------------------------------
Name: Rudy Nadilo
Title: President and CEO
EXECUTIVE
/s/
-----------------------------------
Robert E. Bies
<PAGE>
FORM OF NON-QUALIFIED STOCK OPTION
AGREEMENT dated as of [_______________],
1999, between GREENFIELD ONLINE, INC., a
Connecticut corporation (the "Company"), and
[OPTIONEE] (the "Optionee").
The Company, acting through its Board of Directors or a
committee thereof, has granted to the Optionee, effective as of the date of this
Agreement, an option under the Company's 1999 Stock Option Plan (the "Plan"), a
copy of which is attached as Exhibit A hereto, to purchase Class A Common
Shares, $0.01 par value per share, of the Company (the "Class A Common Shares")
on the terms and subject to the conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and of the
mutual agreements contained in this Agreement, the parties hereby agree as
follows:
Section 1. Definitions. As used in this Agreement, the following terms
have the meanings set forth below:
"Board" means the Board of Directors of the Company or the
Committee (as defined in the Plan).
"Plan" means the 1999 Stock Option Plan of the Company.
"Purchase Agreement" means the Stock Purchase and Redemption
Agreement dated as of May 17, 1999, among the Company and the other
parties thereto, as the same may be amended, modified or supplemented
from time to time.
"Shareholders' Agreement" means the Shareholders' Agreement
dated as of May 17, 1999, among the Company and the shareholders of the
Company, as the same may be amended, modified or supplemented from time
to time.
"Transfer" means, with respect to any Class A Common Shares or
Options, to sell, or in any other way transfer, assign, pledge,
distribute, encumber or otherwise dispose of, such Class A Common
Shares or Options, either voluntarily or involuntarily and with or
without consideration.
"Vested Shares" means the Class A Common Shares with respect
to which the Option is exercisable at any particular time.
The Plan. The terms and provisions of the Plan are hereby
incorporated into this Agreement as if set forth herein in their
entirety. In the event of a conflict between any
<PAGE>
provision of this Agreement and the Plan, the provisions of the Plan
shall control. A copy of the Plan may be obtained from the Company by
the Optionee upon request. Capitalized terms used herein but not
defined herein shall have the meanings set forth in the Plan.
Section 2. Option; Option Price. On the terms and subject to the
conditions of this Agreement, the Optionee shall have the option (the "Option")
to purchase up to [_________] Class A Common Shares of the Company (the "Option
Shares") at the price of $[______] per Class A Common Share (the "Option Price")
at the times and in the manner set forth herein. The Option is not intended to
qualify for federal income tax purposes as an "incentive stock option" within
the meaning of Section 422 of the Code.
Section 3. Term. The term of the Option (the "Option Term") shall
commence on the date hereof and expire on the tenth ---- ----------- anniversary
of the date hereof, unless the Option shall theretofore have been terminated in
accordance with the terms of the Plan (including Sections 7(b) or 12 thereof) or
this Agreement (the date of such expiration or termination, the "Vesting
Termination Date").
Section 4. Time of Exercise.
(a) Unless accelerated in the sole discretion of the
Committee, the Option shall become exercisable in accordance with the
following schedule:
Vesting Date ("Vesting Date") Percentage of Vested Shares
----------------------------- ---------------------------
[First anniversary of grant date] 25%
[insert each six-month anniversary] 12.5%
(b) The Option shall remain exercisable as to all Vested
Shares until the Vesting Termination Date. Option Shares that do not
constitute Vested Shares on the Vesting Termination Date shall not
become Vested Shares after the Vesting Termination Date.
Section 5. Procedure for Exercise.
(a) The Option may be exercised with respect to Vested
Shares, from time to time, in whole or in part (but for the purchase of
whole Common Shares only (as described in Section 9(c) of the Plan)),
by delivery of a written notice (the "Exercise Notice") from the
Optionee to the Secretary of the Company, which Exercise Notice shall:
(i) state that the Optionee elects to exercise the
Option;
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<PAGE>
(ii) state the number of Vested Shares with respect
to which the Optionee is exercising the Option;
(iii) include any representations of the Optionee
required under Section 8 hereof;
(iv) include appropriate proof of the right of such
Person to exercise the Option in the event that the Option
shall be exercised by any Person other than the Optionee;
(v) state the date upon which the Optionee desires to
consummate the purchase of such Vested Shares (which date must
be prior to the end of the Option Term); and
(vi) comply with such further provisions consistent
with the Plan as the Committee may reasonably require.
(b) Payment of the Option Price for the Vested Shares to
be purchased on the exercise of the Option shall be made as provided in
Section 8(a) of the Plan.
(c) The Company shall be entitled to require as a
condition of delivery of the Vested Shares that the Optionee remit or,
in appropriate cases, agree to remit when due an amount in cash
sufficient to satisfy all current or estimated future federal, state
and local income tax withholding and the employee's portion of any
employment taxes relating thereto.
(d) The Optionee shall deliver to the Company a copy of
any election filed by the Optionee with the Internal Revenue Service
under Section 83(b) of the Code no later than 30 days following the
filing of such election with the Internal Revenue Service.
Section 6. No Rights as a Holder of Common Shares. The Optionee shall
not have any rights or privileges of a holder of Class A Common Shares with
respect to any Option Shares until the date of payment for such Option Shares
pursuant to the exercise of the Option.
Section 7. Restriction on Transfer of Options. Notwithstanding any
provision to the contrary in the Shareholders' Agreement, the Option cannot be
Transferred and may be exercised during the lifetime of the Optionee only by the
Optionee, subject to Section 10(b) of the Plan.
Section 8. Shareholders' Agreement. The Optionee acknowledges that this
Option and all Option Shares shall be subject to the provisions of the
Shareholders' Agreement which are applicable to Retained Shareholder Shares (as
such term is defined in the Shareholders' Agreement) in addition to the
provisions of this Agreement and the Plan. The Optionee is a Retained
Shareholder (as such term is defined in the Shareholders' Agreement) and agrees
to comply with all of the terms of the Shareholders' Agreement.
-3-
<PAGE>
Section 9. Restrictive Legend. No Options shall be granted, and no
Class A Common Shares shall be issued and delivered upon the exercise of Options
granted, unless and until the Company and/or the Optionee shall have complied
with all applicable laws, rules and regulations of all public agencies and
authorities applicable to the issuance and distribution of such Common Shares
and to the listing of such Class A Common Shares on any stock exchange on which
any of the shares of the capital stock of the Company may be listed. As a
condition of participating in the Plan, each Optionee agrees to comply with all
such laws, rules and regulations and agrees to furnish to the Company all
information and undertakings as may be required to permit compliance with such
laws, rules and regulations. The Committee in its discretion may, as a condition
to the exercise of any Option granted under the Plan, require an Optionee (i) to
represent in writing that the shares received upon exercise of an Option are
being acquired for investment and not with a view to distribution and (ii) to
make such other representations and warranties as are deemed appropriate by the
Company. All certificates representing Option Shares issued upon exercise of the
Option shall, unless otherwise determined by the Committee, have affixed thereto
the legend required by the Shareholders' Agreement.
Section 10. Notices. All notices, claims, certificates, requests,
demands and other communications hereunder shall be in writing and shall be
deemed to have been duly given and delivered if personally delivered or if sent
by nationally-recognized overnight courier, by telecopy, or by registered or
certified mail, return receipt requested and postage prepaid, addressed as
follows:
(a) if to the Company to:
Greenfield Online, Inc.
274 Riverside Avenue
Westport, Connecticut 06880
Attention: Chief Executive Officer
Facsimile: (203) 221-0791
Telephone: (203) 221-0411
and
Wake, See, Dimes & Bryncizka
27 Imperial Avenue
Westport, CT 06881
Attention: Jonathan A. Flatten
Facsimile: (203) 226-1641
Telephone: (203)
with a copy to:
Greenfield Holdings, LLC
c/o InSight Capital Partners III, L.P.
122 East 42nd Street
-4-
<PAGE>
Suite 2300
New York, NY 10168
Attention: Jeff Horing
Facsimile: (212) 681-0972
Telephone: (212) 681-8181
and
O'Sullivan Graev & Karabell, LLP
30 Rockefeller Plaza
New York, NY 10112
Attention: Ilan S. Nissan, Esq.
Facsimile: (212) 408-2420
Telephone: (212) 408-2443
(b) if to the Optionee, to him at:
[Optionee]
[Address]
Facsimile:
Telephone:
or to such other address as the party to whom notice is to be given may have
furnished to the other party in writing in accordance herewith. Any such notice
or communication shall be deemed to have been received (i) in the case of
personal delivery, on the date of such delivery (or if such date is not a
business day, on the next business day after the date sent), (ii) in the case of
nationally-recognized overnight courier, on the next business day after the date
sent, (iii) in the case of telecopy transmission, when received (or if not sent
on a business day, on the next business day after the date sent), and (iv) in
the case of mailing, on the third business day following that on which the piece
of mail containing such communication is posted.
Section 11. Waiver of Breach. The waiver by either party of a breach of
any provision of this Agreement must be in writing and shall not operate or be
construed as a waiver of any other or subsequent breach.
Section 12. Optionee's Undertaking. The Optionee hereby agrees to take
whatever additional actions and execute whatever additional documents the
Company may in its reasonable judgment deem necessary or advisable in order to
carry out or effect one or more of the obligations or restrictions imposed on
the Optionee pursuant to the express provisions of this Agreement and the Plan.
Section 13. Modification of Rights. The rights of the Optionee are
subject to modification and termination in certain events as provided in this
Agreement and the Plan. This
-5-
<PAGE>
Agreement may not be amended except by written agreement executed by the Company
and the Optionee.
Section 14. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York (without giving
effect to principles of conflicts of law).
Section 15. Counterparts. This Agreement may be executed in one or more
counterparts, and each such counterpart shall be deemed to be an original, but
all such counterparts together shall constitute but one agreement.
Section 16. Entire Agreement; The Plan. This Agreement and the Plan
(and the other writings referred to herein) constitute the entire agreement
between the parties with respect to the subject matter hereof and thereof and
supersede all prior written or oral negotiations, commitments, representations
and agreements with respect thereto.
Section 17. Severability. In the event any one or more of the
provisions of this Agreement should be held invalid, illegal or unenforceable in
any respect in any jurisdiction, such provision or provisions shall be
automatically deemed amended, but only to the extent necessary to render such
provision or provisions valid, legal and enforceable in such jurisdiction, and
the validity, legality and enforceability of the remaining provisions of this
Agreement shall not in any way be affected or impaired thereby.
* * * *
-6-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Option
Agreement as of the date first written above.
GREENFIELD ONLINE, INC.
By:________________________________
Name:
Title:
________________________________
[Optionee]
<PAGE>
EXHIBIT A
1999 Stock Option Plan
[See attached]
<PAGE>
GREENFIELD ONLINE, INC.
FIRST AMENDMENT
TO NON-QUALIFIED STOCK OPTION AGREEMENT
THIS FIRST AMENDMENT ("Amendment") is made effective as of March __,
2000 to that certain Non-Qualified Stock Option Agreement (the "Agreement")
dated as of _________________, by and between Greenfield Online, Inc., a
Delaware corporation (the "Company") and ____________ ("Optionee").
WHEREAS, pursuant to the Agreement, the Company granted Optionee a
non-qualified option to purchase shares of its common stock pursuant to the
Company's 1999 Stock Option Plan, which option is subject to the vesting
schedule set forth in Section 4(a) of the Agreement;
WHEREAS, Optionee is a key employee of the Company that the Company
desires to incentivize and treat fairly; and
WHEREAS, Optionee and the Company have agreed to amend the Agreement in
order to provide for an acceleration of vesting in certain circumstances when
Optionee's employment with the Company terminates after a Corporate Transaction
(as defined below) in the Company;
NOW THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the parties agree to amend the Agreement as follows:
1. The following defined terms shall be added to Section 1:
"Cause" means a good faith finding by the Board of Directors
of the Company that Optionee has: (i) engaged in conduct that
constitutes gross malfeasance of office or flagrant disloyalty to the
Company, dishonesty, fraud, or theft; (ii) willfully and repeatedly
failed to carry out the reasonable directions of the Board or has
engaged in conduct in clear violation of material policies of the
Company; or (iii) been convicted of or entered a plea of nolo
contendere to, a felony or crime under circumstances demonstrably
injurious to the Company. Any termination by the Company of Optionee
that is not for Cause shall be deemed to be without Cause.
"Corporate Transaction" means any of the following events:
(i) Consummation of any merger or consolidation of
the Company in which the Company is not the continuing or surviving
corporation, or pursuant to which shares of Common Stock are converted
into cash, securities, or other property, if following such merger or
consolidation the holders of the Company's outstanding voting
securities immediately prior to such merger or consolidation own less
than 66-2/3% of the outstanding voting securities of the surviving
corporation;
<PAGE>
(ii) Consummation of any sale, lease, exchange, or
other transfer, in one transaction or a series of related transactions,
of all or substantially all of the Company's assets, other than a
transfer of the Company's assets to a majority-owned subsidiary
corporation of the Company; or
(iii) Approval by the holders of the Common Stock of
any plan or proposal for the liquidation or dissolution of the Company.
Ownership of voting securities shall take into account and
shall include ownership as determined by applying Rule 13d-3(d)(1)(i)
(as in effect on the date of adoption of the Plan) under the Exchange
Act.
"Good Reason" means any one of the following: (i) a material
alteration of Optionee's title and status in the Company or assignment
to duties and responsibilities inconsistent with his position; (ii) the
relocation of Optionee to any place greater than twenty five (25) miles
from his current principal location; (iii) the relocation of the
Company's corporate headquarters to a location more than 10 miles from
its current location in Wilton Connecticut; or (iv) a substantial
reduction of Optionee's compensation package, unless such a reduction
is made by the Company ratably with all other employees at similar
levels of responsibility. Any resignation by Optionee that is not for
Good Reason shall be deemed to be without Good Reason.
2. The first sentence of Section 4(a) is amended by inserting the words
"or pursuant to Section 4(c)" after the word "Committee".
3. A new Section 4(c) is added as follows:
(c) In the event that (i) the Company is subject to a
Corporate Transaction, and (ii) within one (1) year of such Corporate
Transaction, the Company terminates Optionee without Cause, or Optionee
resigns his employment within sixty (60) days of an event that
constitutes a Good Reason, all of the Option Shares shall immediately
become Vested Shares and the Option shall be exercisable with respect
to all such Option Shares for a period of sixty (60) days after such
resignation or termination. Upon the expiration of such sixty (60) day
period, the Option shall terminate with respect to any Option Shares as
to which it is not exercised.
4. The parties hereby acknowledge and reaffirm that all of the terms
and conditions of the Agreement not specifically amended herein shall remain in
full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the date first mentioned above.
GREENFIELD ONLINE, INC. OPTIONEE
<PAGE>
By __________________________ ________________________
Its _________________________
<PAGE>
AGREEMENT
This agreement ("Agreement" is dated May 13, 1999 ("Effective Date")
and is by and between Forrester Research, Inc. ("Forrester") and Greenfield
Online, Inc. ("Greenfield").
1. Recitals. Forrester and Greenfield seek to form a strategic
partnership.
A. As the preferred provider of online consumer research services
to Forrester, Greenfield will be presented with the
requirements for each online research project that Forrester
plans to outsource to a vendor. Provided Greenfield can
demonstrate that its capabilities, pricing and material terms
meet Forrester's needs and can be performed for competitive
market prices, Forrester will contract with Greenfield for the
services.
B. Greenfield shall not form a strategic relationship with any
company that competes with Forrester, including but not
limited to Gartner Group, Meta Group, Giga Information Group,
Jupiter Communications, Gomez Advisors, Mainspring
Communications, the Yankee Group and Intelliquest, Inc.
Greenfield will not include a competitor's segmentation that
is based on consumer attitudes and/or behaviors toward
technology in Greenfield's panel, provide data to support a
competitor's product, and/or allow direct or indirect
investment in Greenfield or its affiliates. Any agreements
with Datamonitor that predate this Agreement are exempted from
this restriction.
2. License: Forrester agrees to provide a non-exclusive license to
Greenfield to embed the Technographcs(R) scale ("Scale") set forth in
Exhibit A into the batter of qualitative questions that is administered
to members of Greenfield's online panel (the "Qualitative Battery") for
the uses described below.
A. Greenfield shall administer the Qualitative Battery to all of
its panel members and, with the resulting data, classify and
tag each panelist's record with the corresponding
Technographics segment.
B. Greenfield may provide research services based o the
Technographics data and shall pay Forrester the following
royalties:
1). A royalty equal to 10% of the value (defined as cost
to client less incentives) of each custom research
project that involves and/or names Technographics as
part of the project.
2). A royalty equal to $250 per client for each
syndicated data set that Greenfield provides to its
clients that include the Technogrpahics data element.
<PAGE>
3). These royalties will be paid to Forrester quarterly,
on billings just received, and accompanied by a
report reflecting in reasonable detail the client
projects undertaken in the quarter.
C. Forrester agrees not license the Scale to any company that
competes with Greenfield in the area of marketing research
using the Internet, including but not limited to Digital
Marketing Services, NPD Interactive, NPO Interactive, MB
Interactive, MARC Interactive, market Facts and Harris Black.
Mediamark Research (media research only), the NPD Group
(mail-based research only), and Media Metrix (Internet
audience measurement only) are exempted from this restriction.
3. Research Access. Forrester and Greenfield will provide each other
access to certain information.
A. Forrester shall provide Greenfield access to its Corporate
Technology research at an annual cost of $50,000. Access will
be provided online and will be covered by Forrester's standard
usage agreement.
B. Greenfield shall provide Forrester access to its syndicated
data (including their Technographics segment) at an annual
cost of $50,000. Syndicated studies currently available cover
the college market, gay and lesbian market, and "Vets & Pets."
Forrester shall use the Data for internal research purposes
and may cite Data in the research that it distributes to its
clients and the public, provided that Greenfield's copyright
notice is attached thereto and that Forrester does not
distribute Data in whole without the prior approval of
Greenfield.
C. Should either party need additional information, this will be
made available to each other at prevailing costs for
consulting and special processing.
4. Intellectual Property and Confidentiality. The research products of
each party are their own and are protected by U.S. and international
copyright law and conventions. These provisions are in addition to and
not a replacement of the attached "Confidential Non-Disclosure
Agreement" signed February 9, 1998.
A. Greenfield will own its panel data and hereby grants Forrester
a license for its use in accordance with the terms and
conditions of this Agreement.
B. Forrester owns the Scale and hereby grants Greenfield a
license for its use in accordance with the terms and
conditions of this Agreement.
C. Neither party will disclose the confidential information of
the other and shall use at least the same degree of care to
avoid disclosure as it employees with respect to its own
confidential information
-2-
<PAGE>
5. Term and Termination. This Agreement shall commence on the Effective
Date and shall continue in effort for a period of eighteen months after
which it shall automatically renew unless terminated by one of the
parties on no less than 90 days prior written notice. Either party may
terminate this Agreement in the event of material breach by the other,
providing that the terminating party shall first give the breaching
party 60 days written notice and an opportunity to cure the breach
within that sixty-day period.
6. Limitation of Liability. Services shall be provide in accordance with
the generally accepted standards of the marketing research industry.
Neither party will be liable to the other for lost profits or revenues
or other economic loss, including consequential or similar damages,
arising out of activity under this Agreement. Liability for any claim
arising under this Agreement shall not exceed the amount of fees and/or
expenses paid under this Agreement.
7. Severability. In the event any provision of this Agreement shall not be
enforceable, the remainder of this Agreement shall continue in full
force and effect.
8. Law. This Agreement shall be governed by and interpreted in accordance
with the laws of the State of Delaware.
9. Entire Agreement. This Agreement contains the complete agreement of the
parties, supersedes any previous agreements entered into by the parties
(excluding any agreements covering specific research project,
including, but not limited to, the 1999 "Total Research Program"
project), and neither party shall be bound by any statement or
representation not contained herein.
10. Survivability. Notwithstanding any termination of this Agreement, the
provisions of paragraph 4 shall survive any such termination or
severance and remain binding upon the parties.
<TABLE>
<CAPTION>
Forrester Research, Inc. Greenfield Online, Inc.
<S> <C>
By: /s/ John Boynton By: /s/ Leigh-Brindeland Bell
------------------------------------------------- ----------------------------------------
Name: John Boynton Name: Leigh-Brindeland Bell
----------------------------------------------- --------------------------------------
Title: Vice President Title: VP Business Development
---------------------------------------------- -------------------------------------
</TABLE>
-3-
<PAGE>
Exhibit A
Technographics(R) Scale
1. I like to impress people with my lifestyle.
2. Technology is important to me.
3. I am very competitive when it comes to my career.
4. Having fun is the whole point of life.
5. Family is important, but I have other interests which are just as
important to me.
6. I am consistently looking for new ways to entertain myself.
7. Making a lot of money is important to me.
8. I spend most of my free time doing fun stuff with my friends.
9. I like to spend time learning about new technology products.
10. I like to show off my taste and style.
11. I like technology.
12. My family is by far the most important thing in my life.
13. I put a lot of time and energy into my career.
14. I am very likely to purchase new technology products or services.
15. I spend most of my free time working on improving myself.
Technographcs(R) Segments
ATTITUDE INCOME NOTIFICATION
-4-
<PAGE>
CONFIDENTIAL NON-DISCLOSURE AGREEMENT
THIS AGREEMENT is made this 9 day of February, 1998 by and between
Greenfield Online, a Connecticut corporation ("GO") and Forrester Research, a
Massachusetts corporation ("Client").
WHEREAS, the parties hereto are currently, and in the course of their
business relationship may, from time to time continue to be, engaged in
discussions and evaluations regarding the data and software services and
products offered by GO and the products and services offered by Client (the
"Evaluation").
WHEREAS, in connection therewith one party may receive or come in
contact with certain Confidential Information (as defined) of the other party or
the other party's affiliates or clients;
WHEREAS, as a condition to each of GO and Client disclosing such
Confidential Information to the other, each party hereto agrees to treat such
Confidential Information, whether furnished before, on or after the date of this
Agreement, in accordance with the terms of this Agreement.
NOW THEREFORE, in consideration such disclosure and in further consideration of
the agreements contained herein, the parties agree as follows:
1. The term "Confidential Information" shall mean any information and
data of a confidential nature belonging to the disclosing party, its affiliates
and/or licensors ("Discloser"), including without limitation, proprietary,
technical, developmental, marketing, sales, operating, financial, performance,
cost, business and process information and plans, software, and computer
programming techniques which are disclosed or made available pursuant to this
Agreement in connection with the Evaluation.
2. Except for the software products and GO data, if any, disclosed
hereunder, Confidential Information shall not include information which (a) is
known to the party receiving the information from Discloser ("Recipient") at the
time of disclosure and is not subject to restriction; (b) is now or subsequently
becomes generally known or available to the Recipient by publication, commercial
use or otherwise through no fault of Recipient; (c) is lawfully obtained from a
third party who has the right to make such disclosure; or (d) is independently
developed by or for the Recipient without access to the Discloser's Confidential
Information.
3. Recipient hereby agrees that the Confidential Information will be
used by it solely for the purposes of discussions with Discloser relating to the
Evaluation and as necessary to fulfill any obligations Recipient may have to
Discloser pursuant to any agreements the parties may enter into or otherwise.
Recipient agrees not to disclose the Confidential Information of the other
party, in any form, to any third party except as contemplated herein. Recipient
agrees to maintain the confidential nature of the Confidential Information;
provided however, that any such Confidential Information may be disclosed to its
employees who need access to such
<PAGE>
information for such purposes and are made aware of and agree to be bound by the
confidentiality obligations contained herein.
4. Upon termination of the Evaluation of the parties' relationship with
respect thereto, and upon Discloser's request, Recipient shall return to
Discloser all materials reflecting or containing any of Discloser's Confidential
Information and shall not retain any copies, extracts or other reproductions in
whole or in part of any of the foregoing.
5. Each party acknowledges that unauthorized disclosure or use of the
other party's Confidential Information may cause irreparable harm to such other
party. Each party agrees that money damages may not be a sufficient remedy for
any breach by it of this Agreement and that the non-breaching party shall be
entitled to seek specific performance and injunctive or other equitable relief
as a remedy for any such breach.
6. This Agreement shall be governed by and construed in accordance with
the internal laws of the State of Connecticut, and not the law of conflicts.
7. The parties hereto shall not be obligated to compensate each other
for disclosure of any information under this Agreement and agree that no
warranties of any kind are given with respect to such information, as well as
any use thereof. It is understood that no patent, copyright, trademark or other
proprietary right or license is granted by this Agreement.
8. This Agreement shall be effective as of the first date of disclosure
of Confidential Information to Recipient. Recipient's obligations hereunder with
respect to Confidential Information shall survive the termination of the
parties' relationship. The confidentiality provisions in this Agreement shall
survive termination of this Agreement and the parties' relationship relating to
the Evaluation.
8, Any provision of this Agreement, which is invalid, illegal or
unenforceable, shall not affect in any way the remaining provisions of this
Agreement.
********************
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be entered
into effective as of the date first written above.
<TABLE>
<CAPTION>
GREENFIELD ONLINE, INC. CLIENT NAME
<S> <C>
John Boynton
-------------------------------------
By: /s/ Rudy Nadilo By: /s/
------------------------------------------------- ---------------------------------
Title Pres + CEO Title VP, Business Dvlt.
----------------------------------------------- ------------------------------
Date 2/9/98 Date 2/19/98
------------------------------------------------ -------------------------------
</TABLE>
<PAGE>
1
GREENFIELD ONLINE, INC (GREENFIELD ONLINE)
AND
FLACKETTS STEVENS AND ASSOCIATES (FSA)
AGREEMENT
This Agreement is effective as of 11th June 1999 by and between Greenfield
Online having a place of business at
274 Riverside Avenue
Westport, CT 06880; and
FSA, having a place of business at:
5 Hillgate Street
Notting Hill Gate
London W8 7SP
NOW THEREFORE in consideration of the mutual covenants and conditions set forth
herein, it is agreed as follows:
1. Definitions
Unless the context requires otherwise definitions are as used herein
2. FSA/GFO Service
Both parties agree to establish a business alliance consisting of a
'Jointly Branded and Owned FSA/Greenfield Online Internet Based Moms
and Babies Research Panel Based Research Service (FSA/GFO Service)' to
provide the services and carry out the activities set out in clause
7(a) below.
3. Operations
a) Greenfield Online and FSA will jointly be responsible for day to day
operations of the FSA/GFO Service.
b) The list of matters requiring the prior written consent of both parties
are set out in SCHEDULE 1. If any party contravenes the restrictions of
SCHEDULE 1 or the terms of the budget document developed in accordance
with paragraph 9 (b), they will be in material breach of this
Agreement.
<PAGE>
2
c) There will be a monthly meeting or telephone conference call. This
meeting will be a forum for discussing the development of the business
and raising any issues which need the comments of both parties. At
least three days prior to this meeting the following information will
be supplied.
(i) The size of the panel, together with numbers of additions or
dropouts
(ii) Details of sales contacts/enquiries
(iii) Confirmed sales/cancellations value/turnover/company contribution
(iv) Management accounts (profit and loss, balance sheet and cash
flow sheets)
(v) Quarterly budget reviews for current financial year and
succeeding two financial years (April, July, October, January)
4. Confidential Information
Confidential Information means any proprietary information, technical data,
panel information and databases, trade secrets or know how, including, but not
limited to, research, product plans, products, services, customers, customer
lists, markets, marketing, finances or other business or financial information
disclosed by either party either directly or indirectly in writing or orally to
the other in connection with this Agreement. Confidential Information shall also
include any information that should be reasonably understood by the receiving
party to be confidential.
5. Confidentiality
The confidentiality obligations set out in the signed Confidential Non -
disclosure Agreement between Greenfield Online, Inc and Flackett, Stevens and
Associates Ltd, dated 9th March 1998 and attached hereto are hereby incorporated
into this Agreement.
6. Non Competition
During the term of this Agreement and for two years after its termination, the
parties agree that they will not (i) use any of the other party's confidential
information to (a) directly aid a competitor of the disclosing party or (b)
develop an Internet based "Moms and Babies" research product or (ii) solicit the
employees of the other party for employment.
7. Agreement
a) Greenfield Online and FSA hereby enter into an exclusive business
alliance that will enable the FSA/GFO Service to develop and market a
US "Mom and Baby panel, separate and distinct from the Greenfield
Online database/panel at large" (Baby defined as up to 36 months of
age) Internet research product/service for the sales of that
information to new and existing clients of Greenfield Online and FSA.
The
<PAGE>
3
exclusivity of this Agreement applies only to Internet based baby
products research for the US "Mom and Baby" market. Use of the word
'Internet' in this agreement includes the Internet, World Wide Web
(WWW) and other related online activities associated with doing
business online.
b) FSA and Greenfield Online each agree to present to the other any
additional concepts they develop or plan to develop concerning
online/interactive research products or tools specifically targeted at
the "Moms and Babies" US market, in a good faith effort to enter into a
business alliance for the development and exploitation of such
concepts. Should the part to whom such concept(s) is presented in
accordance with this subparagraph decline to enter into negotiations or
should the parties be unable to come to terms, the initiating party
shall be free to develop such concept without restriction.
c) Greenfield Online and FSA each agree to present to the other any plans
they develop to expand online/interactive research products or tools
specifically targeted at the "Moms and Babies" market outside the US
market, in a good faith effort to enter into a business alliance for
the development and exploitation of such markets. Should the party to
whom such concept(s) is presented in accordance with this subparagraph
decline to enter into negotiations or should the parties be unable to
come to terms, the initiating party shall be free to develop such
concept without restriction.
d) Greenfield Online recruits and maintains a database for online
marketing research purposes, and solely owns the complete database. The
"database" is defined as the people/households and related information
such as name, address demographic profile, etc, in the Greenfield
Online database and includes the moms and babies panel(s) under
development.
e) The FSA/GFO Service owns the Research. The 'Research' is defined as
survey design, questionnaire(s), code frames, analysis package(s),
reports and data associated with this Agreement.
f) This Agreement shall be interpreted under the laws of the State of
Connecticut. Any dispute shall be settled by arbitration in the State
of Connecticut.
g) This agreement cannot be amended except by written agreement of both
parties.
8. Responsibility of Parties
Greenfield Online will on behalf of the FSA/GFO Service undertake the following:
- - Recruit and manage the panel or panels of respondents and Research carried
out by the FSA/GFO Service - specific growth target objectives to be
mutually agreed upon by FSA and Greenfield Online
- - Market and sell the Research
- - Implement and deliver the Research to third parties
<PAGE>
4
- - Manage client relations and projects for subscribers to the FSA/GFO Service
- - Provide marketing management services to the FSA/GFO Service to help create
sales, collateral and marketing programmes for the "Mom and Baby"
syndicated panel and related product/services.
FSA will, on behalf of the FSA/GFO Service, undertake the following:
- - Provide the analytical expertise for the Research to help Greenfield Online
provide the final report, including advising and/or executing weighting and
editing procedures
- - Provide the Media Data on the Baby Magazines to facilitate the re-weighting
process
- - Assist in the marketing and sales of the Research
- - Assist on the development of any additional internet/online/interactive or
electronic based surveys or other products for the "Mom and Baby" market
within the US.
- - FSA will need to be able to communicate with Greenfield Online via email
and have access to the WWW for survey and communication purposes.
Greenfield Online and FSA will on behalf of the FSA/GFO Service:
- - Develop the suite of deliverables for the "Mom and Baby" syndicated service
- - Sell the Research
- - Identify the other as a partner in all press releases and media interviews
relating to this FSA/GFO Service in a mutually agreed manner
9. Costs & Revenues
a) Prior to the start of the ongoing service, which is defined as the
point at which FSA and Greenfield Online agree to begin ongoing
expenditure, each party will bear it's own costs and expenses.
b) Both parties will only charge previously agreed costs to the FSA/GFO
Service and undertake to ensure such costs are reasonable and
competitive. Complete details of costs that are to be allocated to
FSA/GFO Service will be listed in a cost budget to be jointly produced
and agreed by FSA and Greenfield Online and will be appended to this
Agreement at a later date.
<PAGE>
5
c) Financial Statements of the FSA/GFO Service (P&L, balance sheet and
cash flow) will be prepared on a monthly basis within fifteen days of
each month end.
d) Each party will be entitled to 50% of the distributable profits
generated by the FSA/GFO Service under this Agreement and, based on the
cash flow/profit position, a monthly distribution as agreed by both
parties will be made to both parties.
e) Income generated for/by the FSA/GFO Service will be banked in an
account to be set up in the name of the FSA/GFO Service. Such account
shall be controlled by both parties and limits of signatories will be
mutually agreed. The bank account will be in the US.
10. Quality
Both parties agree to work within the code of conduct required by their
respective countries' market research code of conduct. In the event of default,
the defaulting party undertakes to remedy the default and if unable to do so
within 60 days, then the non-defaulting party may terminate this Agreement by
giving ten days written notice, and the research shall pass to the
non-defaulting party.
11. Term of Contract and Termination
a) Term
The minimum term of this Agreement shall be two years beginning upon
the date of execution of this Agreement. Thereafter it will continue
until cancelled by either party. This Agreement may be cancelled by
either party by giving six months written notice to the other, such
notice not to be given prior to eighteen months after the date hereof.
b) Effect of Termination
Upon termination, all rights and duties of the parties shall cease
except:
i) Any amounts owing to or from the FSA/GFO Service by either
party will be settled within 30 days from the date of
termination and the restrictive covenants in clause 6 and the
confidentiality obligations in clause 5 shall continue
ii) On termination of this Agreement for whatever reason, both
parties shall work together to endeavour to ensure that the
termination is carried out in professional manner.
iii) On termination of this Agreement in accordance with clause 11
(a) above, the party receiving notice of termination shall be
entitled to all the intellectual property rights in the
Research and be entitled to continue the service without the
other party.
<PAGE>
6
c) Default
If either party commits an event of default (as defined below), the
other party shall be entitled to terminate this Agreement on ten days
written notice. Upon such termination, all intellectual property rights
in the Research shall belong to the non-defaulting party. An event of
default shall be defined as:
i) A material breach of this Agreement which is incapable of
remedy or which, if such breach is capable of remedy, such
breach has not been remedied within thirty days of notice of
breach having been given to the defaulting party,
ii) Any insolvency event occurs
iii) A party commits a criminal offence
12. Notices
All notices required or permitted under this Agreement shall be in writing
reference this Agreement and be deemed given (a) when delivered personally to an
authorised representative of the receiving party; (b) when delivered by e-mail
where the sending party requests confirmation of receipt of email; one day after
deposit with a commercial overnight carrier for overnight delivery, with written
verification of receipt.
All communications will be sent to the following addresses:
Rudi Nadilo
President and CEO
Greenfield Online, Inc
274 Riverside Avenue
Westport, CT 068880
Tel: 203-221-0411
e-mail: [email protected]
Roy Stevens
Managing Director
FSA International,
5 Hillgate Street
Notting Hill Gate
London W8 7SP
Tel: (0171) 792 260
Ivor Stocker
NOP Research Group Ltd
Ludgate House
245 Blackfriars Road
London, SE1 9UL
Tel: (0171) 890 9358
e-mail: [email protected]
<PAGE>
7
13. Attorney Fees
Subject to court orders to the contrary, each party will pay it's own attorney's
fees and costs of the suit in relation to this Agreement.
14.
This Agreement is personal to the parties, and neither party may assign or
transfer, without the prior written consent of the other, any of its rights or
obligations hereunder.
IN WITNESS HEREOF, the parties have executed this Agreement as of the date set
forth under their names.
Greenfield Online, Inc
BY: /s/ Rudy Nadilo
-----------------------------------------
Name: Rudy Nadilo
Date:6/30/99
/s/ Leigh-Brindeland Bell
- -----------------------------------------
Name: Leigh-Brindeland Bell
Date: 7/12/99
Flackett, Stevens and Associates Ltd
BY: /s/
-----------------------------------------
Name:
Date: June 11th 1999
/s/
- -----------------------------------------
Name:
Date: 11th June 1999
<PAGE>
8
SCHEDULE 1
Attachment to the Greenfield Online/FSA Contract dated 11th June 1999
Neither party may, without the written consent of the other party:
1. Alter the Brand name of the FSA/GFO Service
2. Enter into any ongoing relationships with third parties in respect of
the FSA/GFO Service that involve the payment to, or receipt of monies.
3. Commit the FSA/GFO Service to any expenditure that is in excess of
$5,000 of the Budget that has been agreed by both parties.
4. Withdraw monies from the FSA/GFO Service joint account without
authorisation of the other party.
5. Assign, licence, transfer, dispose of or create any security interest
over, or otherwise deal with any of the company's intellectual property
[except in the ordinary course of business].
6. Apply for registration of any intellectual property.
<PAGE>
UUNET Technologies, Inc. +1 800 258-4039 (voice)
3060 Williams Drive +1 703 206-5629 (voice)
Fairfax, VA 22031 +1 703 206-5601 (fax)
http://www.uu.net [email protected]
UUNET is a registered trademark of, and the UUNET
logo design and The Internet at Work are trademarks
of, UUNET Technologies, Inc.
UUNET CO-LOCATION SERVICES AGREEMENT
Facility Location (Choose One) | |Fairfax, VA | |Palo Alto, CA
- ------------------------------
Term Commencement Date: TBD
- ---------------------- --------------
Date/Month/Year
Equipment Space Options
UUNET offers three types of equipment spaces. All spaces require a minimum
six-month term commitment.
Number of Cabinets Desired Equipment Space Options(1) Monthly Fee Per
Cabinet
- -------------------------- ------------------------ -----------------
| | Half Cabinet $ 500
----------------------
|X| 2 Standard Cabinet $ 900
----------------------
| | Large Cabinet (Fairfax only) $ 1,300
----------------------
| |Install Expedite Fee: $750 (for install requests with less than two weeks'
-------------------- notice from date of request(2)
On-Site Support and Installation Options
Basic On-Site Technical Support (INCLUDED WITH ALL SERVICES)
All Co-Location customers receive Basic On-Site Technical Support. Basic On-Site
Technical Support consists of the following basic operational functions: power
cycling of equipment, securing cabling, setting switches, swapping back-up
tapes, and entering commands into server machines from a keyboard. The first two
hours of Basic On-Site Technical Support per month are provided at no charge.
Additional hours are billed at $100 per hour. Basic On-Site Technical Support
calls are billed in 15 minute increments, with a minimum call of 15 minutes.
|x|Advanced On-Site Technical Support (OPTIONAL SERVICE)
Advanced On-Site Technical Support (described further in Schedule A) consists of
diagnostic and equipment repair activities for selected Sun, DEC, HP, SGI,
Compaq, and Cisco hardware models. Advanced On-Site Technical Support is billed
at $125 per hour. Advanced On-Site Technical Support calls are billed in 30
minute increments, with a minimum call of three hours.
|x|On-Site Equipment Installation (described further in Schedule B) consists of
installation of pre-configured equipment into the storage cabinet, documentation
of physical and network connections, and connection of the equipment to the
power supply and network connectivity. On-Site Equipment Installation is billed
at $125 per hour of use. On-Site Equipment installation calls are billed in 30
minute increments, with a minimum call of three hours.
Internet Connectivity Options (Choose One)
UUNET offers the following flexible Internet connectivity options. Connectivity
is provided via a 100 Mbps Fast Ethernet Hand-off.
| |Tiered Service
Tiered service provides a specific amount of bandwidth to Customer's Space.
Customer has unlimited use of this Internet bandwidth stream at a fixed monthly
cost, but cannot exceed the specified bandwidth tier. Customer may increase the
bandwidth tier at any time during the term of the contract, but must remain at
that tier for at least one
- ----------
(1) Customer must purchase a minimum Bandwidth Tier of 1.5 Mbps for each
Cabinet.
(2) Expedited install cannot be guaranteed. IF UUNET fails to make the Space
available within two weeks of Customer's request, Customer's sole and
exclusive remedy shall be to receive a full refund of the Install Expedite
Fee.
"The Internet At Work"
<PAGE>
calendar month. After the first month at the new tier, Customer may decrease the
bandwidth tier, but never below the tier for which Customer initially
contracted.
One-time Start-Up Fee $2500
<TABLE>
<CAPTION>
Bandwidth Tier Monthly Fee Bandwidth Tier Monthly Fee Bandwidth Tier Monthly Fee
-------------- ----------- -------------- ----------- -------------- -----------
<S> <C> <C> <C> <C> <C>
| |1.5 Mbps $ 2,000 | |15 Mbps $ 14,250 | |40 Mbps $ 37,900
| |3 Mbps $ 3,500 | |20 Mbps $ 19,000 | |45 Mbps $ 42,500
| |5 Mbps $ 5,500 | |25 Mbps $ 23,750 | |50 Mbps $ 47,000
| |8 Mbps $ 8,500 | |30 Mbps $ 28,500 | |60 Mbps $ 56,000
| |10 Mbps $ 9,500 | |35 Mbps $ 33,250 | |75 Mbps $ 69,000
| |100 Mbps $ 90,000
</TABLE>
Burstable Service
Burstable service provides unlimited use of a 10 Mbps, 45 Mbps, or 100 Mbps
Internet connection. The monthly rate is based on Customer's sustained usage of
this connection. Sustained usage is defined at the 95th percentile measurement
of all bandwidth usage samples taken during the month.
|X|10 Mbps Burstable | |45 Mbps Burstable | |100 Mbps Burstable
Service Service Service
One-time Start-up Fee: One-time Start-up Fee: One-time Start-up Fee:
$2,500 $2,500 $2,500
<TABLE>
<CAPTION>
Sustained Usage Monthly Fee Sustained Usage Monthly Fee Sustained Usage Monthly Fee
- --------------- ----------- --------------- ----------- --------------- -----------
<S> <C> <C> <C> <C> <C>
0.0 - 2.0 Mbps $3,500 0.0 6.0 Mbps $11,500 0.0 - 20.0 Mbps $37,500
2.1 - 4.0 Mbps $6,500 6.1 - 10.0 Mbps $18,000 20.1 - 30.0 Mbps $53,500
4.1 - 6.0 Mbps $9,700 10.1 - 15.0 Mbps $26,000 30.1 - 45.0 Mbps $73,000
6.1 - 10.0 Mbps $11,500 15.1 - 20.0 Mbps $32,500 45.1 - 60.0 Mbps $89,000
20.1 - 30.0 Mbps $45,000 60.1 - 100.0 Mbps $100,000
30.1 - 45.0 Mbps $49,000
</TABLE>
Term Commitment(3)
| |1-year Term | |2-year Term |X|3-year Term
(5% discount) (10% discount) (15% discount)
Payment
If purchase order is required, Method of | |Please bill me | |Check(include
provide PO# payment: in order)
--------------
PLEASE READ AND SIGN THE ATTACHED CO-LOCATION TERMS AND CONDITIONS.
- ----------
(3) Applicable only to Monthly Fees. At the conclusion of the Term Commitment,
this Agreement shall continue in effect on a month-to-month basis at UUNET's
then-current list price for the service.
2
<PAGE>
Co-Location Terms and Conditions
UUNET Technologies, Inc. ("UUNET") and Customer agree to the following terms
and conditions as part of the Co-Location Services Agreement (the"Agreement"):
1. SERVICE. The cover page of this Agreement ("Cover Page") identifies the
physical location ("Facility") of the equipment storage space to be made
available to Customer hereunder (the "Space"), and sets forth a description of
the services and Internet connectivity (the "Services") to be provided in
connection with the Space and all equipment installed in the Space (the
"Equipment").
2. CONTRACTORS. Customer acknowledges that certain installation, technical
support, and consulting services may be provided by an unaffiliated third party
contractor ("Contractor") to UUNET. Customer hereby authorizes UUNET to provide
Contractor all Customer location, equipment and contact information necessary to
provide such services.
3. TERM. Unless otherwise specified on the Cover Page, the initial term
("Initial Term") of this Agreement shall be six months from the Term
Commencement Date. If upon completion of the Initial Term or any subsequent term
the parties do not agree to extend the Agreement for an additional Term, the
Services and Space will be provided on a month-to-month basis at UUNET's
then-current list prices. In the event of early cancellation during the Initial
Term or any subsequent Term, Customer will be required to pay 75% of the monthly
recurring fee for the Space and the Customer's then-current bandwidth tier for
each month remaining in the Term.
4. PAYMENT.
4.1 UUNET will invoice the Start-Up Fees on the Cover Page upon execution
and delivery of this Agreement. Monthly Fees for Services and Space will
commence as of the Term Commencement Date indicated on the Cover Page. UUNET
will invoice Monthly Fees monthly in arrears. UUNET reserves the right to change
the rates of Services and Space provided under this Agreement at any time after
the Initial Term of any subsequent term by providing written notice to Customer
at least 60 days in advance of the effective date of the change.
4.2 Payment is due 30 days after date of invoice. Accounts are in default if
payment is not received within 30 days after date of invoice. If Customer's
check is returned to UUNET unpaid, Customer shall be immediately in default and
subject to a returned check charge of $25.00 from UUNET. UUNET reserves the
right to terminate Customer's use of the Space and the Services on any account
unpaid 60 days after date of invoice and, in the event of such unpaid account,
terminate any other service provided by UUNET to Customer, or prohibit removal
of Equipment from the Facility pending payment of all amounts owed to UUNET by
Customer. The Monthly Fee for Space shall continue to accrue until Customer's
Equipment is removed from the Space by Customer. An account in default is
subject to an interest charge on the outstanding balance of the lesser of 1.5%
per month or the highest rate permitted by applicable law. Customer agrees to
pay UUNET's reasonable expenses, including attorneys' and collection agency
fees, incurred in enforcing its rights under the Agreement.
3
<PAGE>
5. USE OF SERVICES. All use of the UUNET Network and the Services must comply
with the then-current version of the UUNET Acceptable Use Policy ("Policy")
available at the following URL: www.uu.net/usepolicy. UUNET reserves the right
to amend the Policy from time to time, effective upon posting of the revised
Policy at the URL. UUNET reserves the right to suspend the Services or terminate
this Agreement effective upon notice for a violation of the Policy. Customer
agrees to indemnify and hold harmless UUNET from any losses, damages, costs or
expenses resulting from any third party claim or allegation ("Claim") arising
out of or relating to use of the Space or Services, including any Claim which,
if true, would constitute a violation of the Policy.
6. PERMISSIBLE USE OF SPACE.
6.1 Customer may use the Space only for the purposes of installing,
maintaining, and operating the Equipment. Access to the Facility is restricted
to Customer's employees and agents. Customer will furnish to UUNET, and keep
current, a written list identifying a maximum of five individuals authorized to
obtain entry to the Facility and access the Space. Customer agrees that no
individual it authorizes to enter the Facility will have been convicted of a
felony. Customer assumes responsibility for all acts or omissions of the
individuals included on this list or authorized by Customer to enter the
Facility, and agrees to indemnify and hold UUNET harmless from any Claim arising
from the acts or omissions of these individuals. Customer's employees and agents
will comply with all applicable laws and ordinances; with the standards and
practices of the telecommunications industry; and with all UUNET or Facility
security procedures, Facility rules, and safety practices. UUNET may revoke the
entry privileges of any person who fails to comply with these Terms and
Conditions, who is disorderly, or who UUNET reasonably suspects will violate
these Terms and Conditions.
6.2 UUNET and its designees may observe the work activities of Customer's
employees and agents in the Facility and may inspect at any time the Equipment
brought into the Space. Customer's employees and agents shall not use any
products, tools, materials, or methods that, in UUNET's reasonable judgment,
might harm, endanger, or interfere with the Services, the Facility, or the
personnel or property of UUNET, its vendors or its other customers. UUNET
reserves the right to take any reasonable action to prevent such potential harm.
6.3 UUNET will perform certain services which support the overall operation
of the Facility (e.g., janitorial services, environmental systems, maintenance)
at no additional charge to Customer. Customer shall be required to maintain the
Space in an orderly manner and shall be responsible for the prompt removal from
the facility of all trash, packing material, cartons, etc. that Customer's
employees or agents brought to or had delivered to the Facility.
6.4 Customer may not make available space within the Space to any third
party. If Customer makes space available to a third party, Customer shall be in
breach of this Agreement and UUNET may pursue any legal or equitable remedy,
including but not limited to the immediate termination of this Agreement.
6.5 Upon termination of this Agreement, Customer is responsible for
arranging prompt removal of its Equipment from the Facility at Customer's sole
risk and expense.
4
<PAGE>
7. CONDUCT IN FACILITY.
7.1 Customer will maintain and operate the Equipment in a safe manner, and
keep the Space in good order and condition. No employees or agents of Customer
will harm or allow any attempt to breach the security of the Facility, the
Services, or any third party system or network at the Facility or accessed by
means of the Services.
7.2 Customer agrees to use the common areas of the Facility for the purposes
for which they are intended. Such rules include, but are not limited to, a
prohibition against smoking in the Facility.
7.3 Customer's employees and agents are prohibited from bringing any of the
following materials into the Facility: wet cell batteries, explosives, flammable
liquids or gases, alcohol, controlled substances, weapons, cameras, tape
recorders, and similar equipment and materials.
7.4 Customer agrees not to alter, tamper with, adjust, or repair any
equipment or property not belonging to Customer, and agrees not to erect signs
or devices on the exterior of the storage cabinet or to make any construction
changes or material alterations to the Space or the interior or external
portions of the Facility.
8. EQUIPMENT DEPLOYMENT.
8.1 Customer will furnish to UUNET, and keep current, an Equipment list
(attached as Attachment C) identifying all Equipment installed in the Space.
UUNET reserves the right to verify installation of the Equipment on the
Equipment List. All Equipment must fit within the Space unless agreed to by
UUNET in an addendum to this Agreement. Customer agrees that power consumption
will not exceed 20 amps 110 VAC per storage cabinet and that all Equipment is UL
approved. Cabling used by Customer must meet national electrical and fire
standards. Customer will be allowed to remove from the Facility only that
Equipment listed on the then-current version of Customer's Equipment List.
8.2 UUNET reserves the right to relocate Equipment within the Facility or to
move Equipment to another facility with at least 45 days' written notice.
Equipment moved or relocated at UUNET"s initiative will be at UUNET"s expense.
Every commercially reasonable effort will be to minimize downtime and service
interruption if Equipment is moved or relocated. If Customer objects to the
location of the new Facility, Customer may terminate this Agreement without
penalty within sixty days of receiving notice of the new Facility's location.
8.3 Customer agrees to immediately remove or render noninfringing, at
Customer's expense, any Equipment alleged to infringe any patent, trademark,
copyright, or other intellectual property right.
8.4 If UUNET negligently or willfully damages any Equipment, UUNET will
repair or replace the damaged item or, at UUNET"s option, will reimburse
Customer for the reasonable cost of repair or replacement. THIS SHALL BE
CUSTOMER'S SOLE AND EXCLUSIVE REMEDY FOR
5
<PAGE>
ANY DAMAGE TO EQUIPMENT CAUSED BY OR ATTRIBUTABLE TO UUNET, ITS EMPLOYEES, OR
AGENTS.
9. ASSIGNMENT. This Agreement is binding upon and shall inure to the benefit of
the parties and their permitted successors and assigns. Neither party may assign
this Agreement without the prior written consent of the other party; provided
that UUNET may assign this Agreement to any present or future affiliate,
subsidiary, or successor, and may assign its right to receive payments. UUNET
may subcontract any or all of the work to be performed by it under this
Agreement but this shall not relieve UUNET of its responsibilities or
obligations hereunder.
10. INDEMNITY. Customer agrees to indemnify UUNET against actions by any person
claiming an ownership or possessory interest, lien, trust, pledge, or security
interest in any Equipment, including without limitation any attempt by such
third party to take possession of the Equipment.
11. INSURANCE
11.1 Customer agrees to maintain, at Customer's expense, during the entire
time this Agreement is in effect for each Space:
11.1.1 Commercial General Liability Insurance in an amount not less than Two
Million dollars ($2,000,000) per occurrence for bodily injury or property
damage:
11.1.2 Employer's Liability Insurance in an amount not less than One Million
dollars ($1,000,000) per occurrence; and
11.1.3 Workers' Compensation Insurance in an amount not less than that
prescribed by statutory limits.
11.1.4 Commercial Automobile Liability Insurance applicable to bodily injury
and property damage, covering owned, non-owned, leased and hired vehicles, in an
amount not less than $1,000,000 per accident.
11.1.5 Umbrella or Excess Liability Insurance with a combined single limit
of no less than $1,000,000 to apply over Commercial General Liability,
Employee's Liability, and Automobile Liability Insurance.
11.2 Prior to taking occupancy of the Space, Customer shall furnish UUNET
with certificate of insurance which evidence the minimum levels of insurance set
forth herein and which name UUNET as an additional insured. In the event the
Facility's landlord, pursuant to a lease relevant to particular Space, requires
additional insurance, Customer hereby agrees to comply with the landlord's
requirements under the lease, as the lease may be modified from time to time.
11.3 None of UUNET, UUNET's subsidiaries, parent companies, or affiliates
shall insure or be responsible for any loss or damage to property of any kind
owned or leased by Customer or by its employees and agents other than losses or
damages resulting from negligence
6
<PAGE>
or willful acts of such parties. Any insurance policy covering the Equipment
against loss or physical damage shall provide that underwriters have given their
permission to waive their rights of subrogation against UUNET, UUNET
subsidiaries, affiliates, the Facility landlord, and their respective directors,
officers and employees.
11.4 Customer will insure or self-insure against claims involving Customer's
employees and agents. Customer agrees to release and indemnify UUNET against
claims by any of Customer's employees and agents arising from dismissal,
suspension, or termination of work, or from denial of entry to the Facility, and
claims by any person arising from Customer's nonpayment for the Space or the
Services.
12. LIMITATION OF LIABILITY. UUNET WILL NOT BE LIABLE FOR ANY INDIRECT,
INCIDENTAL or CONSEQUENTIAL DAMAGES, or FOR ANY LOSS OF PROFITS RESULTING FROM
THE USE OF THE SERVICES, SPACE, OR EQUIPMENT BY CUSTOMER OR ANY THIRD PARTIES.
THIS INCLUDES LOST PROFITS OR LOST DATA RESULTING FROM DELAYS, NONDELIVERIES,
MISDELIVERIES, SERVICE INTERRUPTIONS, OR DAMAGE TO THE SPACE.
13. NO WARRANTY. UUNET PROVIDES THE SPACE AND THE SERVICES AS IS WITHOUT
WARRANTY OF ANY KIND, INCLUDING THE IMPLIED WARRANTIES OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE OF ANY OTHER IMPLIED WARRANTIES. IN THE EVENT
THAT UUNET PROVIDES CUSTOMER WITH PRODUCTS IN CONJUNCTION WITH THE SERVICES, FOR
EXAMPLE THIRD PARTY SOFTARE PRODUCTS, UUNET ALSO SUCH PRODUCTS AS IS WITHOUT
WARRANTY OF ANY KIND, WHETHER EXPRESS OR IMPLIED. UUNET SHALL HAVE NO LIABILITY
FOR FAILURE OF ANY PRODUCT OR SERVICE IT PROVIDES. UUNET DOES NOT MONITOR OR
EXERCISE CONTROL OVER THE CONTENT OF THE INFORMATION RESIDING ON CUSTOMER'S
EQUIPMENT OR TRANSMITTED THROUGH ITS FACILITIES. USE OF ANY INFORMATION OBTAINED
VIA UUNET'S SERVICES IS AT CUSTOMER'S OWN RISK. UUNET SPECIFICALLY DENIES ANY
RESPONSIBILITY FOR THE ACCURACY OR QUALITY OF INFORMATION OBTAINED THROUGH ITS
SERVICES.
14. NO ESTATE OR PROPERTY INTEREST. Customer acknowledges that it has been
granted only a license to occupy the Space and that it has not been granted any
real property interests in the Space or the Facility. Payments by Customer under
this Agreement do not create or vest in Customer (or in any other person) any
leasehold estate, easement, ownership interest, or other property right or
interest of any nature in any part of the Facility. The parties intend that
Equipment, whether or not physically affixed to the Facility, shall not be
construed to be fixtures. Customer (or the lessor of the Equipment, if
applicable) will report the Equipment as its personal property wherever required
by applicable laws, and will pay all taxes levied upon such Equipment.
7
<PAGE>
15. DAMAGE TO THE SPACE
15.1 If the Space is damaged by fire or other casualty, UUNET shall give
prompt notice to Customer of such damage, and may temporarily relocate Equipment
to new Space or a new Facility, if practicable. If the Facility's landlord or
UUNET exercises an option to terminate a particular lease due to damage or
destruction of the Space, or if UUNET decides not to rebuild the Space, this
Agreement shall terminate as of the date of the damage. Monthly Fees for Space
and Services shall proportionately abate for the period from the date of such
damage.
15.2 If neither the landlord of the Facility nor UUNET exercises the right
to terminate, UUNET shall repair the particular Space to substantially the same
condition it was in prior to the damage, completing the same with reasonable
speed. In the event that UUNET shall fail to complete the repair within a
reasonable time period, Customer shall have the option to terminate this
Agreement with respect to the affected Space, which option shall be the sole
remedy available to Customer against UUNET under this Agreement relating to such
failure. If the Space or any portion thereof shall be rendered untenable by
reason of such damage, the Monthly Fee for Space and Services shall
proportionately abate for the period from the date of such damage to the date
when such damage shall have been repaired.
16. PUBLICITY. Neither party shall publicize the existence of the
Agreement without the consent of the other, and in the event of such consent,
all press releases or other materials to be used for publicity shall be
reviewed and approved in writing by the other party.
17. CONFIDENTIALITY. Each party's confidential or proprietary information
disclosed hereunder ("Confidential Information") shall be held confidential by
the receiving party. UUNET's performance under this Agreement, the quality of
UUNET Network performance, and any data provided by UUNET to Customer regarding
performance of the UUNET Network shall be deemed UUNET Confidential Information.
Neither party shall disclose the other party's Confidential Information to third
parties without the other party's written consent, except as permitted pursuant
to this Section. Each party shall disseminate the other party's Confidential
Information among its employees only on a need-to-know basis and shall use such
Confidential Information only for the purpose of performing its obligations
hereunder. To the extent a party is required by applicable law, regulation, or
by a government agency or court order, subpoena, or investigative demand, to
disclose the existence of terms of this Agreement, or the other party's
Confidential Information, such party shall use its reasonable efforts to
minimize such disclosure and obtain an assurance that the recipient shall accord
confidential treatment to such Confidential Information, and shall notify the
other party contemporaneously of such disclosure. UUNET in its discretion, may
terminate this Agreement for cause upon ten days' notice and without penalty in
the event of any breach by Customer of this Section.
18. AGREEMENT SCOPE.
18.1 This Agreement sets forth the entire agreement between UUNET and
Customer with respect to the subject matter within and supersedes all previous
representations, understandings or agreements and shall prevail notwithstanding
any variance with terms and
8
<PAGE>
conditions of any order submitted. Acceptance of this Agreement by UUNET may be
subject, in UUNET's sole discretion, to completion of a satisfactory credit
check with respect to Customer.
18.2 This Agreement shall be governed by and constructed in accordance with
the laws of the Commonwealth of Virginia, irrespective of its choice of law
principles. Any action arising hereunder shall be brought in either the state or
federal courts for the County of Fairfax, Virginia, and each of the parties
shall submit itself to the jurisdiction of such courts for purposes of any
action and waives any rights to removal and change of venue.
I HAVE READ AND AGREE TO THESE CO-LOCATION TERMS AND CONDITIONS
Signature: /s/ Customer Name: Greenfield Online, Inc.
---------------------------
Printed Name: Rudy Nadilo Customer Address: 274 Riverside Avenue
Westport, CT 06880
Title: President +CEO
Date: May 29, 1998
9
<PAGE>
==============================================================================
EMPLOYMENT AGREEMENT
BETWEEN
GREENFIELD ONLINE, INC.
AND
ALASTAIR BRUCE
JULY 1, 1999
==============================================================================
<PAGE>
EMPLOYMENT AGREEMENT dated as of
July 1, 1999, between GREENFIELD ONLINE,
INC., a Connecticut corporation (the
"Company"), and ALASTAIR BRUCE (the
"Executive").
The Company is engaged in the business (the "Subject Business") of
providing customized and syndicated marketing research services over the
Internet. The Executive is, and prior to the date hereof has been, employed by
the Company as Vice President, Client Development, is and has been a key member
of the Company's management team and as such has substantial experience that is
valuable to the Subject Business and the Company.
The Executive and the Company desire to enter into this Employment
Agreement to set forth the terms governing the Executive's continuing employment
as well as to provide adequate and reasonable protection for the Company's
reasonable business interest of safeguarding its tradesecrets, confidential
information, customer and employee relationships
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
Section 1. Consideration.
Executive recognizes and agrees that immediately prior to the execution of this
Agreement he/she was an employee-at-will and did not have a contractual
relationship with the company, express or implied granting the Executive
employment for a definite term or employment that was terminable by the Company
only for cause. Executive agrees that good and valuable consideration exists to
support the execution and enforcement of this Agreement including his/her
continued employment with Company and the Notice and Severance payment provided
herein.
Section 2. Employment.
The Company shall employ the Executive, and the Executive accepts
employment with the Company, as an employee-at-will upon the terms and
conditions set forth in this Agreement for the period beginning on the Effective
Date (as defined in Section 15(j)) and ending on the Termination Date determined
pursuant to Section 5(a) (the "Employment Period"). This is not a contract of
employment. Executive is an employee-at-will and may be terminated by Company at
any time with or without cause.
Section 3. Base Salary, Bonus and Benefits.
(a) During the Employment Period, the Executive's base salary shall be
$90,000.00 per annum or such other rate as the Compensation Committee of the
Board (excluding the Executive if he should be a member of the Board or the
Compensation Committee at the time of such determination) may designate from
time to time (the "Base Salary"), which
<PAGE>
salary shall be reviewed by the Compensation Committee on an annual basis and
payable in such installments as is customary for other senior executives of the
Company. In addition, during the Employment Period, the Executive shall be
entitled to (i) participate in all employee benefit programs and published bonus
programs for which other senior executives of the Company are generally
eligible, (ii) be eligible to participate in all insurance plans available
generally to other senior executives of the Company, (iii) to participate in the
Company's Non-Qualified Employee Stock Option Plan as amended, revised or
terminated from time to time by the Board of Directors, and (iv) take 4 weeks of
paid vacation annually. In the case of any partial month during the Employment
Period, reimbursements, payments and other entitlements pursuant to this Section
3 shall be made or provided to the Executive on a per diem basis.
(b) In addition to the Base Salary and benefits set forth in
paragraph (a) above, during the Employment Period the Executive shall be
entitled to participate in the Management Committee Bonus Plan as published by
the Company and amended from time to time. The amount of the bonus, if any, to
be paid shall be reviewed by the Compensation Committee on an annual basis.
(c) In addition to the Base Salary and benefits set forth in
paragraph (a) above, during the employment period the Executive shall receive
commissions on sales of the Company's products and services made by the
Employee. All commissions shall be subject to the terms and provisions of the
Company's Commission Policy as amended from time to time. Commissions will not
be payable on sales of new products or services made to charter clients during a
new product's launch period.
(d) The Company shall reimburse the Executive for all reasonable
expenses incurred by him in the course of performing his duties under this
Agreement which are consistent with the Company's policies in effect from time
to time with respect to travel, entertainment and other business expenses,
subject to the Company's requirements with respect to reporting and
documentation of such expenses.
(e) The Company shall deduct from any payments to be made by it to
the Executive under this Agreement any amounts required to be withheld in
respect of any Federal, state or local income or other taxes.
Section 4. Position and Duties.
(a) During the Employment Period, the Executive shall initially
serve as Vice President, Client Development of the Company, and shall report to
Steve Cook, Senior Vice President, Client Development. The Executive
acknowledges and agrees that he owes a fiduciary duty of loyalty to the Company
to discharge his duties and otherwise act in a manner consistent with the best
interests of the Company and its Subsidiaries.
(b) During the Employment Period, the Executive shall devote his
best efforts and full working time, attention and energies to the performance of
his duties and responsibilities under this Agreement (except for vacations to
which he is entitled pursuant to Section 3(a) and except for illness or
incapacity). During the Employment Period, the Executive shall not engage in any
business activity which, in the reasonable judgment of the Board (excluding the
Executive
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<PAGE>
if he should be a member of the Board at the time of such determination),
conflicts with the duties of the Executive hereunder, whether or not such
activity is pursued for gain, profit or other pecuniary advantage.
Section 5. Termination.
(a) Termination Date. The Executive's employment under this
Agreement shall terminate upon the earliest to occur (the date of such
occurrence being the "Termination Date") of (i) the effective date of the
Executive's resignation (a "Resignation"), (ii) the Executive's death or
Disability (an "Involuntary Termination"), (iv) the effective date of a
termination of the Executive's employment for Cause by the Board or the
President of the Company (a "Termination for Cause"), and (v) the effective date
of a termination of the Executive's employment by the Board for reasons that do
not constitute Cause (a "Termination Without Cause"). The effective date of a
Resignation shall be as determined under Section 5(b); the effective date of an
Involuntary Termination shall be the date of death or, in the event of a
Disability, the date specified in a notice delivered to the Executive by the
Company; and the effective date of a Termination for Cause or a Termination
Without Cause shall be the date specified in a notice delivered to the Executive
by the Company of such termination.
(b) Resignation. The Executive shall give the Company at least 30
days' prior written notice of a Resignation, with the effective date of such
Resignation specified therein. The Company may, in its discretion, accelerate
the effective date of the Resignation.
Section 6. Effect of Termination; Severance.
(a) In the event of a Termination Without Cause, the Executive or
his beneficiaries or estate shall have the right to receive the following:
(i) the unpaid portion of the Base Salary, computed on a
pro rata basis to the Termination Date;
(ii) the unpaid portion of the Base Salary for the
period beginning on the Termination Date and ending thirty (30) days
from the Termination Date., payable in the same amounts and at the
same intervals as the Base Salary was paid immediately prior to the
Termination Date; provided, however, that in the event of a breach
by the Executive of Section 7, 8, 9 or 10 on or after the
Termination Date, the provisions of Section 12 shall apply;
(iii) reimbursement for any expenses for which the
Executive shall not have been previously reimbursed, as provided in
Section 3(c); and
(iv) the portion of any bonus payable in accordance with
Section 3(b) for the calendar year in which such termination occurs,
pro rated through the date of such termination on a per diem basis.
(b) In the event of a Termination for Cause, an Involuntary
Termination or a Resignation, the Executive or his beneficiaries or estate shall
have the right to receive the following:
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<PAGE>
(i) the unpaid portion of the Base Salary, computed on a
pro rata basis to the Termination Date; and
(ii) reimbursement for any expenses for which the
Executive shall not have been previously reimbursed, as provided in
Section 3(c).
(c) Upon any termination, neither the Executive nor his
beneficiaries or estate shall have any further rights under this Agreement or
any rights arising out of this Agreement other than as provided in Sections 6(a)
and (b) above.
Section 7. Nondisclosure and Nonuse of Confidential Information.
The Executive will not disclose or use at any time, either during
the Employment Period and for a period of five years thereafter, any
Confidential Information of which the Executive is or becomes aware, whether or
not such information is developed by him, except to the extent that such
disclosure or use is directly related to and required by the Executive's
performance of duties assigned to the Executive by the Company.
Section 8. Inventions and Patents.
The Executive agrees that all Work Product belongs to the Company.
The Executive will promptly disclose such Work Product to the Board and perform
all actions reasonably requested by the Board (whether during or after the
Employment Period) to establish and confirm such ownership (including, without
limitation, the execution and delivery of assignments, consents, powers of
attorney and other instruments) and to provide reasonable assistance to the
Company in connection with the prosecution of any applications for patents,
trademarks, trade names, service marks or reissues thereof or in the prosecution
or defense of interferences relating to any Work Product.
Section 9. Non-Compete, Non-Solicitation, Non-Disparagement.
The Executive acknowledges and agrees with the Company that, during
the course of the Executive's employment with the Company, the Executive has had
and will continue to have the opportunity to develop relationships with existing
employees, customers and other business associates of the Company and its
Subsidiaries which relationships constitute goodwill of the Company, and the
Company would be irreparably damaged if the Executive were to take actions that
would damage or misappropriate such goodwill. Accordingly, the Executive agrees
as follows:
(a) The Executive acknowledges that the Company currently conducts
the Subject Business throughout the world (the "Territory"). Accordingly, during
the term hereof and until the first anniversary of the Termination Date (the
"Non-Compete Period"), the Executive shall not, directly or indirectly, enter
into, engage in, assist, give or lend funds to or otherwise finance, be employed
by or consult with, or have a financial or other interest in, any business which
competes or could, in the reasonable judgment of the Board, be deemed to be in
competition with, at the time in question, the Company within the Territory,
whether for or by himself or as an independent contractor, agent, stockholder,
partner or joint venturer for any other Person. To the extent that the covenant
provided for in this Section 9(a) may later be deemed by a court to
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<PAGE>
be too broad to be enforced with respect to its duration or with respect to any
particular activity or geographic area, the court making such determination
shall have the power to reduce the duration or scope of the provision, and to
add or delete specific words or phrases to or from the provision. The provision
as modified shall then be enforced.
(b) Notwithstanding the foregoing, the aggregate ownership by the
Executive of no more than two percent (on a fully-diluted basis) of the
outstanding equity securities of any Person, which securities are traded on a
national or foreign securities exchange, quoted on the NASDAQ stock market or
other automated quotation system, and which Person competes with the Company (or
any part thereof) within the Territory, shall not be deemed to be a violation of
Section 9(a). In the event that any Person in which the Executive has any
financial or other interest directly or indirectly enters into a business during
the Non-Compete Period that competes with the Company within the Territory, the
Executive shall divest all of his interest (other than as permitted to be held
pursuant to the first sentence of this Section 8(b)) in such Person within 15
days after such Person enters into such business that competes with the Company
within the Territory.
(c) The Executive covenants and agrees that, during the period
commencing with the Effective Date and ending on the first anniversary of the
date on which the Executive ceases to be employed by the Company for any reason
whatsoever, the Executive will not, directly or indirectly, either for himself
or for any other Person (A) solicit any employee of the Company or any of its
Subsidiaries to terminate his or her employment with the Company or any of its
Subsidiaries or employ any such individual during his or her employment with the
Company or any of its Subsidiaries and for a period of one year after such
individual terminates his or her employment with the Company or any of its
Subsidiaries, (B) solicit any customer of the Company or any of its Subsidiaries
to purchase or distribute information, products or services of or on behalf of
the Executive or such other Person that are competitive with the information,
products or services provided by the Company or any of its Subsidiaries, or (c)
take any action that may cause injury to the relationships between the Company
or any of its Subsidiaries or any of their employees and any lessor, lessee,
vendor, supplier, customer, distributor, employee, consultant or other business
associate of the Company or any of its Subsidiaries as such relationship relates
to the Company's or any of its Subsidiaries' conduct of their business.
(d) The Executive understands that the foregoing restrictions may
limit his ability to earn a livelihood in a business which is competitive with
the business of the Company and any of its Subsidiaries, but he nevertheless
believes that he has received and will receive sufficient consideration and
other benefits as an employee of the Company and as otherwise provided hereunder
or as described in the recitals hereto to clearly justify such restrictions
which, in any event (given his education, skills and ability), the Executive
does not believe would prevent him from otherwise earning a living.
Section 10. Delivery of Materials Upon Termination of Employment.
The Executive shall deliver to the Company at the termination of the
Employment Period or at any time the Company may request all memoranda, notes,
plans, records, reports,
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computer tapes and software and other documents and data (and copies thereof)
relating to the Confidential Information, Work Product or the Subject Business
which he may then possess or have under his control regardless of the location
or form of such material and, if requested by the Company, will provide the
Company with written confirmation that all such materials have been delivered to
the Company.
Section 11. Insurance.
The Company may, for its own benefit, maintain "keyman" life and
disability insurance policies covering the Executive. The Executive will
cooperate with the Company and provide such information or other assistance as
the Company may reasonably request in connection with the Company obtaining and
maintaining such policies.
Section 12. Enforcement.
Because the Executive's services are unique and because the
Executive has access to Confidential Information and Work Product, the parties
hereto agree that money damages would be an inadequate remedy for any breach of
this Agreement. Therefore, in the event of a breach or threatened breach of this
Agreement, the Company or its successors or assigns may, in addition to other
rights and remedies existing in their favor, apply to any court of competent
jurisdiction for specific performance and/or injunctive or other relief in order
to enforce, or prevent any violations of, the provisions hereof (without posting
a bond or other security). In addition to the foregoing, and not in any way in
limitation thereof, or in limitation of any right or remedy otherwise available
to the Company, if the Executive violates any provision of the foregoing
Sections 7, 8, 9 or 10, any payments then or thereafter due from the Company to
the Executive pursuant to Section 6(a)(ii) shall be terminated forthwith and the
Company's obligation to pay and the Executive's right to receive such payments
shall terminate and be of no further force or effect, in each case without
limiting or affecting the Executive's obligations under such Sections 7, 8, 9 or
10or the Company's other rights and remedies available at law or equity.
Section 13. Representations.
Each party hereby represents and warrants to the other party that
(a) the execution, delivery and performance of this Agreement by such party does
not and will not conflict with, breach, violate or cause a default under any
agreement, contract or instrument to which such party is a party or any
judgment, order or decree to which such party is subject, and (b) upon the
execution and delivery of this Agreement by such party, this Agreement will be a
valid and binding obligation of such party, enforceable in accordance with its
terms, except as enforcement hereof may be limited by any applicable bankruptcy,
reorganization, insolvency or other laws affecting creditors rights generally or
by general principles of equity. In addition, the Executive represents and
warrants to the Company that the Executive is not a party to or bound by any
employment agreement, consulting agreement, non-compete agreement,
confidentiality agreement or similar agreement with any other Person. The
Company and the Executive hereby terminate all existing employment or consulting
agreements between them, if any, to the extent such agreements may be in effect
after the date hereof.
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<PAGE>
Section 14. Definitions.
"Board" shall mean the board of directors of the Company.
"Business Day" shall mean any day that is not a Saturday, Sunday, or
a day on which banking institutions in New York are not required to be open.
"Cause" shall mean (i) the Executive's material breach of any of the
terms of this Agreement; (ii) the conviction of a crime involving fraud, theft
or dishonesty by the Executive; (iii) the Executive's willful and continuing
disregard of lawful instructions of the Board or superiors (if any); (iv) the
continued use of alcohol or drugs by the Executive to an extent that, in the
good faith determination of the Board, such use interferes in any manner with
the performance of the Executive's duties and responsibilities; or (v) the
conviction of the Executive for violating any Law constituting a felony
(including the Foreign Corrupt Practices Act of 1977).
"Confidential Information" means information that is not generally
known to the public and that is used, developed or obtained by the Company or
any of its Subsidiaries in connection with the Subject Business, including, but
not limited to, (i) information, observations, procedures and data obtained by
the Executive while employed by the Company (including those obtained prior to
the date of this Agreement) concerning the business or affairs of the Company or
any of its Subsidiaries, (ii) products or services, (iii) costs and pricing
structures, (iv) analyses, (v) drawings, photographs and reports, (vi) computer
software, including operating systems, applications and program listings, (vii)
flow charts, manuals and documentation, (viii) data bases, (ix) accounting and
business methods, (x) inventions, devices, new developments, methods and
processes, whether patentable or unpatentable and whether or not reduced to
practice, (xi) customers and customer lists, (xii) other copyrightable works,
(xiii) all production methods, processes, technology and trade secrets, and
(xiv) all similar and related information in whatever form. Confidential
Information will not include any information that has been published in a form
generally available to the public prior to the date the Executive proposes to
disclose or use such information. Confidential Information will not be deemed to
have been published merely because individual portions of the information have
been separately published, but only if all material features comprising such
information have been published in combination.
"Disability" shall mean the physical or mental inability of the
Executive (i) to substantially perform all of his duties under this Agreement
for a period of 90 consecutive days or longer or for any 90 days in any period
of 365 consecutive days, or (ii) that, in the opinion of a physician selected by
the Board (excluding the Executive if the Executive is a member of the Board at
such time) is likely to prevent the Executive from substantially performing all
of his duties under this Agreement for more than 90 days in any period of 365
consecutive days.
"Subsidiary" of the Company means and includes (i) any corporation
more than 50% of whose stock of any class or classes having by the terms thereof
ordinary voting power to elect a majority of the directors of such corporation
(irrespective of whether or not at the time stock of any class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time owned by the Company or indirectly
through
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<PAGE>
Subsidiaries and (ii) any partnership, association, joint venture or other
entity (other than a corporation) in which the Company directly or indirectly
through Subsidiaries, has more than a 50% equity interest at the time.
"Work Product" shall mean all inventions, innovations, improvements,
technical information, systems, software developments, methods, designs,
analyses, drawings, reports, service marks, trademarks, tradenames, logos and
all similar or related information (whether patentable or unpatentable) which
relates to the Company's or any of its Subsidiaries' actual or anticipated
business, research and development or existing or future products or services
and which are conceived, developed or made by the Executive in connection with
or relating to (whether or not during usual business hours and whether or not
alone or in conjunction with any other Person) the Executive's position and
duties while employed by the Company (including those conceived, developed or
made prior to the date of this Agreement) together with all patent applications,
letters patent, trademark, tradename and service mark applications or
registrations, copyrights and reissues thereof that may be granted for or upon
any of the foregoing.
Section 15. General Provisions.
(a) Severability. It is the desire and intent of the Parties hereto
that the provisions of this Agreement be enforced to the fullest extent
permissible under the laws and public policies applied in each jurisdiction in
which enforcement is sought. Accordingly, if any particular provision of this
Agreement shall be adjudicated by a court of competent jurisdiction to be
invalid, prohibited or unenforceable for any reason, such provision, as to such
jurisdiction, shall be ineffective, without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of this
Agreement or affecting the validity or enforceability of such provision in any
other jurisdiction. Notwithstanding the foregoing, if such provision could be
more narrowly drawn so as not to be invalid, prohibited or unenforceable in such
jurisdiction, it shall, as to such jurisdiction, be so narrowly drawn, without
invalidating the remaining provisions of this Agreement or affecting the
validity or enforceability of such provision in any other jurisdiction.
(b) Notices. All notices, requests, demands, claims and other
communications hereunder shall be in writing and sufficient if (i) delivered
personally, (ii) delivered by certified United States Post Office mail, return
receipt requested, (iii) telecopied or (iv) sent to the recipient by a
nationally-recognized overnight courier service (charges prepaid) and addressed
to the intended recipient as set forth below:
(a) if to the Executive, to:
with a copy to:
(b) if to the Company, to:
Greenfield Online, Inc.
274 Riverside Avenue
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Westport, Connecticut 06880
Attention: Rudy Nadilo President and CEO
Telecopier: (203) 221-0791
with copies to:
Wake, See, Dimes & Bryniczka
27 Imperial Avenue
P.O. Box 777
Westport, CT 06881
Attention: Jonathan A. Flatow
Telecopier: (203) 226-1641
or such other address as the recipient party to whom notice is to be given may
have furnished to the other party in writing in accordance herewith. Any such
communication shall deemed to have been delivered and received (a) in the case
of personal delivery, on the date of such delivery, (b) in the case of delivery
by mail, on the third Business Day following such mailing, (c) if telecopied, on
the date telecopied, and (d) in the case of delivery by nationally-recognized,
overnight courier, on the Business Day following dispatch.
(c) Entire Agreement. This Agreement and the documents expressly
referred to herein embody the complete agreement and understanding among the
parties and supersede and preempt any prior understandings, agreements or
representations by or among the parties, written or oral, which may have related
to the subject matter hereof in any way.
(d) Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
(e) Successors and Assigns. Except as otherwise provided herein,
this Agreement shall bind and inure to the benefit of and be enforceable by the
Executive and the Company and their respective successors, assigns, heirs,
representatives and estate, as the case may be; provided, however, that the
obligations of the Executive under this Agreement shall not be assigned without
the prior written consent of the Company.
(f) Amendment and Waiver. The provisions of this Agreement may be
amended and waived only with the prior written consent of the Company and the
Executive, and no course of conduct or failure or delay in enforcing the
provisions of this Agreement shall affect the validity, binding effect or
enforceability of this Agreement or any provision hereof.
(g) Governing Law/Venue. This Agreement shall be governed by and
construed in accordance with the domestic laws of the State of Connecticut
without giving effect to any choice or conflict of law provision or rule that
would cause the application of the laws of any jurisdiction other than the State
of Connecticut. The parties agree that any action to enforce the terms of this
Agreement shall be brought in State of Federal Court located in Fairfield County
Connecticut.
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(h) Descriptive Headings; Nouns and Pronouns. Descriptive headings
are for convenience only and shall not control or affect the meaning or
construction of any provision of this Agreement. Whenever the context may
require, any pronouns used herein shall include the corresponding masculine,
feminine or neuter forms, and the singular form of nouns and pronouns shall
include the plural and vice-versa.
(i) Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT.
(j) Effectiveness. This Agreement shall become effective when
executed by both parties (the "Effective Date"). * * * * *
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement as of the date first written above.
GREENFIELD ONLINE, INC.
By: /s/
-----------------------------------------
Name: Rudy Nadilo
Title: President
EXECUTIVE
/s/
----------------------------------------
Alastair Bruce
<PAGE>
Amended Promissory Note
$75,013 May 17, 1999 (As Amended March 3, 2000)
FOR VALUE RECEIVED, Hugh Davis (the "Maker"), hereby promises to pay
to GREENFIELD ONLINE, INC. (the "Payee"), the principal amount of Seventy Five
Thousand Thirteen Dollars ($75,013) on May 17, 2004 (the "Maturity Date"), in
such coin or currency of the United States of America as at the time of payment
shall be legal tender therein for the payment of public and private debts, and
to pay interest on the unpaid principal amount from time to time outstanding
hereunder at the rate of 5.3% per annum, compounded annually based on a year of
360 days. Such interest shall be payable together with principal, when and as
paid, with the final payment of interest to be payable together with all
outstanding principal hereunder on the Maturity Date. In addition, the Maker
promises to pay additional interest at 7.3% per annum on any overdue principal
and (to the extent permitted by law) on any overdue interest, from the due date
thereof until the obligation of the Maker with respect to the payment thereof
shall be discharged.
The Maker may, at his sole option, at any time and from time to time
prepay this Note, without penalty, in whole or in part, together with interest
on the principal amount so prepaid to the date of such prepayment.
The Maker shall make a mandatory prepayment (each, a "Mandatory
Prepayment") in an amount equal to 100% of any and all dividends, distributions
and other payments (including the proceeds of any sale, transfer or other
disposition) paid on or with respect to the Pledged Collateral securing this
Note pursuant to the Pledge Agreement dated as of the date hereof between the
Maker and the Payee (as amended, the "Pledge Agreement"). Each such Mandatory
Prepayment shall be due and payable immediately upon receipt thereof by the
Maker and shall be applied first to interest on this Note accrued and unpaid as
of the date of the Mandatory Prepayment and then to the principal amount of this
Note then outstanding.
The Payee shall be entitled to the rights and security granted by
the Maker to the Payee pursuant to the Pledge Agreement.
Payment of both the principal of and interest on this Note shall be
made by check mailed to such office as the holder of this Note shall designate
in writing to the Maker.
Should the principal of or interest on this Note become due and
payable on other than a business day, the maturity thereof shall be extended to
the next succeeding business day, and interest shall be payable thereon at the
rate per annum herein specified during such extension. The term "business day"
shall mean any day that is not a Saturday, Sunday or legal holiday in the State
of New York.
<PAGE>
In case of the occurrence of any of the following events (each, an
"Event of Default"):
(i) default shall be made in the payment of principal of
or interest on this Note, when and as the same shall become due and
payable, whether at the due date, pursuant to a Mandatory Prepayment
or by acceleration hereof or otherwise;
(ii) the Maker shall (A) apply for or consent to the
appointment of a receiver, trustee or liquidator, (B) admit in
writing his inability to pay his debts as they mature, (C) make a
general assignment for the benefit of creditors, (D) be adjudicated
a bankrupt or insolvent, (E) file a voluntary petition, or have
filed against him a petition, in bankruptcy or petition or answer
seeking a reorganization or an arrangement with his creditors, or
(F) take advantage of any bankruptcy, reorganization, insolvency,
readjustment of debt, dissolution or liquidation law or statute or
file an answer admitting the material allegations of a petition
filed against him in any proceeding under any such law;
(iii) an order, judgment or decree shall be entered,
without the application, approval or consent of the Maker, by any
court of competent jurisdiction, approving a petition seeking
reorganization of the Maker, or appointing a receiver, trustee or
liquidator for the Maker;
(iv) the Maker shall become or be in default under the
provisions of (A) this Note, (B) the Pledge Agreement or the
Employment Agreement dated as of the date hereof, between the Maker
and the Payee, in each case as the same may hereafter be amended and
in effect from time to time, or (C) any other material agreement
between the Maker and the Payee or any of its affiliates or between
the Maker and the holder hereof or any of its affiliates (which
default under such other material agreement is not cured within 10
days from the date of notice hereof to the Maker); or
(v) the Maker shall experience a termination of
employment with the Payee for any reason or shall die;
then, (1) in the case of clauses (i), (iv) and (v) of this Note, the holder of
this Note may, upon written notice to the Maker or his estate or executor,
declare this Note to be forthwith due and payable, whereupon this Note shall
become forthwith due and payable, both as to principal and interest, without
presentment, demand, protest, or other notice of any kind, all of which are
hereby expressly waived, and (2) in the case of clauses (ii) and (iii) of this
Note, this Note shall forthwith become due and payable both as to principal and
interest, automatically without any action on the part of the holder hereof and
without presentment, demand, protest, or other notice of any kind, all of which
are hereby expressly waived.
The provisions hereof shall be binding upon and inure to the benefit
of the holder of this Note and its successors and assigns. This Note may not be
assigned or transferred by the Maker.
2
<PAGE>
The Maker agrees to pay all costs of collection, including
reasonable attorneys' fees, incurred by the holder of this Note in collecting or
enforcing this Note, whether in connection with a reorganization, bankruptcy or
other similar proceeding or upon default.
* * * *
3
<PAGE>
This Note shall be governed by the laws of the State of New York
applicable to contracts made and to be performed therein.
/s/
----------------------------------------
Hugh Davis
4
<PAGE>
Amended Promissory Note
$425,075 May 17, 1999(As Amended March 3, 2000)
FOR VALUE RECEIVED, Rudy Nadilo (the "Maker"), hereby promises to
pay to GREENFIELD ONLINE, INC. (the "Payee"), the principal amount of Four
Hundred Twenty Five Thousand Seventy Five Dollars ($425,075) on May 17, 2004
(the "Maturity Date"), in such coin or currency of the United States of America
as at the time of payment shall be legal tender therein for the payment of
public and private debts, and to pay interest on the unpaid principal amount
from time to time outstanding hereunder at the rate of 5.3% per annum,
compounded annually based on a year of 360 days. Such interest shall be payable
together with principal, when and as paid, with the final payment of interest to
be payable together with all outstanding principal hereunder on the Maturity
Date. In addition, the Maker promises to pay additional interest at 7.3% per
annum on any overdue principal and (to the extent permitted by law) on any
overdue interest, from the due date thereof until the obligation of the Maker
with respect to the payment thereof shall be discharged.
The Maker may, at his sole option, at any time and from time to time
prepay this Note, without penalty, in whole or in part, together with interest
on the principal amount so prepaid to the date of such prepayment.
The Maker shall make a mandatory prepayment (each, a "Mandatory
Prepayment") in an amount equal to 100% of any and all dividends, distributions
and other payments (including the proceeds of any sale, transfer or other
disposition) paid on or with respect to the Pledged Collateral securing this
Note pursuant to the Pledge Agreement dated as of the date hereof between the
Maker and the Payee (as amended, the "Pledge Agreement"). Each such Mandatory
Prepayment shall be due and payable immediately upon receipt thereof by the
Maker and shall be applied first to interest on this Note accrued and unpaid as
of the date of the Mandatory Prepayment and then to the principal amount of this
Note then outstanding.
The Payee shall be entitled to the rights and security granted by
the Maker to the Payee pursuant to the Pledge Agreement.
Payment of both the principal of and interest on this Note shall be
made by check mailed to such office as the holder of this Note shall designate
in writing to the Maker.
Should the principal of or interest on this Note become due and
payable on other than a business day, the maturity thereof shall be extended to
the next succeeding business day, and interest shall be payable thereon at the
rate per annum herein specified during such extension. The term "business day"
shall mean any day that is not a Saturday, Sunday or legal holiday in the State
of New York.
<PAGE>
In case of the occurrence of any of the following events (each, an
"Event of Default"):
(i) default shall be made in the payment of principal of
or interest on this Note, when and as the same shall become due and
payable, whether at the due date, pursuant to a Mandatory Prepayment
or by acceleration hereof or otherwise;
(ii) the Maker shall (A) apply for or consent to the
appointment of a receiver, trustee or liquidator, (B) admit in
writing his inability to pay his debts as they mature, (C) make a
general assignment for the benefit of creditors, (D) be adjudicated
a bankrupt or insolvent, (E) file a voluntary petition, or have
filed against him a petition, in bankruptcy or petition or answer
seeking a reorganization or an arrangement with his creditors, or
(F) take advantage of any bankruptcy, reorganization, insolvency,
readjustment of debt, dissolution or liquidation law or statute or
file an answer admitting the material allegations of a petition
filed against him in any proceeding under any such law;
(iii) an order, judgment or decree shall be entered,
without the application, approval or consent of the Maker, by any
court of competent jurisdiction, approving a petition seeking
reorganization of the Maker, or appointing a receiver, trustee or
liquidator for the Maker;
(iv) the Maker shall become or be in default under the
provisions of (A) this Note, (B) the Pledge Agreement or the
Employment Agreement dated as of the date hereof, between the Maker
and the Payee, in each case as the same may hereafter be amended and
in effect from time to time, or (C) any other material agreement
between the Maker and the Payee or any of its affiliates or between
the Maker and the holder hereof or any of its affiliates (which
default under such other material agreement is not cured within 10
days from the date of notice hereof to the Maker); or
(v) the Maker shall experience a termination of
employment with the Payee for any reason or shall die;
then, (1) in the case of clauses (i), (iv) and (v) of this Note, the holder of
this Note may, upon written notice to the Maker or his estate or executor,
declare this Note to be forthwith due and payable, whereupon this Note shall
become forthwith due and payable, both as to principal and interest, without
presentment, demand, protest, or other notice of any kind, all of which are
hereby expressly waived, and (2) in the case of clauses (ii) and (iii) of this
Note, this Note shall forthwith become due and payable both as to principal and
interest, automatically without any action on the part of the holder hereof and
without presentment, demand, protest, or other notice of any kind, all of which
are hereby expressly waived.
The provisions hereof shall be binding upon and inure to the benefit
of the holder of this Note and its successors and assigns. This Note may not be
assigned or transferred by the Maker.
2
<PAGE>
The Maker agrees to pay all costs of collection, including
reasonable attorneys' fees, incurred by the holder of this Note in collecting or
enforcing this Note, whether in connection with a reorganization, bankruptcy or
other similar proceeding or upon default.
* * * *
3
<PAGE>
This Note shall be governed by the laws of the State of New York
applicable to contracts made and to be performed therein.
/s/
---------------------------------------
Rudy Nadilo
<PAGE>
AMENDMENT NO. 1, dated as of
March 10, 2000 (this "Amendment No. 1"),
to the Note and Warrant Purchase
Agreement dated as of March 3, 2000 (the
"Purchase Agreement"), among GREENFIELD
ONLINE, INC., a Delaware corporation (the
"Borrower"), and GREENFIELD HOLDINGS,
LLC, a Delaware limited liability company
(the "Purchaser").
RECITALS
The Borrower has requested that the Maturity Date (as defined in the
Purchase Agreement) of the 10% Notes issued pursuant to the Purchase Agreement
be extended to June 30, 2001. The Purchaser is willing to agree to such
extension, but only on the terms and subject to the conditions set forth herein.
NOW, THEREFORE, the parties hereto hereby agree as follows:
Section 1. Defined Terms. Unless otherwise defined herein, capitalized
terms shall be accorded the definitions assigned to them in the Purchase
Agreement.
Section 2. Amendments to the Purchase Agreement.
2.1. Section 1 of the Purchase Agreement is hereby amended by
deleting the reference to "June 30, 2000" in subclause (ii) of clause (a)
thereof and replacing it with "June 30, 2001".
2.2. The Purchase Agreement is hereby amended by adding a new
Section 4A thereto to read in its entirety as follows:
"Section 4A. Contingent Right To Additional Warrants.
Notwithstanding anything to the contrary contained in the Financing
Documents, if the Corporation has not repaid all of the principal
and interest due on the 10% Notes on or prior to each date set forth
below, then, not later than the fifth business day following such
date, the Corporation shall issue to the Purchaser additional
warrants (the "Contingent Warrants") to purchase the number of Class
A Common Shares (as such number of Class A Common Shares may be
adjusted for stock splits, stock dividends, split ups, combinations,
reclassifications of Class A Common Shares, capital reorganizations,
mergers or consolidations and other similar events) set forth
opposite the corresponding date below (each such date, as
applicable, shall be referred to as the "Contingent Warrant
Effective Date"):
<PAGE>
September 30, 2000 34,965
December 31, 2000 34,965
March 31, 2001 34,965
June 30, 2001 34,965
The exercise price at any time for each Class A Common Share subject
to a particular Contingent Warrant shall be the fair market value of
a Class A Common Share, as determined in good faith by the
Corporation's Board of Directors, as of the applicable Contingent
Warrant Effective Date. The exercise period for each Contingent
Warrant shall be at any time or from time to time after the
applicable Contingent Warrant Effective Date until and including the
fifth anniversary thereof. The Contingent Warrants shall contain
such other terms and conditions substantially as set forth in the
form of Warrant attached hereto as Exhibit B."
Section 3. Expenses. The Corporation hereby confirms its obligations under
Section 16 of the Purchase Agreement with respect to the payment of expenses,
fees and other amounts thereunder in connection with this Amendment No. 1, the
Contingent Warrants and the Class A Common Shares issued pursuant to exercise of
the Contingent Warrants.
Section 4. References to the Purchase Agreement. From and after the date
hereof, all references in the Purchase Agreement and each of the other Financing
Documents to the Purchase Agreement shall be deemed to be references to the
Purchase Agreement after giving effect to this Amendment No. 1.
Section 5. No Other Amendments. Except as expressly set forth herein, the
Purchase Agreement remains in full force and effect in accordance with its terms
and nothing contained herein shall be deemed (i) to be a waiver, amendment,
modification or other change of any term, condition or provision of the Purchase
Agreement or any other Financing Document (or a consent to any such waiver,
amendment, modification or other change), (ii) to be a consent to any
transaction, (iii) to prejudice any right or rights which the Purchaser may have
under the Purchase Agreement and/or any of the other Financing Documents, or
(iv) to entitle the Corporation to a waiver, amendment, modification or other
change of any term, condition or provision of the Purchase Agreement or any
other Financing Document (or a consent to any such waiver, amendment,
modification or other change), or to a consent, in the future in similar or
different circumstances.
Section 6. Further Assurances. The parties hereto agree to do such further
acts and things, and to execute and deliver such additional conveyances,
assignments, agreements and instruments, as the Agent may at any time reasonably
request in connection with the administration and enforcement of this Amendment
No. 1 or in order better to assure and confirm unto the Purchaser its rights and
remedies hereunder and to permit the exercise thereof in compliance with
applicable law.
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<PAGE>
Section 7. Notices. All notices, demands and requests of any kind to be
delivered to any party hereto in connection with this Amendment No. 1 shall
be delivered in accordance with the notice provisions contained in the
Purchase Agreement.
Section 8. Headings. The headings used herein are for convenience of
reference only and shall not affect the construction of, nor shall they be
taken into consideration in interpreting, this Amendment No. 1.
Section 9. Counterparts. This Amendment No. 1 may be executed in any
number of separate counterparts, each of which shall be an original and all
of which taken together shall constitute one and the same instrument.
Section 10. Applicable Law. THIS AMENDMENT NO. 1 SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW
YORK (WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAW).
[SIGNATURE PAGES FOLLOW]
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment
No. 1 to be duly executed and delivered as of the day and year first above
written.
GREENFIELD ONLINE, INC.
By: /s/ Jonathan A. Flatow
-----------------------------------------
Jonathan A. Flatow
Secretary
GREENFIELD HOLDINGS, LLC
By: /s/ Jeffrey Horing
-----------------------------------------
Jeffrey Horing
President
<PAGE>
GREENFIELD ONLINE, INC.
FIRST AMENDMENT
TO NON-QUALIFIED STOCK OPTION AGREEMENT
THIS FIRST AMENDMENT ("Amendment") is made effective as of March 3, 2000
to those certain Non-Qualified Stock Option Agreements (the "Agreements") dated
as of, _______________, by and between Greenfield Online, Inc., a Delaware
corporation (the "Company") and ____________ ("Optionee").
WHEREAS, pursuant to the Agreement, the Company granted Optionee a
non-qualified option to purchase shares of its common stock pursuant to the
Company's 1999 Stock Option Plan, which option is subject to the vesting
schedule set forth in Section 4(a) of the Agreement;
WHEREAS, Optionee is a key employee of the Company that the Company
desires to incentivize and treat fairly; and
WHEREAS, Optionee and the Company have agreed to amend the Agreement in
order to provide for an acceleration of vesting in certain circumstances when
Optionee's employment with the Company terminates after a Corporate Transaction
(as defined below) in the Company;
NOW THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the parties agree to amend the Agreement as follows:
1. The following defined terms shall be added to Section 1:
"Cause" means a good faith finding by the Board of Directors of the
Company that Optionee has: (i) engaged in conduct that constitutes gross
malfeasance of office or flagrant disloyalty to the Company, dishonesty,
fraud, or theft; (ii) willfully and repeatedly failed to carry out the
reasonable directions of the Board or has engaged in conduct in clear
violation of material policies of the Company; or (iii) been convicted of
or entered a plea of nolo contendere to, a felony or crime under
circumstances demonstrably injurious to the Company. Any termination by
the Company of Optionee that is not for Cause shall be deemed to be
without Cause.
"Corporate Transaction" means any of the following events:
(i) Consummation of any merger or consolidation of the Company
in which the Company is not the continuing or surviving corporation, or
pursuant to which shares of Common Stock are converted into cash,
securities, or other property, if following such merger or consolidation
the holders of the Company's outstanding voting securities immediately
prior to such merger or consolidation own less than 66-2/3% of the
outstanding voting securities of the surviving corporation;
(ii) Consummation of any sale, lease, exchange, or other
transfer, in one transaction or a series of related transactions, of all
or substantially all of the Company's assets, other than a transfer of the
Company's assets to a majority-owned subsidiary corporation of the
Company; or
1
<PAGE>
(iii) Approval by the holders of the Common Stock of any plan
or proposal for the liquidation or dissolution of the Company.
Ownership of voting securities shall take into account and shall
include ownership as determined by applying Rule 13d-3(d)(1)(i) (as in
effect on the date of adoption of the Plan) under the Exchange Act.
"Good Reason" means any one of the following: (i) a material
alteration of Optionee's title and status in the Company or assignment to
duties and responsibilities inconsistent with his position; (ii) the
relocation of Optionee to any place greater than twenty five (25) miles
from his current principal location; (iii) the relocation of the Company's
corporate headquarters to a location more than 10 miles from its current
location in Wilton Connecticut; or (iv) a substantial reduction of
Optionee's compensation package, unless such a reduction is made by the
Company ratably with all other employees at similar levels of
responsibility. Any resignation by Optionee that is not for Good Reason
shall be deemed to be without Good Reason.
2. The first sentence of Section 4(a) is amended by inserting the words
"or pursuant to Section 4(c)" after the word "Committee".
3. A new Section 4(c) is added as follows:
(c) In the event that (i) the Company is subject to a Corporate
Transaction, and (ii) within one (1) year of such Corporate Transaction,
the Company terminates Optionee without Cause, or Optionee resigns his
employment within sixty (60) days of an event that constitutes a Good
Reason, all of the Option Shares shall immediately become Vested Shares
and the Option shall be exercisable with respect to all such Option Shares
for a period of sixty (60) days after such resignation or termination.
Upon the expiration of such sixty (60) day period, the Option shall
terminate with respect to any Option Shares as to which it is not
exercised.
4. The parties hereby acknowledge and reaffirm that all of the terms and
conditions of the Agreement not specifically amended herein shall remain in full
force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of
the date first mentioned above.
GREENFIELD ONLINE, INC. OPTIONEE
By _______________________ ________________________
Its
2
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in this Registration Statement on Form S-1 of our
reports dated March 3, 2000 relating to the financial statements of Greenfield
Online, Inc., which appear in such Registration Statement. We also consent to
the reference to us under the heading "Experts" in such Registration Statement.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Stamford, Connecticut
March 15, 2000
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 1,708,738
<SECURITIES> 0
<RECEIVABLES> 1,854,614
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 4,470,407
<PP&E> 1,277,630
<DEPRECIATION> 0
<TOTAL-ASSETS> 23,352,988
<CURRENT-LIABILITIES> 5,670,213
<BONDS> 0
0
0
<COMMON> 38,548,783
<OTHER-SE> (38,226,068)
<TOTAL-LIABILITY-AND-EQUITY> 23,352,988
<SALES> 5,557,465
<TOTAL-REVENUES> 5,557,465
<CGS> 2,516,758
<TOTAL-COSTS> 19,269,599
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (1,016,239)
<INCOME-PRETAX> (14,728,373)
<INCOME-TAX> 940,452
<INCOME-CONTINUING> (13,787,921)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-BASIC> (0.56)
<EPS-DILUTED> 0
</TABLE>
