<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 20, 1996
REGISTRATION NO. 333-14119
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
PRE-EFFECTIVE
AMENDMENT NO. 2
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
MEDIALINK WORLDWIDE INCORPORATED
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
DELAWARE 52-1481284
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
4899
(PRIMARY STANDARD INDUSTRIAL CLASSIFICATION CODE NUMBER)
</TABLE>
------------------------
708 THIRD AVENUE
NEW YORK, NY 10017
(212) 682-8300
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
LAURENCE MOSKOWITZ
PRESIDENT AND CHIEF EXECUTIVE OFFICER
MEDIALINK WORLDWIDE INCORPORATED
708 THIRD AVENUE
NEW YORK, NY 10017
(212) 682-8300
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
------------------------
Copies to:
<TABLE>
<S> <C>
THEODORE WM. TASHLIK, ESQ. WILLIAM N. DYE, ESQ.
MARTIN M. GOLDWYN, ESQ. WILLKIE FARR & GALLAGHER
TASHLIK, KREUTZER & GOLDWYN P.C. ONE CITICORP CENTER
833 NORTHERN BOULEVARD 153 EAST 53RD STREET
GREAT NECK, NY 11021 NEW YORK, NY 10022
(516) 466-8005 (212) 821-8000
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, 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 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. / /
------------------------
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 SECTION 8(A), MAY
DETERMINE.
- --------------------------------------------------------------------------------
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<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION
Dated November 20, 1996
2,000,000 SHARES
[LOGO]
COMMON STOCK
------------------------
All of the 2,000,000 shares being offered hereby are being sold by Medialink
Worldwide Incorporated ('Medialink' or the 'Company'). Up to 300,000
additional shares may be sold by certain of the Company's stockholders
(the 'Selling Stockholders') in the event that the Underwriters
exercise their over-allotment option. The Company will not receive
any proceeds from the sale of shares by the Selling Stockholders.
See 'Principal and Selling Stockholders.'
------------------------
Prior to the offering, there has been no public market for the Common Stock. It
is currently estimated that the initial public offering price will be between
$9.00 and $11.00 per share. See 'Underwriting.' Application has been
made to have the Common Stock approved for quotation on the Nasdaq
National Market under the symbol 'MDLK.'
------------------------
SEE 'RISK FACTORS' BEGINNING ON PAGE 7 HEREOF FOR CERTAIN INFORMATION THAT
SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS(1) COMPANY(2)
<S> <C> <C> <C>
- --------------------------------------------------------------------------------
PER SHARE $ $ $
TOTAL(3) $ $ $
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(1) The Company and the Selling Stockholders have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended. See 'Underwriting.'
(2) Before deduction of expenses payable by the Company estimated at $ .
(3) The Selling Stockholders have granted the several Underwriters a 30-day
option to purchase up to an additional 300,000 shares of Common Stock solely
to cover over-allotments, if any. If such option is exercised in full, the
total price to public, underwriting discounts and commissions and proceeds
to the Selling Stockholders will be $ , $ and $ ,
respectively. The proceeds to the Company will not change from the amount
set forth above. See 'Underwriting.'
------------------------
The Common Stock is being offered by the Underwriters named herein when, as
and if received and accepted by them, subject to their right to reject orders in
whole or in part and subject to certain other conditions. It is expected that
delivery of the shares will be made in New York, New York on or about ,
1996.
------------------------
DEAN WITTER REYNOLDS INC. WHEAT FIRST BUTCHER SINGER
, 1996
<PAGE>
Tap the Power of photo of person
videotaping
GLOBAL MEDIA
photo of
computer screen
We broadcast the stories
and project the images
that make the news on
television and radio, in the
workplace and in the home.
VIDEO NEWS RELEASES SATELLITE MEDIA
TOURS reaching Television Viewers
AUDIO NEWS RELEASES RADIO MEDIA
TOURS reaching Radio Listeners
VIDEO CONFERENCES LIVE BROADCASTS
reaching Internal Audiences
PUBLIC RELATIONS RESEARCH PRESS CLIPPING
ANALYSIS proving the Value of
Communications
PRESS RELEASE DISTRIBUTION reaching
Trade and Newspaper Readers
AUDIO/VIDEO VIA THE INTERNET reaching
On-line Newsrooms and the Public
photo of satellite
|
|
photo of hand at electronic board
|
|-------------------------------
| photo of a newscaster |
| |
- ----------------------------------------------------
photo of | photo of person in | photo of |
globe | control room | |
| | persons |
| | |
- -------------------------------------| hand on a |----------------------------
photo of audio photo of | MEDIALINK |
broadcaster globe radio knob | |
- --------------------------------------------------------------------------------
| |
| Worldwide Communications Solutions |
------------------------------------------
HEADQUARTERS
New York
OFFICES
London
Atlanta
Chicago
Dallas
Los Angeles
Norwalk, CT
Washington
AFFILIATES
Brussels
Dubai
Geneva
Hamburg
Hong Kong
Johannesburg
Madrid
Melbourne
Oslo
Paris
Rome
San Juan/Miami
Seoul
Stockholm
Tel Aviv
Tokyo
Toronto
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH MAY STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON
STOCK AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET.
SUCH TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ NATIONAL MARKET OR OTHERWISE.
SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
<PAGE>
------------------------
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFER CONTAINED HEREIN AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR ANY UNDERWRITER. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION
THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE
HEREOF OR SINCE THE DATES AS OF WHICH INFORMATION IS SET FORTH HEREIN. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO
BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO
WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary............................. 4
Risk Factors................................... 7
Use of Proceeds................................ 12
Dividend Policy................................ 12
Dilution....................................... 13
Capitalization................................. 14
Selected Financial Information................. 15
Management's Discussion and Analysis of
Financial Condition and Results of
Operations................................... 16
<CAPTION>
PAGE
----
<S> <C>
Business....................................... 21
Management..................................... 33
Certain Transactions........................... 39
Principal and Selling Stockholders............. 40
Description of Capital Stock................... 42
Shares Eligible for Future Sale................ 45
Underwriting................................... 46
Legal Matters.................................. 47
Experts........................................ 47
Additional Information......................... 47
Index to Financial Statements.................. F-1
</TABLE>
------------------------
UNTIL , 1996 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS) ALL
DEALERS EFFECTING TRANSACTIONS IN THE COMMON STOCK, WHETHER OR NOT PARTICIPATING
IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN
ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS
UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
3
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by reference to the more
detailed information and the Consolidated Financial Statements and Notes thereto
appearing elsewhere in this Prospectus.
THE COMPANY
Medialink is a leading worldwide provider of video and audio production and
distribution services for businesses and other organizations seeking to
communicate their news through television, radio and other media. The Company's
principal services are based on its core business -- satellite distribution of
video news releases (VNRs) and the electronic monitoring of their broadcast on
television. A VNR is the video equivalent of a conventional press release and is
used for the same purposes, such as to introduce a new product or service,
explain a technological breakthrough, communicate during a crisis or advocate a
position on an issue of public concern. VNRs are produced for easy integration
into newscasts and are distributed to the media for their use in complete or
edited form. The Company began offering video production services in 1994 and
has since developed a full range of video, audio and print services which it now
provides on a global basis. Video production, audio services, and print
distribution, all introduced since the beginning of 1994, accounted for
approximately 27% of revenues for the nine months ended September 30, 1996.
Medialink enables its clients to reach more than 3,000 newsrooms at television
and radio networks, local stations, cable channels, direct broadcast satellite
systems, as well as on-line services, including those available on the Internet.
The Company has provided its services to more than 1,100 clients over the
last twenty-four months. The Company's clients include corporations such as
General Motors, IBM, Johnson & Johnson, Sony and Ciba Geigy/Sandoz;
organizations such as the American Association of Retired Persons and the
AFL-CIO; and the world's largest marketing communications firms such as
Burson-Marsteller, Hill & Knowlton, Edelman Public Relations Worldwide and the
Shandwick Group. No single client accounted for more than 4% of the Company's
revenues in 1995. Materials distributed by the Company have aired on ABC, CBS,
NBC and their affiliates, as well as CNN and CNBC in the United States, and the
BBC, CNN International, Sky News, RAI (Italy) and NHK (Japan) internationally.
Organizations that conduct public relations campaigns, including most
marketing communications agencies, do not generally find it cost-effective to
maintain the facilities and personnel necessary to produce material suitable for
use on news broadcasts and distribute it to the media, especially on a global
basis. As a result, it is often more economical to outsource such services from
a specialist firm such as the Company, which can provide the necessary talent
and production, distribution and monitoring facilities. The Company serves a
global marketplace. Based on surveys taken by the Company and published
reports, the Company estimates that it competes in a market which was
approximately $500 million in 1995, considering only the United States and the
United Kingdom.
Medialink's competitive advantages include its extensive operating history
with media outlets, key industry relationships, prominent client base,
combination of professional skills, ability to integrate new technology and
worldwide distribution and production capabilities. The Company has an exclusive
agreement with the Associated Press (the 'AP') to use the AP's dedicated links
to notify U.S. television and radio newsrooms of upcoming satellite
transmissions. The Company has agreements with the AP and ABC Radio Networks
Inc. ('ABC Radio') for satellite transmission of audio services to radio
stations in the U.S. The Company uses Nielsen Media Research and Competitive
Media Reporting to monitor domestic television station usage of video services.
Internationally, the Company has a network of 17 affiliates in Europe, Latin
America, South Africa, Asia and the Pacific Rim. International revenues
increased approximately 317% from $360,000 in 1993 to $1.5 million in 1995.
The Company plans to expand its business by (i) developing new services;
(ii) leveraging its client relationships by cross-marketing services to its
clients; (iii) continuing its global expansion; and (iv) pursuing acquisitions
and strategic alliances with other companies that can add to the Company's
service capabilities or geographic scope. In July 1996 the Company, through its
wholly owned subsidiary Medialink PR Data Corporation ('Medialink PR Data'),
acquired certain assets of PR Data Systems, Inc. (the 'PR Data Acquisition') to
expand its research capabilities and to add print news release distribution
services.
4
<PAGE>
THE OFFERING
Common Stock offered by the Company.......... 2,000,000 shares
Common Stock to be outstanding after
the Offering............................... 5,047,933 shares(1)
Use of Proceeds.............................. For general corporate purposes
and possible acquisitions. See
'Use of Proceeds.'
Nasdaq National Market symbol................ MDLK
SUMMARY FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE AND OTHER DATA)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------------------------------------------
1991 1992 1993 1994
-------- -------- -------- -------- NINE MONTHS ENDED
SEPTEMBER 30,
---------------------------------
1995 1996
--------------------- 1995 ---------------------
PRO --------- PRO
ACTUAL FORMA(2) ACTUAL ACTUAL FORMA(2)
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues................... $ 4,891 $ 5,802 $ 6,065 $ 7,548 $ 10,625 $ 12,237 $ 7,382 $ 11,158 $ 12,014
Gross profit............... 3,024 3,577 3,435 4,509 6,071 7,492 4,100 6,553 7,318
Operating income (loss).... 87 140 (215) 440 698 705 303 1,005 1,011
Net income (loss).......... $ 21(3) $ 144(3) $ (231) $ 1,464(4) $ 381 $ 374 $ 166 $ 579 $ 567
Net income (loss) before
tax valuation
reversal(4).............. $ 21(3) $ 144(3) $ (231) $ 222(4) $ 381 $ 374 $ 166 $ 579 $ 567
Pro forma net income per
share(5)................. $ 0.11 $ 0.05 $ 0.17
Shares used to compute pro
forma net income per
share(5)................. 3,453 3,453 3,485
OTHER DATA:
Number of offices.......... 4 4 5 6 7 8 7 8 8
Average revenues per sales
employee................. $326,000 $322,000 $347,000 $414,000 $ 506,000 $532,000
</TABLE>
<TABLE>
<CAPTION>
SEPTEMBER 30, 1996
---------------------------
ACTUAL AS ADJUSTED(6)
------ -----------------
<S> <C> <C>
BALANCE SHEET DATA:
Working capital...................................................................... $1,500 $19,400
Total assets......................................................................... 6,551 24,451
Long-term debt, net of current portion............................................... 284 284
Stockholders' equity................................................................. 3,173 21,073
</TABLE>
- ------------------
(1) Does not include an aggregate of (i) 569,594 shares of Common Stock issuable
upon exercise of options outstanding under the Company's Amended and
Restated Stock Option Plan ('Stock Option Plan') and (ii) 62,400 shares of
Common Stock reserved for issuance upon exercise of options outstanding
under the 1996 Directors Stock Option Plan ('Directors Stock Option Plan').
(2) Gives effect to PR Data Acquisition as if the transaction occurred at the
beginning of the period presented. The Company paid for the PR Data
Acquisition through the payment of $120,000 cash, the issuance of 24,000
shares of Common Stock and the assumption of certain liabilities not to
exceed the book value of the assets acquired by $372,000. The pro forma
financial information is not necessarily indicative of the operating results
which would have been achieved had the acquisition occurred at the beginning
of the period presented or the results to be achieved in the future.
(3) Includes a loss of $40,000 from discontinued operations in 1991 and the
utilization of net operating losses resulting in tax benefits of $12,000 in
1991 and $49,000 in 1992.
(4) In accordance with Statement of Financial Accounting Standards No. 109, the
Company reversed its valuation allowance against deferred tax assets in the
amount of $1,242,000 in 1994. See Note 5 to the Company's Financial
Statements.
(5) See Note 9 to the Company's Financial Statements for an explanation of the
method used to determine the number of shares.
(6) Gives effect to the offering of 2,000,000 shares of Common Stock (at an
assumed price of $10.00 per share) and the estimated net proceeds of $17.9
million, as if the offering occurred on September 30, 1996.
5
<PAGE>
Medialink is headquartered in New York and maintains offices in Washington,
D.C., Chicago, Dallas, Los Angeles, Atlanta and Norwalk, Connecticut. Its
international activities are coordinated from its London office. Medialink was
incorporated under the laws of the State of Delaware in 1986. The Company
maintains its principal offices at 708 Third Avenue, New York, New York 10017.
The Company's telephone number is 212-682-8300. The Company's Internet address
is www.medialinkworldwide.com. Information contained in the Company's World Wide
Web ('Web') site shall not be deemed part of this Prospectus.
------------------------
Unless otherwise indicated, all information in this Prospectus (i) assumes
no exercise of the Underwriters' over-allotment option, (ii) reflects a 1.2 for
1 stock split of the Common Stock effected in the form of a stock dividend on
July 31, 1996 and (iii) gives effect to the automatic conversion of all
outstanding shares of Series A, Series B and Series C Preferred Stock into an
aggregate of 2,111,669 shares of Common Stock to be effective upon the closing
of this offering (the 'Preferred Stock Conversions'). See 'Description of
Capital Stock.' Medialink is a service mark of the Company.
6
<PAGE>
RISK FACTORS
An investment in the shares of Common Stock offered hereby involves a high
degree of risk. The following factors, in addition to the other information in
this Prospectus, should be carefully considered in evaluating the Company and
its business before purchasing the shares of Common Stock offered hereby. This
Prospectus contains forward-looking statements which involve risks and
uncertainties. The Company's actual results in the future could differ
significantly from the results discussed in such forward-looking statements.
Factors that could cause or contribute to such a difference include, but are not
limited to, those discussed in 'Risk Factors' below, 'Management's Discussion
and Analysis of Financial Condition and Results of Operations' and 'Business,'
as well as those discussed elsewhere in this Prospectus.
FLUCTUATIONS IN QUARTERLY OPERATING RESULTS; SEASONALITY OF BUSINESS
The Company experiences quarterly seasonal variations in revenues as a
result of many factors, including its clients' business cycles and timing of
product introductions. As a result, the Company's revenues are typically lower
during the first and third quarters of the Company's fiscal year. The Company
expects this seasonality to continue in the future. In addition, other factors
that may cause the Company's quarterly results to fluctuate include timing of
the completion, material reduction or cancellation of projects or timing of the
receipt of new business, timing of the hiring or loss of sales personnel, the
relative profit mix of projects, strategic pricing decisions of the Company and
costs relating to the expansion of operations and other factors. Events which
dominate news broadcasts may cause the Company's clients to delay their use of,
or not use, the Company's services for a particular project as such clients may
determine that their messages may not receive adequate attention in light of the
coverage of other news events. Such circumstances could have a material adverse
effect on the Company's business, operating results and financial condition. See
'Management's Discussion and Analysis of Financial Condition and Results of
Operations.'
DEPENDENCE ON KEY PERSONNEL
The Company's success depends to a significant degree upon the continuing
contributions of, and on its ability to attract and retain, qualified management
and sales, operations, marketing and technical personnel. In particular, the
loss of the services of its founders, Laurence Moskowitz, the Company's Chairman
of the Board, President and Chief Executive Officer, or J. Graeme McWhirter, its
Executive Vice President and Chief Financial Officer, could have a material
adverse effect upon the Company. There can be no assurance that an adequate
replacement could be found if the Company were to lose the services of Mr.
Moskowitz or Mr. McWhirter. There can be no assurance that the Company will be
able to continue to attract and retain qualified management and sales,
operations, marketing and technical personnel in the future. The Company's
failure to attract and retain key personnel would have a material adverse effect
on its business, operating results and financial condition. The Company is the
beneficiary of a $1.25 million key man life insurance policy on the life of
Laurence Moskowitz. The Company has entered into employment agreements with its
executive officers which will become effective upon the consummation of this
offering. See 'Management.'
DEPENDENCE ON CERTAIN SUPPLIERS
The Company has an exclusive agreement with the AP for the operation of the
AP Express/Medialink Newswire serving approximately 720 television stations
across the U.S. The Company believes that its agreement with the AP gives it a
competitive advantage because of this ability to notify television stations of
upcoming video transmissions, and the termination of such agreement could have a
material adverse effect on the Company's business, operating results and
financial condition. The Company's agreement with the AP expires in November
1999. The Company uses Nielsen Media Research and Competitive Media Reporting
for electronic monitoring of video television broadcasts. In addition, the
Company has agreements with the AP and ABC Radio for satellite transmissions of
audio services to radio stations in the U.S. The termination of any of these
services could have a material adverse effect on the Company's business,
operating results and financial condition. The Company benefits from favorable
volume pricing agreements with certain suppliers for satellite transmission
services. The inability in the future to obtain sufficient supply or service
from these and other vendors, or to develop alternative sources, could result in
price increases, delays or reductions in services which could have a material
adverse effect on the Company's business, operating results and financial
condition.
The Company's ability to distribute material to media outlets in accordance
with its clients' requirements depends on a number of factors. Some of these
factors are outside of the Company's control, including equipment
7
<PAGE>
failure and interruption in services by its telecommunications service
providers. The Company's failure to make timely distributions could have a
material adverse effect on the Company's business, operating results and
financial condition. The Company has experienced increases in satellite
transmission costs during the past two years. The inability or unwillingness of
the Company to pass such cost increases to its clients could have a material
adverse effect on the Company's business, operating results and financial
condition.
DEPENDENCE ON VIDEO NEWS RELEASES
A substantial portion of the Company's revenues to date has been derived
from the production, distribution and monitoring of VNRs in the U.S. and
overseas. A decline in demand for, or reduction in average prices charged by the
Company for, VNR services, whether as a result of competition, technological
change or otherwise, would have a material adverse effect on the Company's
business, operating results and financial condition. Additionally, the Company
is dependent upon the willingness of the media outlets to which it supplies VNRs
to actually use them on their news broadcasts. Should these media outlets reduce
the use of VNRs, there would be a material adverse effect on the Company's
business, operating results and financial condition. See 'Management's
Discussion and Analysis of Financial Condition and Results of Operations' and
'Business.'
DEPENDENCE ON NEW SERVICES FOR GROWTH
The Company believes that its growth will depend, in part, on its ability
to effectively market recently introduced services and to develop new services
in a timely and cost-effective manner. There can be no assurance that the
Company will be successful in marketing and developing these recently introduced
services or other new services or that if such development is completed, the
Company's planned introduction of these services will realize market acceptance
or will meet the technical or other requirements of its clients. If the Company
is unable to effectively market new services, there could be a material adverse
effect on the Company's business, operating results and financial condition. See
'Business.'
RISKS ASSOCIATED WITH ACQUISITIONS
The Company's growth strategy includes pursuing acquisitions in the
communications services industry. The success of this strategy depends not only
upon the Company's ability to identify and acquire suitable businesses on a
cost-effective basis, but also upon its ability to integrate acquired personnel,
operations, products, services and technology into its organization effectively,
to retain and motivate key personnel and to retain the clients of acquired
firms. There can be no assurance that the Company will be able to achieve any of
the foregoing. The Company competes for acquisition opportunities with other
companies that have significantly greater financial and other resources than
those of the Company. The Company may use Common Stock and/or Preferred Stock
(which could result in dilution to the purchasers of the Common Stock offered
hereby) or may incur long-term indebtedness or a combination thereof for all or
a portion of the consideration to be paid in future acquisitions. The Company
has no current plans, agreements or commitments and is not currently engaged in
any negotiations with respect to any acquisitions.
GLOBAL EXPANSION
The Company plans to continue its international expansion through direct
operations and foreign affiliations. There can be no assurance, however, that
the Company's services will achieve market acceptance in other countries. The
Company's ability to successfully enter these new markets will depend, in part,
on its ability to attract personnel with experience in these locations and to
attract partners with the necessary local business relationships. Changes in
government policies and regulations in foreign countries could require the
Company's services to be redesigned or could restrict the Company's ability to
deliver its material. Telecommunications standards in foreign countries differ
from those in the U.S. and may require the Company to incur substantial costs
and expend significant managerial resources to comply with such standards.
Furthermore, international business is subject to country-specific risks and
circumstances, including different tax laws, difficulties in expatriating
profits, currency exchange rate fluctuations, increases in duties, price
controls and the complexities of administering business abroad. These and other
related risks and circumstances could have a material adverse effect on the
Company's business, operating results and financial condition.
ABILITY TO INTEGRATE NEW TECHNOLOGY
The communications industry is characterized by rapidly changing
technology. The Company's ability to remain competitive will depend in
significant part upon its ability to continue to integrate new technology into
its services. New technologies, as well as the introduction of services
embodying new technologies, could render the Company's existing services
obsolete or unmarketable. There can be no assurance that the Company will be
8
<PAGE>
successful in identifying and developing new services that respond to
technological change, that the Company will not experience difficulties that
could delay or prevent the successful development, introduction and marketing of
these services or that its new or enhanced services will adequately meet the
requirements of the marketplace and achieve market acceptance. See 'Business.'
COMPETITION
The markets for the Company's services are highly competitive. The
principal competitive factors affecting the Company are effectiveness,
reliability, price, technological sophistication and timeliness. Numerous
specialty companies compete with the Company in each of its business lines
although no single company competes across all service lines. Many of the
Company's competitors or potential competitors have longer operating histories,
longer client relationships and significantly greater financial, management,
technological, sales, marketing and other resources than the Company. In
addition, clients could perform internally all or certain of the services
provided by the Company rather than outsourcing such services. The Company
expects that competition will increase substantially as a result of industry
consolidations and alliances, as well as through the emergence of new
competitors. The Company believes that the market for communications services
may become increasingly concentrated in the future as a result of the
acquisition and integration of smaller service providers, which are likely to
permit many of the Company's competitors to devote significantly greater
resources to the development and marketing of new competitive services. There
can be no assurance that existing or future competitors will not develop or
offer communications services that provide significant performance, price,
creative or other advantages over those offered by the Company. The Company
could face competition from companies in related communications markets which
could offer services that are similar or superior to those offered by the
Company. In addition, national and regional telecommunications providers could
enter the market with materially lower electronic delivery costs, and radio and
television networks could also begin transmitting business communications
separate from their news programming. The Company's ability to maintain and
attract clients depends to a significant degree on the quality of services
provided and its reputation among its clients and potential clients as compared
to that of competitors. There can be no assurance that the Company will not face
increased competition in the future or that such competition will not have a
material adverse effect on the Company's business, operating results and
financial condition.
MANAGEMENT OF GROWTH; RISKS ASSOCIATED WITH EXPANSION
The Company's business has grown rapidly in recent years. The Company's
expansion has resulted, and is expected in the future to result, in substantial
growth in the number of its employees and in increased responsibility for both
existing and new management personnel. The Company's success depends to a
significant extent on the ability of its executive officers and other members of
senior management, only one of whom has any executive management experience with
a public company, to manage that growth and operate effectively, both
independently and as a group. See 'Management.'
In addition, the Company plans to expand its services and open new offices.
There can be no assurance that the Company will be able to manage its recent or
any future expansion effectively and profitably, and any inability to do so
would have a material adverse effect on the Company's business, operating
results and financial condition. There also can be no assurance that the Company
will be able to sustain the rates of growth that it has experienced in the past.
ABSENCE OF LONG-TERM CONTRACTS
The Company's clients generally retain the Company on a project-by-project
basis rather than under long-term contracts. As a result, there can be no
assurance that a client will engage the Company for further services once a
project is completed. Assignments from existing clients represented a
significant portion of the Company's revenues for 1995 and the nine months ended
September 30, 1996, accounting for 63% and 70%, respectively. To the extent that
a large number of the Company's current clients do not continue to use the
Company's services, and the Company is unable to attract new clients or leverage
existing client relationships by cross-marketing its services, there would be a
material adverse effect on the Company's business, operating results and
financial condition.
SUSCEPTIBILITY TO GENERAL ECONOMIC CONDITIONS
The Company's revenues are affected by its clients' marketing
communications spending and advertising budgets. The Company's revenues and
results of operations may be subject to fluctuations based upon general economic
conditions in the geographic locations where it distributes its material. If
there were to be a general economic downturn or a recession in these geographic
locations, then the Company expects that business
9
<PAGE>
enterprises, including its clients and potential clients, could substantially
and immediately reduce their marketing and communications budgets. In the event
of such an economic downturn, there would be a material adverse effect on the
Company's business, operating results and financial condition.
CONCENTRATION OF STOCK OWNERSHIP; POTENTIAL ISSUANCE OF PREFERRED STOCK;
PROVISIONS WITH POTENTIAL ANTI-TAKEOVER EFFECTS
Upon completion of this offering, the executive officers and directors of
the Company and their affiliates and other holders of 5% or more of the Common
Stock will beneficially own approximately 38.4% of the Common Stock
(approximately % if the Underwriters' over-allotment option is exercised in
full). As a result, these stockholders will be able to control or significantly
influence all matters requiring stockholder approval, including the election of
directors and approval of significant corporate transactions. Such concentration
of ownership may have the effect of delaying or preventing a change in control
of the Company. See 'Principal Stockholders.'
In addition, the Company's Board of Directors has the authority to issue up
to 1,000,000 shares of Preferred Stock and to determine the price, rights,
preferences, privileges and restrictions thereof, including voting rights,
without any further vote or action by the Company's stockholders. Although the
Company has no current plans to issue any shares of Preferred Stock, the rights
of the holders of Common Stock would be subject to, and may be adversely
affected by, the rights of the holders of any Preferred Stock that may be issued
in the future. Issuance of Preferred Stock could have the effect of delaying,
deferring or preventing a change in control of the Company. Furthermore, certain
provisions of the Company's Amended and Restated Certificate of Incorporation
and Amended and Restated Bylaws and of Delaware law could have the effect of
delaying, deferring or preventing a change in control of the Company. See
'Management,' 'Certain Transactions,' 'Principal and Selling Stockholders' and
'Description of Capital Stock.'
The Company is subject to the provisions of Section 203 of the Delaware
General Corporation Law which prevent certain Delaware corporations, including
those whose securities are listed on the Nasdaq National Market, from engaging,
under certain circumstances, in a 'business combination' with any 'interested
stockholder' for three years following the date that such stockholder became an
'interested stockholder.' A Delaware corporation may 'opt out' of this law with
an express provision in its original certificate of incorporation or an
amendment either to its certificate of incorporation or to its by-laws approved
by a majority of the outstanding voting shares. The Company has not opted out of
the law which may inhibit a third party 'interested stockholder' from commencing
a 'business combination.'
DISCRETION IN USE OF PROCEEDS
The Company intends to use the net proceeds from the sale of the Common
Stock offered hereby for general corporate purposes and possible acquisitions.
The Company, however, has not designated any specific use for these proceeds.
Accordingly, the Company will have complete discretion with respect to the use
of these proceeds and there can be no assurance that they can or will be
invested to yield a significant return. See 'Use of Proceeds.'
NO PRIOR MARKET; POSSIBLE VOLATILITY OF STOCK PRICE
Prior to this offering there has been no public market for the Company's
Common Stock and, although the Company has applied to have the Common Stock
approved for quotation and trading on the Nasdaq National Market, there can be
no assurance that an active trading market will develop or be sustained after
this offering. The initial public offering price of the Common Stock offered
hereby will be determined through negotiations among the Company and the
Representatives of the Underwriters and may not be indicative of future market
prices. There can be no assurance that the market price of the Common Stock will
not decline below the initial public offering price. The trading prices of the
Common Stock may be highly volatile and subject to wide fluctuations in response
to a number of factors, including variations in operating results, limited
trading volume, failure to meet expectations of, or a change in recommendation
by, securities analysts, announcements of extraordinary events such as
litigation or acquisitions, announcements of technological innovations or new
services by the Company or its competitors, as well as trends in the Company's
industry and general market conditions. In addition, stock markets have
experienced extreme price and volume fluctuations in recent years. This
volatility has had a substantial effect on the market prices of securities of
many companies for reasons frequently unrelated to the operating performance of
the specific companies. These broad market fluctuations may adversely affect the
market price of the Company's Common Stock. See 'Underwriting.'
10
<PAGE>
IMMEDIATE AND SUBSTANTIAL DILUTION
Assuming an initial public offering price of $10.00 per share, investors
participating in this offering will incur immediate, substantial dilution of
approximately $6.10 in the net tangible book value per share. To the extent
outstanding options to purchase the Company's Common Stock are exercised, there
will be further dilution to such investors. See 'Dilution.'
BENEFITS OF THIS OFFERING TO CURRENT STOCKHOLDERS
Upon the consummation of this offering, the current stockholders of the
Company will realize certain benefits, including the creation of a public
trading market for their shares of Common Stock and the corresponding
facilitation of sales by such stockholders of their shares of Common Stock in
the secondary market. Such stockholders purchased their Common Stock at an
average price of $1.27 per share, substantially below the initial public
offering price.
SHARES ELIGIBLE FOR FUTURE SALES
Sales of a substantial number of shares of Common Stock in the public
market following this offering or the prospect of such sales could adversely
affect the market price of the Common Stock prevailing from time to time.
Upon completion of this offering, the Company will have 5,047,933 shares of
Common Stock outstanding. Of these shares, 2,000,000 shares of Common Stock
offered hereby will be freely transferable without restriction unless purchased
by 'affiliates' of the Company as that term is defined under Rule 144 ('Rule
144') promulgated under the Securities Act of 1933, as amended (the 'Securities
Act'). The remaining shares will be 'restricted securities' as that term is
defined in Rule 144 under the Securities Act and may not be sold other than
pursuant to an effective registration statement under the Securities Act or
pursuant to an exemption from such registration requirement. Subject to the
contractual restrictions discussed below, 3,021,412 shares of Common Stock will
be eligible for sale under Rule 144 from the date of this Prospectus. 2,111,669
of such shares are entitled to certain registration rights. See 'Description of
Capital Stock.' Certain of the Company's stockholders are subject to lock-up
agreements under which they have agreed not to sell or otherwise dispose of any
shares of Common Stock without the prior written consent of Dean Witter Reynolds
Inc. for a period of 180 days after the date of this Prospectus whether now
owned or hereafter acquired by such stockholders or with respect to which such
stockholders have or hereafter acquire the power of disposition or enter into
any swap or any other agreement or any transaction that transfers, in whole or
in part, directly or indirectly, the economic consequence of ownership of the
Common Stock or any Common Stock deemed to be beneficially owned by such
stockholders, whether any such swap or transaction is to be settled by delivery
of Common Stock or other securities, in cash or otherwise. Such stockholders
also have agreed not to exercise their registration rights for 180 days after
the date of this Prospectus and have granted Dean Witter Reynolds Inc. the right
of first refusal to be engaged as the lead manager of the underwritten public
offering of their shares if registration rights are exercised following the
expiration of the lock-up period until the date that is 12 months from the date
of this Prospectus. The Company has consented to any such engagement of Dean
Witter Reynolds Inc. The Company has agreed not to issue or sell any shares of
Common Stock, without the prior written consent of Dean Witter Reynolds Inc. for
a period of 180 days after the date of this Prospectus other than the issuance
of shares upon the exercise of stock options. Upon the expiration of the 180-day
lock-up period, certain of the shares of Common Stock subject to the lock-up
agreements will become eligible for sale in the public market subject to the
conditions of Rule 144. See 'Underwriting' and 'Shares Eligible For Future
Sales.'
The Company intends to file a Registration Statement on Form S-8 to
register the 812,648 shares of Common Stock issuable upon the exercise of
options granted under the Stock Option Plan and the Directors Stock Option Plan.
Following the filing of the Form S-8, shares of Common Stock issued upon the
exercise of options granted under the Stock Option Plan and the Directors Stock
Option Plan will be available for sale in the public market upon vesting of such
options, subject to Rule 144 volume limitations applicable to affiliates.
11
<PAGE>
USE OF PROCEEDS
The net proceeds to the Company from the sale of the 2,000,000 shares of
Common Stock offered by the Company hereby are estimated to be $17.9 million,
assuming a public offering price of $10.00 per share, and after deducting the
Underwriters' discounts and commissions and the estimated offering expenses
payable by the Company.
The Company intends to use the net proceeds of this offering for general
corporate purposes and possible acquisitions. No portion of the proceeds of this
offering has been allocated to any specific acquisition. Although the Company
reviews and considers possible acquisitions on an on-going basis, no specific
acquisitions are planned as of the date of this Prospectus. Pending such uses,
the Company plans to invest the net proceeds of this offering in short-term,
interest-bearing investment grade securities. See 'Business.'
DIVIDEND POLICY
The Company has never paid dividends on its Common Stock. The Company
intends to retain any earnings to provide funds for utilization in its business
and does not anticipate paying any cash dividends on its Common Stock in the
foreseeable future. The Company's loan agreement contains provisions which
prohibit the payment of cash dividends by the Company.
12
<PAGE>
DILUTION
At September 30, 1996 the pro forma net tangible book value of the Company,
as adjusted to give effect to the Preferred Stock Conversions as if the
Preferred Stock Conversions had occurred on September 30, 1996, was $1,802,533
or $0.59 per share of Common Stock outstanding. 'Pro Forma net tangible book
value' per share represents the total amount of the Company's tangible assets
less total liabilities, divided by the number of shares of Common Stock
outstanding prior to the offering. After giving effect to the sale by the
Company of the 2,000,000 shares of Common Stock offered hereby (at an assumed
initial public offering price of $10.00 per share and after deducting estimated
underwriting discounts and offering expenses), the pro forma net tangible book
value of the Company at September 30, 1996 would have been $19,702,533 or $3.90
per share. This amount represents an immediate increase of $3.31 per share to
existing stockholders and an immediate dilution of $6.10 per share to new
investors. The following table illustrates this per share dilution:
<TABLE>
<S> <C> <C>
Assumed initial public offering price per share of Common Stock....................... $10.00
Pro forma net tangible book value per share before the offering.................. $0.59
Increase per share attributable to the offering.................................. 3.31
-----
Pro forma net tangible book value per share of Common Stock after the offering........ 3.90
------
Dilution per share to new investors in the offering................................... $ 6.10
------
------
</TABLE>
The following table sets forth, on a pro forma basis at September 30, 1996,
after giving effect to the Preferred Stock Conversions and the offering, the
number of shares of Common Stock purchased from the Company, the total
consideration paid and the average price per share paid by the existing
stockholders and by the investors purchasing shares of Common Stock offered
hereby (assuming an initial public offering price of $10.00 per share before
deducting underwriting discounts and offering expenses):
<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
--------------------- ---------------------- PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
---------- ------- ----------- ------- ---------
<S> <C> <C> <C> <C> <C>
Existing stockholders(1).................. 3,047,933 60.4% $ 3,884,261 16.3% $ 1.27
New investors(1).......................... 2,000,000 39.6 20,000,000 83.7 10.00
---------- ------- ----------- -------
Total..................................... 5,047,933 100.0% $23,884,261 100.0%
---------- ------- ----------- -------
---------- ------- ----------- -------
</TABLE>
- ------------------
(1) If the over-allotment option is exercised in full, sales by Selling
Stockholders will reduce the number of shares held by the existing
stockholders to 2,747,933 shares or approximately 54.4% of the total shares
of Common Stock outstanding and will increase the number of shares held by
new investors to 2,300,000 or approximately 45.6% of the total shares of
Common Stock outstanding after this offering. See 'Principal and Selling
Stockholders.'
The foregoing computations assume no exercise of options to purchase
569,594 shares of Common Stock reserved for issuance under the Company's Stock
Option Plan at a weighted average exercise price of $3.16 per share and 62,400
shares of Common Stock reserved for issuance under the Directors Stock Option
Plan at an exercise price of $3.54 per share. To the extent that any outstanding
options are exercised, there will be further dilution to new investors. See
'Management.'
13
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of the Company (i) on an
actual basis as of September 30, 1996 and (ii) as adjusted to give effect to the
Preferred Stock Conversions and the issuance and sale by the Company of the
2,000,000 shares of Common Stock offered hereby, at an estimated initial public
offering price of $10.00 per share, and the receipt of the estimated net
proceeds therefrom, after deducting the underwriting discounts and commissions
and estimated offering expenses payable by the Company. This table should be
read in conjunction with the Financial Statements and related Notes thereto,
'Management's Discussion and Analysis of Financial Condition and Results of
Operations' and the Unaudited Pro Forma Condensed Combined Financial Statements
appearing elsewhere in this Prospectus.
<TABLE>
<CAPTION>
SEPTEMBER 30, 1996
-------------------------
ACTUAL AS ADJUSTED
---------- -----------
<S> <C> <C>
Current portion of long-term debt........................................ $ 37,143 $ 37,143
---------- -----------
---------- -----------
Long-term debt........................................................... $ 283,950 $ 283,950
Stockholders' equity(1)
Preferred Stock, $.01 par value, 1,000,000 shares authorized; none
issued and outstanding, actual and as adjusted(2)................... -- --
Series A, 10% Cumulative Convertible Preferred Stock, $1.50 par value;
655,417 shares authorized, issued and outstanding actual; none
issued and outstanding as adjusted.................................. 983,126 --
Series B, 10% Cumulative Convertible Preferred Stock, $1.35 par value;
475,185 shares authorized, issued and outstanding actual; none
issued and outstanding as adjusted.................................. 641,500 --
Series C, 10% Cumulative Convertible Preferred Stock, $2.75 par value;
645,455 shares authorized; 629,130 shares issued and outstanding
actual; none issued and outstanding as adjusted..................... 1,730,107 --
Common Stock, $.01 par value, 15,000,000 shares authorized; 936,264
shares issued and outstanding actual; 5,047,933 shares issued and
outstanding as adjusted............................................. 9,363 50,479
Additional paid-in capital............................................... 520,165 21,733,782
Accumulated deficit...................................................... (711,012) (711,012)
Equity adjustment for foreign currency translation....................... (634) (634)
---------- -----------
Total stockholders' equity............................................. 3,172,615 21,072,615
---------- -----------
Total capitalization..................................................... $3,456,565 $21,356,565
---------- -----------
---------- -----------
</TABLE>
- ------------------
(1) Does not include an aggregate of (i) 569,594 shares of Common Stock issuable
upon exercise of options outstanding under the Company's Stock Option Plan
at a weighted average exercise price of $3.16 per share of Common Stock and
(ii) 62,400 shares of Common Stock reserved for issuance upon exercise of
options outstanding under the Directors Stock Option Plan, at an exercise
price of $3.54 per share.
(2) Contingent upon the effectiveness of this offering.
14
<PAGE>
SELECTED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE AND OTHER DATA)
The following selected historical financial information presented below as
of and for each of the five years ended December 31, 1995 have been derived from
financial statements of the Company audited by KPMG Peat Marwick LLP,
independent certified public accountants. The financial statements as of
December 31, 1994 and 1995 and for each of the years in the three year period
ended December 31, 1995 are included elsewhere in this Prospectus. The selected
unaudited historical information presented below for the nine month periods
ended September 30, 1995 and 1996 and as of September 30, 1996, are derived from
the unaudited financial statements of the Company included elsewhere in this
Prospectus. In the opinion of management of the Company, the unaudited financial
information reflects all adjustments, consisting of normal recurring
adjustments, necessary to present fairly the financial information for such
periods and as of such date. The results of the nine month periods ended
September 30, 1995 and 1996 are not necessarily indicative of results to be
expected for the full year.
The unaudited pro forma information gives effect to the PR Data Acquisition
as if it had occurred at the beginning of the period presented. The pro forma
information is not necessarily indicative of the results of operations that
would have been reported if the PR Data Acquisition had occurred during those
periods, or that may be reported in the future.
This data should be read in conjunction with the historical financial
statements of the Company and PR Data Systems Inc. ('PR Data') and the Unaudited
Pro Forma Condensed Combined Financial Statements of the Company appearing
elsewhere in this Prospectus.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------------------------------------
1991 1992 1993 1994
-------- -------- -------- -------- NINE MONTHS ENDED
SEPTEMBER 30,
----------------------------
1995 1996
-------------------- 1995 -------------------
PRO ------ PRO
ACTUAL FORMA ACTUAL ACTUAL FORMA
-------- --------- ------ ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues...................... $ 4,891 $ 5,802 $ 6,065 $ 7,548 $ 10,625 $ 12,237 $7,382 $11,158 $12,014
Direct costs.................. 1,867 2,225 2,629 3,039 4,553 4,745 3,282 4,605 4,696
-------- -------- -------- -------- -------- --------- ------ ------- ---------
Gross profit.................. 3,024 3,577 3,435 4,509 6,071 7,492 4,100 6,553 7,318
General and administrative
expenses.................... 2,937 3,437 3,651 4,069 5,373 6,787 3,797 5,548 6,307
-------- -------- -------- -------- -------- --------- ------ ------- ---------
Operating income (loss)....... 87 140 (215) 440 698 705 303 1,005 1,011
Other income (expense)........ (12) 18 (3) 1 15 (11 ) 12 5 (27)
-------- -------- -------- -------- -------- --------- ------ ------- ---------
Income (loss) before income
taxes....................... 75 158 (218) 441 713 694 315 1,010 984
Income tax expense
(benefit)................... 26 63 13 (1,023)(1) 332 320 149 431 417
-------- -------- -------- -------- -------- --------- ------ ------- ---------
Income (loss) from continuing
operations before
discontinued operations and
extraordinary
item........................ 49 95 (231) 1,464(1) 381 374 166 579 567
Net income (loss)............. $ 21(2) $ 144(2) $ (231) $ 1,464(1) $ 381 $ 374 $ 166 $ 579 $ 567
-------- -------- -------- -------- -------- --------- ------ ------- ---------
-------- -------- -------- -------- -------- --------- ------ ------- ---------
Net income (loss) applicable
to common stock............. $ (295)(2) $ (184)(2) $ (566) $ 1,129 $ 46 $ 374 $ (85 ) $ 327 $ 567
Net income (loss) before tax
valuation reversal(1)....... $ 21(2) $ 144(2) $ (231) $ 222 $ 381 $ 374 $ 166 $ 579 $ 567
Pro forma net income per
share(3) $ 0.11 $0.05 $ 0.17
Shares used to compute pro
forma net income per
share(3).................... 3,453 3,453 3,485
OTHER DATA:
Number of offices............. 4 4 5 6 7 8 7 8 8
Average revenues per sales
employee.................... $326,000 $322,000 $347,000 $414,000 $506,000 $532,000
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
---------------------------------------------- -------------
1991 1992 1993 1994 1995 1996
------ ------ ------ ------ ------ -------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital.......................................... $ 248 $ 370 $ 218 $ 887 $1,722 $ 1,500
Total assets............................................. 1,399 1,483 1,683 3,237 4,387 6,551
Long-term debt, net of current portion................... 30 -- -- -- -- 284
Stockholders' equity..................................... 488 750 557 2,017 2,425 3,173
</TABLE>
- ------------------
(1) In accordance with Statement of Financial Accounting Standards No. 109, the
Company reversed its valuation allowance against deferred tax assets in the
amount of $1,242,000 in 1994. See Note 5 to the Company's Financial
Statements.
(2) Includes a loss of $40,000 from discontinued operations in 1991 and the
utilization of net operating losses resulting in tax benefits of $12,000 in
1991 and $49,000 in 1992.
(3) See Note 9 to the Company's Financial Statements for an explanation of the
method used to determine the number of shares.
15
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
The following discussion of the Company's historical results of operations
and of its liquidity and capital resources should be read in conjunction with
the Selected Financial Information of the Company and the Financial Statements
of the Company and the Notes thereto included elsewhere in the Prospectus.
The Company was formed in September 1986 and initially concentrated on the
satellite distribution of VNRs and the electronic monitoring of their broadcast
on television. The Company has grown as a result of the introduction of new
services and domestic and international expansion. The Company now provides a
wide array of services on a worldwide basis. These services include video
distribution and monitoring (introduced in 1987), live broadcasts, including
satellite media tours and video conferencing (1988), video production, research
and analysis of marketing communications campaigns and programs (1994) and audio
distribution and production (1996). Services introduced since 1994 (video
production, audio distribution and production, research and analysis, and print
distribution) accounted for approximately 27% of revenues for the nine months
ended September 30, 1996. The PR Data Acquisition in July 1996 has expanded the
Company's research capabilities and added print news release distribution
services. The following table illustrates on a percentage of revenues basis the
changing mix of the Company's revenues since 1992:
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
YEARS ENDED DECEMBER 31, SEPTEMBER 30,
---------------------------- -------------
SERVICES 1992 1993 1994 1995 1996
- -------------------------------------------- ---- ---- ---- ---- -------------
<S> <C> <C> <C> <C> <C>
Video distribution and monitoring........... 73% 75% 73% 61% 52%
Video production............................ -- NM 7 12 19
Live broadcasts............................. 27 25 20 22 21
Audio distribution and production........... -- -- -- -- 2
Research and analysis....................... -- -- NM 5 5
Print distribution.......................... -- -- -- -- 1
</TABLE>
The Company launched its international services and established an office
in London in 1993. The Company has since developed 17 affiliate relationships
which enable the Company to provide global production and distribution.
International revenues more than quadrupled from $360,000 in 1993 to $1.5
million in 1995. International revenues increased by $1.1 million, or 110% from
$1.0 million for the nine months ended September 30, 1995 to $2.1 million for
the nine months ended September 30, 1996.
In addition to adding new services, the Company has continued to expand
geographically by adding new offices, most recently in Dallas in 1994 and
Atlanta in 1995, and by adding personnel to existing offices. Each new office
has resulted in the development of new client relationships.
Clients pay for production, distribution, monitoring and live broadcasts on
a fixed-fee basis. The Company does not charge the media for airing the clients'
material. The Company's revenues do not depend on the usage by the media of the
clients' material. The Company's production department specifies in advance of
each project the services to be provided for the specified fee. In the event
that a project requires additional services, the client incurs additional fees.
Research is conducted pursuant to contracts and on a project basis. These
contracts and projects are priced on a fixed-fee basis. Distribution and live
broadcast revenues are recognized upon the completion of the project. Video
production and research revenues are recognized on the percentage of completion
basis. Generally, video production projects are completed within one month from
the time they are initiated; research projects can last for up to one year.
Direct costs include costs associated with the use of the AP
Express/Medialink Newswire, satellite transmission, electronic monitoring,
production crews, editing, studios, tabulation services and sales commissions.
Satellite transmission costs have increased during the past two years. During
the third quarter of 1995 the Company began to pass such increase in costs to
its clients. General and administrative expenses
16
<PAGE>
include all salary-related costs as well as general overhead costs such as
advertising, travel and entertainment expenses, and rent.
The Company experiences quarterly seasonal variations in revenues as a
result of several factors, including its clients' business cycles and timing of
product introductions. Accordingly, since the Company's salary and overhead
costs are relatively stable from quarter to quarter, the Company's results from
operations have been higher in the second and fourth quarters of the fiscal
year. In addition, the Company's gross profit margins reflect the mix of
business between the Company's services.
The Company consummated the PR Data Acquisition in July 1996. PR Data had
revenues of approximately $1.7 million in 1995. The Company paid for the PR Data
Acquisition through the payment of $120,000 cash, the issuance of 24,000 shares
of Common Stock and the assumption of certain liabilities not to exceed the book
value of the assets acquired by $372,000. In addition, the Company will make
payments in the aggregate amount of $410,000 payable over the next five years
under the terms of non-compete agreements with certain officers and stockholders
of PR Data. The transaction was accounted for as a purchase.
GENERAL
Results of Operations
The following table sets forth for the periods indicated certain components
of the Company's statement of operations as a percentage of revenues.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------------
1993 1994 1995
------------------------ ------------------------ ------------------------
<S> <C> <C> <C>
Revenues.............................. 100.0% 100.0% 100.0%
Direct costs.......................... 43.4 40.3 42.9
------ ------ ------
Gross profit.......................... 56.6 59.7 57.1
General and administrative expenses... 60.2 53.9 50.6
------ ------ ------
Operating income (loss)............... (3.6) 5.8 6.5
Other income.......................... -- -- 0.1
------ ------ ------
Income (loss) before income taxes..... (3.6) 5.8 6.6
Income tax expense (benefit).......... 0.2 (13.6)(1) 3.1
------ ------ ------
Net income (loss)..................... (3.8)% 19.4%(1) 3.5%
------ ------ ------
------ ------ ------
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30,
------------------------------------------------------------------
1995 1996
------------------------------- -------------------------------
<S> <C> <C>
Revenues.............................. 100.0% 100.0%
Direct costs.......................... 44.5 41.3
------ ------
Gross profit.......................... 55.5 58.7
General and administrative expenses... 51.4 49.7
------ ------
Operating income (loss)............... 4.1 9.0
Other income.......................... 0.1 0.0
------ ------
Income (loss) before income taxes..... 4.2 9.0
Income tax expense (benefit).......... 2.0 3.8
------ ------
Net income (loss)..................... 2.2% 5.2%
------ ------
------ ------
</TABLE>
- ------------------
(1) In accordance with Statement of Financial Accounting Standards No. 109, the
Company reversed its valuation allowance against deferred tax assets in the
amount of $1,242,000 in 1994. See Note 5 to the Company's Financial
Statements.
NINE MONTHS ENDED SEPTEMBER 30, 1996 COMPARED TO THE NINE MONTHS ENDED SEPTEMBER
30, 1995
Revenues. Revenues increased by $3.8 million, or 51.2%, from $7.4 million
for the nine months ended September 30, 1995 (the 'September 1995 Period') to
$11.2 million for the nine months ended September 30, 1996 (the 'September 1996
Period'). This increase was primarily due to increased sales of VNR production
services, which increased by $1.2 million, increased sales of VNR distribution
services, which increased by $1.3 million, and live broadcast services, which
increased by $687,000. In addition, following the PR Data Acquisition in July
1996 Medialink PR Data contributed $250,000 to the Company's revenues. Revenues
from international services contributed $941,000 to the Company's revenue
growth.
Direct Costs. Direct costs increased by $1.3 million, or 40.2%, from $3.3
million for the September 1995 Period to $4.6 million for the September 1996
Period. Direct costs as a percentage of revenues decreased to 41.3% for the
September 1996 Period from 44.5% for the September 1995 Period, reflecting an
increase in business activity and the mix of business during the period.
General and Administrative Expenses. General and administrative expenses
increased by $1.7 million, or 46.2%, from $3.8 million for the September 1995
Period to $5.5 million for the September 1996 Period. General
17
<PAGE>
and administrative expenses as a percentage of revenues decreased to 49.7% for
the September 1996 Period from 51.4% for the September 1995 Period. Salary
related costs increased by $1.0 million as the Company strengthened its upper
and mid-level management, expanded its sales and operations staff and as a
result of the PR Data Acquisition. In addition, sales and marketing costs
increased by $108,000 for the September 1996 Period and rent and utilities
increased by $149,000 for the September 1996 Period resulting from the expansion
of the Company's sales and operations staff and the PR Data Acquisition.
Operating Income. As a result of the foregoing, operating income increased
by $702,000, or 231.7%, from $303,000 for the September 1995 Period to $1.0
million for the September 1996 Period. As a percentage of revenues, operating
income for the September 30, 1996 Period was 9.0% as compared with 4.1% for the
September 1995 Period.
Income Tax Expense. Income tax expense reflects an allocation based on the
full year anticipated tax expense. Combined federal, state and local taxes were
anticipated to be 42.7% for the September 1996 Period and were 47.2% for the
September 1995 Period.
YEAR ENDED DECEMBER 31, 1995 COMPARED TO THE YEAR ENDED DECEMBER 31, 1994
Revenues. Revenues increased by $3.1 million, or 40.7%, from $7.5 million
for the year ended December 31, 1994 to $10.6 million for the year ended
December 31, 1995. The increase was primarily due to increased sales of VNR
distribution services, which increased by $930,000, VNR production services,
which increased by $780,000, live broadcast services, which increased by
$780,000, and research and analysis services, which increased by $500,000. These
increases were primarily attributable to international revenue growth which
increased by $650,000, improved productivity of the Company's sales and
marketing team, the growth of U.S. production services and the introduction of
research and analysis services at the end of 1994.
Direct Costs. Direct costs increased by $1.6 million, or 49.9%, from $3.0
million in 1994 to $4.6 million in 1995. Direct costs as a percentage of
revenues increased from 40.3% of revenues for 1994 to 42.9% of revenues for
1995. This increase was attributable to a change in the mix of the Company's
business and an increase in satellite costs.
General and Administrative Expenses. General and administrative expenses
increased by $1.3 million, or 32.0%, from $4.1 million in 1994 to $5.4 million
in 1995. General and administrative expenses as a percentage of revenues
decreased to 50.6% in 1995 from 53.9% in 1994. Salary-related costs increased by
$700,000 in 1995 as the Company increased its staff to respond to the increased
demand for the Company's services and sales and marketing costs increased by
$100,000 in 1995.
Operating Income. As a result of the foregoing, operating income increased
by $258,000, or 58.6%, from $440,000 in 1994 to $698,000 in 1995. As a
percentage of revenues, operating income for 1995 was 6.5% as compared with 5.8%
for 1994.
Income Tax Expense (Benefit). In 1994 the income tax benefit resulted
primarily from the reversal of the balance of the Company's valuation allowance
on deferred tax assets in accordance with SFAS No. 109 as a result of the
Company's determination that it had become more likely than not that such
deferred tax assets would be realized.
YEAR ENDED DECEMBER 31, 1994 COMPARED TO THE YEAR ENDED DECEMBER 31, 1993
Revenues. Revenues increased by $1.5 million, or 24.4%, from $6.0 million
for the year ended December 31, 1993 to $7.5 million in the year ended December
31, 1994. This increase was primarily due to increased sales of VNR distribution
services which increased by $1.0 million, and VNR production services which
increased by $490,000. These increases were primarily attributable to improved
productivity of the Company's sales and marketing team, the introduction of VNR
production services in the U.S. and international revenue growth which increased
by $475,000.
Direct Costs. Direct costs increased by $409,000, or 15.6%, from $2.6
million in 1993 to $3.0 million in 1994. Direct costs as a percentage of
revenues decreased to 40.3% in 1994 from 43.3% in 1993. The gross margin
improved as a result of the change in the mix in the Company's business.
18
<PAGE>
General and Administrative Expenses. General and administrative expenses
increased by $418,000, or 11.5%, from $3.7 million in 1993 to $4.1 million in
1994. General and administrative expenses as a percentage of revenues decreased
to 53.9% in 1994 from 60.2% in 1993. Salary-related costs increased by $219,000
in 1994 and sales and marketing costs increased by $84,000 in 1994.
Operating Income (Loss). As a result of the foregoing, operating income
increased by $656,000, from an operating loss of $215,000 in 1993 to an
operating profit of $440,000 in 1994. As a percentage of revenues, operating
income for 1994 was 5.8% as compared with a loss of 3.5% for 1993.
Income Tax Expense (Benefit). Income tax expense reflected on the
statement of operations represents federal, state and local taxes. In 1994 the
income tax benefit resulted primarily from the reversal of the Company's
valuation allowance on deferred tax assets in accordance with SFAS No. 109. In
1993, income tax expense reflected state and local taxes as the Company had
determined that, based on its operating losses and the level of its deferred tax
assets, it was unable to conclude that it was more likely than not that such
deferred tax assets would be realized in the future.
QUARTERLY RESULTS
The Company experiences quarterly seasonal variations in revenues as a
result of several factors, including its clients' business cycles and timing of
product introductions. Accordingly, since the Company's salary and overhead
costs are relatively stable from quarter to quarter, the Company's results from
operations have been higher in the second and fourth quarters. The following
table presents the Company's operating results for the eight quarters ended
September 30, 1996. The information for each of these quarters is unaudited but
has been prepared on the same basis as the Company's audited financial
statements and in the opinion of the Company's management reflects all the
adjustments made in conjunction with the Company's audited financial statements
and notes thereto appearing elsewhere in the prospectus. Operating results for
any quarter are not indicative of results for any future periods.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
----------------------------------------------------------------------------------------
DECEMBER 31, MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31, MARCH 31, JUNE 30,
1994 1995 1995 1995 1995 1996 1996
------------ --------- -------- ------------- ------------ --------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues........................ $ 2,126 $ 2,018 $ 2,920 $ 2,445 $ 3,242 $ 3,329 $ 4,102
Direct costs.................... 860 876 1,329 1,078 1,270 1,439 1,769
------------ --------- -------- ------------- ------------ --------- --------
Gross profit.................... 1,266 1,142 1,591 1,367 1,972 1,890 2,333
General and administrative
expenses...................... 1,099 1,192 1,284 1,319 1,578 1,568 1,832
------------ --------- -------- ------------- ------------ --------- --------
Operating income (loss)......... 167 (50) 307 48 394 322 501
Other income (expense).......... 2 3 4 5 3 7 6
------------ --------- -------- ------------- ------------ --------- --------
Income (loss) before taxes...... 169 (47) 311 53 397 329 507
Income tax expense (benefit).... 69 (22) 145 25 185 134 207
------------ --------- -------- ------------- ------------ --------- --------
Net income (loss)............... $ 100 $ (25) $ 166 $ 28 $ 212 $ 195 $ 300
------------ --------- -------- ------------- ------------ --------- --------
------------ --------- -------- ------------- ------------ --------- --------
Pro forma net income (loss) per
share(1)...................... $ 0.03 $ (0.01) $ 0.05 $ 0.01 $ 0.06 $ 0.05 $ 0.09
<CAPTION>
SEPTEMBER 30,
1996
-------------
<S> <C>
Revenues........................ $ 3,727
Direct costs.................... 1,397
-------------
Gross profit.................... 2,330
General and administrative
expenses...................... 2,148
-------------
Operating income (loss)......... 182
Other income (expense).......... (9)
-------------
Income (loss) before taxes...... 173
Income tax expense (benefit).... 90
-------------
Net income (loss)............... $ 83
-------------
-------------
Pro forma net income (loss) per
share(1)...................... $ 0.03
</TABLE>
<TABLE>
<CAPTION>
AS A PERCENTAGE OF REVENUES
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues........................ 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Direct costs.................... 40.5 43.4 45.5 44.2 39.2 43.2 43.1
------------ --------- -------- ------------- ------------ --------- --------
Gross profit.................... 59.5 56.6 54.5 55.8 60.8 56.8 56.9
General and administrative
expenses...................... 51.6 59.0 44.0 53.9 48.7 47.1 44.7
------------ --------- -------- ------------- ------------ --------- --------
Operating income (loss)......... 7.9 (2.4) 10.5 1.9 12.1 9.7 12.2
Other income (expense).......... -- 0.1 0.1 0.2 0.1 0.2 0.1
------------ --------- -------- ------------- ------------ --------- --------
Income (loss) before taxes...... 7.9 (2.3) 10.6 2.1 12.2 9.9 12.3
Income tax expense (benefit).... 3.2 (1.1) 5.0 1.0 5.7 4.0 5.0
------------ --------- -------- ------------- ------------ --------- --------
Net income (loss)............... 4.7% (1.2)% 5.6% 1.1% 6.5% 5.9% 7.3%
------------ --------- -------- ------------- ------------ --------- --------
------------ --------- -------- ------------- ------------ --------- --------
<CAPTION>
<S> <C>
Revenues........................ 100.0%
Direct costs.................... 37.5
-------------
Gross profit.................... 62.5
General and administrative
expenses...................... 57.7
-------------
Operating income (loss)......... 4.8
Other income (expense).......... (0.2)
-------------
Income (loss) before taxes...... 4.6
Income tax expense (benefit).... 2.4
-------------
Net income (loss)............... 2.2%
-------------
-------------
</TABLE>
- ------------------
(1) See Note 9 to the Company's Financial Statements for an explanation of the
method used to determine the number of shares.
19
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The Company has financed its operations primarily through cash generated
from operations. Since the end of 1994, the Company's cash balance has increased
by approximately $344,000 from $262,000 as of December 31, 1994 to $606,000 as
of September 30, 1996 as a result of continued profitability. Cash flows
provided by operating activities amounted to $405,700, $435,007 and $1,181,220
for the years ended December 31, 1994 and 1995 and the nine months ended
September 30, 1996, respectively. The increase in cash generated from operations
was primarily due to increases in the Company's operating income. During the
same period the Company repaid $273,870 in bank debt. The Company has no capital
expenditure plans other than in the ordinary course of business consistent with
its prior practices. Capital expenditures are primarily incurred to support the
Company's growth in sales and operations and were approximately $127,000 and
$394,000 for the years ended December 31, 1994 and 1995, respectively, and
$412,000 for the nine months ended September 30, 1996. The Company believes that
the net proceeds from the offering and cash flow from operations will be
sufficient to fund its cash needs for at least the next twelve months.
The Company has a credit facility secured by the Company's accounts
receivable and all other assets of the Company which matures on February 28,
1997, bears interest at the prime rate plus 1% and is payable monthly. Under the
terms of the credit facility, the Company can borrow up to the lesser of
$500,000 or 70% of its eligible accounts receivable, as defined in the agreement
governing the credit facility, and is prohibited from paying cash dividends on
its stock. As of September 30, 1996 the Company had no borrowings outstanding
under the credit facility.
EFFECTS OF NEW ACCOUNTING PRONOUNCEMENTS
Long-Lived Assets. In March 1995, the Financial Accounting Standards Board
('FASB') issued SFAS No. 121, 'Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed Of.' This statement is effective
for fiscal years beginning after December 15, 1995. The adoption of this
statement in fiscal 1996 did not have a material effect on the Company's
financial statements.
Stock-Based Compensation. In October 1995, the FASB issued SFAS No. 123,
'Accounting for Stock-Based Compensation,' which requires adoption of the
disclosure provisions no later than fiscal years beginning after December 15,
1995 and adoption of the measurement and recognition provisions for non-employee
transactions no later than after December 15, 1995. The new standard defines a
fair value method of accounting for the issuance of stock options and other
equity instruments. Under the fair value method, compensation cost is measured
at the grant date based on the fair value of the award and is recognized over
the service period, which is usually the vesting period. Pursuant to SFAS No.
123, companies are encouraged, but not required, to adopt the fair value method
of accounting for employee stock-based transactions. Companies are also
permitted to continue to account for such transactions under Accounting
Principles Board Opinion ('APB') No. 25, 'Accounting for Stock Issued to
Employees,' but would be required to disclose in a note to the financial
statements pro forma net income and per share amounts as if the company had
applied the new method of accounting. SFAS No. 123 also requires increased
disclosures for stock-based compensation arrangements regardless of the method
chosen to measure and recognize compensation for employee stock-based
arrangements. The Company has elected to continue to account for such
transactions under APB No. 25 and will disclose the required pro forma effect on
net income and earnings per share in its annual financial statements.
20
<PAGE>
BUSINESS
Medialink is a leading worldwide provider of video and audio production and
distribution services for businesses and other organizations seeking to
communicate their news through television, radio and other media. The Company's
principal services are based on its core business -- satellite distribution of
VNRs and the electronic monitoring of their broadcast on television. A VNR is
the video equivalent of a conventional press release and is used for the same
purposes, such as to introduce a new product or service, explain a technological
breakthrough, communicate during a crisis or advocate a position on an issue of
public concern. VNRs are produced for easy integration into newscasts and are
distributed to the media for their use in complete or edited form.
The Company began offering video production services in 1994 and has since
developed a full range of video, audio and print services which it now provides
on a global basis. Medialink enables its clients to reach more than 3,000
newsrooms at television and radio networks, local stations, cable channels,
direct broadcast satellite systems, as well as on-line services, including those
available on the Internet. The Company also coordinates live television
interviews through satellite media tours (SMTs) and produces live broadcasts of
newsworthy events for its clients. Similar to its video services, the Company
also offers its clients audio news releases (ANRs) and radio media tours (RMTs).
The Company believes that its proprietary database of over 40,000 news contacts,
which includes their editorial preferences and technical requirements, increases
the Company's efficiency.
The Company has provided its services to more than 1,100 clients over the
last twenty-four months. The Company's clients include corporations such as
General Motors, IBM, Johnson & Johnson, Sony and Ciba Geigy/Sandoz;
organizations such as the American Association of Retired Persons and the
AFL-CIO; and the world's largest marketing communications firms such as
Burson-Marsteller, Hill & Knowlton, Edelman Public Relations Worldwide and the
Shandwick Group. No single client accounted for more than 4% of the Company's
revenues in 1995. Materials distributed by the Company have aired on ABC, CBS,
NBC and their affiliates, as well as CNN and CNBC in the United States, and the
BCC, CNN International, Sky News, RAI (Italy) and NHK (Japan) internationally.
As an integral part of its services, the Company monitors media usage of
the material it distributes. Television usage is monitored using electronic
technology and data provided by several independent services, including Nielsen
Media Research and Competitive Media Reporting. Radio usage is monitored using
data provided by independent news tracking services, as well as data collected
automatically when radio stations call in to the Company's automated digital ANR
retrieval system. The Company provides its clients with monitoring reports which
include the date and time at which the clients' material was used, the media and
markets in which it was used and a report on the size and demographic
composition of the audience. The Company believes that this ability to
accurately monitor and report usage on a timely basis is critical to its
success. The Company also offers research and analysis services which provide
customized studies to measure the results of clients' public relations programs,
analyze competitive trends and measure return on investment of their marketing
communications efforts. As a result of the PR Data Acquisition in July 1996, the
Company expanded its research capabilities and added print news release
distribution services. In August 1996 the Company changed its corporate name
from Video Broadcasting Corporation to Medialink Worldwide Incorporated.
INDUSTRY BACKGROUND
The Company serves a global marketplace. Based on a combination of surveys
taken by the Company and published reports, the Company estimates that it
competes in a market which was approximately $500 million in 1995, considering
only the United States and the United Kingdom. The Company believes that the
following trends have created growing opportunities for its services in domestic
and international markets:
Increasing Importance of Television as a Communications Medium. The
average amount of time that Americans over the age of 18 spend watching
television has increased by 7% over the last five years to 30 hours per week per
person and is projected to grow an additional 5% over the next five years
according to a regularly published industry source. At the same time, the
average time spent by that same group reading newspapers has declined by more
than 5% over this period to 3.17 hours per week and is expected to continue
to decline over the next
21
<PAGE>
five years according to the same source. In addition, a 1994 survey by the Roper
organization indicates that 72% of Americans get most of their news from
television.
Growing Number of Media Outlets. As the number of traditional media
outlets (broadcast, cable television and radio) has increased and as new media
outlets (on-line and Internet) develop, there has also been a proliferation of
news programs such as MSNBC and CNNfn. As a result, it has become more difficult
to deliver newsworthy material effectively to all media outlets. Increasingly,
organizations and their marketing communications firms are looking for
cost-effective and efficient ways of reaching all of these media outlets.
Outsourcing of Communications Services. At the same time that new
technologies and new media outlets have rendered marketing communications more
complex, few organizations have developed the capacity to provide key marketing
communications services (including video production and distribution)
internally. Many organizations have also followed the trend of reducing their
marketing communications staffs and now often outsource these functions. Outside
service providers offer several advantages, including: the ability to reach a
greater share of the available media; the avoidance of costs such as hiring
additional staff; and the opportunity to act quickly by utilizing the outside
service providers' distribution channels that could take months or years to
develop internally.
THE COMPANY'S COMPETITIVE ADVANTAGES
The Company believes that it is strategically positioned to benefit from
industry trends because of its ability to provide a wide array of video and
audio production, distribution, monitoring and research services on a worldwide
basis. The Company's competitive advantages include its extensive operating
history with media outlets, key industry relationships, prominent client base,
combination of professional skills, ability to integrate new technology and
worldwide production and distribution capabilities.
Extensive Operating History with Media Outlets. The Company has completed
more than 10,000 projects over the course of its ten years of operations and, as
a result, has developed strong relationships with both television and radio
newsrooms worldwide. As evidenced by the frequent usage of its news releases by
media outlets, the Company believes that it has developed a reputation as a
reliable producer of newsworthy, broadcast-quality VNRs and ANRs. In addition,
the Company has created a proprietary database of information about more than
approximately 720 television stations, more than 2,300 radio stations in the
U.S. and 300 other media outlets worldwide. This database contains historical
usage patterns of the stations, information preferences demonstrated by the
stations' news directors and editors and incorporates underlying demographic
data describing the audiences reached by each station.
Key Industry Relationships. The Company has established key relationships
with prominent news distribution and support services companies. For the past
nine years, the Company has benefited from an exclusive arrangement with the AP
for the use of its dedicated links to newsroom computers at television and,
recently, radio stations in the U.S., to notify stations of upcoming video and
audio satellite transmissions. This system is the largest advisory service for
satellite-delivered news, and is relied upon by television and radio stations
across the U.S. The Company also uses the AP for audio transmissions by
satellite. In addition, through an agreement with ABC Radio, the Company's audio
services reach more than 2,300 radio stations in the U.S. Medialink primarily
monitors domestic television station usage of VNRs, SMTs and live broadcast
events under an agreement with Nielsen Media Research and also uses Competitive
Media Reporting's monitoring services.
Prominent Client Base. The Company has provided its services to more than
1,100 clients worldwide over the last twenty-four months. The Company has
developed client relationships with such companies as AT&T, Columbia Tristar
Pictures, Federal Express, General Mills, Hasbro, Intel, MCI and Toyota. The
Company also works with the world's largest public relations firms,
not-for-profit organizations and government entities. The clients for the
Company's research and analysis services include corporations such as GTE,
General Motors, Kraft Foods, Miller Brewing and NYNEX. Assignments from
existing clients represented a significant portion of the Company's revenues
for fiscal 1995 and the nine months ended September 30, 1996, accounting for 63%
and 70%, respectively. The Company believes that the prominence of its client
base enhances its reputation among news professionals and helps it attract new
clients.
22
<PAGE>
Combination of Professional Skills. The Company's staff is comprised of
professionals from the fields of public and investor relations, broadcast and
print journalism, production and distribution technology and media and marketing
research. This combination of skills enhances the Company's understanding of the
communications services industry and has enabled the Company to develop its
wide-ranging expertise. The public relations skills of its staff helps the
Company to effectively articulate the messages that its clients want to
communicate. The broadcast and print journalism background of its employees
provides the Company with the ability to translate the messages into video and
audio content in a broadcast style that is familiar to the news media and that
can be easily integrated into news programming. The production and distribution
technology background of the Company's operations staff contributes a broad
understanding of newsrooms' technical requirements which enables the Company to
adapt its services to changes in hardware and transmission systems. The media
and marketing background of the Company's research personnel enables Medialink
to integrate sophisticated market research techniques into its services.
Ability to Integrate New Technology. The Company's ability to integrate
new technology into its services significantly enhances its high-quality,
cost-effective services worldwide. Medialink adapts and implements new
technology through internal development and deployment, strategic alliances and
marketing and vendor agreements. Currently, the Company is experimenting with
digital video and audio transmission and retrieval systems. The Company
continuously monitors technological developments that have the potential to
enhance the value of its services.
Worldwide Distribution and Production. The Company offers its services on
a worldwide basis through all of its offices and through a network of 17
affiliates. The affiliates are independently owned companies which possess
production and marketing capabilities as well as demonstrated working
relationships with local media. All affiliates are trained in the Company's
methods of operation. In Asia, the Pacific Rim, South Africa and Latin America,
the affiliates market the Company's services and provide the Company's clients
with production, distribution and monitoring services. In Europe, the affiliates
market the Company's services to their own clients and provide production
services for the Company's clients.
STRATEGY
The Company's strategy is to maintain and leverage its leading position in
video distribution to become the premiere provider of production, distribution
and monitoring services for its clients' news across all media. The Company
believes that it can continue to broaden its communications services and reach
its strategic objective by (i) developing new services; (ii) leveraging its
client relationships by cross-marketing services to its clients; (iii)
continuing its global expansion; and (iv) pursuing acquisitions and strategic
alliances with companies that can add to the Company's service capabilities or
geographic scope. The following are the key elements of the Company's strategy:
Develop New Services. In recent years the Company has expanded its
services beyond its original video distribution and live broadcast services.
Video production, introduced in 1994, contributed 19% of revenues for the nine
months ended September 30, 1996; and research and analysis, and audio production
and distribution services, introduced in 1994 and 1996, respectively,
contributed 7% of revenues for the nine months ended September 30, 1996. The
Company developed its audio services to satisfy the demand of existing clients
and to offer its services to an expanded range of clients. With the PR Data
Acquisition in July 1996, the Company expanded its research capabilities and
added print news release distribution services. The Company is currently
developing digital video and audio distribution services for the Internet.
Leverage Client Relationships through Cross-Marketing. The Company's
client relationships typically begin with a single project, but often develop to
a point where a client may use several of the Company's services on multiple
occasions. The Company intends to leverage its client relationships by selling
its clients additional communications services, including the production of VNRs
and the production and distribution of ANRs. At present, fewer than 20% of the
Company's clients use its video production services and fewer than 2% use its
audio production and distribution services. The Company also intends to market
its expanded research and analysis service to its clients and to offer its
existing services to PR Data clients. Because production and research services
require a higher degree of collaboration between the Company and its clients and
are typically delivered
23
<PAGE>
over a longer period of time, the Company believes that these services
contribute to developing closer client relationships, thus increasing the
Company's opportunity to sell clients a broader range of services.
Continue to Expand Globally. Since the Company established operations in
London, approximately 30% of the Company's annual revenue growth has been from
international operations. The Company has expanded and will continue to expand
its client base through aggressive marketing, the establishment of additional
sales offices in the U.S., the expansion of its international affiliate network,
particularly in Asia and the Pacific Rim, and the hiring of additional
personnel.
Pursue Acquisitions and Strategic Alliances. The Company operates within a
fragmented industry that includes competitors which do not have the resources to
take advantage of emerging technologies or to offer a full range of integrated
communications support services. At the same time, the Company believes that its
clients are increasingly demanding a full array of integrated services on a
worldwide basis. The Company believes that these trends will encourage
consolidation within the industry and create opportunities for acquisitions and
strategic alliances. No specific acquisitions are planned as of the date of this
Prospectus. There can be no assurance that the Company will be successful in
acquiring and then integrating acquired operations and personnel. See 'Risk
Factors.'
MEDIALINK CLIENTS AND SERVICES
The Company offers its clients a wide array of services which may be
purchased individually or in a customized package. The Company's services
include the following:
VIDEO SERVICES
------------------------------------
Video News Release Distribution
and Monitoring:
Domestic
International
Electronic Press Kits
Internet Delivery
(under development)
Live Broadcasts:
Satellite Media Tours
Special Event Broadcasts
Video Conferences
Video News Release Production:
Domestic
International
Public Service Announcements
AUDIO SERVICES
------------------------------------
Audio News Release Distribution
and Monitoring:
Domestic
International
Radio Media Tours
Audio Conferences
Public Service Announcements
Internet Delivery
(under development)
RESEARCH AND
ANALYSIS SERVICES
AND OTHER SERVICES
------------------------------------
News Coverage Analysis
Campaign Effectiveness
Assessment
Competitive Analysis
Performance Benchmarking
Press Release Distribution
<PAGE>
CLIENTS
The Company has a wide variety of clients, either directly or through the
client's marketing communications support firms. Clients range from Fortune 100
companies to trade associations, government entities and not-for-profit
organizations. Client relationships generally begin with a limited assignment
and have often grown to the provision of a variety of integrated services. The
following chart demonstrates the breadth of services that the Company offers to
a representative list of clients. Some of the clients listed are parent
companies of subsidiaries who use the Company's services. Unless otherwise
indicated, all of the clients listed in the table below are direct clients of
the Company. For the fiscal year ended 1995, no client accounted for more than
4% of the Company's revenues.
<TABLE>
<CAPTION>
CLIENTS SERVICES PROVIDED
- ----------------------------------------------- -------------------------------------------------------------------------
CORPORATIONS, TRADE ASSOCIATIONS VIDEO VIDEO LIVE RESEARCH
AND NOT-FOR-PROFIT ORGANIZATIONS DISTRIBUTION PRODUCTION BROADCAST AND ANALYSIS AUDIO PRINT
- ----------------------------------------------- ------------ ---------- --------- ------------ ----- -----
<S> <C> <C> <C> <C> <C> <C>
COMPUTER/ELECTRONICS
AT&T........................................... / / / / / /
Ameritech...................................... / / / /
Cable & Wireless*.............................. / / / /
Ericsson*...................................... / /
GTE............................................ / / / /
IBM............................................ / / / / / / / /
Intel.......................................... / /
Hewlett Packard................................ / / / /
MCI............................................ / / / / / / / /
Microsoft*..................................... / /
NYNEX.......................................... / / / /
Packard Bell*.................................. / /
Sega*.......................................... / / / /
Sony*.......................................... / / / / / / / / / /
Sprint*........................................ / /
ENTERTAINMENT
Buena Vista Home Video......................... / /
Castle Rock Entertainment...................... / / / /
Disney......................................... / /
MCA Universal.................................. / /
National Basketball Association................ / /
Time Warner*................................... / / / / / /
20th Century Fox............................... / / / / / /
CONSUMER PRODUCTS
Federal Express*............................... / / / / / /
General Mills*................................. / / / /
Hasbro*........................................ / / / /
Heinz*......................................... / / / / / /
Kraft Foods*................................... / / / / / / / / / /
Lever Brothers*................................ / / / /
Miller Brewing*................................ / / / / / / / /
Pepsi*......................................... / / / / / / / /
Phillip Morris*................................ / /
VISA USA....................................... / / / /
HEALTH AND PHARMACEUTICAL
Abbott Laboratories*........................... / / / /
Ciba Geigy/Sandoz.............................. / / / /
Glaxo-Wellcome*................................ / /
Janssen Pharmaceutica*......................... / /
Johnson & Johnson.............................. / / / / / /
Merck*......................................... / / / / / /
Smith Kline/Beecham*........................... / / / /
</TABLE>
(table continued on next page)
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<TABLE>
<CAPTION>
CLIENTS SERVICES PROVIDED
- ----------------------------------------------- -------------------------------------------------------------------------
CORPORATIONS, TRADE ASSOCIATIONS VIDEO VIDEO LIVE RESEARCH
AND NOT-FOR-PROFIT ORGANIZATIONS DISTRIBUTION PRODUCTION BROADCAST AND ANALYSIS AUDIO PRINT
- ----------------------------------------------- ------------ ---------- --------- ------------ ----- -----
MANUFACTURING
<S> <C> <C> <C> <C> <C> <C>
BMW*........................................... / / / / / /
Boeing*........................................ / /
DuPont*........................................ / /
Eastman Kodak*................................. / /
Ford Motor Company............................. / / / / / /
General Motors................................. / / / / / /
Jaguar......................................... / / / /
Owens Corning*................................. / /
Toyota......................................... / / / /
Volkswagen..................................... / /
PUBLIC RELATIONS FIRMS
Burson-Marsteller.............................. / / / / / /
Edelman Public Relations Worldwide............. / / / /
Fleishman-Hillard.............................. / / / /
Golin/Harris................................... / / / /
Hill & Knowlton................................ / / / /
Ogilvy Adams & Rinehart........................ / / / / / /
Porter/Novelli................................. / / / / / /
Shandwick Group................................ / / / / / /
<CAPTION>
INDEPENDENT PRODUCERS
- -----------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Corporate Television Group..................... / / / /
Perri Productions.............................. / /
Robert Chang Productions....................... / /
Washington Independent Productions............. / / / / / /
GOVERNMENT AGENCIES/NOT-FOR-PROFIT
ORGANIZATIONS
American Assoc. of Retired Persons............. / / / /
British Department of the Environment.......... / / / /
European Commission............................ / / / /
Labor Institute for Public Affairs
(AFL-CIO)*................................... / / / / / /
National Institutes of Health.................. / /
U.S. Dept. of Labor............................ / /
U.S. Federal Reserve........................... / / / /
U.S. Fish & Wildlife Service................... / /
</TABLE>
- ------------------
* Some or all of the projects were received indirectly through a marketing
communications firm or an independent producer.
SERVICES
Video Services
Each of the Company's video services is composed of a combination of three
basic elements: notification, distribution and monitoring. Notification is the
process of informing newsrooms that material will be available, when it will be
available and how it will be delivered. Distribution is the process of
delivering the material, usually by satellite. Monitoring is the process of
collecting data on its usage and analyzing and reporting that usage back to the
client.
VNR Distribution. VNRs are the video equivalents of a conventional press
release and are used for the same purposes, such as to introduce a new product
or service, explain a technological breakthrough, communicate during a crisis or
advocate a position on an issue of public concern. VNRs are produced on
deadlines ranging from a few hours to a few weeks. VNRs are distributed to
broadcasters and formatted in broadcast-news style for easy integration, in
complete or edited form, into television and cable news programs. A VNR package
(fully narrated story with announce track) usually runs from 90 seconds to two
minutes. A VNR
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package also includes, in certain cases, B-roll (supplemental video to help
television news producers customize the story), which may also be distributed
separately.
An example of a VNR project distributed domestically and monitored by the
Company is Pepsi's broadcast campaign to counter rumors that syringes had been
found in soft drink cans. Pepsi produced four VNRs which aired in one week and
countered the rumors by showing the viewing public how difficult it would be to
tamper with the canning process. The Company's electronic monitoring indicated a
cumulative audience of 488 million over the one-week period, including airings
on ABC, NBC, CBS, CNN and CNBC.
The price for the domestic distribution and monitoring of a VNR typically
ranges from approximately $4,500 to $10,000, depending on project
specifications. The price for international distribution and monitoring of a VNR
typically ranges from approximately $8,000 to $30,000, depending on project
specifications.
VNR Production. The Company also produces VNRs. The VNR production process
begins with a consultation between the client and a Company producer following
which the producer and the client agree on the concept, a deadline and a
production budget. The producer prepares a script, schedules a freelance camera
crew, edits the videotape and submits it for client approval prior to
distribution.
The Company produced and distributed a VNR for the Hard Rock Cafe of the
opening of the Hard Rock Hotel and Casino in Las Vegas. The Company's electronic
monitoring indicated a cumulative audience of more than 36 million from 190
airings on 137 television stations or network news programs, including CNN, Hard
Copy, Inside Edition, WWOR, WABC in New York, KNBC in Los Angeles, WLS in
Chicago, WCAU in Philadelphia, WCVB in Boston, KDFW and WFAA in Dallas, KTRK in
Houston and WJW in Cleveland.
The price for domestic distribution and production of a VNR typically
ranges from approximately $9,000 to $30,000, depending on project
specifications. The price for international distribution and production of a VNR
typically ranges from approximately $12,000 to $40,000, depending on project
specifications.
Electronic Press Kits. The Company also produces and distributes
Electronic Press Kits (EPKs) for entertainment clients. EPKs are longer version
VNRs promoting upcoming feature films and home video cassettes which are
distributed to entertainment reviewers and reporters at television stations for
airing as part of their film reviews. EPKs include a trailer previewing scenes
from the film, location shots of the film sets and interviews of the stars and
director.
Buena Vista Pictures retained the Company in June 1996 to distribute an EPK
to promote the opening of The Hunchback of Notre Dame. The Company's monitoring
of the EPK indicated a cumulative audience of more than 47 million on more than
500 television news broadcasts. Portions of the EPK aired on networks and
stations such as CNN, WWOR in New York, KABC and KCBS in Los Angeles, WBBM and
WGN in Chicago, WPVI in Philadelphia, KRON in San Francisco, WMUR in Boston,
WJLA and WRC in Washington, DC and WFAA in Dallas.
The price for EPK production and distribution typically ranges from
approximately $7,500 to $25,000, depending on project specifications.
Live Broadcast Services. Live broadcast services include Satellite Media
Tours (SMTs), news conferences and special-event broadcasts. SMTs consist of a
sequence of one-on-one satellite interviews with a series of pre-booked
television reporters typically at 12 to 20 stations across the country or around
the world. Typical SMT applications include, among others, an interview with a
celebrity or author promoting an upcoming event, product, movie or book release.
SMTs generally are conducted from a studio but can originate from remote
locations. SMTs may be aired live by the television station or recorded for
later airing.
An example of a SMT coordinated by the Company was the American Egg Board's
promotion of the benefits of eggs in the diet featuring a National Football
League star. The Company's monitoring of the SMT indicated a cumulative audience
of 3.3 million. Portions of the SMT aired on 20 television stations or cable
systems, including WNBC in New York, Newschannel 8 in Washington, DC, KTVU in
San Francisco, WAGA in Atlanta, WEWS in Cleveland, WTHR in Indianapolis and WTNH
in Hartford.
The price for a SMT typically ranges from approximately $9,000 to $21,000,
depending on project specifications.
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Other live broadcast services include interviews, news conferences and
interactive video conferences. Examples of these include: coverage from the
floor the New York Stock Exchange of the first day of trading of Revlon's shares
and production of a major international video conference for Johnson & Johnson,
featuring primary speakers in Orlando, Florida, an interactive presentation from
a speaker in Zurich, Switzerland, as well as elements from news programs that
originated in many of the conference participants' home countries.
The price for live broadcast distribution ranges from approximately $10,000
to $200,000, depending on project specifications.
Audio Services
ANRs. ANRs are used for the same purposes as VNRs. ANRs are distributed to
radio stations for news, public affairs and 'talk radio' programs. ANRs are
produced on deadlines ranging from less than an hour to several days. ANRs are
produced for easy integration into a station's programming and are formatted for
their use in complete or edited form. Usage monitoring is conducted by telephone
surveys, traditional clipping services that monitor radio news in selected major
markets and an automated digital telephone retrieval system.
An example of an ANR produced and distributed by the Company was the
promotion of the initial availability of Nicotrol(Registered), an
over-the-counter nicotine patch distributed by McNeil Consumer Products.
Monitoring of the ANR indicated a cumulative audience of 3.8 million for
portions of the ANR from airings on 102 stations or networks nationwide
including Bloomberg Business News and in major markets such as New York,
Chicago, Boston, Detroit, Houston, Atlanta, Cleveland and Baltimore.
The price for domestic production and distribution of an ANR typically
ranges from approximately $3,500 to $5,500, depending on project specifications.
The price for international production and distribution of an ANR typically
ranges from approximately $10,000 to $20,000, depending on project
specifications.
RMTs. Medialink also offers RMTs. Similar to SMTs, RMTs consist of a
sequence of one-on-one interviews with a series of pre-booked radio stations
across the country or around the world. RMTs generally are conducted by
telephone from a studio, often in conjunction with a SMT. In October 1996 the
Company produced a RMT for 20th Century Fox in which actor Tom Hanks promoted
his new feature film 'That Thing You Do.' The RMT originated from the Company's
digital radio studio in its New York office. The monitoring of this RMT
indicated a cumulative audience of 1.4 million. The RMT was aired nationwide,
including radio stations in New York, Chicago, San Francisco, Detroit, Dallas,
Washington, Miami, Atlanta, Seattle, San Diego and Minneapolis.
The price for a RMT typically ranges from approximately $4,900 to $6,900,
depending on project specifications.
Research and Analysis Services
Through its Medialink Public Relations Research division, the Company
provides customized studies which clients use to gauge the effectiveness of
their public relations efforts. Based on data provided by electronic monitoring
and press clipping services, the Company uses statistical analyses to measure
the quantity and quality of the client's print and broadcast news coverage. The
reports include a digest of newspaper, magazine and broadcast coverage;
circulation and viewership totals; a qualitative scoring of the tone and content
of the coverage; and, upon request, an estimate of the price that equivalent
exposure would have cost if paid advertising were used.
Medialink also offers interpretive analyses that provide an overall
appraisal of the efficiency and impact of a client's communications efforts; a
comparison of the client's news coverage with that of its competitors; a
benchmark against which future efforts can be measured; and a gauge of return on
investment for marketing communications programs. In some cases the Company
conducts field research, interviewing journalists to ascertain their attitudes
toward a client company. Certain projects require the Company to survey the
public to determine how a client's reputation may have been affected by the
client's public relations efforts. Clients use these reports to continually
refine their public relations programs.
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The division's clients have included AT&T, General Motors, GTE, Miller
Brewing, Kodak, Nynex and Kraft Foods. Research and analysis projects vary
widely in price depending on specifications and can range in price from $5,000
for a single project to an annual retainer of $200,000.
Other Services. Medialink's other services include production and
distribution of Public Service Announcements (PSAs), distribution of photographs
and other graphic material to television stations and the distribution of
conventional press releases. PSAs are video messages in the public interest,
generally produced for non-profit organizations, that are aired by television
stations as a public service. The Company also transmits still photos or
graphics that are distributed with a press release to visually enhance the story
and are used as illustrations in newscasts while a news announcer reads the
story. Medialink also provides print distribution services, which includes the
distribution of conventional press releases via facsimile and mail.
Services Under Development. The Company is experimenting with an Internet
audio service called 'Medialink News Now.' The Company posts digital audio files
at www.medialinkvideonews.com. Although the service is intended primarily for
radio stations, any computer user with the appropriate equipment can retrieve
broadcast-quality audio from this Web site. In addition, the Company is testing
various technologies that might provide the basis for a service that delivers
video via the Web. This experiment could evolve into a system that allows
television stations to preview VNRs.
CASE STUDIES
The following case studies illustrate the Company's marketing
communications solutions for certain of the Company's clients, in each case
indicating the message to be conveyed to the public, the manner in which the
Company's services were employed and the results the services achieved.
General Mills. The Betty Crocker Products division of General Mills sought
to generate maximum publicity for a complete makeover of Betty Crocker, a
consumer icon celebrating its 75th anniversary. General Mills had, periodically,
updated the look of this fictional character in order to keep the symbol of the
Betty Crocker brand contemporary. Along with a wide range of public relations
activities undertaken by the client to maximize consumer awareness of the
brand's changes, the client employed a suite of video services, including a live
satellite transmission of the introduction ceremony, a SMT and a VNR.
The live broadcast was hosted by a key brand manager for the Betty Crocker
brand, who introduced the artists and several of the 75 women who inspired the
new composite Betty Crocker portrait. Corporate executives discussed the brand's
heritage and demonstrated how Betty Crocker's appearance had changed over the
years. Immediately following this event, Medialink coordinated a SMT during
which newscasters from 23 stations interviewed the artist and the brand
executive. In addition, video from the introduction ceremony was incorporated
into a VNR that was carried by major-market television stations and on ABC's
'Good Morning America' and 'World News Tonight.'
The Company's monitoring of the live broadcast, SMT and VNR indicated a
cumulative audience of 42 million. This project demonstrates the Company's
ability to orchestrate several of its services in a manner intended to amplify
the public exposure of a significant corporate event.
Web-TV. In July 1996 Web-TV introduced the first product to provide
consumers with access to the Internet via household television sets. The system
is based on a set-top box manufactured by Sony and Philips that allows users to
navigate the Web with a device that resembles a television remote control.
Medialink produced a VNR in which the company's founder demonstrated the system
and coordinated a SMT that was featured on the news broadcasts of 21 stations,
as well as CNNfn. To broaden exposure for this development, Medialink created an
ANR using the audio component of the television release. The ANR was carried by
all-news radio stations in New York, Los Angeles and Philadelphia, among others.
The Company's monitoring of the VNR, SMT and ANR indicated a cumulative
audience of 24.8 million. This project demonstrates Medialink's ability to
produce material for one medium and readily adapt it to others, in this instance
from television to radio.
Speedo International. Speedo International, a major manufacturer of
aquatic sporting gear, sought to capitalize on the interest in competitive
swimming surrounding the 1996 summer Olympics, as it introduced a
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new line of swimsuits. The swimsuits were made from Aquablade(Registered), a
proprietary material, that, according to scientific tests reported by Speedo,
added as much as 8% to a swimmer's speed.
The client sought television news coverage in Europe, Australia and Latin
America. Medialink's London office coordinated the production of a VNR, which
included footage of scientific testing, 3-D computer animation and underwater
photography. Segments were produced using athletes from various countries and in
various languages so that broadcasters could select an interview to give the
story a local appearance. The VNR was distributed through Medialink's affiliate
network.
The Company's monitoring of the VNR indicated a cumulative audience of 174
million in 12 countries. This project demonstrates the Company's ability to
support a client's global requirements and to provide appropriate material to
media in several countries around the world.
DISTRIBUTION AND MONITORING SYSTEMS
Video. The Company provides VNR notification advisories to U.S. television
newsrooms through the exclusive AP Express/Medialink Newswire. These
notification advisories include a description and script of the VNR, as well as
the technical satellite transmission information needed by stations to receive
the material. Medialink typically distributes the VNR by satellite transmission
or by fiber optic cable. To monitor domestic broadcasts of VNRs, the Company
encodes each transmission using technologies provided by Nielsen Media Research
and Competitive Media Reporting. This encoding enables Nielsen Media Research
and Competitive Media Reporting to electronically monitor the broadcasts.
Monitoring data is then analyzed by the Company and combined with relevant
additional information collected by Medialink, audience ratings from Nielsen
Media Research and audience demographics. Medialink packages this information
for the client into daily monitoring reports for the first five days after a VNR
is distributed. Reports are then provided on a weekly basis for the next three
weeks and a final comprehensive report is presented to the client five weeks
after the VNR's distribution.
The Company coordinates international distribution through its London
office. Notification advisories are provided by broadcast fax and telephone.
Distribution is primarily by satellite, although most international VNR
distributions also require cassette delivery by overnight courier. The Company
monitors international broadcasts through a combination of telephone surveys and
analysis of clipping services data.
The Company uses the AP Express/Medialink Newswire, faxes and telephone
calls to notify television stations of the availability of a SMT. SMTs are
conducted by satellite. The Company's media relations department schedules
interviews with each of the stations participating in the SMT. SMTs are
monitored in the same manner as are VNRs.
Audio. The Company uses the AP Express/Medialink Radio Newswire, broadcast
fax and telephone calls, as appropriate, to notify more than 2,300 radio
stations. This group of stations includes virtually all radio stations with
significant news or talk-centered programming. Medialink uses the satellite
transmission facility of the AP to transmit ANRs and RMTs to stations that
subscribe to this AP service.
Medialink also has an agreement with ABC Radio for the satellite
transmission of ANRs. ABC Radio offers this service on a common-carrier basis
which allows for the receipt of this material by ABC Radio network affiliates
and otherwise unaffiliated stations. Medialink also stores and distributes ANRs
on a digital system that can be called by radio stations using a toll-free
number. ANR monitoring is performed by telephone surveys, by analyzing data
provided by third party monitoring services and tabulating station calls to the
digital system.
The Company distributes RMTs in the U.S. by telephone. The scheduling of
interviews with stations is arranged by the Company's media relations
department. RMTs are monitored by the Company in the same manner as it monitors
ANRs.
Other. The Company continues to enhance its existing, and develop new,
electronic distribution capabilities by employing and integrating new
technology. The Company intends to capitalize on the commercial development of
the Internet as a promotional tool and as an additional distribution channel.
The Company created a Web site which contains the Company's promotional and
educational material (www.medialinkworldwide.com). The Company has also created
an additional Web site for broadcast journalists, editors and producers which
contains notification information and links to other Web sites with more
in-depth information concerning the Company's clients and their communication
releases (www.medialinkvideonews.com).
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Currently, the Company is developing Internet audio services. In addition, the
Company is testing other Internet technologies to expand its video service
offerings.
SALES AND MARKETING
As of October 1, 1996 the Company employed a team of 31 sales, marketing
and sales support personnel in seven U.S. offices and in London. Services are
also marketed internationally by the Company's 17 affiliates located in Europe,
Asia, the Pacific Rim, South Africa and Latin America. Each salesperson receives
a base salary but is compensated primarily through a commission structure that
is based on sales volume and profitability. Each salesperson participates in
ongoing training programs in sales techniques and communications technology.
Details regarding the Company's operations by geographic area are included in
Note 6 to the Company's Financial Statements.
The sales force concentrates on cultivating long-term relationships with
clients. Certain sales personnel specialize in particular industries, such as
the pharmaceutical or high-tech industries, developing an in-depth knowledge of
the industry. The support personnel screen prospects so that the sales personnel
can focus their efforts on presenting the Company's services in an appropriate
manner. Sales personnel are trained to represent all of the Company's service
offerings and are encouraged to create opportunities to sell multiple services.
The Company's marketing programs are designed to position the Company as a
leading provider of integrated video, audio and research services.
Company-sponsored workshops, typically attended by 60 clients and potential
clients, are central to the Company's marketing efforts. At these workshops,
outside authorities and Company personnel make presentations concerning current
developments in the news and public relations industries. In addition, the
Company is able to discuss its services and demonstrate how these services can
serve the needs of workshop attendees. The workshops are held around the world
and cover such subjects as combining radio and television techniques;
international opportunities; and obtaining news exposure for health and medical
projects. Management believes that these workshops are an efficient way to
strengthen the bonds between its sales force and its clients, and that this has
contributed to the increase in the average revenues per salesperson/sales
assistant from $347,000 in 1993 to $506,000 in 1995. The Company also uses
brochures, video tapes, advertisements in trade publications and its Web sites
as marketing tools.
COMPETITION
The markets for the Company's services are highly competitive. The
principal competitive factors affecting the Company are effectiveness,
reliability, price, technological sophistication and timeliness. Numerous
specialty companies compete with the Company in each of its business lines
although no single company competes across all service lines. Many of the
Company's competitors or potential competitors have longer operating histories,
longer client relationships and significantly greater financial, management,
technological, sales, marketing and other resources than the Company. In
addition, clients could perform internally all or certain of the services
provided by the Company rather than outsourcing such services. The Company
expects that competition will increase substantially as a result of industry
consolidations and alliances, as well as through the emergence of new
competitors. The Company believes that the market for communications services
may become increasingly concentrated in the future as a result of the
acquisition and integration of smaller service providers, which are likely to
permit many of the Company's competitors to devote significantly greater
resources to the development and marketing of new competitive products and
services. There can be no assurance that existing or future competitors will not
develop or offer services that provide significant performance, price, creative
or other advantages over those offered by the Company. The Company could face
competition from companies in related communications markets which could offer
services that are similar or superior to those offered by the Company. In
addition, national and regional telecommunications providers could enter the
market with materially lower electronic delivery costs, and radio and television
networks could also begin transmitting business communications separate from
their news programming. The Company's ability to maintain and attract clients
depends to a significant degree on the quality of services provided and its
reputation among its clients and potential clients as compared to that of
competitors. There can be no assurance that the Company will not face increased
competition in the future or that such competition will not have a material
adverse effect on the Company's business, operating results and financial
condition. See 'Risk Factors.'
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EMPLOYEES
As of October 31, 1996, the Company had approximately 108 employees
including 56 in operations, 29 in sales and marketing and 23 in administration.
None of the Company's employees is represented by a labor union. Management
believes that its employee relations are good. The Company also engages on a
part-time, project-by-project basis, independent production crews at various
locations worldwide. These crews have the skills, training and experience which
the Company requires for its production services.
The Company's staff of professionals come from a variety of backgrounds in
the fields of public and investor relations, broadcast and print journalism,
production and distribution technology and media and marketing research. As a
result of downsizing in the broadcast journalism industry, the Company has been
able to attract experienced personnel from this industry. The Company seeks and
hires staff with appropriate credentials and relevant experience in the fields
of journalism, media and marketing, video and audio production, distribution,
research and analysis, and public and investor relations services. Personnel
have experience with organizations including ABC News, CBS News, the BBC, Time
Warner, Dow Jones, The New York Times, PR Newswire, Knight Ridder, United Press
International, CNBC, The Times of London and Edelman Public Relations Worldwide.
FACILITIES
The Company's New York City headquarters consist of approximately 15,000
square feet of leased space and the Company's international office located in
London, England, consists of approximately 1,500 square feet of leased space.
The Company also maintains leased offices in Washington, D.C.; Los Angeles,
California; Chicago, Illinois; Norwalk, Connecticut; Dallas, Texas and Atlanta,
Georgia. The Company believes that its facilities are adequate to meet its
current requirements.
LEGAL PROCEEDINGS
The Company is not a party to any material legal proceedings.
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MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The executive officers and directors of the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------------------------ --- ---------------------------------------------------------------
<S> <C> <C>
Laurence Moskowitz........................ 45 Chairman of the Board, President and Chief Executive Officer
J. Graeme McWhirter....................... 40 Executive Vice President, Chief Financial Officer and Assistant
Secretary
David Davis............................... 60 Senior Vice President/International, Director
Nicholas F. Peters........................ 45 Senior Vice President/Operations
Mark Manoff............................... 45 Senior Vice President/Sales
Mark Weiner............................... 41 Vice President/Research and Media Relations
Mary Buhay................................ 31 Vice President/Sales and Special Services
Harold Finelt(1)(2)(3).................... 36 Director
Donald Kimelman(2)(3)..................... 49 Director
James J. O'Neill(1)....................... 58 Director
Gerald P. Rodeen.......................... 49 Director
Theodore Wm. Tashlik(2)(3)................ 56 Director
</TABLE>
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(1) Member of the Audit Committee
(2) Member of the Compensation Committee
(3) Member of the Stock Option Committee
Laurence Moskowitz, the founder of Medialink, has served as Chairman,
President and Chief Executive Officer of the Company since its inception in
1986. He began his professional career as a reporter for United Press
International in Pittsburgh before being promoted to an editor for UPI in
Philadelphia. In 1976 Mr. Moskowitz founded Mediawire, a Philadelphia-based
regional public relations newswire which was merged into PR Newswire, a unit of
United News & Media plc, where he was Vice President until leaving to form
Medialink.
J. Graeme McWhirter, a co-founder of Medialink, has served as Chief
Financial Officer since 1986 and has been Executive Vice President since 1992.
From 1984 to 1988, Mr. McWhirter was Executive Vice President and Chief
Financial Officer of Commonwealth Realty Trust, a publicly quoted Real Estate
Investment Trust. From 1976 to 1984, Mr. McWhirter was with KPMG Peat Marwick in
London and Philadelphia as a manager.
David Davis has been a member of Medialink's Board of Directors since
September 1992 and in 1996 became Senior Vice President/International. From
September 1992 to the date of this offering, The Davis Partnership, a
partnership beneficially owned by Mr. Davis, served as a consultant to the
Company. From 1968 to 1992, Mr. Davis was employed by Edelman Public Relations
Worldwide. During such period, Mr. Davis was a manager responsible for Europe
and Asia Pacific and served as Vice Chairman at Daniel J. Edelman, Inc. From
1951 to 1968, Mr. Davis was a journalist for Britain's national Press
Association, Universal News Services (Britain's first business newswire), and
the Times of London.
Nicholas F. Peters has served as Senior Vice President/Operations since
January 1996. From April 1992 to January 1996, Mr. Peters was Vice
President/Operations and from October 1987 to April 1992, he was Executive
Editor and then Vice President/Sales & Marketing. From April 1983 to October
1987, Mr. Peters was a newswriter and producer at CBS News, working with Dan
Rather and Charles Osgood. From May 1979 to April 1983, he was News Director at
WHYY, the National Public Radio affiliate in Philadelphia. From February 1973 to
May 1979, he was a newspaper reporter with the Indianapolis Star, Raleigh (N.C.)
Times and Philadelphia Bulletin.
Mark Manoff has served as Senior Vice President/Sales since January 1996.
From April 1992 to January 1996, Mr. Manoff served as Vice President/Sales and
from February 1989 to April 1992 he served as its Vice President/Operations. Mr.
Manoff opened Medialink's Washington, D.C. office in November 1987 and served as
its general manager until February 1989. Mr. Manoff was chief political
correspondent for the Philadelphia Daily News from January 1979 to March 1983.
Mr. Manoff served as a political consultant in New York and
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Washington from March 1983 to January 1986 and was an editor in the Dow Jones
Community newspaper group.
Mark Weiner joined Medialink in September 1994 as Vice President/Research
and Media Relations. From April 1986 to September 1992, Mr. Weiner served as a
Managing Partner of PR Data. From September 1992 to September 1993, Mr. Weiner
served as Senior Vice President of Copernicus: The Marketing Investment Strategy
Group, a marketing and research consultancy. He was a columnist with McNaught
Newspaper Syndicate after working with the staff of the New York Times News
Service from 1979 to 1984.
Mary Buhay has served as Vice President/Sales and Special Services since
July 1996. Ms. Buhay joined Medialink in March 1993 as Sales Manager, in October
1993 she was promoted to New York Bureau Manager and in August 1995 she was
appointed Associate Vice President for eastern and mid-western sales. From 1988
to 1993, Ms. Buhay held sales management positions in the news and advertising
division of Radio TV Reports, a broadcast research firm owned by the Arbitron
Company.
Harold Finelt has served as a director of the Company since 1987. Mr.
Finelt joined American Research & Development, a private venture capital firm,
as an associate in 1986 and he has been a Vice President of such firm since
1990. He is a general partner of American Research & Development's venture funds
and a general partner of Hospitality Technology Funds, L.P.
Donald Kimelman has served as a director of the Company since 1987. Mr.
Kimelman has been the Pennsylvania editor of the Philadelphia Inquirer
responsible for supervising state and suburban coverage since January 1996. Mr.
Kimelman worked for the Annapolis Evening Capital and the Baltimore Sun prior to
joining The Philadelphia Inquirer. At the Inquirer, he had local, national,
foreign and investigative assignments prior to becoming an editor. From 1981 to
1983, he was a national correspondent and from 1983 to 1986 he was Moscow bureau
chief. Mr. Kimelman was deputy editor of the editorial page of The Philadelphia
Inquirer from 1987 to 1993 and became foreign editor in August 1994.
James J. O'Neill has served as a director of the Company since 1994. Since
1995 he has acted as a private financial consultant. From 1990 to 1995 Mr.
O'Neill served as a Senior Vice President of Rothschild Inc.
Gerald P. Rodeen has served as a director of the Company since 1986. Mr.
Rodeen has been a partner of the law firm of Dilks, Rodeen, Gibson & Smith Ltd.
for more than five years.
Theodore Wm. Tashlik has served as a director of the Company since 1992.
Mr. Tashlik has been a member of the law firm of Tashlik, Kreutzer & Goldwyn
P.C., which represents the Company in certain matters, for more than five years.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board has standing Audit, Compensation and Stock Option Committees. The
Audit Committee consists of Harold Finelt and James J. O'Neill and the
Compensation and Stock Option Committees consist of Harold Finelt, Donald
Kimelman and Theodore Wm. Tashlik. The Audit Committee makes recommendations
concerning the engagement of independent public accountants, reviews with the
independent public accountants the plans and results of the audit engagement,
reviews the independence of the independent public accountants, considers the
range of audit and non-audit fees and reviews the adequacy of the Company's
internal controls. The Compensation Committee is responsible for establishing
salaries, bonuses, and other compensation for the Company's officers, and the
Stock Option Committee is responsible for administering the Company's stock
option plans.
CLASSIFICATION OF BOARD OF DIRECTORS
The seven directors comprising the Board of Directors are divided into
three classes, each class with as equal a number of directors as possible.
Messrs. Rodeen and O'Neill constitute Class I and will stand for election at the
annual meeting of stockholders to be held in 1997. Messrs. Tashlik and Davis
constitute Class II and will stand for election at the annual meeting of
stockholders to be held in 1998. Messrs. Finelt, Kimelman and Moskowitz
constitute Class III and will stand for election at the annual meeting of
stockholders to be held in 1999. After their initial term following the
offering, directors in each class will serve three year terms. All directors
will serve until successors have been duly elected and qualified. Officers are
chosen by and serve at the discretion of the Board of Directors. There are no
family relationships among the directors and executive officers of the Company.
34
<PAGE>
COMPENSATION OF DIRECTORS
Directors do not receive any compensation for their services. Directors
receive reimbursements of expenses incurred in attending meetings and are
eligible to participate in the Company's Directors Stock Option Plan. The
Directors Stock Option Plan provides that each non-employee director shall
automatically be granted options to purchase 3,000 shares of Common Stock upon
his election as a director, at an exercise price equal to the fair market value
of the Common Stock. Thereafter, each non-employee director shall be granted
options to purchase 3,000 shares of Common Stock on the anniversary of the
election or appointment of such director. Through the date hereof the Company
has granted non-qualified options to purchase an aggregate of 62,400 shares of
Common Stock to the directors at an exercise price of $3.54 per share.
EXECUTIVE COMPENSATION
The following table shows compensation paid for the year ended December 31,
1995 to (i) the Chief Executive Officer and (ii) the Company's four other most
highly compensated individuals who were serving as officers on December 31, 1995
and whose salary plus bonus exceeded $100,000 for the year ended December 31,
1995 (collectively, the 'Named Executive Officers').
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
------------
ANNUAL COMPENSATION SECURITIES ALL OTHER
----------------------------- UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION SALARY ($)(1) BONUS ($)(1) OPTIONS (#) ($)(3)
- -------------------------------------------------- ------------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Laurence Moskowitz
Chairman of the Board,
President and Chief Executive Officer........... $ 132,203 $ 30,145 9,600 $1,093
J. Graeme McWhirter
Executive Vice President,
Chief Financial Officer and Assistant
Secretary....................................... 118,926 15,163 8,400 984
Nicholas F. Peters
Senior Vice President/Operations................ 100,983 15,073 7,200 937
Mark Manoff
Senior Vice President/Sales..................... 101,699 17,177 7,200 1,481
Mary Buhay
Vice President of Sales/Special Services........ 47,351 70,455(2) 3,600 538
</TABLE>
- ------------------
(1) All figures are rounded down to the nearest whole dollar.
(2) Includes sales commission of $70,255.
(3) Represents matching contributions by the Company to the Company's 401(k)
tax deferred savings plan (the '401(k) Plan') for the benefit of the
executive.
OPTION GRANTS IN LAST FISCAL YEAR
The following table contains information concerning stock option grants
made to each of the Named Executive Officers in 1995. No stock appreciation
rights were granted to these individuals during such year.
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE
INDIVIDUAL GRANTS (1) VALUE AT ASSUMED
-------------------------------------------------------- ANNUAL RATES OF
NUMBER OF PERCENT OF STOCK PRICE
SHARES TOTAL OPTIONS APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OPTION TERM(3)
OPTIONS EMPLOYEES IN PRICE PER EXPIRATION ------------------
NAME GRANTED(#) FISCAL YEAR(2) SHARE DATE 5%($) 10%($)
- ---------------------------------------- ----------- -------------- --------- ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Laurence Moskowitz...................... 9,600 12.8% $2.29 6/30/2005 $35,810 $57,021
J. Graeme McWhirter..................... 8,400 11.2 2.29 6/30/2005 31,333 49,893
Nicholas F. Peters...................... 7,200 9.6 2.29 6/30/2005 26,857 42,766
Mark Manoff............................. 7,200 9.6 2.29 6/30/2005 26,857 42,766
Mary Buhay.............................. 3,600 4.8 2.29 6/30/2005 13,429 21,383
</TABLE>
(Footnotes on next page)
35
<PAGE>
(Footnotes from previous page)
- ------------------
(1) These options have a term of 10 years, subject to earlier termination upon
certain events related to termination of employment and amendment or
termination of the Plan. Each of these options was granted at an exercise
price equal to the estimated fair market value of the underlying stock on
the date of the grant, as determined by the Board of Directors. The option
shares vested 20% on the date of grant and will vest 20% on each anniversary
date thereafter.
(2) Based on options granted for an aggregate of 75,000 shares during the year
ended December 31, 1995.
(3) The 5% and 10% assumed compounded annual rates of stock price appreciation
are mandated by rules of the Securities and Exchange Commission. There can
be no assurance provided to any executive officer or any other holder of the
Company's securities that the actual stock price appreciation over the
ten-year option term will be at the assumed 5% and 10% levels or at any
other defined level. Unless the market price of the Common Stock appreciates
over the option term, no value will be realized from the option grants made
to the Named Executive Officers.
OPTION EXERCISES AND FISCAL YEAR-END VALUES
The following table sets forth information concerning option exercises and
option holdings for the year ended December 31, 1995 with respect to each of the
Named Executive Officers. No Named Executive Officers exercised any options
during such year.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SHARES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS ON DECEMBER 31, IN-THE-MONEY OPTIONS ON
1995(#) DECEMBER 31, 1995 ($)(1)
---------------------------- ----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----------------------------------------------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Laurence Moskowitz......................................... 10,560 8,340 $22,186 $11,111
J. Graeme McWhirter........................................ 10,320 7,380 21,886 9,911
Nicholas F. Peters......................................... 8,160 6,240 17,189 8,299
Mark Manoff................................................ 8,160 6,240 17,189 8,299
Mary Buhay................................................. 720 2,880 900 3,600
</TABLE>
- ------------------
(1) Based on the fair market value of the Company's Common Stock at December 31,
1995, of $3.54 per share (as determined by the Company's Board of Directors)
less the exercise price payable for such shares.
EMPLOYMENT CONTRACTS
Each of the Company's executive officers has entered into an employment
agreement with the Company which commences on the date of the closing of this
offering.
The employment agreements with Messrs. Moskowitz and McWhirter provide for
an annual base salary of not less than $150,000 and $135,000, respectively, plus
a bonus to be awarded annually at the discretion of the Compensation Committee.
The employment agreements have a term of three years.
The employment agreements with Messrs. Peters, Manoff and Ms. Buhay provide
for annual base salaries of not less than $108,150, $108,150 and $80,000,
respectively, plus bonuses to be awarded annually at the discretion of the
Compensation Committee. In addition, Ms. Buhay is entitled to receive certain
sales commissions. The employment agreements have a term of two years.
The employment agreement with Mr. David Davis provides for an annual base
salary of $135,000 plus a bonus based upon the Company's European pre-tax
profits as compared to targeted levels. The employment agreement has a term of
two years. Prior to the effectiveness of such agreement, Mr. Davis was a partner
in a consultant to the Company. See 'Certain Transactions.'
The employment agreements entitle these executive officers to participate
in the health, insurance, pension and other benefits, if any, generally provided
to employees of the Company.
The employment agreements contain covenants prohibiting the solicitation of
employees and the solicitation of clients and vendors during certain periods and
covenants prohibiting the improper disclosure of confidential information at any
time. The employment agreements also provide that the executive officer, with
certain exceptions, until two years after the termination of his or her
employment with the Company, would not participate in any capacity in any
business activities with respect to the production of video and audio public
36
<PAGE>
relations materials for distribution to news media, the distribution of public
relations text, audio and video to news media and the general public via
satellite, cassette, wire or other means, the maintenance of data bases of media
contacts for and on behalf of clients, the analysis and written appraisal of
public relations and public affairs campaigns as determined through press
clipping review or electronic data base searches, and such other businesses as
the Company may conduct from time to time.
The Company may terminate the employment of the executive officers upon the
death or extended disability of the executive officer or for cause (as defined).
If the employment of the executive officer is terminated by the Company without
cause, the employment agreements require the Company to continue to pay the
executive officer's salary and health and insurance benefits for a period of one
year after such termination in the case of Messrs. Moskowitz and McWhirter and a
period of between three to six months in all other cases, or until the
termination of the employment agreement or the commencement of employment
elsewhere, if earlier.
STOCK OPTION PLANS
THE AMENDED AND RESTATED STOCK OPTION PLAN
The Company's Amended and Restated Stock Option Plan ('Stock Option Plan')
provides for options for a total of 670,808 shares of Common Stock authorized to
be granted under the Stock Option Plan. The Stock Option Plan provides for the
grant of options to its employees, directors and consultants in order to provide
them with financial incentives to promote the success of the Company's long term
business objectives and to increase their proprietary interest in the success of
the Company. The Stock Option Plan provides for a fifteen year expiration period
for non-qualified stock options and ten years for incentive stock options
granted thereunder and allows for the exercise of options by delivery by the
optionee of previously owned Common Stock of the Company having a fair market
value equal to the option price, or by delivery by the optionee of exercisable
options valued at the excess of the aggregate fair market value of the Common
Stock subject to such options over the aggregate exercise price of such options,
or by a combination of cash and Common Stock. During 1995, the Company granted
options to purchase 75,000 shares of Common Stock at exercise prices of $2.29
and having an expiration date of June 30, 2005. During 1995, 4,800 options were
exercised and 204,548 shares were available for future grant under the Stock
Option Plan. At September 30, 1996 there were outstanding options to purchase
569,594 shares of Common Stock under the Stock Option Plan and 63,054 options
were available for future grant. During 1996 the Company granted options to
purchase 411,494 shares at an average exercise price ranging from $3.54 to $6.46
per share.
The Stock Option Plan is administered by the Stock Option Committee of the
Board of Directors. The Committee has broad discretion in determining the
recipients of options and numerous other terms and conditions of the options.
The exercise price for shares purchased upon the exercise of non-qualified stock
options granted under the Plan is determined by the Stock Option Committee as of
the date of the grant. The exercise price of an incentive stock option must be
at least equal to the fair market value of the Common Stock on the date such
option is granted (110% of the fair market value for shareholders who, at the
time the option is granted, own more than 10% of the total combined classes of
stock of the Company or any subsidiary). No employees may be granted incentive
stock options in any year for shares having a fair market value, determined as
of the date of grant, in excess of $100,000.
Incentive stock options have a term of ten years, except options granted to
shareholders holding 10% or more of the Common Stock of the Company which have a
term of five years, in each case subject to earlier termination. Options
generally may be exercised only if the option holder remains continuously
associated with the Company or a subsidiary from the date of grant to the date
of exercise. However, options may be exercised upon termination of employment or
upon the death or disability of any employee within certain specified periods.
1996 DIRECTORS STOCK OPTION PLAN
The Company's 1996 Directors Stock Option Plan ('Directors Stock Option
Plan') provides for options for a total of 180,000 shares of Common Stock
authorized to be granted under the Directors Stock Option Plan. Pursuant to the
Directors Stock Option Plan, the Company has granted to each non-employee
director non-qualified options to purchase 2,400 shares of Common Stock for each
year that such individual was a member of the Board of Directors prior to 1996;
provided, however, that in no event shall the number of options granted for
service prior to 1996 exceed 14,400 shares. Through the date hereof the Company
has granted non-qualified
37
<PAGE>
options to purchase an aggregate of 62,400 shares of Common Stock to
non-employee directors at an exercise price of $3.54 per share.
The Directors Stock Option Plan provides for the automatic annual grant of
options to non-employee directors and is administered by the Board of Directors.
Commencing January 31, 1997, and as of each anniversary date thereafter, each
non-employee director who was in office as of the effective date of the
Directors Stock Option Plan will be automatically granted an option to purchase
3,000 shares of Common Stock. Each non-employee director who was not a director
as of the effective date of the Directors Stock Option Plan shall be granted, as
of the date of his election, options to purchase 3,000 shares of Common Stock
and shall be granted as of each anniversary date thereafter, options to purchase
an additional 3,000 shares of Common Stock.
To remain eligible, a non-employee director must continue to be a member of
the Board of Directors. Options granted to directors for services prior to 1996
are all vested and exercisable; each option granted thereafter is exercisable in
increments of 33 1/3% per year commencing on the first anniversary date of the
date of grant. The exercise price for all options may not be less than the fair
market value of the Common Stock on the date of grant. Options under the
Directors Stock Option Plan have a term of up to 15 years and may be exercised
for limited periods after a person ceases to serve as a director.
401(k) PLAN
All Company employees are eligible to participate in the 401(k) Plan and
may make elective salary reduction contributions to the 401(k) Plan of up to 15%
of their annual compensation, subject to a dollar limit established by law. In
addition, the Company may provide, in its discretion, a matching contribution
equal to a percentage of the employee's contribution. Participants are fully
vested at all times in the amounts they contribute to the 401(k) Plan. Only
participants who have completed a year of service during the 401(k) Plan year
and are actively employed on the last day of such year are vested in the
Company's matching contributions for such year. The Company's contributions are
tax deductible to the Company. Benefits under the 401(k) Plan generally become
payable upon retirement, death or disability.
38
<PAGE>
CERTAIN TRANSACTIONS
Pursuant to a consulting agreement, dated March 1, 1994, between the
Company and The Davis Partnership, a partnership which is beneficially owned by
Mr. Davis, served as a consultant to the Company. Mr. David Davis, on behalf of
The Davis Partnership, provides services to the Company based in its London
office, including planning, marketing, staffing and operations, and developing
strategic partnerships in the United Kingdom and Europe. For such services, the
Davis Partnership received $93,611 and $76,385 for the fiscal years ended
December 31, 1995 and December 31, 1994, respectively. Under the terms of the
consulting agreement, the Company is obligated to pay to The Davis Partnership
an annual consulting fee equal to pounds 54,000 and a bonus determined by a
formula contained in the consulting agreement. The bonus is to be paid 50% in
cash and 50% in shares of Common Stock. As part of the bonus under the
consulting agreement, Mr. Davis received 2,521 shares of Common Stock in March
1996. The term of this Consulting Agreement was automatically renewed on January
1, 1996 for a twelve month period. Upon the completion of this offering, the
Consulting Agreement will be terminated and Mr. Davis, in his individual
capacity, will enter into an employment agreement with the Company. The Company
does not contemplate having any future relations with The Davis Partnership. See
'Management.'
The Company believes that material affiliated transactions between the
Company and its directors, officers, principal stockholders or any affiliates
thereof have been, and will be in the future, on terms no less favorable than
could be obtained from unaffiliated third parties.
39
<PAGE>
PRINCIPAL AND SELLING STOCKHOLDERS
The following table sets forth certain information as of the date hereof
regarding the beneficial ownership of the Company's Common Stock prior to and
upon completion of the offering, assuming no exercise of the Underwriters'
over-allotment option, (i) by each of the Company's directors and Named
Executive Officers, (ii) by all directors and Named Executive Officers as a
group, (iii) by each person who is known by the Company to own beneficially more
than 5% of the Company's Common Stock, and (iv) by each of the Selling
Stockholders.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED PRIOR TO PERCENTAGE OF
DIRECTORS, OFFERING(1) NUMBER OF SHARES
NAMED EXECUTIVE OFFICERS -------------------- SHARES SUBJECT BENEFICIALLY OWNED
AND 5% STOCKHOLDERS NUMBER PERCENT TO OVER-ALLOTMENT AFTER OFFERING(2)
- ------------------------------------------------------ --------- ------- ----------------- ------------------
<S> <C> <C> <C> <C>
American Research & Development II, L.P.(3) .......... 595,070 19.5% 11.8%
c/o American Research & Development Corp.
45 Milk Street
Boston, MA 02109
New York State Business Venture Partnership .......... 440,506 14.5 8.7
c/o Rothschild Inc.
1251 Avenue of the Americas
51st Floor
New York, NY 10020
Laurence Moskowitz(4) ................................ 411,474 13.4 8.1
c/o Medialink Worldwide Incorporated
708 Third Avenue
New York, NY 10017
Harriet Himmel Gilman ................................ 270,667 8.9 5.4
c/o The Chase Manhattan Private Bank
(Florida), N.A.
218 Royal Palm Way
Palm Beach, FL 33480
Henry L. Kimelman(5) ................................. 171,111 5.6 3.4
P.O. Box 301709
St. Thomas, Virgin Islands 00803
J. Graeme McWhirter(6)................................ 98,519 3.2 1.9
Nicholas F. Peters(7)................................. 20,960 * *
Mark Manoff(8)........................................ 39,644 1.3 *
Mary Buhay(9)......................................... 2,800 * *
Harold Finelt(10) .................................... 609,470 19.9 12.0
c/o American Research & Development Corp.
45 Milk Street
Boston, MA 02109
Donald Kimelman(11)................................... 56,400 1.8 1.1
James J. O'Neill(9)................................... 4,800 * *
Gerald P. Rodeen(12).................................. 97,722 3.2 1.9
Theodore Wm. Tashlik(12).............................. 46,221 1.5 *
David Davis(13)....................................... 14,281 * *
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
All Named Executive Officers and Directors
as a Group (11 Persons)............................. 1,402,291 43.5 26.9
</TABLE>
(Footnotes on next page)
40
<PAGE>
(Footnotes from previous page)
- ------------------
<TABLE>
<C> <S>
* Represents less than 1% of the outstanding shares of Common Stock including shares issuable to such
beneficial owner under options which are presently exercisable or will become exercisable within 60 days.
(1) Unless otherwise indicated, each person has sole voting and investment power with respect to the shares
shown as beneficially owned by such person.
(2) If the over-allotment option is exercised in full, the percentage of shares beneficially owned after
offering of , and will be reduced to , and , respectively.
(3) Francis J. Hughes, Jr. and Harold Finelt are the individual general partners of ARD Partners USA, L.P., a
general partner of ARD Master, L.P., the sole general partner of American Research & Development II, L.P.,
and as such may be deemed to beneficially own all shares held by American Research & Development II, L.P.
Each of such general partners disclaims beneficial ownership of a portion of such shares.
(4) Includes 31,620 shares of Common Stock which may be acquired upon the exercise of stock options which are
presently exercisable or will become exercisable within 60 days.
(5) Does not include an aggregate of 144,000 shares of Common Stock held by the Charlotte Kimelman Charitable
Remainder Trust, Henry L. Kimelman Charitable Remainder Trust, Henry L. Kimelman Family Foundation and SDJ
Family Trust as to which Mr. Kimelman disclaims beneficial ownership.
(6) Includes 27,939 shares of Common Stock which may be acquired upon the exercise of stock options which are
presently exercisable or will become exercisable within 60 days. Also includes 6,000 shares owned by the
McWhirter Family LLC which may be deemed to be beneficially owned by Mr. McWhirter.
(7) Includes 17,960 shares of Common Stock which may be acquired upon the exercise of stock options which are
presently exercisable or will become exercisable within 60 days.
(8) Includes 18,020 shares of Common Stock which may be acquired upon the exercise of stock options which are
presently exercisable or will become exercisable within 60 days.
(9) Represents shares of Common Stock which may be acquired upon the exercise of stock options which are
presently exercisable or will become exercisable within 60 days.
(10) Includes 595,070 shares of Common Stock held by American Research Development II, L.P. Francis J. Hughes,
Jr. and Harold Finelt are the individual general partners of ARD Partners USA, L.P., a general partner of
ARD Master, L.P., the sole general partner of American Research & Development II, L.P., and as such may be
deemed to beneficially own all shares held by American Research & Development II, L.P. Each of such general
partners disclaims beneficial ownership of a portion of such shares. Also includes 14,400 shares of Common
Stock which may be acquired upon the exercise of stock options which are presently exercisable or will
become exercisable within 60 days.
(11) Includes 14,400 shares of Common Stock which may be acquired upon the exercise of stock options which are
presently exercisable or will become exercisable within 60 days. Also includes 42,000 shares of Common Stock
held by SDJ Family Trust as to which Mr. Kimelman has voting power and beneficial ownership of 33% of such
shares.
(12) Includes 14,400 shares of Common Stock which may be acquired upon the exercise of stock options which are
presently exercisable or will become exercisable within 60 days.
(13) Includes 11,760 shares of Common Stock which may be acquired upon the exercise of stock options which are
presently exercisable or will become exercisable within 60 days.
</TABLE>
41
<PAGE>
DESCRIPTION OF CAPITAL STOCK
COMMON STOCK
The Amended and Restated Certificate of Incorporation of the Company
authorizes the issuance of up to 15,000,000 shares of Common Stock, par value of
$.01 per share. Upon completion of the offering, there will be 5,047,933 shares
of Common Stock issued and outstanding. As of the date of this Prospectus, there
are 936,264 shares of Common Stock outstanding held of record by 70
stockholders. An additional 2,111,669 shares of Common Stock will be issued upon
the completion of this offering as a result of the Preferred Stock Conversions.
To date, there has been no public market for the Common Stock.
Holders of Common Stock ('Holders') are entitled to one vote per share for
each share held of record on all matters submitted to a vote of the
stockholders. Holders are entitled to receive ratably such dividends as may be
declared by the Board on the Common Stock out of funds legally available
therefor. The Holders have no preemptive rights, cumulative voting rights, or
rights to convert shares of Common Stock into any other securities, and are not
subject to future calls or assessments by the Company. All shares of Common
Stock of the Company issued in connection with the offering will be fully paid
and nonassessable.
PREFERRED STOCK
The Amended and Restated Certificate of Incorporation authorizes the Board
of Directors to issue up to an aggregate of 1,000,000 shares of preferred stock
(the 'Preferred Stock'), to establish one or more series of Preferred Stock and
to determine, with respect to each such series, the preferences, rights and
other terms thereof. The authorized class of Preferred Stock may be issued in
series from time to time with such designations, relative rights, priorities,
preferences, qualifications, limitations and restrictions thereof as the Board
of Director determines. The rights, priorities, preferences, qualifications,
limitations and restrictions of different series of Preferred Stock may differ
with respect to dividend rates, amounts payable on liquidation, voting rights,
conversion rights, redemption provisions, sinking fund provisions and other
matters. The Board of Directors may authorize the issuance of Preferred Stock
which ranks senior to the Common Stock with respect to the payment of dividends
and the distribution of assets on liquidation. In addition, the Board of
Directors is authorized to fix the limitations and restrictions, if any, upon
the payment of dividends on Common Stock to be effective while any shares of
Preferred Stock are outstanding. The Board of Directors, without stockholder
approval, can issue Preferred Stock with voting and conversion rights which
could adversely affect the voting power of the holders of Common Stock. Upon
completion of the offering, no shares of Preferred Stock will be outstanding and
the Board of Directors has no present plans to issue any such shares.
In accordance with their terms, the outstanding shares of the Series A,
Series B and Series C Preferred Stock will, upon the closing of this offering,
convert into an aggregate of 2,111,669 shares of Common Stock.
STOCK MARKET LISTING
Application has been made to have the Common Stock approved for quotation
on the Nasdaq National Market under the symbol 'MDLK.'
REGISTRATION RIGHTS
The holders of 2,111,669 shares of Common Stock are entitled to certain
rights with respect to the registration of such shares under the Securities Act.
Under the terms of agreements between the Company and these holders, if the
Company proposes to register any of its securities under the Securities Act,
either for its own account or the account of other security holders exercising
registration rights, such holders are entitled to notice of such registration
and are entitled to include at the Company's expense shares of such Common Stock
therein; provided, among other conditions, that the underwriters of any offering
have the right to limit the number of such shares included in such registration.
In addition, such holders may require the Company, on not more than two
occasions and only in the event the aggregate offering price of such shares is
greater than $5 million, to file a registration statement under the Securities
Act at the Company's expense with respect to such shares, and the Company is
required to use its best efforts to effect such registration, subject to certain
conditions and limitations.
42
<PAGE>
Further, these holders may require the Company to register all or a portion of
their shares with registration rights on Form S-3, when the Company is eligible
to use such form, subject to certain conditions and limitations.
CERTAIN ANTITAKEOVER PROVISIONS
Preferred Stock. The Amended and Restated Certificate of Incorporation
authorizes the Board of Directors to establish one or more series of Preferred
Stock and to determine, with respect to any series of Preferred Stock, the
preferences, rights and other terms of such series. See 'Preferred Stock.' The
Company believes that the ability of the Board of Directors to issue one or more
series of Preferred Stock will provide the Company with increased flexibility in
structuring possible future financings and acquisitions and in meeting other
corporate needs. The authorized shares of Preferred Stock, as well as shares of
Common Stock, would be available for issuance without further action by the
Company's stockholders, unless such action is required by applicable law or the
rules of any stock exchange or automated quotation system on which the Company's
securities may be listed or traded. Although the Board of Directors has no
present intention to do so, it could, in the future, issue a series of Preferred
Stock which, due to its terms, could impede a merger, tender offer or other
transaction that some, or a majority, of the Company's stockholders might
believe to be in their best interests.
Section 203 of the Delaware General Corporation Law. The Company is
subject to the provisions of Section 203 of the Delaware General Corporation Law
(the 'Antitakeover Law') regulating corporate takeovers. The Antitakeover Law
prevents certain Delaware corporations, including those whose securities are
listed on the Nasdaq National Market, from engaging, under certain
circumstances, in a 'business combination' (which includes a merger or sale of
more than 10% of the corporation's assets) with any 'interested stockholder' (a
stockholder who acquired 15% or more of the corporation's outstanding voting
stock without the prior approval of the corporation's Board of Directors) for
three years following the date that such stockholder became an 'interested
stockholder.' A Delaware corporation may 'opt out' of the Antitakeover Law with
an express provision in its original certificate of incorporation, or an express
provision in its certificate of incorporation or by-laws resulting from a
stockholders' amendment approved by at least a majority of the outstanding
voting shares. The Company has not 'opted out' of the application of the
Antitakeover Law.
Classified Board of Directors. The Company's Amended and Restated
Certificate of Incorporation provides for the Board of Directors to be divided
into three classes of directors serving staggered three-year terms. As a result,
approximately one-third of the Board of Directors will be elected each year.
Classification of the Board of Directors expands the time required to change the
composition of a majority of directors and may tend to discourage a takeover bid
for the Company. Moreover, under the General Corporation Law of the State of
Delaware, in the case of a corporation having a classified Board of Directors,
the stockholders may remove a director only for cause. The provisions of
Delaware law, when coupled with provisions of the Company's Amended and Restated
Certificate of Incorporation and Amended and Restated By-Laws authorizing only
the Board of Directors to fill vacant directorships, will preclude stockholders
of the Company from removing incumbent directors without cause and
simultaneously gaining control of the Board of Directors by filling the
vacancies with their own nominees.
Certain Other Provisions. The Company's Amended and Restated Certificate
of Incorporation does not provide for cumulative voting in the election of
directors. The Company's Amended and Restated By-Laws provide that stockholders
must own fifty percent of the Common Stock to be permitted to call a special
meeting of the stockholders.
Reference is made to the full text of the Company's Amended and Restated
Certificate of Incorporation and its Amended and Restated By-Laws and the
foregoing statute for their entire terms. The partial summary contained above is
not intended to be complete. See 'Risk Factors--Concentration of Stock
Ownership; Potential Issuance of Preferred Stock; Provisions with Potential
Anti-Takeover Effects.'
LIMITATION OF LIABILITY AND INDEMNIFICATION MATTERS
The Company's Amended and Restated Certificate of Incorporation limits the
liability of directors for monetary damages to the maximum extent permitted by
Delaware law. Such limitation of liability has no effect on the availability of
equitable remedies, such as injunctive relief or rescission.
43
<PAGE>
The Company's Amended and Restated By-Laws provide that the Company will
indemnify its directors, officers, employees and agents (including persons
serving at the request of the Company as a director, officer, employee or agent
of another organization, including service with respect to an employee benefit
plan and any former director, officer, employee or agent, or other such person)
against certain liabilities to the fullest extent permitted by Delaware law. The
Company is also empowered under its Amended and Restated By-Laws to purchase
insurance on behalf of any person whom it is required or permitted to indemnify.
The Company has entered into indemnification agreements with each of its current
directors and officers, which provide for indemnification of, and advancement of
expenses to, such persons to the greatest extent permitted by Delaware law,
including by reason of action or inaction occurring in the past and
circumstances in which indemnification and advancement of expenses to such
persons is permitted or is discretionary to the greatest extent permitted by
Delaware law. These provisions may have the practical effect in certain cases of
eliminating the ability of stockholders to collect monetary damages from
directors. The Company believes that theses provisions will assist the Company
in attracting and retaining qualified individuals to serve as directors or
officers. It is the opinion of the staff of the Securities and Exchange
Commission that indemnification provisions such as those contained in these
agreements have no effect on a director's or officer's liability under the
federal securities laws.
At the present time, there is no pending litigation or proceeding involving
a director, officer, employee or other agent of the Company in which
indemnification would be required or permitted. The Company is not aware of any
threatened litigation or proceeding which may result in a claim for such
indemnification.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the Common Stock will be ChaseMellon
Shareholder Services, 450 West 33rd Street, New York, New York 10001.
44
<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE
Sales of a substantial number of shares of Common Stock in the public
market following this offering or the prospect of such sales could adversely
affect the market price of the Common Stock prevailing from time to time.
Upon completion of this offering, the Company will have 5,047,933 shares of
Common Stock outstanding. Of these shares, 2,000,000 shares of Common Stock
offered hereby will be freely tradable without restriction unless purchased by
'affiliates' of the Company as that term is defined under Rule 144 promulgated
under the Securities Act of 1933. The remaining shares will be 'restricted
securities' as that term is defined in Rule 144 under the Securities Act and may
not be sold other than pursuant to an effective registration statement under the
Securities Act or pursuant to an exemption from such registration requirement.
Subject to the contractual restrictions discussed below, 3,021,412 shares of
Common Stock will be eligible for sale under Rule 144 from the date of this
Prospectus. Restricted securities may be sold in the public market only if
registered or if they qualify for an exemption from registration under Rule 144,
144(k) or 701 promulgated under the Securities Act, which rules are summarized
below.
Certain of the Company's stockholders are subject to lock-up agreements
under which they have agreed not to sell or otherwise dispose of any shares of
Common Stock without the prior written consent of Dean Witter Reynolds Inc. for
a period of 180 days after the date of this Prospectus whether now owned or
hereafter acquired by such stockholders or with respect to which such
stockholders have or hereafter acquire the power of disposition or enter into
any swap or any other agreement or any transaction that transfers, in whole or
in part, directly or indirectly, the economic consequence of ownership of the
Common Stock or any Common Stock deemed to be beneficially owned by such
stockholders, whether any such swap or transaction is to be settled by delivery
of Common Stock or other securities, in cash or otherwise. Such stockholders
also have agreed not to exercise their registration rights for 180 days after
the date of this Prospectus and have granted Dean Witter Reynolds Inc. the right
of first refusal to be engaged as the lead manager of the underwritten public
offering of their shares if registration rights are exercised following the
expiration of the lock-up period until the date that is 12 months from the date
of this Prospectus. The Company has consented to any such engagement of Dean
Witter Reynolds Inc. The Company has agreed not to issue or sell any shares of
Common Stock, without the prior written consent of Dean Witter Reynolds Inc. for
a period of 180 days after the date of this Prospectus other than the issuance
of shares upon the exercise of stock options. Upon the expiration of the 180-day
lock-up period, certain of the shares of Common Stock subject to the lock-up
agreements will become eligible for sale in the public market subject to the
conditions of Rule 144. See 'Underwriting.'
In general, under Rule 144 as currently in effect, an affiliate of the
Company, or person (or persons whose shares are aggregated) who has beneficially
owned restricted securities for at least two years but less than three years,
will be entitled to sell in any three-month period a number of shares that does
not exceed the greater of (i) 1% of the then outstanding shares of Common Stock
(5,047,933 shares immediately after this offering) or (ii) the average weekly
trading volume during the four calendar weeks immediately preceding the date on
which notice of the sale is filed with the Securities and Exchange Commission.
Sales pursuant to Rule 144 are subject to certain requirements relating to
manner of sale, notice and availability of current public information about the
Company. A person (or persons) whose shares are aggregated who is not deemed to
have been an affiliate of the Company at any time during the 90 days immediately
preceding the sale and who has beneficially owned his or her shares for a least
three years is entitled to sell such shares pursuant to Rule 144(k) without
regard to the limitations described above. In general, under Rule 701 under the
Securities Act as currently in effect, any employee, consultant or advisor of
the Company who purchases shares from the Company in connection with a
compensatory stock or option plan or other written agreement related to
compensation is eligible to resell such shares 90 days after the effective date
of this offering in reliance on Rule 144, but without compliance with certain
restrictions contained in Rule 144. Rule 701 is available for stockholders of
the Company as to all shares issued pursuant to stock option exercises occurring
on or after May 20, 1988 (the effective date of the Rule) of options granted
prior to the offering.
The Company intends to file a Registration Statement on Form S-8 to
register the 812,648 shares of Common Stock issuable upon the exercise of
options granted under the Stock Option Plan and the Directors Stock Option Plan.
Following the filing of the Form S-8, shares of Common Stock issued upon the
exercise of options granted under the Stock Option Plan and the Directors Stock
Option Plan will be available for sale in the public market upon vesting of such
options, subject to Rule 144 volume limitations applicable to affiliates.
45
<PAGE>
UNDERWRITING
The Underwriters named below, for whom Dean Witter Reynolds Inc. and Wheat,
First Securities, Inc. are acting as representatives (the 'Representatives'),
have severally agreed, subject to the terms and conditions of an underwriting
agreement (the 'Underwriting Agreement'), to purchase from the Company the
number of shares of Common Stock set forth opposite their respective names
below:
<TABLE>
<CAPTION>
UNDERWRITER NUMBER OF SHARES
- ---------------------------------------------------------------------------- ----------------
<S> <C>
Dean Witter Reynolds Inc....................................................
Wheat, First Securities, Inc................................................
----------------
Total..................................................................
----------------
----------------
</TABLE>
The Underwriting Agreement provides that the obligations of the several
Underwriters thereunder are subject to approval of certain legal matters by
counsel and to various other conditions. The nature of the Underwriters'
obligation is such that they must purchase all of the shares of Common Stock
offered to the public (other than those covered by the over-allotment option
described below), if any of such shares are purchased.
Prior to the offering, there has been no public market for the shares of
Common Stock. The initial public offering price for the shares of Common Stock
was determined through agreement among the Company and the Representatives.
Among the factors considered in making such determination were the prevailing
market conditions and general economic conditions, the market prices of
securities and certain financial and operating information of publicly traded
companies which the Company and the Representatives believed to be comparable to
the Company, the earnings and certain other financial and operating information
of the Company in recent periods, the future prospects of the Company and its
industry in general and other factors deemed relevant.
The Company has been advised by the Underwriters that the Underwriters
propose to offer the shares of Common Stock directly to the public at the
initial public offering price set forth on the cover page of this Prospectus and
to certain dealers (who may include Underwriters) at the public offering price
less a concession not to exceed $ per share. Such dealers may reallow a
concession not to exceed $ per share in sales to other dealers. After the
initial public offering, the public offering price and concessions and
reallowances to dealers may be changed by the Underwriters.
The Selling Stockholders have granted the Underwriters an option
exercisable for 30 days from the date of this Prospectus to purchase up to
300,000 additional shares of Common Stock at the initial public offering price
less the underwriting discounts and commissions, solely to cover
over-allotments. To the extent such option is exercised, each Underwriter will
be obligated, subject to certain conditions, to purchase approximately the same
percentage of such additional shares of Common Stock as the number of shares of
Common Stock set forth opposite each Underwriter's name in the preceding table
bears to the total number of shares of Common Stock listed in such table.
The Company and the Selling Stockholders have agreed to indemnify the
several Underwriters against certain liabilities, including liabilities under
the Securities Act, or to contribute to payments the Underwriters may be
required to make in respect thereof.
The Company, the Company's officers and directors, and certain holders of
Common Stock have agreed not to offer, sell, contract to sell or otherwise
dispose of any shares of Common Stock or any securities convertible into or
exercisable or exchangeable for Common Stock or any right to acquire Common
Stock for a period of 180 days after the date of this Prospectus without the
prior written consent (which consent may be given without notice to the
Company's stockholders or other public announcement) of Dean Witter Reynolds
Inc. Dean Witter Reynolds Inc. has advised the Company that it has no present
intention of releasing any of the Company's
46
<PAGE>
stockholders from such lock-up agreements until the expiration of such 180-day
period. See 'Shares Eligible for Future Sale.'
The Representatives have advised the Company and the Selling Stockholders
that the Underwriters do not intend to confirm sales to any account over which
they exercise discretionary authority.
The Company, each of its directors and executive officers and certain other
stockholders of the Company have agreed with the Underwriters that they will not
offer, sell or contract to sell, or otherwise dispose of or enter into any
agreement to sell, directly or indirectly, any securities convertible into, or
exchangeable or exercisable for, shares of Common Stock for a period of 180 days
after the date of this Prospectus without the prior written consent of Dean
Witter Reynolds Inc. See 'Shares Eligible for Future Sale.'
At the Company's request, the Representatives have reserved up to
shares of Common Stock for sale at the initial public offering price to the
Company's employees and other persons having certain relationships with the
Company. The number of shares of Common Stock available for sale to the general
public will be reduced to the extent these persons purchase such reserved
shares. Any reserved shares not purchased will be offered by the Underwriters to
the general public on the same terms as the other shares offered hereby.
LEGAL MATTERS
Certain legal matters with respect to the legality of the securities
offered hereby will be passed upon for the Company by Tashlik, Kreutzer &
Goldwyn P.C., Great Neck, New York. Theodore Wm. Tashlik, a member of Tashlik,
Kreutzer & Goldwyn P.C. and a director of the Company, beneficially owns 31,821
shares of the Company's Common Stock and stock options to purchase 14,400 shares
of Common Stock. Certain legal matters will be passed upon for the Underwriters
by Willkie Farr & Gallagher, New York, New York.
EXPERTS
The financial statements of the Company as of December 31, 1994 and 1995
and for each of the years in the three-year period ended December 31, 1995 and
the financial statements of PR Data Systems, Inc. as of December 31, 1994 and
1995 and for the years then ended have been included herein and in the
registration statement in reliance upon the reports of KPMG Peat Marwick LLP,
independent certified public accountants, appearing elsewhere herein, and upon
the authority of said firm as experts in accounting and auditing.
ADDITIONAL INFORMATION
The Company has filed with the Securities and Exchange Commission (the
'Commission') in Washington, D.C., a Registration Statement on Form S-1 under
the Securities Act, relating to the Common Stock offered hereby. This
Prospectus, which constitutes a part of the Registration Statement, does not
contain all of the information set forth in the Registration Statement, certain
items of which are contained in exhibits and schedules to the Registration
Statement as permitted by the rules and regulations of the Commission.
Statements contained in this Prospectus as to the contents of any contract,
agreement or any other document referred to herein are not necessarily complete.
Where such contract, agreement or other document is an exhibit to the
Registration Statement, reference is made to such exhibit for a more complete
description of the matter involved, each such statement being qualified in all
respects by such reference. For further information regarding the Company and
the securities offered hereby, reference is made to the Registration Statement
and to the exhibits filed as a part thereof, which may be inspected at the
office of the Commission without charge or copies of which may be obtained
therefrom upon request to the Commission and payment of the prescribed fee.
A copy of the Registration Statement and the exhibits thereto may be
inspected without charge at the public reference facilities maintained by the
Commission's Headquarters at 450 Fifth Street, Room 1024, N.W., Judiciary Plaza,
Washington, D.C. 20549, and at the Commission's Regional Offices at Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661, and 7
World Trade Center, 13th Floor, New York, New York 10048, and copies of all or
any part of the Registration Statement may be obtained from such offices upon
the payment of the fees prescribed by the Commission. The Commission maintains a
Web site that contains reports, proxy and information statements and other
information regarding the Company. The address of such Web site is
http://www.sec.gov.
The Company intends to furnish to its stockholders annual reports
containing financial statements audited by independent auditors and quarterly
reports containing unaudited financial data for the first three quarters of each
fiscal year.
47
<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Historical
- -----------------------------------------------------------------------------------------------------------
Medialink Worldwide Incorporated
Independent Auditors' Report............................................................................... F-2
Balance Sheets............................................................................................. F-3
Statements of Operations................................................................................... F-4
Statements of Stockholders' Equity......................................................................... F-5
Statements of Cash Flows................................................................................... F-6
Notes to Financial Statements.............................................................................. F-7
PR Data Systems, Inc.
Independent Auditors' Report............................................................................... F-14
Balance Sheets............................................................................................. F-15
Statements of Operations and Accumulated Deficit........................................................... F-16
Statements of Cash Flows................................................................................... F-17
Notes to Financial Statements.............................................................................. F-18
Pro Forma
- -----------------------------------------------------------------------------------------------------------
Medialink Worldwide Incorporated
Unaudited Pro Forma Condensed Combined Financial Statements................................................ F-22
Unaudited Pro Forma Condensed Combined Statement of Operations for the nine months ended September 30,
1996..................................................................................................... F-23
Unaudited Pro Forma Condensed Combined Statement of Operations for the year ended December 31, 1995........ F-24
Notes to Unaudited Pro Forma Condensed Combined Financial Statements....................................... F-25
</TABLE>
All schedules have been omitted because the required information either is
not applicable or is shown in the financial statements or notes thereto.
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Medialink Worldwide Incorporated:
We have audited the accompanying balance sheets of Medialink Worldwide
Incorporated as of December 31, 1994 and 1995, and September 30, 1996, and the
related statements of operations, stockholders' equity and cash flows for each
of the years in the three-year period ended December 31, 1995 and the nine month
period ended September 30, 1996. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Medialink Worldwide
Incorporated as of December 31, 1994 and 1995, and September 30, 1996, and the
results of its operations and its cash flows for each of the years in the
three-year period ended December 31, 1995, and the nine month period ended
September 30, 1996, in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
November 15, 1996
New York, New York
F-2
<PAGE>
MEDIALINK WORLDWIDE INCORPORATED
BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------
1994 1995
----------- ----------- SEPTEMBER 30,
-------------
1996
-------------
<S> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents................................... $ 262,414 $ 306,678 $ 606,232
Accounts receivable, less allowance for doubtful accounts of
$87,584, $161,367 and $245,004 in 1994, 1995 and 1996,
respectively (Note 2)..................................... 1,335,339 2,418,029 3,185,477
Prepaid expenses and other current assets................... 167,317 262,492 158,957
Deferred tax assets--current portion (Note 5)............... 333,697 617,314 319,746
----------- ----------- -------------
Total current assets...................................... 2,098,767 3,604,513 4,270,412
----------- ----------- -------------
Property and Equipment:
Furniture and fixtures...................................... 143,717 184,292 367,528
Office equipment............................................ 621,919 604,599 788,124
Leasehold improvements...................................... 101,969 174,621 299,720
----------- ----------- -------------
867,605 963,512 1,455,372
Less accumulated depreciation and amortization.............. 547,667 419,132 566,387
----------- ----------- -------------
Net property and equipment................................ 319,938 544,380 888,985
Due from officers............................................. 6,532 6,532 4,883
Goodwill net of amortization (Note 10)........................ -- -- 668,888
Deferred tax assets (Note 5).................................. 714,286 134,389 45,502
Other intangible assets--net (Note 10)........................ -- -- 312,066
Other assets.................................................. 97,676 97,518 360,220
----------- ----------- -------------
Total assets.............................................. $ 3,237,199 $ 4,387,332 $ 6,550,956
----------- ----------- -------------
----------- ----------- -------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current portion of obligations under capital leases (Note
3)........................................................ $ -- $ -- $ 11,699
Current portion of long-term debt (Note 10)................. -- -- 37,143
Current portion of covenant not to compete (Note 10)........ -- -- 60,000
Accounts payable............................................ 1,065,072 1,586,561 2,171,245
Accrued expenses............................................ 113,203 229,009 408,559
Income taxes payable........................................ 33,945 67,132 82,241
----------- ----------- -------------
Total current liabilities................................. 1,212,220 1,882,702 2,770,887
Commitment under covenant not to compete, excluding current
portion (Note 10)........................................... -- -- 252,066
Deferred rent payable......................................... 8,433 79,878 40,696
Obligation under capital leases, excluding current portion
(Note 3).................................................... -- -- 30,742
Long-term debt, excluding current portion (Note 10)........... -- -- 283,950
----------- ----------- -------------
Total liabilities......................................... 1,220,653 1,962,580 3,378,341
----------- ----------- -------------
Stockholders' Equity (Note 4):
Series A, 10% cumulative convertible preferred stock, $1.50
par value. Authorized; issued and outstanding 655,417
shares.................................................... 983,126 983,126 983,126
Series B, 10% cumulative convertible preferred stock, $1.35
par value. Authorized; issued and outstanding 475,185
shares.................................................... 641,500 641,500 641,500
Series C, 10% cumulative convertible preferred stock, $2.75
par value. Authorized 645,455 shares; issued and
outstanding 629,130 shares................................ 1,730,107 1,730,107 1,730,107
Common stock, $.01 par value. Authorized
15,000,000 shares; issued and outstanding 901,943,
906,743 and 936,264 shares in 1994, 1995 and
1996, respectively........................................ 9,019 9,067 9,363
Additional paid-in capital.................................. 346,572 352,524 520,165
Accumulated deficit......................................... (1,671,117) (1,289,882) (711,012)
Equity adjustment for foreign currency translation.......... (22,661) (1,690) (634)
----------- ----------- -------------
Total stockholders' equity................................ 2,016,546 2,424,752 3,172,615
----------- ----------- -------------
Total liabilities and stockholders' equity................ $ 3,237,199 $ 4,387,332 $ 6,550,956
----------- ----------- -------------
----------- ----------- -------------
</TABLE>
See accompanying notes to financial statements.
F-3
<PAGE>
MEDIALINK WORLDWIDE INCORPORATED
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEARS ENDED DECEMBER 31, SEPTEMBER 30,
----------------------------------------- --------------------------
1993 1994 1995 1995 1996
----------- ----------- ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenues.............................. $ 6,064,569 $ 7,547,761 $10,624,680 $ 7,382,316 $11,158,239
Direct costs (Note 7)................. 2,629,114 3,038,503 4,553,349 3,282,667 4,604,668
----------- ----------- ----------- ----------- -----------
Gross profit..................... 3,435,455 4,509,258 6,071,331 4,099,649 6,553,571
General and administrative expenses
(Note 3)............................ 3,650,569 4,068,786 5,373,307 3,796,548 5,548,433
----------- ----------- ----------- ----------- -----------
Operating (loss) income.......... (215,114) 440,472 698,024 303,101 1,005,138
Other income (expense):
Interest expense.................... (12,332) (6,205) -- -- (14,674)
Interest and other income........... 9,259 7,062 15,273 11,939 19,144
----------- ----------- ----------- ----------- -----------
(Loss) income before income
taxes.......................... (218,187) 441,329 713,297 315,040 1,009,608
Income tax expense (benefit) (Note
5).................................. 13,222 (1,022,963) 332,062 148,707 430,738
----------- ----------- ----------- ----------- -----------
Net (loss) income................ $ (231,409) $ 1,464,292 $ 381,235 $ 166,333 $ 578,870
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Net (loss) income applicable to common
stock............................... $ (566,882) $ 1,128,819 $ 45,762 $ (85,272) $ 327,265
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Pro forma net income per common
and common equivalent
share--unaudited (Note 9)...... $ 0.11 $ 0.05 $ 0.17
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
See accompanying notes to financial statements.
F-4
<PAGE>
MEDIALINK WORLDWIDE INCORPORATED
STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
SERIES A, 10% SERIES B, 10% SERIES C, 10%
CUMULATIVE CUMULATIVE CUMULATIVE
CONVERTIBLE CONVERTIBLE CONVERTIBLE
COMMON STOCK PREFERRED STOCK PREFERRED STOCK PREFERRED STOCK
-------------------- -------------------- -------------------- ---------------------
NO. OF NO. OF NO. OF NO. OF
SHARES PAR VALUE SHARES PAR VALUE SHARES PAR VALUE SHARES PAR VALUE
------- --------- ------- --------- ------- --------- ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31,
1992.................... 879,650 $ 8,796 655,417 $ 983,126 475,185 $ 641,500 629,130 $1,730,107
Issuance of common stock.. 19,293 193 -- -- -- -- -- --
Stock options exercised... 3,000 30 -- -- -- -- -- --
Net loss.................. -- -- -- -- -- -- -- --
Translation adjustment.... -- -- -- -- -- -- -- --
------- --------- ------- --------- ------- --------- ------- ----------
Balance at December 31,
1993.................... 901,943 9,019 655,417 983,126 475,185 641,500 629,130 1,730,107
Net income................ -- -- -- -- -- -- -- --
Translation adjustment.... -- -- -- -- -- -- -- --
------- --------- ------- --------- ------- --------- ------- ----------
Balance at December 31,
1994.................... 901,943 9,019 655,417 983,126 475,185 641,500 629,130 1,730,107
Stock options exercised... 4,800 48 -- -- -- -- -- --
Net income................ -- -- -- -- -- -- -- --
Translation adjustment.... -- -- -- -- -- -- -- --
------- --------- ------- --------- ------- --------- ------- ----------
Balance at December 31,
1995.................... 906,743 9,067 655,417 983,126 475,185 641,500 629,130 1,730,107
Issuance of common
stock................... 26,521 266 -- -- -- -- -- --
Stock options exercised... 3,000 30 -- -- -- -- -- --
Net income................ -- -- -- -- -- -- -- --
Translation adjustment.... -- -- -- -- -- -- -- --
------- --------- ------- --------- ------- --------- ------- ----------
Balance at September 30,
1996.................... 936,264 $ 9,363 655,417 $ 983,126 475,185 $ 641,500 629,130 $1,730,107
------- --------- ------- --------- ------- --------- ------- ----------
------- --------- ------- --------- ------- --------- ------- ----------
<CAPTION>
EQUITY
ADJUSTMENT
FOR
ADDITIONAL FOREIGN TOTAL
PAID-IN ACCUMULATED CURRENCY STOCKHOLDERS'
CAPITAL DEFICIT TRANSLATION EQUITY
---------- ----------- ---------- -------------
<S> <C> <C> <C> <C>
Balance at December 31,
1992.................... $318,928 $(2,904,000) $(28,131) $ 750,326
Issuance of common stock.. 23,924 -- -- 24,117
Stock options exercised... 3,720 -- -- 3,750
Net loss.................. -- (231,409) -- (231,409)
Translation adjustment.... -- -- 10,176 10,176
---------- ----------- ---------- -------------
Balance at December 31,
1993.................... 346,572 (3,135,409) (17,955) 556,960
Net income................ -- 1,464,292 -- 1,464,292
Translation adjustment.... -- -- (4,706) (4,706)
---------- ----------- ---------- -------------
Balance at December 31,
1994.................... 346,572 (1,671,117) (22,661) 2,016,546
Stock options exercised... 5,952 -- -- 6,000
Net income................ -- 381,235 -- 381,235
Translation adjustment.... -- -- 20,971 20,971
---------- ----------- ---------- -------------
Balance at December 31,
1995.................... 352,524 (1,289,882) (1,690) 2,424,752
Issuance of common
stock................... 163,921 -- -- 164,187
Stock options exercised... 3,720 -- -- 3,750
Net income................ -- 578,870 -- 578,870
Translation adjustment.... -- -- 1,056 1,056
---------- ----------- ---------- -------------
Balance at September 30,
1996.................... $520,165 $ (711,012) $ (634) $ 3,172,615
---------- ----------- ---------- -------------
---------- ----------- ---------- -------------
</TABLE>
See accompanying notes to financial statements.
F-5
<PAGE>
MEDIALINK WORLDWIDE INCORPORATED
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
NINE MONTHS
YEARS ENDED DECEMBER 31, ENDED SEPTEMBER 30,
-------------------------------------- ----------------------
1993 1994 1995 1995 1996
---------- ---------- ---------- -------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income................................ $ (231,409) $1,464,292 $ 381,235 $166,333 $ 578,870
Adjustments to reconcile net (loss) income to net
cash (used in) provided by operating activities:
Depreciation and amortization.................... 117,547 127,377 148,509 106,057 160,339
Provision for bad debts.......................... 58,105 5,601 74,701 53,896 83,638
Equity adjustment for foreign currency
translation.................................... 10,176 (4,706) 20,971 39,483 1,056
Loss on disposal of assets....................... -- -- 22,489 22,489 --
Deferred income taxes............................ -- (1,047,983) 296,280 130,816 386,455
Deferred rent payable............................ (9,666) (5,951) 71,445 364 (39,182)
Increase in accounts receivable.................. (211,067) (375,383) (1,154,422) (514,295) (562,371)
Decrease in due from officers.................... 3,000 -- -- -- 1,649
(Increase) decrease in prepaid expenses and other
current assets................................. (67,696) (41,993) (94,713) (66,794) 105,068
Increase in accounts payable and accrued
expenses....................................... 226,491 261,133 635,325 344,385 450,589
(Decrease) increase in income taxes payable...... (3,199) 23,313 33,187 31,781 15,109
---------- ---------- ---------- -------- ----------
Total adjustments.............................. 123,691 (1,058,592) 53,772 148,182 602,350
---------- ---------- ---------- -------- ----------
Net cash (used in) provided by operating
activities................................... (107,718) 405,700 435,007 314,515 1,181,220
---------- ---------- ---------- -------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net cash used in acquisition of PR Data Systems,
Inc............................................ -- -- -- -- (119,801)
Additions to property and equipment.............. (62,420) (127,407) (394,496) (346,072) (412,188)
Increase in other assets......................... (4,049) (60,117) (2,247) (14,188) (8,381)
---------- ---------- ---------- -------- ----------
Net cash used in investing activities.......... (66,469) (187,524) (396,743) (360,260) (540,370)
---------- ---------- ---------- -------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Deferred offering costs.......................... -- -- -- -- (253,425)
Proceeds from exercise of options................ -- -- 6,000 -- 3,750
Proceeds from issuance of common stock........... 27,867 -- -- -- 9,186
Principal payments under covenant not to
compete........................................ -- -- -- -- (4,970)
Borrowings under note payable--bank.............. 250,000 -- -- -- --
Principal payments under capital lease
obligations.................................... -- -- -- -- (1,950)
Repayments of note payable--bank................. (70,000) (180,000) -- -- (84,980)
Repayment of long-term debt...................... -- -- -- -- (8,907)
---------- ---------- ---------- -------- ----------
Net cash provided by (used in) financing
activities................................... 207,867 (180,000) 6,000 -- (341,296)
---------- ---------- ---------- -------- ----------
Net increase in cash and cash equivalents...... 33,680 38,176 44,264 (45,745) 299,554
CASH AND CASH EQUIVALENTS at beginning of
period....................................... 190,558 224,238 262,414 262,414 306,678
---------- ---------- ---------- -------- ----------
CASH AND CASH EQUIVALENTS at end of period..... $ 224,238 $ 262,414 $ 306,678 $216,669 $ 606,232
---------- ---------- ---------- -------- ----------
---------- ---------- ---------- -------- ----------
</TABLE>
See accompanying notes to financial statements.
F-6
<PAGE>
MEDIALINK WORLDWIDE INCORPORATED
NOTES TO FINANCIAL STATEMENTS
INFORMATION RELATING TO THE NINE MONTHS ENDED SEPTEMBER 30, 1995 IS UNAUDITED.
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Description of Business
Medialink Worldwide Incorporated (the 'Company') is a Delaware corporation
incorporated on September 24, 1986. In August 1996 the Company changed its name
from Video Broadcasting Corporation. The Company is a worldwide provider of
video and audio production and distribution services for business and other
organizations that seek to communicate their news through television, radio and
other media. Since July 18, 1996, as a result of the acquisition of
substantially all of the assets and liabilities of PR Data Systems Inc. ('PR
Data'--see note 10), the Company has expanded its research capabilities and
added print news release distribution services. The Company has seven offices in
the United States and one office in the United Kingdom ('UK').
(b) Revenue Recognition
Fees earned from the distribution and monitoring of video news releases and
the distribution of printed news releases are recognized in the period that the
release is distributed. Fees earned for satellite media tours and producing
video news releases and live broadcasts are recognized in the period that
services are performed.
(c) Property and Equipment
Property and equipment are stated at cost. Depreciation on property and
equipment is computed on the straight-line method over the estimated useful
lives of the assets. Leasehold improvements are amortized over the shorter of
the lease term or estimated useful life of the asset.
(d) Deferred Rent Payable
In accordance with Statement of Financial Accounting Standards No. 13,
'Accounting for Leases,' the Company recognizes rental costs on a straight-line
basis over the fixed term of the lease period. Deferred rent payable represented
the excess of rental expense recorded over rental payments to date.
(e) Cash and Cash Equivalents
The Company considers all highly liquid debt instruments with original
maturities of three months or less to be cash equivalents. At December 31, 1994
and 1995 and September 30, 1996, cash equivalents consisted of amounts on
deposit in money market accounts amounting to $186,776, $109,159 and $55,294,
respectively.
(f) Foreign Currency Translation
Foreign operations' financial statements are translated to U.S. dollars in
accordance with Statement of Financial Accounting Standards No. 52, 'Foreign
Currency Translation.' Assets and liabilities of the foreign bureau are
translated into U.S. dollars at year-end rates of exchange. Statements of
operations accounts are translated at the average exchange rate prevailing
during the year. Resulting translation adjustments are reported as a separate
component of stockholders' equity.
(g) Income Taxes
The Company accounts for income taxes under the provisions of Statement of
Financial Accounting Standards No. 109, 'Accounting for Income Taxes' (Statement
109). Under the asset and liability method of Statement 109, deferred tax assets
and liabilities are recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of existing assets
and liabilities and their respective tax bases and operating loss and tax credit
carryforwards. Deferred tax assets and liabilities are measured using enacted
tax rates expected to apply to taxable income in the years in which those
temporary differences are
F-7
<PAGE>
MEDIALINK WORLDWIDE INCORPORATED
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
INFORMATION RELATING TO THE NINE MONTHS ENDED SEPTEMBER 30, 1995 IS UNAUDITED.
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
expected to be recovered or settled. Under Statement 109, the effect on deferred
tax assets and liabilities of a change in tax rates is recognized in income in
the period that includes the enactment date.
(h) Use of Estimates
Management of the Company has made a number of estimates and assumptions
relating to the reporting of assets and liabilities and the disclosure of
contingent assets and liabilities to prepare these financial statements in
conformity with generally accepted accounting principles. Actual results could
differ from those estimates.
(i) Fair Value of Financial Instruments
The carrying values of financial instruments approximate their estimated
fair value because of the short maturity of these instruments.
(j) Unaudited Interim Financial Statements
In the opinion of management, the unaudited statements of operations and
cash flows for the nine months ended September 30, 1995 have been prepared on
the same basis as the audited financial statements contained herein and include
all adjustments, consisting only of normal recurring adjustments, necessary for
a fair presentation of the financial information set forth therein. The results
of operations for the nine months ended September 30, 1996, are not necessarily
indicative of the results that may be expected for the year end December 31,
1996.
(2) NOTE PAYABLE--BANK
In March 1995, the Company entered into a credit facility with a bank.
Under this agreement, the Company can borrow up to the lesser of $500,000 or 70%
of the eligible accounts receivable, as defined in the agreement, through
February 28, 1997. The interest rate for the bank borrowings is the prime rate
plus 1.00% and is payable monthly. The loan is secured by the Company's accounts
receivable and all other assets of the Company. No borrowings were outstanding
under this credit facility at December 31, 1994 and 1995 or September 30, 1996.
The loan agreement requires the Company to meet certain financial ratio tests
and prohibits the payment of cash dividends.
Borrowings in 1993 and 1994 under a previous credit facility with another
bank bore interest at the prime rate plus 1 3/4%.
(3) LEASE COMMITMENTS
The Company has several noncancelable operating leases for office space
expiring at various dates through 2004. As of September 30, 1996, future minimum
lease payments under noncancelable operating leases are as follows:
YEAR ENDING DECEMBER 31, AMOUNT
- -------------------------------------------------------------- ----------
1996.......................................................... $ 134,377
1997.......................................................... 541,076
1998.......................................................... 544,645
1999.......................................................... 512,414
2000.......................................................... 463,762
2001.......................................................... 430,681
Thereafter.................................................... 126,379
----------
$1,264,379
==========
Total rent expense for operating leases in the years ended December 31,
1993, 1994 and 1995 and the nine months ended September 30, 1996 was $362,993,
$368,171, $326,916 and $471,391, respectively.
F-8
<PAGE>
MEDIALINK WORLDWIDE INCORPORATED
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
INFORMATION RELATING TO THE NINE MONTHS ENDED SEPTEMBER 30, 1995 IS UNAUDITED.
(3) LEASE COMMITMENTS--(CONTINUED)
The Company leases copier equipment under capital leases. Minimum future lease
payments under capital leases at September 30, 1996 are:
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31,
- --------------------------
<S> <C>
1996........................................................... $ 4,988
1997........................................................... 14,963
1998........................................................... 14,963
1999........................................................... 17,919
2000........................................................... 351
--------
Total minimum lease payments................................... 53,184
Less amount representing interest.............................. (10,743)
--------
Present value of net minimum lease payments.................... 42,441
Less current portion........................................... (11,699)
--------
$ 30,742
--------
--------
</TABLE>
(4) STOCKHOLDERS' EQUITY
Stock Split
In July 1996, the Company effected a 1.2 for one stock split. In addition,
the Company restated its Certificate of Incorporation to increase its authorized
capitalization from 5,000,000 shares of common stock, par value $.01 per share
('Common Stock'), to 15,000,000 shares. These changes resulted in an increase in
Common Stock and corresponding decrease in additional paid-in capital. All per
share data and references to numbers of shares have been restated for all
periods presented to reflect these changes.
Preferred Shares
Annual dividends on the Series A, 10% cumulative convertible preferred
stock, Series B, 10% cumulative convertible preferred stock and Series C, 10%
cumulative convertible preferred stock are cumulative, commencing July 1, 1989
for Series A and Series B and October 31, 1989 for Series C, until declared and
paid at the discretion of the Board of Directors. At December 31, 1995,
dividends in arrears on the Series A, Series B and Series C cumulative
convertible preferred stock amounted to approximately $639,000, $417,000 and
$1,017,000, respectively.
Each share of Series A, Series B and Series C cumulative convertible
preferred stock is convertible at any time at the option of the stockholder into
1.2 shares of Common Stock and will convert into 1.2 shares of Common Stock upon
the closing of an initial public offering pursuant to which the Company receives
net cash proceeds of at least $5 million, and in which the public price per
share is at least $5.50.
Stock Option Plan for Employees
The Company has a stock option plan (the 'Stock Option Plan') that provides
for the granting of options to employees to purchase shares of the Common Stock.
The Company has reserved 490,808 shares for the exercise of these options. In
January 1996, the Company increased the shares reserved for grant by 180,000.
The option price under the Plan shall not be less than 85% of the fair market
value of such share of Common Stock on the date of the grant as determined by
the Company. Under the Stock Option Plan, options issued are exercisable at such
times as determined by the Company but no later than ten years after the date of
the grant.
Options to purchase 251,100 shares of Common Stock at $1.25 and $2.29 per
share were granted and are outstanding at December 31, 1995. Twenty percent of
the options become exercisable each July 1, commencing in the year the options
are granted. The options expire six years from the date of grant. However, upon
the
F-9
<PAGE>
MEDIALINK WORLDWIDE INCORPORATED
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
INFORMATION RELATING TO THE NINE MONTHS ENDED SEPTEMBER 30, 1995 IS UNAUDITED.
(4) STOCKHOLDERS' EQUITY--(CONTINUED)
termination of employment of any person, the options will expire 90 days after
the termination date, but no later than the specified expiration date.
In February and July of 1996, 387,494 and 24,000 options were granted at
exercise prices of $3.54 and $6.46, respectively, with a five-year term pursuant
to the Stock Option Plan.
Activity under the Stock Option Plan is summarized as follows:
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
----------------------------- -------------
1993 1994 1995 1996
------- ------- ------- -------------
<S> <C> <C> <C> <C>
Outstanding options at January 1........................ 277,500 262,500 213,600 251,100
Granted--option prices ranging from $1.25 per share in
1993, $1.25 per share in 1994, $2.29 per share in 1995
and $3.54 and $6.46 per share in 1996................. -- 14,400 75,000 411,494
Exercised............................................... (3,000) -- (4,800) (3,000)
Cancelled and expired................................... (12,000) (63,300) (32,700) (90,000)
------- ------- ------- -------
Outstanding (in 1996, exercisable at $1.25 to $6.46 per
share) at end of period............................... 262,500 213,600 251,100 569,594
------- ------- ------- -------
------- ------- ------- -------
Exercisable (in 1996, exercisable at $1.25 to $6.46 per
share) at end of period............................... 201,480 208,740 214,140 189,639
------- ------- ------- -------
------- ------- ------- -------
Available for grant at end of period.................... 17,948 66,848 204,548 63,054
------- ------- ------- -------
------- ------- ------- -------
</TABLE>
Stock Option Plan for Directors
In February 1996, the Company established a stock option plan (the
'Directors Stock Option Plan') that provides for the granting of options to
non-employee members of the Company's Board of Directors to purchase shares of
the Common Stock. The Company has reserved 180,000 shares for the exercise of
these options. The option price under the Directors Stock Option Plan shall not
be less than the fair market value of such share of Common Stock on the date of
the grant as determined by the Company. Under the Directors Stock Option Plan,
options issued are exercisable at such times as determined by the Company but no
later than fifteen years after the date of the grant.
Options to purchase 62,400 shares of Common Stock at $3.54 per share were
granted to non-employee directors in February 1996 for services rendered prior
to 1996. No individual directors' grant exceeded 14,400 shares. The options
expire fifteen years from the date of grant. However, upon the termination of
board membership of any person, the options will expire 90 days after the
termination date, but no later than the specified expiration date. These
directors will be eligible for additional grants of 3,000 shares per year in
future years if they continue to serve the Company in that capacity. Such future
grants would become exercisable over a three-year period.
Common Stock Warrants
In 1989, the Company issued warrants to purchase 10,110 shares of its
Common Stock at $2.50 per share. Such warrants expired in 1994.
Deferred Compensation Plan
The Company has a 401(k) plan (the '401(k) Plan') covering all eligible
employees. The 401(k) Plan is currently funded by voluntary salary deductions by
plan members and is limited to the maximum amount that can be deducted for
Federal income tax purposes. The Company is not required to make contributions
to the 401(k) Plan; however, employer contributions may be made on a
discretionary basis. For the three years ended
F-10
<PAGE>
MEDIALINK WORLDWIDE INCORPORATED
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
INFORMATION RELATING TO THE NINE MONTHS ENDED SEPTEMBER 30, 1995 IS UNAUDITED.
(4) STOCKHOLDERS' EQUITY--(CONTINUED)
December 31, 1995, the Company's expenses in connection with the 401(k) Plan
were $16,186, $20,320 and $27,233 for 1993, 1994 and 1995, respectively, and
$44,366 for the nine months ended September 30, 1996 which is reflected in
general and administrative expenses in the accompanying financial statements.
(5) INCOME TAXES
The provision for income taxes expense (benefit) consists of the following:
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
----------------------------------- -------------
1993 1994 1995 1996
-------- ----------- -------- -------------
<S> <C> <C> <C> <C>
Current:
Federal......................................... $ -- $ 12,393 $ 20,000 $ 22,617
State and local................................. 13,222 12,627 15,782 21,666
-------- ----------- -------- ---------
13,222 25,020 35,782 44,283
Deferred:
Federal......................................... -- (783,341) 221,462 299,226
State and local................................. -- (264,642) 74,818 87,229
-------- ----------- -------- ---------
-- (1,047,983) 296,280 386,455
-------- ----------- -------- ---------
$ 13,222 $(1,022,963) $332,062 $ 430,738
-------- ----------- -------- ---------
-------- ----------- -------- ---------
</TABLE>
Income tax (benefit) expense differs from the amount computed by
multiplying the statutory rate of 34% to income before income taxes due to the
following:
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
----------------------------------- -------------
1993 1994 1995 1996
-------- ----------- -------- -------------
<S> <C> <C> <C> <C>
Income tax (benefit) expense at statutory rate.... $(74,184) $ 150,052 $242,929 $ 343,267
Increase (reduction) in income taxes resulting
from:
State and local income taxes, net of Federal
income tax benefit........................... 13,222 40,717 59,796 71,871
Nondeductible expenses.......................... -- 16,159 9,337 13,306
Increase (reduction) in valuation allowance..... 74,184 (1,242,284) -- --
Other........................................... -- 12,393 20,000 2,294
-------- ----------- -------- ---------
$ 13,222 $(1,022,963) $332,062 $ 430,738
-------- ----------- -------- ---------
-------- ----------- -------- ---------
</TABLE>
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets at December 31, 1994 and 1995 and September
30, 1996 are presented below:
<TABLE>
<CAPTION>
1994 1995 1996
---------- -------- --------
<S> <C> <C> <C>
Deferred tax assets:
Accounts receivable, principally due to allowance for doubtful
accounts.................................................... $ 35,857 $ 46,114 $ 82,886
Leasehold improvements, principally due to differences in
amortization................................................ 12,202 4,457 11,390
Equipment, principally due to differences in depreciation...... 26,063 33,441 34,112
Net operating loss carryforward................................ 973,861 667,691 214,243
Other.......................................................... -- -- 22,617
---------- -------- --------
Net deferred tax asset........................................... $1,047,983 $751,703 $365,248
---------- -------- --------
---------- -------- --------
</TABLE>
F-11
<PAGE>
MEDIALINK WORLDWIDE INCORPORATED
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
INFORMATION RELATING TO THE NINE MONTHS ENDED SEPTEMBER 30, 1995 IS UNAUDITED.
Upon the adoption of Statement 109 in 1993, because of its operating losses
and the level of deferred tax assets, the Company could not conclude that it was
more likely than not that its deferred tax assets would be realized and,
consequently, set up a valuation allowance. At December 31, 1994, based on its
earnings for the year and expectations of future earnings, the Company
determined that it was more likely than not that its deferred tax assets would
be realized and, consequently, reversed the remaining valuation allowance.
(6) FOREIGN OPERATIONS
Selected financial information regarding the Company's UK office as of and
for the years ended December 31, 1993, 1994 and 1995 and for the nine months
ended September 30, 1996 is as follows:
<TABLE>
<CAPTION>
1993 1994 1995 1996
--------- --------- ---------- ----------
<S> <C> <C> <C> <C>
Total assets...................................... $ 393,878 $ 560,295 $ 940,086
--------- ---------- ----------
--------- ---------- ----------
Total liabilities................................. $ 156,233 $ 327,818 $ 500,965
--------- ---------- ----------
--------- ---------- ----------
Revenues.......................................... $ 360,074 $ 834,749 $1,484,670 $1,880,619
--------- --------- ---------- ----------
--------- --------- ---------- ----------
Operating gain (loss)............................. $(281,081) $(103,341) $ (21,606) $ 82,620
--------- --------- ---------- ----------
--------- --------- ---------- ----------
</TABLE>
(7) COMMITMENTS
On April 30, 1990, the Company entered into an agreement for communications
services. The agreement, which was amended and restated on November 1, 1993,
was extended until November 1, 1999. The agreement provides for guaranteed
minimum payments on October 31, 1996 which currently approximate $516,000 per
year. Charges included in direct costs on the accompanying statement of
operations under this agreement amounted to $516,344, $497,617 and $526,516
for the years ended December 31, 1993, 1994 and 1995, respectively, and
$383,133 for the nine months ended September 30, 1996.
(8) SUPPLEMENTAL CASH FLOWS INFORMATION
Cash paid for interest and income taxes during the years ended December 31,
1993, 1994 and 1995 and the nine months ended September 30, 1996 was as follows:
1993 1994 1995 1996
------- ------ ------ -------
Interest........................... $12,332 $6,205 $ -- $14,674
Income taxes....................... $16,421 $2,868 $3,733 $28,615
In connection with the acquisition of the operations of PR Data Systems,
Inc. ('PR Data') in July 1996, the Company issued shares of Common Stock to the
sellers valued at $155,000 and assumed certain of the obligations and
liabilities of PR Data as at the closing date with the exception that such
obligations and liabilities assumed could not exceed the book value of assets
acquired by more than $372,000.
(9) UNAUDITED PRO FORMA INFORMATION
Pro forma net income per common and common equivalent share is calculated
using the weighted average number of shares of Common Stock outstanding during
the period, plus Common Stock issuable pursuant to options granted under the
Stock Option Plan issued at prices below the assumed initial public offering
price per share during the twelve-month period immediately preceding the initial
filing date of the Company's Registration Statement for its public offering,
assuming such Common Stock was outstanding for all periods presented. In
addition, shares of Common Stock issuable upon the conversion of all shares of
Series A, Series B and Series C Preferred Stock into shares of Common Stock are
included in the calculation as if they were outstanding for all periods
presented. The weighted average number of common equivalent shares outstanding
during the period ended December 31, 1995 and September 30, 1996, after
reflecting a 1 for 1.2 stock split effective July 31, 1996 was 3,453,109 and
3,485,011, respectively.
F-12
<PAGE>
MEDIALINK WORLDWIDE INCORPORATED
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
INFORMATION RELATING TO THE NINE MONTHS ENDED SEPTEMBER 30, 1995 IS UNAUDITED.
(10) ACQUISITION OF PR DATA SYSTEMS, INC.
On July 18, 1996, the company entered into an asset purchase agreement (the
'Agreement') with PR Data and its stockholders. Under the terms of the
Agreement, the Company acquired all of PR Data's tangible and intangible assets
for cash of $120,000 and through the issuance of 24,000 shares of the Company's
Common Stock valued at $155,000. The Company also assumed certain of the
obligations and liabilities of PR Data as at the closing date with the exception
that such obligations and liabilities assumed could not exceed the book value of
assets acquired by more than $372,000.
The Company also entered into non-compete agreements with the principal
officers and stockholders of PR Data. These agreements are for periods of five
years and provide for quarterly payments aggregating $410,000 during this
period. The present value of each of the non-compete asset and the related
payment obligation at September 30, 1996 is $312,066, respectively.
The Company has accounted for this acquisition as a purchase. The
information for the nine months ended September 30, 1996 contained in the
accompanying 1996 financial statements reflect the operating results of PR Data
subsequent to July 18, 1996.
The purchase price exceeds the fair value of the assets acquired and
assumed by approximately $677,000 which has been allocated to goodwill. In
addition, the non-compete agreements have been recorded as an intangible asset
at the present value of the related payments, calculated using the Company's
estimated rate at the time of 9.5%. Goodwill is being amortized over 15 years
and the non-compete agreements are being amortized over five years.
Immediately following the acquisition, the Company converted certain of the
liabilities of PR Data that it assumed, which were payable to a former
stockholder of PR Data, into a note in the amount of $330,000. This note bears
interest at 8% and is payable in equal installments over seven years. Aggregate
principal payments under this note after September 30, 1996 are as follows:
PERIOD AMOUNT
------ --------
Period ending December 31,
1996..................................................... $ 9,085
1997..................................................... 38,193
1998..................................................... 41,341
1999..................................................... 44,749
2000..................................................... 48,437
2001..................................................... 52,430
2002..................................................... 56,752
2003..................................................... 30,106
--------
Total principal payments................................. 321,093
less current portion..................................... (37,143)
--------
$283,950
--------
--------
F-13
<PAGE>
INDEPENDENT AUDITORS' REPORT
THE BOARD OF DIRECTORS
PR DATA SYSTEMS, INC.:
We have audited the accompanying balance sheets of PR Data Systems, Inc. as
of December 31, 1994 and 1995, and the related statements of operations and
accumulated deficit and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of PR Data Systems, Inc. as of
December 31, 1994 and 1995, and the results of its operations and its cash flows
for the years then ended in conformity with generally accepeted accounting
principles.
KPMG Peat Marwick LLP
New York, New York
August 22, 1996
F-14
<PAGE>
PR DATA SYSTEMS, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
-------------------- -----------
1994 1995 1996
-------- -------- -----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current Assets:
Cash....................................................................... $ 5,083 $ 4,008 $ --
Accounts receivable net of allowance for doubtful accounts of $25,000 and
$18,000 in 1994 and 1995, respectively.................................. 219,838 248,229 252,320
Prepaid expenses........................................................... 3,104 2,707 1,284
-------- -------- -----------
Total current assets.................................................... 228,025 254,944 253,604
Property and equipment, net of accumulated depreciation of $238,027 and
$216,540 in 1994 and 1995, respectively (Note 2)........................... 54,892 90,301 77,576
Security deposits............................................................ 6,035 7,731 7,731
Deferred loan costs.......................................................... 7,044 5,166 4,227
-------- -------- -----------
Total assets............................................................ $295,996 $358,142 $ 343,138
-------- -------- -----------
-------- -------- -----------
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities:
Current portion of obligations under capital leases (Note 3)............... 8,307 11,699 11,699
Current portion of long-term debt (Note 4)................................. 136,455 104,442 87,513
Loans payable (Note 5)..................................................... -- 11,500 --
Accounts payable........................................................... 136,361 133,160 129,717
Amounts payable to related parties (Note 5):
Accrued interest........................................................ 49,785 76,910 90,107
Accrued rent............................................................ 30,922 43,470 27,962
Accrued salaries........................................................... 29,390 30,535 32,598
Other accrued expenses..................................................... 1,488 235 1,888
Deferred revenue........................................................... 51,806 54,056 --
Income taxes payable....................................................... 895 615 349
-------- -------- -----------
Total current liabilities............................................... 445,409 466,622 381,833
Obligations under capital leases, excluding current portion (Note 3)......... 36,390 38,541 31,876
Long-term debt, payable to related parties (Note 4).......................... 287,362 293,107 353,607
-------- -------- -----------
Total liabilities....................................................... 769,161 798,270 767,316
-------- -------- -----------
Commitments (Notes 3 and 5)
Stockholders' Deficit:
Common stock, no par value. Authorized, issued and outstanding 200
shares.................................................................. 17,000 17,000 17,000
Accumulated deficit........................................................ (490,165) (457,128) (441,178)
-------- -------- -----------
Total stockholders' deficit............................................. (473,165) (440,128) (424,178)
-------- -------- -----------
Total liabilities and stockholders' deficit............................. $295,996 $358,142 $ 343,138
-------- -------- -----------
-------- -------- -----------
</TABLE>
See accompanying notes to financial statements.
F-15
<PAGE>
PR DATA SYSTEMS, INC.
STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT
<TABLE>
<CAPTION>
YEARS ENDED SIX MONTHS
DECEMBER 31, ENDED JUNE 30,
------------------------ ----------------------
1994 1995 1995 1996
---------- ---------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C>
Revenues................................ $1,669,783 $1,691,603 $ 808,557 $ 843,788
Direct expenses......................... 344,961 263,133 141,947 116,006
---------- ---------- --------- ---------
Gross profit....................... 1,324,822 1,428,470 666,610 727,782
Selling, general and administrative
expenses.............................. 1,377,169 1,354,019 657,611 681,763
---------- ---------- --------- ---------
Operating (loss) income............ (52,347) 74,451 8,999 46,019
Interest expense........................ (38,401) (40,799) (33,410) (29,486)
---------- ---------- --------- ---------
(Loss) income before income
taxes............................ (90,748) 33,652 (24,411) 16,533
Income taxes (Note 6)................... 624 615 365 583
---------- ---------- --------- ---------
Net (loss) income.................. (91,372) 33,037 (24,776) 15,950
Accumulated deficit at beginning of
period................................ (398,793) (490,165) (490,165) (457,128)
---------- ---------- --------- ---------
Accumulated deficit at end of period.... $ (490,165) $ (457,128) $(514,941) $(441,178)
---------- ---------- --------- ---------
---------- ---------- --------- ---------
</TABLE>
See accompanying notes to financial statements.
F-16
<PAGE>
PR DATA SYSTEMS, INC.
STATEMENTS OF CASH FLOWS
INFORMATION AS OF JUNE 30, 1996 AND INFORMATION RELATING TO THE
SIX MONTHS ENDED JUNE 30, 1996 AND 1995 IS UNAUDITED.
<TABLE>
<CAPTION>
YEARS ENDED SIX MONTHS
DECEMBER 31, ENDED JUNE 30,
-------------------- --------------------
1994 1995 1995 1996
-------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net (loss) income................................................ $(91,372) $ 33,037 $(24,776) $ 15,950
Adjustments to reconcile net (loss) income to net cash
provided by operating activities:
Depreciation and amortization................................. 10,118 17,840 10,620 13,664
Provision for doubtful accounts............................... 22,000 21,007 9,667 658
Loss on disposition of equipment and vehicles................. 675 1,143 1,143 --
Decrease (increase) in accounts receivable.................... 5,523 (49,398) 77,798 (4,749)
Decrease in prepaid expenses.................................. 745 397 1,561 1,423
(Decrease) increase in accounts payable....................... (11,309) (3,201) 4,975 (3,443)
Increase in amounts payable to related parties................ 31,925 39,673 (57,556) (2,311)
(Decrease) increase in accrued salaries....................... (888) 1,145 (169) 2,063
Decrease in other accrued expenses............................ (2,060) (1,253) 13,512 1,653
Increase in deferred revenue.................................. 51,806 2,250 (5,534) (54,056)
Increase (decrease) in income taxes payable................... 645 (280) (530) (266)
Increase in security deposits................................. (4,237) (1,696) (1,696) --
-------- -------- -------- --------
Net cash provided by operating activities................ 13,571 60,664 29,015 (29,414)
-------- -------- -------- --------
Cash flows from investing activities:
Capital expenditures for property and equipment.................. -- (35,554) (13,684) --
-------- -------- -------- --------
Net cash used in investing activities.................... -- (35,554) (13,684) --
-------- -------- -------- --------
Cash flows from financing activities:
Proceeds of borrowings from stockholders......................... 71,410 45,240 745 60,500
Proceeds of other borrowings..................................... 24,900 63,000 -- --
Principal payments on borrowings from stockholders............... (56,400) (39,495) -- --
Principal payments on loan from Small Business Administration.... (29,760) (32,013) (15,592) (16,929)
Principal payments under capital lease obligations............... (693) (11,417) (5,567) (6,665)
Principal payments on other borrowings........................... (24,900) (51,500) -- (11,500)
-------- -------- -------- --------
Net cash used in financing activities.................... (15,443) (26,185) (20,414) 25,406
-------- -------- -------- --------
Net decrease in cash..................................... (1,872) (1,075) (5,083) (4,008)
Cash at beginning of period........................................ 6,955 5,083 5,083 4,008
-------- -------- -------- --------
Cash at end of period.............................................. $ 5,083 $ 4,008 $ -- $ --
-------- -------- -------- --------
-------- -------- -------- --------
Supplemental schedule of noncash investing and financing
activities:
Acquisition of equipment under capital lease.................. $ 45,389 $ 16,960
-------- --------
-------- --------
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest...................................................... $ 15,298 $ 29,343
-------- --------
-------- --------
Income taxes.................................................. $ 250 $ 250
-------- --------
-------- --------
</TABLE>
See accompanying notes to financial statements.
F-17
<PAGE>
PR DATA SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
INFORMATION AS OF JUNE 30, 1996 AND INFORMATION RELATING TO THE
SIX MONTHS ENDED JUNE 30, 1996 AND 1995 IS UNAUDITED.
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Description of Business
PR Data Systems, Inc. ('PR Data') is engaged in public relations services,
including the distribution of news releases to media and reporting on the
effectiveness of such releases in meeting the customers' requirements.
(b) Revenue Recognition
Fees earned for the distribution of news releases are recognized when the
services are performed and billed. PR Data typically enters into annual
agreements with customers under which it reports on the effectiveness of news
releases. Fees earned under these arrangements are recognized ratably over the
term of the agreement.
(c) Property and Equipment
Property and equipment are stated at cost. Depreciation is calculated
principally on a straight-line basis over the estimated useful lives of the
assets. Equipment held under capital leases is amortized on a straight-line
basis over the lease term. Costs paid to a consultant to develop certain
databases used by PR Data have been deferred and are being amortized over five
years.
(d) Deferred Loan Costs
Costs incurred in obtaining a loan from the Small Business Administration
have been deferred and are being amortized over the term of the loan (six
years).
(e) Income Taxes
Income taxes are accounted for under the asset and liability method.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases and operating loss and tax credit carryforwards. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date. PR Data makes an allowance for deferred tax assets to the extent
that management considers that some portion or all of such assets will not be
realized.
(f) Financial Instruments
The fair value of financial instruments at December 31, 1994 and 1995
approximates cost due to the relatively short maturities of such instruments.
(g) Use of Estimates
Management of PR Data has made a number of estimates and assumptions
relating to the reporting of assets and liabilities and the disclosure of
contingent assets and liabilities to prepare these financial statements in
conformity with generally accepted accounting principles. Actual results could
differ from those estimates.
(h) Unaudited Interim Financial Statements
In the opinion of management, the unaudited interim balance sheet as of
June 30, 1996 and the related statements of operations and accumulated deficit
and cash flows for the six months ended June 30, 1995 and 1996 have been
prepared on the same basis as the audited financial statements contained herein
and include all adjustments, consisting only of normal recurring adjustments,
necessary for a fair presentation of the financial information set forth
therein. The results of operations for the six months ended June 30, 1996 are
not necessarily indicative of the results that may be expected for the year end
December 31, 1996.
F-18
<PAGE>
PR DATA SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
INFORMATION AS OF JUNE 30, 1996 AND INFORMATION RELATING TO THE
SIX MONTHS ENDED JUNE 30, 1996 AND 1995 IS UNAUDITED.
(2) PROPERTY AND EQUIPMENT
Property and equipment consist of the following:
<TABLE>
<CAPTION>
1994 1995
--------- ---------
<S> <C> <C>
Copier equipment held under capital leases......................... $ 45,389 $ 62,349
Office furniture................................................... 20,982 22,332
Office and computer equipment and software......................... 226,548 222,160
--------- ---------
292,919 306,841
Less accumulated depreciation...................................... (238,027) (216,540)
--------- ---------
$ 54,892 $ 90,301
--------- ---------
--------- ---------
</TABLE>
Depreciation expenses amounted to $10,118 and $17,840 in 1994 and 1995,
respectively.
(3) OBLIGATIONS UNDER CAPITAL LEASES
Minimum future lease payments under capital leases at December 31, 1995
are:
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31,
- ---------------------------------------------------------------
<S> <C>
1996........................................................... $14,963
1997........................................................... 14,963
1998........................................................... 14,963
1999........................................................... 17,919
2000........................................................... 351
-------
Total minimum lease payments................................... 63,159
Less amount representing interest.............................. (12,919)
-------
Present value of net minimum lease payments.................... $50,240
Less amount currently due...................................... (11,699)
-------
$38,541
-------
-------
</TABLE>
(4) LONG-TERM DEBT
Long-term debt consists of the following:
<TABLE>
<CAPTION>
1994 1995
-------- --------
<S> <C> <C>
Small Business Administration loan due August 31, 1998................ $136,455 $104,442
Stockholders' loans................................................... 287,362 293,107
-------- --------
423,817 397,549
Less current portion.................................................. 136,455 104,442
-------- --------
Long-term portion, net................................................ $287,362 $293,107
-------- --------
-------- --------
</TABLE>
The Small Business Administration loan bears interest at 2 1/4% over prime
(10 3/4% at December 31, 1995) and is payable in monthly installments over the
term of the loan. The loan is guaranteed by the officers and secured by third
mortgages on their residences and assignment of proceeds under the officers'
life insurance policies. Restrictive covenants include maintaining a current
ratio of not less than 1.5 to 1 at the end of any fiscal quarter and contain
limits as to officers' salary increases and paydowns on stockholder loans. PR
Data did not meet the current ratio requirement at December 31, 1994 or 1995.
Consequently, the entire loan balance is classified as a current liability on
the accompanying balance sheets.
The stockholders' loans bear interest at 8 1/2% or 2% over prime (10 1/2%
at December 31, 1995) and have been classified as long term as the shareholders
agreed not to demand repayment before January 1, 1997.
F-19
<PAGE>
PR DATA SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
INFORMATION AS OF JUNE 30, 1996 AND INFORMATION RELATING TO THE
SIX MONTHS ENDED JUNE 30, 1996 AND 1995 IS UNAUDITED.
(5) RELATED PARTY TRANSACTIONS
During March 1992, PR Data entered into a five-year lease expiring in
September 1996 for office space from a partnership 50% owned by certain
stockholders. The lease agreement calls for a monthly base rent of $12,175 plus
escalation charges for real estate taxes. These escalation charges totaled
$17,894 and $19,794 in 1994 and 1995, respectively. PR Data negotiated a
reduction in the monthly payments to $10,175 for the period April 1, 1994
through March 31, 1995.
During 1995, a partnership, 50% owned by certain stockholders of PR Data,
advanced funds without interest to cover short-term working capital needs of PR
Data.
At December 31, 1994 and 1995, amounts payable to related parties included
rent payable to a partnership 50% owned by certain stockholders of $30,922 and
$43,370, respectively, and interest on stockholders' loans of $49,785 and
$76,910, respectively.
(6) INCOME TAXES
Income tax expense attributable to income from continuing operations
consists of:
<TABLE>
<CAPTION>
CURRENT DEFERRED TOTAL
------- -------- -----
<S> <C> <C> <C>
Year ended December 31, 1994:
Federal............................................... $ -- $ -- $ --
State and local....................................... 624 -- 624
------- -------- -----
$ 624 $ -- $ 624
------- -------- -----
------- -------- -----
Year ended December 31, 1995:
Federal............................................... -- -- --
State and local....................................... 615 -- 615
------- -------- -----
$ 615 $ -- $ 615
------- -------- -----
------- -------- -----
</TABLE>
Income tax expense differs from the amount computed by multiplying the
statutory rate of 34% to income (loss) before income taxes due to the following:
<TABLE>
<CAPTION>
1994 1995
-------- --------
<S> <C> <C>
Income tax (benefit) expense at statutory rate............... $(30,854) $ 11,442
Increase (reduction) in income taxes resulting from:
State taxes, net of Federal tax deduction.................. (4,244) 1,827
Nondeductible expenses..................................... 218 1,507
Increase (decrease) in valuation allowance................. 35,873 (15,447)
Other...................................................... (369) 1,286
-------- --------
$ 624 $ 615
-------- --------
-------- --------
</TABLE>
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at December 31,
1994 and 1995 are presented below:
<TABLE>
<CAPTION>
1994 1995
--------- ---------
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforwards........................ $ 133,512 $ 125,780
Accounts receivable principally due to allowance for
doubtful accounts.................................... 10,356 7,729
Property and equipment, due to differences in
depreciation for book and tax purposes............... 4,509 (579)
Other................................................... 1,350 1,350
--------- ---------
149,727 134,280
--------- ---------
</TABLE>
F-20
<PAGE>
PR DATA SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
INFORMATION AS OF JUNE 30, 1996 AND INFORMATION RELATING TO THE
SIX MONTHS ENDED JUNE 30, 1996 AND 1995 IS UNAUDITED.
(6) INCOME TAXES--(CONTINUED)
<TABLE>
<CAPTION>
1994 1995
--------- ---------
Less valuation allowance................................ (149,727) (134,280)
<S> <C> <C>
--------- ---------
Deferred tax assets, net of valuation allowance...... $ -- $ --
--------- ---------
--------- ---------
</TABLE>
At December 31, 1995, PR Data has net operating loss carryforwards for
Federal income tax purposes of $243,482 which are available to offset future
Federal taxable income, if any, through 2009.
The net change in the total valuation allowance for the years ended
December 31, 1994 and 1995 was an increase of $35,873 and a decrease of $15,447,
respectively. In assessing the realizability of deferred tax assets, management
considers whether it is more likely than not that some portion or all of the
deferred tax assets will not be realized. The ultimate realization of deferred
tax assets is dependent upon the generation of future taxable income during the
periods in which those temporary differences become deductible. Management
considers the scheduled reversal of deferred tax liabilities and projected
future taxable income in making this assessment. In order to fully realize the
deferred tax assets, PR Data will need to generate future taxable income of
approximately $324,000 prior to the expiration of the net operating loss
carryforwards in 2009. Based upon the level of historical taxable income (loss)
and projection for future taxable income over the periods in which the deferred
tax assets are deductible, management could not conclude that it is more likely
than not that PR Data will be able to realize the benefits of these deductible
differences and, accordingly, has provided a valuation allowance equal to the
excess of deferred tax assets over deferred tax liabilities.
(7) BUSINESS CONCENTRATION
During 1994 and 1995, PR Data generated revenue of $481,400 and $479,000,
respectively, from services provided to two customers. The total accounts
receivable balance at December 31, 1994 and 1995 relating to these customers was
$34,302 and $64,528, respectively.
(8) SUBSEQUENT EVENT
On July 18, 1996, PR Data completed an asset purchase agreement (the
'Agreement') with Medialink Worldwide Incorporated, formerly known as Video
Broadcasting Corporation ('Medialink'), a Delaware corporation, and Medialink PR
Data Corporation (the 'Purchaser'), a Delaware corporation which is a wholly
owned subsidiary of Medialink.
Under the terms of the Agreement, the Purchaser acquired all of PR Data's
tangible and intangible assets for cash of $120,000 and through the issuance of
24,000 shares of Common Stock valued at $155,000. The purchaser also assumed all
of the obligations and liabilities of PR Data as at the closing date with the
exception that such obligations and liabilities assumed could not exceed the
book value of assets acquired by more than $372,000.
The Purchaser also entered into noncompete agreements with PR Data's
principal officers and stockholders. These agreements are for periods of five
years and provide for quarterly payments aggregating $410,000 during this
period.
F-21
<PAGE>
MEDIALINK WORLDWIDE INCORPORATED
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
The following Unaudited Pro Forma Condensed Combined Statements of
Operations for the nine months ended September 30, 1996 and the year ended
December 31, 1995 illustrates the effect of the PR Data Acquisition. The
Unaudited Pro Forma Condensed Combined Statements of Operations assumes that the
PR Data Acquisition occurred at the beginning of the periods presented.
Pursuant to the terms of the PR Data Acquisition, the Company issued 24,000
shares of Common Stock, made a cash payment of $120,000 and assumed certain
liabilities not to exceed the book value of assets acquired by more than
$372,000. In addition, the Company will make quarterly payments in the aggregate
amount of $410,000 payable over the next five years under the terms of
non-compete agreements with certain officers and stockholders of PR Data. The
transaction was accounted for as a purchase. The Unaudited Pro Forma Condensed
Combined Financial Statements also reflect the pay down of PR Data's existing
Small Business Administration loan in the amount of approximately $89,000 and
the conversion of long-term debt and certain other obligations of PR Data to its
stockholders into a new note in the amount of $330,000 which occurred
immediately following the consummation of the PR Data Acquisition.
The pro forma adjustments are based upon currently available information
and upon certain assumptions that management believes are reasonable. The PR
Data Acquisition has been recorded based upon the estimated fair market value of
the net tangible and intangible assets acquired at the date of the acquisition.
The adjustments included in the Unaudited Pro Forma Condensed Combined Financial
Statements represent management's preliminary determination of these adjustments
based upon available information. There can be no assurance that the actual
adjustments will not differ significantly from the pro forma adjustments
reflected in the pro forma financial information.
The Unaudited Pro Forma Condensed Combined Financial Statements are not
necessarily indicative of either future results of operations or results that
might have been achieved if the foregoing transaction had been consummated as of
the indicated dates. The Unaudited Pro Forma Condensed Combined Financial
Statements should be read in conjunction with the historical financial
statements of Medialink and PR Data included elsewhere herein, together with the
related notes thereto.
F-22
<PAGE>
MEDIALINK WORLDWIDE INCORPORATED
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
MEDIALINK PR DATA PRO FORMA
HISTORICAL HISTORICAL ADJUSTMENTS PRO FORMA
----------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues............................................ $11,158,239 $928,154 $ (2,133)(1) $12,014,388
(69,872)(2)
Direct costs........................................ 4,604,668 161,875 (69,872)(2) 4,696,671
----------- ---------- ----------- -----------
Gross profit...................................... 6,553,571 766,279 (2,133) 7,317,717
General and administrative expenses................. 5,548,433 724,361 24,447(3) 6,306,696
27,083(4)
(17,628)(5)
----------- ---------- ----------- -----------
Operating income.................................. 1,005,138 41,918 (36,035) 1,011,021
Other income (expense)
Interest expense.................................. (14,674) (32,761) (3,480)(6) (45,910)
5,005(7)
Interest and other income......................... 19,144 0 19,144
----------- ---------- ----------- -----------
Income before income taxes........................ 1,009,608 9,157 (34,510) 984,255
Income tax expense.................................. 430,738 916 (14,632)(8) 417,022
----------- ---------- ----------- -----------
Net income.......................................... $ 578,870 $ 8,241 $ (19,878) $ 567,233
----------- ---------- ----------- -----------
----------- ---------- ----------- -----------
Net income per common and common equivalent share... $ 0.16(9)
-----------
-----------
</TABLE>
See accompanying notes to unaudited pro forma condensed combined financial
statements.
F-23
<PAGE>
MEDIALINK WORLDWIDE INCORPORATED
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1995
--------------------------------------------------------
MEDIALINK PR DATA PRO FORMA
HISTORICAL HISTORICAL ADJUSTMENTS PRO FORMA
----------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues.............................................. $10,624,680 $1,691,603 $ (8,229)(1) $12,237,144
(70,910)(2)
Direct costs.......................................... 4,553,349 263,133 (70,910)(2) 4,745,572
----------- ---------- ----------- -----------
Gross profit........................................ 6,071,331 1,428,470 (8,229) 7,491,572
General and administrative expenses................... 5,373,307 1,354,019 39,143(3) 6,786,155
50,000(4)
(30,314)(5)
----------- ---------- ----------- -----------
Operating income.................................... 698,024 74,451 (67,058) 705,417
Other income (expense)
Inerest expense..................................... -- (40,799) 4,972(6) (26,587)
9,240(7)
Interest and other income........................... 15,273 -- 15,273
----------- ---------- ----------- -----------
Income before income taxes.......................... 713,297 33,652 (52,846) 694,103
Income tax expense.................................... 332,062 615 (12,696)(8) 319,981
----------- ---------- ----------- -----------
Net income............................................ $ 381,235 $ 33,037 $ (40,150) $ 374,122
----------- ---------- ----------- -----------
----------- ---------- ----------- -----------
Pro forma net income per common and common equivalent
share............................................... $ 0.11(9)
-----------
-----------
</TABLE>
See accompanying notes to unaudited pro forma condensed combined financial
statements.
F-24
<PAGE>
MEDIALINK WORLDWIDE INCORPORATED
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
(1) Reflects the elimination of management fee income of PR Data from a related
party that will no longer be earned after the PR Data Acquisition.
(2) Reflects the elimination of fees for services paid to PR Data by Medialink.
(3) Reflects the amortization expenses of the excess of cost over the fair value
of the net tangible liabilities acquired in the PR Data Acquisition by use
of the straight-line method over 15 years.
(4) Reflects the amortization of the value assigned to various non-compete
agreements with certain officers and stockholders of PR Data.
(5) Reflects the adjustment to the salaries of the former officers and
stockholders of PR Data under the terms of their new employment agreements
with Medialink effective after the PR Data Acquisition.
(6) Reflects the effect of interest due on the note due to a stockholder of PR
Data in the principal amount of $330,000.
(7) Reflects the reduction in interest expense as a result of the payoff of the
Small Business Administration loan at the closing of the PR Data
Acquisition.
(8) Reflects the tax effect of the pro forma adjustments at Medialink's
effective tax rate.
(9) See Note 9 to the Company's Financial Statements for an explanation of the
method used to determine the pro forma net income per common and common
equivalent share.
F-25
<PAGE>
CASE STUDIES
PEPSI
Illustration shows assembly line on which soft drink cans are being filled.
Pepsi was the target of rumors regarding product tampering in its soft drink
cans. Pepsi decided to counter these allegations by showing the public the
conditions under which the beverage was manufactured and packaged. VNRs were
produced to accomplish that, and were distributed by Medialink to TV stations
nationwide. Medialink's monitoring concluded that the releases achieved a
cumulative audience of 488 million over a one-week period.
GENERAL MILLS
General Mills wished to celebrate the 75th anniversary of the Betty Crocker
brand by unveiling the latest modernization "makeover" of the Betty Crocker
image. This was a significant corporate event, and management sought to
generate a maximum amount of news coverage. Medialink broadcast the ceremony at
which the new likeness was presented; conducted a Satellite Media Tour that
reached TV stations around the nation; and produced a VNR to extend the story's
reach. In the aggregate, approximately 42 milllion viewers saw at least part of
the campaign.
Illustration shows likeness of Betty Crocker.
SPEEDO
Illustration shows newscaster with three women in swimsuits.
This major swimwear manufacturer sought to introduce products made from a new
proprietary fabric, Aquablade(R), that, according to scientific tests reported
by Speedo, could increase a swimmer's speed by as much as 8%. This line was set
for release in Europe, Australia and Latin America. The challenge was to prepare
and distribute "master" material that could be readily adapted by TV stations
in numerous countries taking into account local languages and customs. This was
accomplished by coordinating the efforts of Medialink's international network of
affiliates. The story was seen by approximately 171 million viewers within the
targeted markets.
MEDIALINK LOGO
WORLDWIDE COMMUNICATIONS SOLUTIONS
<PAGE>
[LOGO]
2,000,000 SHARES
COMMON STOCK
PROSPECTUS
DEAN WITTER REYNOLDS INC.
WHEAT FIRST BUTCHER SINGER
, 1996
<PAGE>
PART II
INFORMATION NOT REQUIRED IN 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 Registrant in connection
with the sale of the Common Stock being registered. All items are estimated
except the SEC registration and NASD and NASDAQ filing fees.
SEC registration fee........................................... $ 7,667
NASD filing fee................................................ 3,030
NASDAQ fee..................................................... 30,120
Blue Sky fees and expenses..................................... 10,000
Printing and engraving expenses................................ *
Legal fees and expenses........................................ *
Accounting fees and expenses................................... *
Transfer agent fees............................................ 2,000
Miscellaneous.................................................. *
-------
Total..................................................... $ *
-------
-------
- ------------------
* To be filed by amendment.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law (the 'DGCL') provides
that a corporation may indemnify directors and officers as well as other
employees and individuals against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement in connection with specified
actions, suits or proceedings, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation--a
'derivative action'), if they acted in good faith and in a manner they
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe their conduct was unlawful. A similar standard is
applicable in the case of derivative actions, except that indemnification only
extends to expenses (including attorneys' fees) incurred in connection with the
defense or settlement of such actions, and the statute requires court approval
before there can be any indemnification where the person seeking indemnification
has been found liable to the corporation. The statute provides that it is not
exclusive of other indemnification that may be granted by a corporation's
charter, by-laws, disinterested director vote, stockholder vote, agreement or
otherwise.
Article Twelfth of the Company's Amended and Restated Certificate of
Incorporation provides that each person who was or is made a party to (or is
threatened to be made a party to) or is otherwise involved in any civil or
criminal action, suit or proceeding by reason of the fact that such person is or
was a director or officer of the Company shall be indemnified and held harmless
by the Company to the fullest extent authorized by Section 145 of the DGCL
against all expense, liability and loss (including without limitation attorneys'
fees) incurred by such person in connection therewith.
Article Ninth of the Company's Amended and Restated Certificate of
Incorporation provides that, to the fullest extent permitted by the DGCL, the
Company's directors will not be personally liable to the Company or its
stockholders for monetary damages resulting from a breach of their fiduciary
duty as directors. However, nothing contained in such Article Ninth shall
eliminate or limit the liability of directors (i) for any breach of the
director's duty of loyalty to the Company or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of the law, (iii) under Section 174 of the DGCL or (iv) for any
transaction from which the director derived an improper personal benefit.
Article XI of the Registrant's Amended and Restated By-Laws provides that
each person who was or is made a party or is threatened to be made a party to
any threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that he is or
was a director, officer, employee or agent of the Registrant or is or was
serving at the request of the Registrant as a director, officer, employee or
agent of
II-1
<PAGE>
another corporation or of a partnership, joint venture, trust or other
enterprise, 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 Registrant to the fullest extent authorized
by the Delaware General Corporation Law, as the same exists or may hereafter be
amended, 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. Such indemnification 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.
The Company has entered into indemnification agreements with each of its
current directors and officers, which provide for indemnification of, and
advancement of expenses to, such persons to the greatest extent permitted by
Delaware law, including by reason of action or inaction occurring in the past,
and circumstances in which indemnification and advancement of expenses to such
persons are permitted or are discretionary to the greatest extent under Delaware
law.
Subsequent to the consummation of this offering, the Company intends to
maintain directors and officers liability insurance covering all directors and
officers of the Company against claims arising out of the performance of their
duties.
Reference is made to the Underwriting Agreement (Exhibit 1.1) which
provides for indemnification of the Company, its directors, officers and
controlling persons.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
The following information is furnished with regard to all securities sold
by the Company within the past three years which were not registered under the
Securities Act. Amounts have been restated to reflect a 1.2 for 1 stock split of
the Common Stock effected in the form of a stock dividend on July 31, 1996.
These transactions were private transactions not involving a public offering and
were exempt from the registration provisions of the Securities Act pursuant to
Section 4(2) or Rule 701 thereof. Options granted to employees were granted
pursuant to the Company's stock option plans. Options granted to non-employee
directors were granted pursuant to the Directors Stock Option Plan.
On July 18, 1996, the Company granted to William Wubbenhorst, Jack
Schoonover and Nancy Schoonover stock options to purchase an aggregate of 24,000
shares of Common Stock at an exercise price of $6.46 per share, pursuant to
stock option agreements executed in connection with the PR Data Acquisition.
On July 18, 1996, the Company issued to William Wubbenhorst, Jack
Schoonover and Nancy Schoonover an aggregate of 24,000 shares of Common Stock,
valued at an aggregate of $155,000, pursuant to the Asset Purchase Agreement
executed in connection with the PR Data Acquisition.
In March 1996, the Company issued 2,521 shares of Common Stock to David
Davis, pursuant to a consulting agreement between the Company and The Davis
Partnership, a partnership which is beneficially owned by Mr. Davis.
On February 15, 1996, the Company granted to non-employee directors of the
Company stock options to purchase 62,400 shares of Common Stock at an exercise
price of $3.54 per share.
On July 1, 1995 and February 1, 1996, the Company granted to Laurence
Moskowitz stock options to purchase 9,600 and 92,400 shares of Common Stock,
respectively, at exercise prices of $2.29 and $3.54 per share, respectively.
On July 1, 1995 and February 1, 1996, the Company granted to J. Graeme
McWhirter stock options to purchase 8,400 and 76,394 shares of Common Stock,
respectively, at exercise prices of $2.29 and $3.54 per share, respectively.
On July 1, 1995 and February 1, 1996, the Company granted to Mark Manoff
stock options to purchase 7,200 and 39,700 shares of Common Stock, respectively,
at exercise prices of $2.29 and $3.54 per share, respectively.
On July 1, 1995 and February 1, 1996, the Company granted to Nicholas F.
Peters stock options to purchase 7,200 and 39,400 shares of Common Stock,
respectively, at exercise prices of $2.29 and $3.54 per share, respectively.
On July 1, 1995 and February 1, 1996, the Company granted to Mary Buhay
stock options to purchase 3,600 and 6,800 shares of Common Stock, respectively,
at exercise prices of $2.29 and $3.54 per share, respectively.
II-2
<PAGE>
On February 1, 1996, the Company granted to employees stock options to
purchase 132,800 shares of Common Stock at an exercise price of $3.54 per share.
On July 1, 1995, the Company granted to employees stock options to purchase
39,000 shares of Common Stock at an exercise price of $2.29.
On March 1, 1994, the Company granted to David Davis stock options to
purchase 14,400 shares of Common Stock at an exercise price of $1.25 per share.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ---------- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
1.1 -- Form of Underwriting Agreement.
3.1 -- Form of Amended and Restated Certificate of Incorporation of Medialink Worldwide Incorporated
(the 'Company').
*3.2 -- Amended and Restated By-Laws of the Company.
**4.1 -- Specimen Stock Certificate.
4.2 -- Registration and Preemptive Rights Agreement, dated October 31, 1989, by and among Video
Broadcasting Corporation, New York State Business Venture Partnership, American Research &
Development II, L.P., and the parties listed therein.
**5.1 -- Legal Opinion of Tashlik, Kreutzer & Goldwyn P.C.
*10.1 -- Asset Purchase Agreement, dated July 18, 1996, between Medialink PR Data Corporation, Video
Broadcasting Corporation, PR Data Systems, Inc., Jack Schoonover, William Wubbenhorst and Nancy
Schoonover.
10.2 -- Employment Agreement, dated as of November 18, 1996, by and between Medialink Worldwide
Incorporated and Laurence Moskowitz.
10.3 -- Employment Agreement, dated as of November 18, 1996, by and between Medialink Worldwide
Incorporated and J. Graeme McWhirter.
**10.4 -- Employment Agreement, dated as of November 18, 1996, by and between Medialink Worldwide
Incorporated and David Davis.
10.5 -- Employment Agreement, dated as of November 18, 1996, by and between Medialink Worldwide
Incorporated and Nicholas F. Peters.
10.6 -- Form of Employment Agreement, dated as of November 18, 1996, by and between Medialink Worldwide
Incorporated and Mark Manoff.
10.7 -- Employment Agreement, dated as of November 18, 1996, by and between Medialink Worldwide
Incorporated and Mary Buhay.
*10.8 -- Non-Negotiable Subordinated Promissory Note, dated July 18, 1996, between Medialink PR Data
Corporation and William Wubbenhorst.
*10.9 -- Lease, dated July 18, 1996, between Oakwood Avenue Partners and Medialink PR Data Corporation.
*10.10 -- Lease, dated September 21, 1994, between Clemons Properties Partner and Video Broadcasting
Corporation.
*10.11 -- Lease Modification Agreement, dated December 1995 between Clemons Properties Partners and Video
Broadcasting Corporation.
*10.12 -- Second Lease Modification Agreement, dated March 4, 1996, between Clemons Properties Partners and
Video Broadcasting Corporation.
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ---------- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
*10.13 -- Third Lease Modification Agreement, dated May, 1996, between Clemons Properties Partners and Video
Broadcasting Corporation.
*10.14 -- Sublease, dated April 1, 1996, between Video Broadcasting Corporation and Media on Demand, Inc.
*10.15 -- Lease, dated October 1, 1990, between 1401 New York Avenue, Inc. and Video Broadcasting
Corporation.
*10.16 -- First Amendment of Lease, dated March 25, 1996, between 1401 New York Avenue, Inc. and Video
Broadcasting Corporation.
*10.17 -- Lease, dated January 3, 1994, between Continental Bank, N.A., as Trustee for the Allstate
Retirement Plan and Continental Bank, N.A., as Trustee for the Agents Pension Plan and Video
Broadcasting Corporation.
*10.18 -- Office Lease, dated June 7, 1989, between Teachers' Retirement System of the State of Illinois and
Video Broadcasting Corporation.
*10.19 -- First Amendment to Lease, dated June 1, 1994 between Teachers' Retirement System of the State of
Illinois and Video broadcasting Corporation.
*10.20 -- Office Lease, dated May 5, 1994, between Copperfield Investment & Development Company and Video
Broadcasting Corporation.
*10.21 -- First Amendment to Lease, dated September 15, 1994, between Copperfield Investment & Development
Company and Video Broadcasting Corporation.
*10.22 -- Lease Agreement, dated November 14, 1994, between City & Corporate Counsel Limited and Video
Broadcasting Corporation Inc.
*10.23 -- Underlease, dated February 9, 1995, between City & Corporate Counsel Limited and Video
Broadcasting Corporation Inc.
*10.24 -- Agreement, dated March 6, 1996, between Medialink, Inc. and ABC Radio Networks, Inc.
*10.25 -- Agreement, dated February 9, 1993, between Video Broadcasting Corporation and
NewsWorthy(Registered).
*10.26 -- Renewal of Agreement, dated February 21, 1995, between Video Broadcasting Corporation and
NewsWorthy(Registered).
*10.27 -- Amended and Restated AP Express Agreement, dated November 1, 1992, between Press Association, Inc.
and Video Broadcasting Corporation. Portions of Exhibit 10.27 have been omitted and filed
separately with the Commission.
*10.28 -- Addendum, dated February 21, 1996, to the AP Express Agreement, between Press Association, Inc.
and Video Broadcasting Corporation. Portions of Exhibit 10.28 have been omitted and filed
separately with the Commission.
10.29 -- Amendment to the Amended and Restated AP Express Agreement, dated November 1, 1992.
*10.30 -- Satellite Services Agreement, dated January 1, 1996, between Global Access Telecommunication
Services, Inc. and Medialink.
*10.31 -- Nielsen Sigma Service Agreement, dated September 14, 1994, between Video Broadcasting Corp. and
A.C. Nielsen Company.
*10.32 -- Loan Modification Agreement, dated February 28, 1996, between Video Broadcasting Corporation and
Silicon Valley Bank.
*10.33 -- Video Broadcasting Corporation 401(k) Tax Deferred Savings Plan.
*10.34 -- Amended and Restated Stock Option Plan and form of Stock Option Agreement.
*10.35 -- Video Broadcasting Corporation 1996 Directors Stock Option Plan and form of 1996 Directors Stock
Option Agreement.
*10.36 -- Form of Indemnification Agreement.
*10.37 -- Consulting Agreement by and between Video Broadcasting Corporation and Davis Partnership dated
March 1, 1994.
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ---------- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
10.38 -- Tower Place Office Lease by and between Tower Place, L.P. and Medialink Worldwide Incorporated,
dated , 1996.
**10.39 -- Second Amendment to Lease, made as of the day of September, 1996 by and between Teachers'
Retirement System of the State of Illinois and Medialink Worldwide Incorporated.
*21.1 -- List of Subsidiaries of the Company.
23.1 -- Consent of KPMG Peat Marwick LLP.
**23.2 -- Consent of Tashlik, Kreutzer & Goldwyn P.C. (contained in the opinion to be filed as Exhibit 5.1
hereto).
*24.1 -- Power of Attorney.
</TABLE>
- ------------------
* Previously filed.
** To be filed by amendment
(b) Financial Statement Schedules
Not applicable
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes to provide to the Underwriters
at the closing specified in the Underwriting Agreement certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described in Item 14, 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 of 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 the purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus filed as
part of this Registration Statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the Registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be
part of this Registration Statement as of the time it was declared
effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Pre-Effective Amendment No. 2 to Form S-1 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 20th day of
November, 1996.
MEDIALINK WORLDWIDE INCORPORATED
By: /s/ LAURENCE MOSKOWITZ
--------------------------------
Laurence Moskowitz
Chairman of the Board, President
and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Pre-Effective Amendment No. 2 to Form S-1 Registration Statement has been signed
by the following persons in the capacities indicated below on the 20th day of
November, 1996.
<TABLE>
<S> <C>
/s/ LAURENCE MOSKOWITZ Chairman of the Board, President and Chief Executive Officer
- ----------------------------------------- (Principal Executive Officer)
Laurence Moskowitz
* Executive Vice President, Chief Financial Officer and Assistant
- ----------------------------------------- Secretary (Principal Financial and Accounting Officer)
J. Graeme McWhirter
* Senior Vice President/International, Director
- -----------------------------------------
David Davis
* Director
- -----------------------------------------
Harold Finelt
* Director
- -----------------------------------------
Donald Kimelman
* Director
- -----------------------------------------
James J. O'Neill
* Director
- -----------------------------------------
Gerald P. Rodeen
* Director
- -----------------------------------------
Theodore Wm. Tashlik
*By: /S/ LAURENCE MOSKOWITZ
------------------------------
Laurence Moskowitz
Attorney-in-Fact
by Power of Attorney
dated October 15, 1996
</TABLE>
II-6
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ---------- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1.1 -- Form of Underwriting Agreement.
3.1 -- Form of Amended and Restated Certificate of Incorporation of Medialink Worldwide Incorporated
(the 'Company').
*3.2 -- Amended and Restated By-Laws of the Company.
**4.1 -- Specimen Stock Certificate.
4.2 -- Registration and Preemptive Rights Agreement, dated October 31, 1989, by and among
Video Broadcasting Corporation, New York State Business Venture Partnership, American
Research & Development II, L.P, and the parties listed therein.
**5.1 -- Legal Opinion of Tashlik, Kreutzer & Goldwyn P.C.
*10.1 -- Asset Purchase Agreement, dated July 18, 1996, between Medialink PR Data Corporation,
Video Broadcasting Corporation, PR Data Systems, Inc., Jack Schoonover, William
Wubbenhorst and Nancy Schoonover.
10.2 -- Employment Agreement, dated as of November 18, 1996, by and between Medialink Worldwide
Incorporated and Laurence Moskowitz.
10.3 -- Employment Agreement, dated as of November 18, 1996, by and between Medialink Worldwide
Incorporated and J. Graeme McWhirter.
**10.4 -- Employment Agreement, dated as of November 18, 1996, by and between Medialink Worldwide
Incorporated and David Davis.
10.5 -- Employment Agreement, dated as of November 18, 1996, by and between Medialink Worldwide
Incorporated and Nicholas F. Peters.
10.6 -- Form of Employment Agreement, dated as of November 18, 1996, by and between Medialink Worldwide
Incorporated and Mark Manoff.
10.7 -- Employment Agreement, dated as of November 18, 1996, by and between Medialink Worldwide
Incorporated and Mary Buhay.
*10.8 -- Non-Negotiable Subordinated Promissory Note, dated July 18, 1996, between Medialink PR
Data Corporation and William Wubbenhorst.
*10.9 -- Lease, dated July 18, 1996, between Oakwood Avenue Partners and Medialink PR Data
Corporation.
*10.10 -- Lease, dated September 21, 1994, between Clemons Properties Partner and Video
Broadcasting Corporation.
*10.11 -- Lease Modification Agreement, dated December , 1995 between Clemons Properties
Partners and Video Broadcasting Corporation.
*10.12 -- Second Lease Modification Agreement, dated March 4, 1996, between Clemons Properties
Partners and Video Broadcasting Corporation.
*10.13 -- Third Lease Modification Agreement, dated May, 1996, between Clemons Properties
Partners and Video Broadcasting Corporation.
*10.14 -- Sublease, dated April 1, 1996, between Video Broadcasting Corporation and Media on
Demand, Inc.
*10.15 -- Lease, dated October 1, 1990, between 1401 New York Avenue, Inc. and Video Broadcasting
Corporation.
*10.16 -- First Amendment of Lease, dated March 25, 1996, between 1401 New York Avenue, Inc. and
Video Broadcasting Corporation.
*10.17 -- Lease, dated January 3, 1994, between Continental Bank, N.A., as Trustee for the
Allstate Retirement Plan and Continental Bank, N.A., as Trustee for the Agents Pension
Plan and Video Broadcasting Corporation.
*10.18 -- Office Lease, dated June 7, 1989, between Teachers' Retirement System of the State of
Illinois and Video Broadcasting Corporation.
*10.19 -- First Amendment to Lease, dated June 1, 1994 between Teachers' Retirement System of the
State of Illinois and Video broadcasting Corporation.
*10.20 -- Office Lease, dated May 5, 1994, between Copperfield Investment & Development Company
and Video Broadcasting Corporation.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ---------- ---------------------------------------------------------------------------------------------
<S> <C> <C>
*10.21 -- First Amendment to Lease, dated September 15, 1994, between Copperfield Investment &
Development Company and Video Broadcasting Corporation.
*10.22 -- Lease Agreement, dated November 14, 1994, between City & Corporate Counsel Limited and
Video Broadcasting Corporation Inc.
*10.23 -- Underlease, dated February 9, 1995, between City & Corporate Counsel Limited and Video
Broadcasting Corporation Inc.
*10.24 -- Agreement, dated March 6, 1996, between Medialink, Inc. and ABC Radio Networks, Inc.
*10.25 -- Agreement, dated February 9, 1993, between Video Broadcasting Corporation and
NewsWorthy(Registered).
*10.26 -- Renewal of Agreement, dated February 21, 1995, between Video Broadcasting Corporation
and NewsWorthy(Registered).
*10.27 -- Amended and Restated AP Express Agreement, dated November 1, 1992, between Press
Association, Inc. and Video Broadcasting Corporation. Portions of Exhibit 10.27 have
been omitted and filed separately with the Commission.
*10.28 -- Addendum, dated February 21, 1996, to the AP Express Agreement, between Press
Association, Inc. and Video Broadcasting Corporation. Portions of Exhibit 10.28 have
been omitted and filed separately with the Commission.
*10.29 -- Amendment to the Amended and Restated AP Express Agreement, dated November 1, 1992.
*10.30 -- Satellite Services Agreement, dated January 1, 1996, between Global Access
Telecommunication Services, Inc. and Medialink.
*10.31 -- Nielsen Sigma Service Agreement, dated September 14, 1994, between Video Broadcasting
Corp. and A.C. Nielsen Company.
*10.32 -- Loan Modification Agreement, dated February 28, 1996, between Video Broadcasting
Corporation and Silicon Valley Bank.
*10.33 -- Video Broadcasting Corporation 401(k) Tax Deferred Savings Plan.
*10.34 -- Amended and Restated Stock Option Plan and form of Stock Option Agreement.
*10.35 -- Video Broadcasting Corporation 1996 Directors Stock Option Plan and form of 1996
Directors Stock Option Agreement.
*10.36 -- Form of Indemnification Agreement.
*10.37 -- Consulting Agreement by and between Video Broadcasting Corporation and Davis
Partnership dated March 1, 1994.
10.38 -- Tower Place Office Lease by and between Tower Place, L.P. and Medialink Worldwide
Incorporated, dated , 1996.
**10.39 -- Second Amendment to Lease, made as of the day of September, 1996, by and between
Teachers' Retirement System of the State of Illinois and Medialink Worldwide
Incorporated.
*21.1 -- List of Subsidiaries of the Company.
23.1 -- Consent of KPMG Peat Marwick LLP.
**23.2 -- Consent of Tashlik, Kreutzer & Goldwyn P.C. (contained in the opinion to be filed as
Exhibit 5.1 hereto).
*24.1 -- Power of Attorney.
</TABLE>
- ------------------
* Previously filed
** To be filed by amendment
<PAGE>
2,000,000 Shares
MEDIALINK WORLDWIDE INCORPORATED
Common Stock
UNDERWRITING AGREEMENT
December __, 1996
DEAN WITTER REYNOLDS INC.
WHEAT, FIRST SECURITIES, INC.
As Representative of the several Underwriters
c/o Dean Witter Reynolds Inc.
2 World Trade Center
65th Floor
New York, New York 10048
Dear Sirs:
1. Introductory. Medialink Worldwide Incorporated, a Delaware corporation
(the "Company"), proposes to issue and sell, pursuant to the terms of this
Agreement, to the several Underwriters named in Schedule A hereto (the
"Underwriters" which term also shall include any underwriter substituted as
hereinafter provided in Section 11) an aggregate of 2,000,000 shares of Common
Stock, par value $.01 per share (the "Common Stock") of the Company. The
aggregate of 2,000,000 shares so proposed to be sold are hereinafter referred to
as the "Firm Stock." The selling stockholders named in Schedule B hereto (the
"Selling Stockholders") also propose to sell severally to the Underwriters, on a
pro rata basis, at the option of the Underwriters, an aggregate of not more than
300,000 shares of Common Stock as provided in Section 3 of this Agreement. The
aggregate of 300,000 shares so proposed to be sold is herein called the
"Optional Stock." The Firm Stock and the Optional Stock are collectively
referred to herein as the "Stock." Dean
<PAGE>
Witter Reynolds Inc. and Wheat, First Securities, Inc. are acting as
representatives of the several Underwriters and in such capacity are hereinafter
referred to as the "Representatives."
Before the purchase and public offering of the Stock by the several
Underwriters, the Company and the Representatives, acting on behalf of the
several Underwriters, shall enter into an agreement substantially in the form of
Exhibit A hereto (the "Pricing Agreement"). The offering of the Stock will be
governed by this Agreement, as supplemented by the Pricing Agreement. From and
after the date of the execution and delivery of the Pricing Agreement, this
Agreement shall be deemed to incorporate the Pricing Agreement.
2. (a) Representations and Warranties of the Company. The Company
represents and warrants to, and agrees with, the several Underwriters, as of the
date hereof and as of the date of the Pricing Agreement (such later date being
hereinafter referred to as the "Representation Date"), that:
(i) A registration statement on Form S-1 (File No. 333-14119) with
respect to the Stock, a copy of which has heretofore been delivered to you,
has been carefully prepared by the Company in conformity with the
requirements of the Securities Act of 1933, as amended (the "Act"), and the
published rules and regulations (the "Rules and Regulations") of the
Securities and Exchange Commission (the "Commission") under the Act, and
has been filed with the Commission under the Act; and the Company has so
prepared and proposes so to file prior to the effective date of such
registration statement an amendment to such registration statement
including the final form of prospectus (which may omit such information as
permitted by Rule 430A of the Rules and Regulations). Such registration
statement as amended and the prospectus constituting a part thereof
(including in each case the information, if any, deemed to be a part
thereof pursuant to Rule 430A(b) or Rule 434 of the Rules and Regulations)
are hereinafter referred to as the "Registration Statement" and the
"Prospectus", respectively, except that if any revised prospectus shall be
provided to the Underwriters by the Company for use in connection with the
offering of the Stock which differs from the prospectus on file at the
Commission at the time the Registration Statement becomes effective
(whether or not such prospectus is required to be filed by the Company
pursuant to Rule 424(b) of the Rules and Regulations), the term
"Prospectus" shall refer to such revised prospectus from and after the time
it is first provided to the Underwriters for such use. If the Company
elects to rely on Rule 434 under the Rules
2
<PAGE>
and Regulations, all references to the Prospectus shall be deemed to
include, without limitation, the form of prospectus and the term sheet,
taken together, provided to the Underwriters by the Company in reliance on
Rule 434 under Rules and Regulations (the "Rule 434 Prospectus"). If the
Company files a registration statement to register additional shares of
Common Stock and relies on Rule 462(b) for such registration statement to
become effective upon filing with the Commission (the "Rule 462
Registration Statement"), then any reference to "Registration Statement"
herein shall be deemed to be to both the registration statement referred to
above (No. 333-14119) and the Rule 462 Registration Statement, as each such
registration statement may be amended pursuant to the Act.
(ii) When the Registration Statement becomes effective and as of the
Representation Date, the Registration Statement and the Prospectus will
conform in all material respects to the requirements of the Act and the
Rules and Regulations. At the time the Registration Statement becomes
effective and at the Representation Date, the Registration Statement will
not include any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading. The Prospectus, at the time the
Registration Statement becomes effective and as of the Representation Date
(unless the term "Prospectus" refers to a prospectus which has been
provided to the Underwriters by the Company for use in connection with the
offering of the Stock which differs from the prospectus on file at the
Commission at the time the Registration Statement becomes effective, in
which case at the time it is first provided to the Underwriters for such
use) and at the Closing Date (as hereinafter defined), will not include an
untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided,
however, that the foregoing representations, warranties and agreements
shall not apply to information contained in or omitted from the
Registration Statement or the Prospectus in reliance upon, and in
conformity with, written information furnished to the Company by or on
behalf of any Underwriter, directly or through the Representatives,
specifically for use in the preparation thereof.
3
<PAGE>
(iii) Subsequent to the respective dates as of which information is
given in the Registration Statement and Prospectus, (A) neither the Company
nor its sole subsidiary, Medialink PR Data Corporation ("Medialink PR"),
has incurred any liabilities or obligations (indirect, direct or
contingent) or entered into any oral or written agreements or other
transactions not in the ordinary course of business that, singly or in the
aggregate, could reasonably be expected to be material to the Company and
Medialink PR considered as a whole or that could reasonably be expected to
result in a material reduction in the earnings of the Company and Medialink
PR considered as a whole, (B) neither the Company nor Medialink PR has
sustained any loss or interference with its business or properties from
strike, fire, flood, windstorm, accident or other calamity (whether or not
covered by insurance) that, singly or in the aggregate, could reasonably be
expected to be material to the Company and Medialink PR considered as a
whole, (C) there has been no material change in the indebtedness of the
Company, no change in the capital stock of the Company and no dividend or
distribution of any kind declared, paid or made by the Company on any class
of its capital stock, and (D) there has not been any material adverse
change, nor any development that could, singly or in the aggregate, result
in a material adverse change in the condition (financial or other),
business, prospects or results of operations of the Company and Medialink
PR considered as a whole, whether or not arising in the ordinary course of
business.
(iv) The financial statements, together with the related notes and
schedules, set forth in the Prospectus and elsewhere in the Registration
Statement, fairly present, on the basis stated in the Registration
Statement, the financial position and the results of operations and changes
in financial position of the Company and Medialink PR at the respective
dates or for the respective periods therein specified. Such financial
statements and related notes and schedules have been prepared in accordance
with generally accepted accounting principles applied on a consistent basis
except as may be set forth in the Prospectus. The selected financial data
set forth in the Prospectus under the caption "Selected Financial
Information" fairly presents, on the
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basis stated in the Registration Statement, the information set forth
therein.
(v) The Unaudited Pro Forma Condensed Combined Financial Statements of
the Company and the related notes thereto included in the Registration
Statement and the Prospectus have been prepared in accordance with the
Commission's rules and guidelines with respect to pro forma financial
statements and have been properly compiled on the bases described therein,
and the assumptions used in the preparation thereof are reasonable and the
adjustments used therein are appropriate to give effect to the transactions
and circumstances referred to therein.
(vi) KPMG Peat Marwick LLP, who have expressed their opinions on the
audited financial statements and related schedules included in the
Registration Statement, are independent public accountants as required by
the Act and the Rules and Regulations.
(vii) Each of the Company and Medialink PR has been duly organized and
is validly existing and in good standing as a corporation under the laws of
the State of Delaware, with power and authority (corporate and other) to
own, lease and operate its properties and to conduct its businesses as
described in the Registration Statement and Prospectus; the Company and
Medialink PR each is in possession of and operating in compliance with all
franchises, grants, authorizations, licenses, permits, easements, consents,
certificates and orders required for the conduct of its business, all of
which are valid and in full force and effect, and neither the Company nor
Medialink PR has received any notice of proceedings relating to the
revocation or modification of any such franchise, grant, authorization,
license, permit, easement, consent, certificate or order which, singly or
in the aggregate, if the subject of an unfavorable decision, would result
in a materially adverse change in the condition (financial or otherwise),
business, prospects or results of operations of the Company and Medialink
PR considered as a whole; and the Company and Medialink PR each is duly
qualified to do business and in good standing as foreign corporations in
all other jurisdictions where their ownership or leasing of
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properties or the conduct of their businesses requires such qualification.
(viii) The Company has authorized, issued and outstanding capital
stock as set forth under the heading "Capitalization" in the Prospectus
(except for subsequent issuances, if any, pursuant to reservations or
agreements referred to in the Prospectus); the issued and outstanding
shares of Common Stock (including the outstanding shares of the Stock) of
the Company conform to the description thereof in the Prospectus and have
been duly authorized and validly issued and are fully paid and
nonassessable and are duly approved for listing on the Nasdaq National
Market; the stockholders of the Company have no preemptive rights with
respect to any shares of capital stock of the Company and all outstanding
shares of capital stock of Medialink PR have been duly authorized and
validly issued, and are fully paid and nonassessable and are owned directly
by the Company free and clear of any liens, encumbrances, equities or
claims.
(ix) The Stock to be issued and sold by the Company to the
Underwriters hereunder has been duly and validly authorized and, when
issued and delivered against payment therefor as provided herein and in the
Pricing Agreement, will be duly and validly issued and fully paid and
nonassessable and will conform to the description thereof in the
Prospectus.
(x) Except as disclosed in the Prospectus, there are no legal or
governmental proceedings pending to which the Company or Medialink PR is a
party or of which any property of the Company or Medialink PR is the
subject, that are required to be disclosed in the Registration Statement
(other than as described therein), or which, if determined adversely to the
Company or Medialink PR, would individually or in the aggregate result in a
material adverse change in the condition (financial or otherwise),
business, prospects or results of operations of the Company and Medialink
PR considered as a whole or which might materially and adversely affect the
consummation of this Agreement; and to the best of the Company's knowledge
no such proceedings are threatened or contemplated by governmental
authorities or threatened by others.
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(xi) Neither the Company nor Medialink PR is, or with the giving of
notice or passage of time or both would be, in breach or violation of any
of the terms or provisions of or in default under (A) any statute, rule or
regulation applicable to the Company or Medialink PR, (B) any indenture,
contract, lease, mortgage, deed of trust, note or loan agreement or other
agreement or instrument to which the Company or Medialink PR is a party or
by which it may be bound, (C) its certificate of incorporation, by-laws or
other organizational documents, and (D) any order, decree or judgment of
any court or governmental agency or body having jurisdiction over the
Company or Medialink PR. The performance of this Agreement and the
consummation of the transactions herein contemplated will not, with the
giving of notice or passage of time or both, result in a breach or
violation of any of the terms or provisions of or constitute a default
under (W) any statute, rule or regulation applicable to the Company or
Medialink PR, (X) any indenture, contract, mortgage, lease, deed of trust,
note or other agreement or instrument to which the Company or Medialink PR
is a party or by which it is bound, (Y) the Company's or Medialink PR's
certificate of incorporation, by-laws or other organizational documents, or
(Z) any order, decree judgment of any court or governmental agency or body
having jurisdiction over the Company or Medialink PR or any of their
respective properties.
(xii) No labor dispute with the employees of the Company or Medialink
PR exists or is imminent; and the Company and Medialink PR are not aware of
any existing or imminent labor disturbance by the employees of any of their
principal suppliers, manufacturers or contractors which might be expected
to result in any material adverse change in the condition (financial or
otherwise), or in the earnings, affairs, business or prospects of the
Company and Medialink PR considered as a whole.
(xiii) No consent, approval, authorization, order, registration or
qualification of or with any court or governmental agency or body is
required for the issuance and sale of the Stock by the Company or for the
consummation by the Company of the transactions contemplated by this
Agreement, including, without limitation, the use of the
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<PAGE>
proceeds from the sale of the Stock to be sold by the Company in the manner
contemplated in the Prospectus under the caption "Use of Proceeds," except
such as may be required by the National Association of Securities Dealers,
Inc. (the "NASD") or under the Act or the Securities Exchange Act of 1934
(the "Exchange Act") or the securities or Blue Sky laws of any jurisdiction
in connection with the purchase and distribution of the Stock by the
Underwriters.
(xiv) This Agreement and the Pricing Agreement have been duly
authorized, executed and delivered by the Company.
(xv) The Company and Medialink PR own or have obtained valid licenses
for all trademarks, trademark registrations, service marks, service mark
registrations, trade names and copyrights described in the Prospectus as
being owned, licensed or used by the Company or Medialink PR or that are
necessary for the conduct of their respective businesses as described in
the Prospectus (collectively, "Intellectual Property") and neither the
Company nor Medialink PR is aware of any claim (or of any facts that would
form a reasonable basis for any claim) to the contrary or any challenge by
any third party to the rights of the Company or Medialink PR with respect
to any such Intellectual Property or to the validity or scope of any such
Intellectual Property and neither the Company nor Medialink PR currently
has any claim against a third party with respect to the infringement by
such third party of any such Intellectual Property, which claims or
challenges, if adversely determined, could, singly or in the aggregate,
have a material adverse effect on the condition (financial or otherwise),
business, prospects or results of operations of the Company and Medialink
PR considered as a whole. The Company has a good faith belief in the
distinctiveness and enforceability of all trademarks, service marks and
trade names comprising the Intellectual Property.
(xvi) The Company and Medialink PR have such certificates, permits,
licenses, franchises, consents, approvals, authorizations and clearances as
are necessary to own, lease or operate their respective properties and to
conduct their respective businesses in the manner described in the
Prospectus ("Licenses") and all such Licenses are
8
<PAGE>
valid and in full force and effect. The Company and Medialink PR are in
compliance in all material respects with their respective obligations under
such Licenses and no event has occurred that allows, or after notice or
lapse of time or both would allow, revocation, suspension or termination of
any such License or a material violation of any such laws or regulations.
No such License contains a burdensome restriction on the Company or
Medialink PR that is not adequately disclosed in the Registration Statement
and the Prospectus.
(xvii) The Company is not an "investment company" or an entity
"controlled" by an "investment company" as such terms are defined in the
Investment Company Act of 1940, as amended.
(xviii) The Company and Medialink PR do not own any real property. The
Company and Medialink PR have good and marketable title to all personal
property owned by the Company and Medialink PR, free and clear of any
mortgage, pledge, lien, security interest, claim or encumbrance of any kind
that may materially interfere with the use of such properties or the
conduct of the business of the Company and Medialink PR considered as a
whole; and all material properties held under lease or sublease by the
Company or Medialink PR are held under valid, subsisting and enforceable
leases or subleases.
(xix) The Company and Medialink PR maintain accurate books and records
reflecting their respective assets and maintain internal accounting
controls which provide reasonable assurance that (A) transactions are
executed with management's authorization, (B) transactions are recorded as
necessary to permit preparation of financial statements and to maintain
accountability for assets, (C) access to assets is permitted only in
accordance with management's authorization and (D) the reported
accountability of assets is compared with existing assets at reasonable
intervals.
(xx) The Company has complied, and will continue to comply, with all
provisions of Section 517.075 of the Florida Statutes (Chapter 92-198, Laws
of Florida) and the rules thereunder.
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<PAGE>
(xxi) Each of the Company and Medialink PR carry or is entitled to the
benefits of insurance in such amounts and covering such risks as is
generally maintained by or on behalf of companies of established repute
engaged in the same of similar business, and all such insurance is in full
force and effect.
(xxii) The properties, assets and operations of each of the Company
and Medialink PR are in compliance with all applicable federal, state,
local and foreign laws, rules and regulations orders, decrees, judgments,
permits and licenses relating to public and worker health and safety and to
the protection and clean-up of the natural environment and activities or
conditions related thereto, including, without limitation, those relating
to the generation, handling, disposal, transportation or release of
hazardous materials (collectively, "Environmental Laws"), except to the
extent that failure to comply could not, singly or in the aggregate, have a
material adverse effect on the condition (financial or otherwise),
business, prospects or results of operations of the Company and Medialink
PR considered as a whole. With respect to such properties, assets and
operations, including any previously owned, leased or operated properties,
assets or operations, there are no past, present or, to the best knowledge
of the Company, reasonably anticipated future events, conditions,
circumstances, activities, practices, incidents, actions or plans of the
Company or Medialink PR that may interfere with or prevent compliance or
continued compliance in all material respects with applicable Environmental
Laws. Neither the Company nor Medialink PR is the subject of any federal,
state, local or foreign investigation, and neither the Company nor
Medialink PR has received any notice or claim (or is aware of any facts
that would form a reasonable basis for any claim), nor entered into any
negotiations or agreements, with any third party relating to any liability
or remedial action or potential liability or remedial action under
Environmental Laws, nor are there any pending, reasonably anticipated or,
to the best knowledge of the Company, threatened actions, suits or
proceedings against or affecting the Company, Medialink PR or their
properties, assets, or operations, in connection with any such
Environmental Laws. The term "hazardous materials" shall
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<PAGE>
mean those substances that are regulated by or form the basis for liability
under any applicable Environmental Laws.
(xxiii) Each of the Company and Medialink PR has filed all federal,
state, local and foreign tax returns required to be filed, such returns are
complete and accurate in all material respects, and all taxes shown by such
returns or otherwise assessed that are due or payable have been paid,
except such taxes as are being contested in good faith and as to which
adequate reserves have been provided. The charges, accruals and reserves on
the books of the Company and Medialink PR in respect of any tax liability
for any year not finally determined are adequate to meet any assessments or
reassessments for additional taxes; and there has been no tax deficiency
asserted and, to the best knowledge of the Company, no tax deficiency might
be asserted or threatened against the Company or Medialink PR that could,
singly or in the aggregate, have a material adverse effect on the financial
(financial or otherwise), business, prospects or results of operations of
the Company and Medialink PR considered as a whole.
(xxiv) Each "employee benefit plan" within the meaning of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), in which
employees of the Company or Medialink PR are eligible to participate is in
compliance in all material respects with the applicable provisions of ERISA
and the Internal Revenue Code of 1986, as amended. Neither the Company nor
Medialink PR has any liability under Title IV of ERISA, nor does the
Company or Medialink PR expect that any such liability will be incurred,
that could singly or in the aggregate, have a material adverse effect on
the condition (financial or otherwise), business, prospects or results of
operations of the Company and Medialink PR considered as a whole.
(xxv) No transaction has occurred between or among the Company,
Medialink PR and any of their respective officers, directors or affiliates
or, to the best of the Company's knowledge, any affiliate of any such
officer or director, that is required to be described in the Registration
Statement that is not so described.
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<PAGE>
(xxvi) Except as disclosed in the Registration Statement and
Prospectus, there are no contracts, agreements or understandings between
the Company or Medialink PR and any third party (whether acting in an
individual, fiduciary or other capacity) granting such third party the
right to require the Company to file a registration statement under the Act
with respect to any securities of the Company owned or to be owned by such
third party or to require the Company to include such securities in the
securities registered pursuant to the Registration Statement or in any
securities being registered pursuant to any other registration statement
filed by the Company under the Act.
(xxvii) There are no statutes, regulations, contracts or other
documents that are required to be described in the Registration Statement
or the Prospectus or to be filed as an exhibit to the Registration
Statement that are not described or filed as required. The contracts so
described in the Registration Statement and the Prospectus are in full
force and effect and neither the Company or Medialink PR nor, to the best
knowledge of the Company, any other party, is in breach of or default under
any such contracts.
(xxviii) The Company has not taken and will not take, directly or
indirectly, any action designed to or that could reasonably be expected to
cause or result in the stabilization or manipulation of the price of the
Common Stock and the Company has not distributed and will not distribute
any offering material in connection with the offering and sale of the Stock
other than any preliminary prospectus filed with the Commission or the
Prospectus or other materials, if any, permitted by the Act or the Rules or
Regulations.
(xxix) Neither the Company nor Medialink PR has, at any time during
the last five years, (A) made any unlawful contributions to any candidate
for foreign office or failed to disclose fully any contributions in
violation of law or (B) made any payment to any federal, state or local
governmental officer or official or other person charged with similar
public or quasi-public duties, other than payments required or permitted by
the laws of the United States or any jurisdiction thereof.
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<PAGE>
(xxx) Except as contemplated by this Agreement, there is no broker,
finder or other party that is entitled to receive from the Company or
Medialink PR any brokerage or finder's fee or any other fee, commission or
similar payment in connection with the Stock to be sold by the Company.
(b) Any certificate signed by an officer of the Company and delivered to
the Representatives or counsel for the Underwriters shall be deemed a
representation and warranty of the Company to each Underwriter as to the matters
covered thereby.
(c) Representations, Warranties and Agreements of the Selling Stockholders.
Each Selling Stockholder represents and warrants to, and agrees with, the
several Underwriters that:
(i) Such Selling Stockholder has full right, power and authority to
enter into this Agreement, the Pricing Agreement and the custody agreement
and power of attorney (the "Power of Attorney"). The custody agreement and
the Power of Attorney are collectively referred to herein as the "Custody
Agreement." Such Selling Stockholder has duly executed and delivered this
Agreement and the Pricing Agreement. The Custody Agreement has been duly
executed and delivered on behalf of each Selling Stockholder and the
Custody Agreement constitutes the valid and binding agreement of such
Selling Stockholder enforceable against such Selling Stockholder in
accordance with its terms.
(ii) Such Selling Stockholder has full right, power and authority to
sell, transfer, assign and deliver the Optional Stock being sold by such
Selling Stockholder hereunder. Immediately prior to the delivery of the
shares of Optional Stock being sold by such Selling Stockholder, such
Selling Stockholder was the sole registered owner of such shares of
Optional Stock and had good and valid title to such shares of Optional
Stock, free and clear of all adverse claims as defined in Section 8-302 of
the Uniform Commercial Code and, upon registration of such shares of
Optional Stock in the names of the Underwriters or their nominees, assuming
that such purchasers purchased such shares of Optional Stock in good faith
without notice of any adverse claims as defined
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in Section 8-302 of the Uniform Commercial Code, such purchasers will have
acquired all the rights of such Selling Stockholder in such shares of
Optional Stock free of any adverse claim, any lien in favor of the Company
or any third party or restrictions on transfer imposed by the Company.
(iii) The performance of this Agreement and the Custody Agreement and
the consummation of the transactions herein and therein contemplated will
not, with the giving of notice or the passage of time or both, result in a
breach or violation of any of the terms or provisions of or constitute a
default under any statute, rule or regulation applicable to such Selling
Stockholder, or any indenture, mortgage, deed of trust, note or loan
agreement or other agreement or instrument to which such Selling
Stockholder is a party or by which it is bound, or any judgment, order or
decree of any court or governmental agency or body having jurisdiction over
such Selling Stockholder or any of its properties, or, if such Selling
Stockholder is a corporation, limited partnership, limited liability
company or trust, the certificate or articles of incorporation, or other
organizational documents or bylaws of such Selling Stockholder.
(iv) For a period of 180 days after the date of the Prospectus, such
Selling Stockholder will not, without the prior written consent of Dean
Witter Reynolds Inc., directly or indirectly, (i) offer, sell, assign,
transfer, encumber, pledge, contract to sell, grant an option to purchase
or otherwise dispose of, other than by operation of law, any shares of
Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock or any other rights to purchase Common Stock
(including, without limitation, Common Stock which may be deemed to be
beneficially owned by such Selling Stockholder in accordance with the Rules
and Regulations (such shares, the "Beneficially Owned Shares") whether now
owned or hereafter acquired by such Selling Stockholder or with respect to
which such Selling Stockholder has or hereafter acquires the power of
disposition, or file any registration statement under the Act, with respect
to any of the foregoing or (ii) enter into any swap or any other agreement
or any transaction that transfers, in whole or in part, directly or
indirectly, the economic consequence of ownership of Common
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<PAGE>
Stock or any Beneficially Owned Shares, whether any such swap or
transaction is to be settled by delivery of Common Stock or other
securities, in cash or otherwise, except for (A) the Stock being sold
hereunder or (B) the exercise of outstanding options granted by the Company
or pursuant to any options granted or to be granted pursuant to any
employee or non-employee director stock option plans (but not the sale,
distribution, pledge, hypothecation or other disposition of shares of
Common Stock received upon exercise of any such option).
(v) Such Selling Stockholder has duly executed and delivered the
Custody Agreement (A) appointing _________________ and _______________, and
each of them, as attorney-in-fact (the "Attorneys-in-fact") with authority
to execute and deliver this Agreement on behalf of such Selling
Stockholder, to authorize the delivery of the shares of Optional Stock to
be sold by such Selling Stockholder hereunder and otherwise to act on
behalf of such Selling Stockholder in connection with the transactions
contemplated by this Agreement, and (B) appointing ____________________, as
Custodian, to hold in custody for delivery under this Agreement
certificates for the shares of Optional Stock to be sold by such Selling
Stockholder hereunder.
(vi) No consent, approval, authorization or order of any court or
governmental agency or body is required for the consummation by such
Selling Stockholder of the transactions contemplated by this Agreement,
except such as may be required by the NASD or under the Act or Exchange Act
or the securities or Blue Sky laws of any jurisdiction in connection with
the purchase and distribution of the Optional Stock by the Underwriters.
(vii) Such Selling Stockholder has not (A) taken, directly or
indirectly, any action designed to cause or result in, or that has
constituted or might reasonably be expected to constitute, the
stabilization or manipulation of the price of any security of the Company
to facilitate the sale or resale of the Optional Stock or (B) since the
filing of the Registration Statement (1) sold, bid for, purchase or paid
anyone any compensation for soliciting purchases of, the Optional Stock or
(2) paid or agreed to pay to any
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<PAGE>
person any compensation for soliciting another to purchase any other
securities of the Company.
(viii) All information furnished or to be furnished to the Company by
or on behalf of such Selling Stockholder for use in connection with the
preparation of the Registration Statement and the Prospectus, insofar as it
relates to such Selling Stockholder, is or will be true and correct in all
respects and, with respect to the Registration Statement, does not and will
not contain an untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading, and, with respect to the Prospectus,
does not and will not contain any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
(ix) Nothing has come to such Selling Stockholder's attention that has
caused such Selling Stockholder to believe that (A) at the time the
Registration Statement becomes effective and at the Representation Date, it
will include any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading and (B) the Prospectus, at the time the
Registration Statement becomes effective and as of the Representation Date
(unless the term "Prospectus" refers to a prospectus which has been
provided to the Underwriters by the Company for use in connection with the
offering of the Stock which differs from the prospectus on file at the
Commission at the time the Registration Statement becomes effective, in
which case at the time it is first provided to the Underwriters for such
use) and at the Option Closing Date, the Prospectus will include any untrue
statement of material fact or omit to state any material fact necessary in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading. The foregoing representations,
warranties and agreements in this subsection (ix) shall not apply to
information contained in or omitted from the Registration Statement or the
Prospectus in reliance upon, and in conformity with, written information
furnished to the Company by or on behalf of any
16
<PAGE>
Underwriter, directly or through the Representatives, specifically for use
in the preparation thereof.
Each Selling Stockholder agrees that the shares of Optional Stock
represented by the certificates held in custody under the Custody Agreement are
for the benefit of and coupled with and subject to the interests of the
Underwriters, the other Selling Stockholders and the Company hereunder, and that
the arrangement for such custody and the appointment of the Attorneys-in-fact
are irrevocable; that the obligations of such Selling Stockholder hereunder
shall not be terminated by operation of law, whether by the death or incapacity
of such Selling Stockholder, or any other event, that if such Selling
Stockholder should die or become incapacitated or any other event occur, before
the delivery of the Optional Stock hereunder, certificates for the Optional
Stock to be sold by such Selling Stockholder shall be delivered on behalf of
such Selling Stockholder in accordance with the terms and conditions of this
Agreement and the Custody Agreement, and action taken by the Attorneys-in-fact
or any of them under the Power of Attorney shall be as valid as if such death,
incapacity or other event had not occurred, whether or not the Custodian, the
Attorneys-in-fact or any of them shall have notice of such death, incapacity or
other event.
Each Selling Stockholder further agrees that neither such Selling
Stockholder nor any of its officers, directors or affiliates will (a) take,
directly or indirectly, prior to the termination of the underwriting syndicate
contemplated by this Agreement, any action designed to cause or to result in, or
that might reasonably be expected to constitute, the stabilization or
manipulation of the price of any securities of the Company to facilitate the
sale or resale of any of the shares of Common Stock, (b) sell, bid for, purchase
or pay anyone any compensation for soliciting purchases of, Common Stock or (c)
pay to or agree to pay any person any compensation for soliciting another to
purchase any other securities of the Company.
3. Purchase by, and Sale and Delivery to, Underwriters; Closing Date. On
the basis of the representations, warranties, covenants and agreements herein
contained, and subject to the terms and conditions herein set forth, the Company
agrees to sell to the Underwriters the Firm Stock, and subject to the terms and
conditions herein set forth, the Underwriters agree, severally and not jointly,
to purchase from the Company, at the price per share set forth in the Pricing
Agreement, the number of shares of Firm Stock set forth opposite its name in
Schedule A (except as otherwise provided in the Pricing Agreement), subject to
adjustment in accordance with Section 11 hereof.
The Underwriters agree to reserve a maximum of _____ shares of Firm Stock
for offering and sale to certain officers and employees of the Company and to
certain other persons designated by the Company directly related to the conduct
of its business, at the public offering price. Any such shares of Firm Stock not
purchased by such persons immediately following the initial public offering of
the Firm Stock will be offered to the public by the Underwriters as set forth in
the Prospectus.
If the Company has elected not to rely upon Rule 430A under the Rules and
Regulations, the initial public offering price and the purchase price per share
to be paid by the several Underwriters for the Firm Stock each
17
<PAGE>
have been determined and set forth in the Pricing Agreement, dated the date
hereof, and an amendment to the Registration Statement and the Prospectus will
be filed before the Registration Statement becomes effective.
If the Company has elected to rely upon Rule 430A under the Rules and
Regulations, the purchase price per share to be paid by the several Underwriters
for the Firm Stock shall be an amount equal to the initial public offering
price, less an amount per share to be determined by agreement between the
Representatives and the Company. The initial public offering price per share of
the Firm Stock shall be a fixed price to be determined by agreement between the
Representatives and the Company. The initial public offering price and the
purchase price, when so determined, shall be set forth in the Pricing Agreement.
In the event that such prices have not been agreed upon and the Pricing
Agreement has not been executed and delivered by all parties thereto by the
close of business on the fourteenth business day following the date of this
Agreement, this Agreement shall terminate forthwith, without liability of any
party to any other party, unless otherwise agreed to by the Company and the
Representatives.
The Company will deliver the Firm Stock to the Representatives for the
respective accounts of the several Underwriters (in the form of definitive
certificates, issued in such names and in such denominations as the
Representatives may direct by notice in writing to the Company given at or prior
to 12:00 Noon, New York Time, on the business day preceding the Closing Date or,
if no such direction is received, in the names of the respective Underwriters in
the amount set forth opposite each Underwriter's name on Schedule A hereto),
against payment of the purchase price therefor by wire transfer in immediately
available funds (same day funds), all at the offices of Willkie Farr &
Gallagher, One Citicorp Center, 153 East 53rd Street, New York, New York 10022.
The time and date of delivery and closing shall be at 10:00 A.M., on December
__, 1996, in accordance with Rule 15c6-1 of the Exchange Act; provided, however,
that such date and time may be accelerated or extended by agreement among the
Company, and the Representatives or postponed pursuant to the provisions of
Section 11 hereof. The time and date of such payment and delivery are herein
referred to as the "Closing Date". The Company shall make the certificates for
the Stock available to the Representatives for examination on behalf of the
Underwriters not later than 3:00 P.M., New York Time, on the business day
preceding the Closing Date.
In addition, for the purpose of covering any over-allotments in connection
with the distribution and sale of the Firm Stock as contemplated by the
Prospectus, the Selling Stockholders hereby grant the Underwriters an option to
purchase, severally and not jointly, up to 300,000 shares in the aggregate of
the Optional Stock. The purchase price per share to be paid for the Optional
Stock shall be the same price per share as for the Firm Stock. The option
granted hereby may be exercised as to all or any part of the Optional Stock at
any time not more than 30 days subsequent to the effective date of this
Agreement. No Optional Stock shall be sold and delivered unless the Firm Stock
previously has been, or simultaneously is, sold and delivered. The right to
purchase the Optional Stock or any portion thereof may be surrendered and
terminated at any time upon notice by the Representatives to the Selling
Stockholders.
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The option granted hereby may be exercised by the Representatives on behalf
of the Underwriters by giving written notice to the Selling Stockholders setting
forth the number of shares of the Optional Stock to be purchased by them and the
date and time for delivery of and payment for the Optional Stock. Such date and
time for delivery of and payment for the Optional Stock (which may be the First
Closing Date) is herein called the "Option Closing Date" and shall not be later
than _____ days after written notice is given. All purchases of Optional Stock
from the Selling Stockholders shall be made on a pro rata basis. Optional Stock
shall be purchased for the account of each Underwriter in the same proportion as
the number of shares of Firm Stock set forth opposite such Underwriter's name in
Schedule A hereto bears to the total number of shares of Firm Stock (subject to
adjustment by the Representatives to eliminate odd lots). Upon exercise of the
option by the Representatives, the Selling Stockholders agree to sell to the
Underwriters the number of shares of Optional Stock set forth in the written
notice of exercise and the Underwriters agree, severally and not jointly,
subject to the terms and conditions herein set forth, to purchase such shares of
Optional Stock.
The Selling Stockholders will deliver the Optional Stock to the
Representatives for the respective accounts of the several Underwriters (in the
form of definitive certificates, issued in such names and in such denominations
as the Representatives may direct by notice in writing to the Selling
Stockholders given at or prior to 12:00 Noon, New York Time, on the business day
preceding the Option Closing Date or, if no such direction is received, in the
names of the respective Underwriters), against payment of the purchase price
therefor by wire transfer in immediately available funds (same day funds),
payable to the order of [_____________________], as custodian for the Selling
Stockholders, all at the offices of Willkie Farr & Gallagher, One Citicorp
Center, 153 East 53rd Street, New York, New York 10022. The Selling Stockholders
shall make the certificates for the Optional Stock available to the
Representatives for examination on behalf of the Underwriters not later than
3:00 P.M., New York Time, on the business day preceding the Option Closing Date.
It is understood that Dean Witter Reynolds Inc. or Wheat, First Securities,
Inc., individually and not as Representatives of the several Underwriters, may
(but shall not be obligated to) make payment to the Company or to the Selling
Stockholders on behalf of any Underwriter or Underwriters, for
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the Stock to be purchased by such Underwriter or Underwriters. Any such payment
by Dean Witter Reynolds Inc. or Wheat, First Securities, Inc. shall not relieve
such Underwriter or Underwriters from any of its or their other obligations
hereunder.
After the Registration Statement becomes effective, the several
Underwriters propose to make an initial public offering of the Stock at the
initial public offering price. The Representatives shall promptly advise the
Company and the Selling Stockholders of the making of the initial public
offering.
4. Covenants and Agreements of the Company. The Company covenants and
agrees with the several Underwriters that:
(a) The Company will use its best efforts to cause the Registration
Statement to become effective under the Act, will advise the Representatives
promptly as to the time at which the Registration Statement becomes effective,
will advise the Representatives promptly of the issuance by the Commission of
any stop order suspending the effectiveness of the Registration Statement or of
the institution of any proceedings for that purpose, and will use its best
efforts to prevent the issuance of any such stop order and to obtain as soon as
possible the lifting thereof, if issued. If the Company elects to rely on Rule
434 under the Rules and Regulations, the Company will prepare a Rule 434
Prospectus that complies with the requirements of Rule 434 under the Rules and
Regulations. If Company elects not to rely on Rule 434, the Company will provide
the Underwriters with copies of the form of Prospectus, in such number as the
Underwriters may reasonably request, and file or transmit for filing with the
Commission such Prospectus in accordance with Rule 424(b) of the Rules and
Regulations by the close of business in New York on the business day immediately
succeeding the date of the Pricing Agreement. If the Company elects to rely on
Rule 434, the Company will provide the Underwriters with the copies of the form
of Rule 434 Prospectus, in such number as the Underwriters may reasonably
request, and file or transmit for filing with the Commission the Rule 434
Prospectus in accordance with Rule 424(b) of the Rules and Regulations by the
close of business in New York on the business day immediately succeeding the
date of the Pricing Agreement.
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(b) The Company will advise the Representatives promptly of any request by
the Commission for any amendment of or supplement to the Registration Statement
or the Prospectus or for additional information, and will not at any time file
any amendment to the Registration Statement or supplement to the Prospectus
which shall not previously have been submitted to the Representatives a
reasonable time prior to the proposed filings thereof or to which the
Representatives shall reasonably object in writing or which is not in compliance
with the Act and the Rules and Regulations.
(c) The Company will prepare and file with the Commission, promptly upon
the request of the Representatives, any amendments or supplements to the
Registration Statement or the Prospectus (including any revised prospectus which
the Company proposes for use by the Underwriters in connection with the offering
of the Stock which differs from the prospectus on file at the Commission at the
time the Registration Statement becomes effective, whether or not such revised
prospectus is required to be filed pursuant to Rule 424 of the Rules and
Regulations or any term sheet prepared in reliance on Rule 434 of the Rules and
Regulations) which in the opinion of the Representatives may be necessary to
enable the several Underwriters to continue the distribution of the Stock and
will use its best efforts to cause the same to become effective as promptly as
possible.
(d) If at any time after the effective date of the Registration Statement
when a prospectus relating to the Stock is required to be delivered under the
Act any event relating to or affecting the Company or Medialink PR occurs or has
occurred as a result of which the Prospectus would include an untrue statement
of a material fact, or omit to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, or if it is necessary, at any time to amend the Prospectus
to comply with the Act, the Company will promptly notify the Representatives
thereof and will prepare an amended or supplemented prospectus (in form and
substance satisfactory to counsel to the Underwriters) which will correct such
statement or omission; and, in case any Underwriter is required to deliver a
prospectus relating to the Stock nine months or more after the effective date of
the Registration Statement, the Company upon the request of the Representatives
and at the expense of such Underwriter will prepare promptly such prospectus or
prospectuses as may be necessary to
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permit compliance with the requirements of Section 10(a)(3) of the Act.
(e) The Company will deliver to the Representatives, at or before the
Closing Date, signed copies of the Registration Statement and all amendments
thereto including all financial statements and exhibits thereto, and will
deliver to the Representatives such number of copies of the Registration
Statement, including such financial statements but without exhibits, and of all
amendments thereto, as the Representatives may reasonably request. The Company
will deliver or mail to or upon the order of the Representatives on the date of
the initial public offering, and thereafter from time to time during the period
when delivery of a prospectus relating to the Stock is required under the Act,
as many copies of the Prospectus, in final form or as thereafter amended or
supplemented as the Representatives may reasonably request; provided, however,
that the expense of the preparation and delivery of any prospectus required for
use nine months or more after the effective date of the Registration Statement
shall be borne by the Underwriters required to deliver such prospectus.
(f) The Company will make generally available to its security holders as
soon as practicable, but in any event not later than 60 days after the close of
the period covered thereby, an earnings statement (in form complying with the
provisions of Rule 158 under the Act) which will be in reasonable detail (but
which need not be audited) and which will comply with Section 11(a) of the Act,
covering a period of at least twelve months beginning not later than the first
day of the Company's fiscal quarter next following the "effective date" (as
defined in Rule 158) of the Registration Statement.
(g) The Company will cooperate with the Representatives to enable the Stock
to be qualified for sale under the securities laws of such jurisdictions as the
Representatives may designate and at the request of the Representatives will
make such applications and furnish such information as may be required of it as
the issuer of the Stock for that purpose; provided, however, that the Company
shall not be required to qualify to do business or to file a general consent to
service of process in any such jurisdiction. The Company will, from time to
time, prepare and file such statements and reports as are or may be
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<PAGE>
required of it as the issuer of the Stock to continue such qualifications in
effect for so long a period as the Representatives may reasonably request for
the distribution of the Stock.
(h) The Company will furnish to its stockholders annual reports containing
financial statements certified by independent public accountants and shall also
furnish quarterly summary financial information in reasonable detail which may
be unaudited. During the period of five years from the date hereof, the Company
will deliver to the Representatives and, upon request, to each of the other
Underwriters, copies of each annual report of the Company and each other report
furnished by the Company to its stockholders; and will deliver to the
Representatives, as soon as they are available, copies of any other reports
(financial or other) which the Company shall publish or otherwise make available
to any of its security holders as such, and as soon as they are available,
copies of any reports and financial statements furnished to or filed with the
Commission or any national securities exchange or the NASD.
(i) The Company will use its best efforts to effect the listing of the
Stock on the Nasdaq National Market. The Company will file with the Nasdaq
National Market all documents and notices required by the Nasdaq National Market
of companies that have issued securities that are traded in the over-the-counter
market and quotations for which are reported by Nasdaq National Market.
(j) The Company will use the net proceeds received by it from the sale of
the Stock in the manner specified in the Prospectus under "Use of Proceeds."
(k) The Company will file with the Commission such reports on Form SR as
may be required pursuant to Rule 463 under the Act.
(l) During a period of 180 days from the date of the Prospectus, the
Company will not, without prior written consent of Dean Witter Reynolds Inc.,
directly or indirectly, sell, offer to sell, grant any option for the sale of,
or otherwise dispose of or enter into any agreement to sell, any Common Stock or
any
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<PAGE>
security convertible into Common Stock (except for Common Stock issued pursuant
to reservations, agreements or employee benefit plans disclosed in the
Registration Statement).
(m) At the time this Agreement is executed, the Company shall have
furnished to the Representatives a letter from each officer and director of the
Company and certain stockholders of the Company addressed to the
Representatives, in which each such person agrees that, during a period of 180
days from the date of the Prospectus, such person will not, without the prior
written consent of Dean Witter Reynolds Inc., directly or indirectly, (i) offer,
sell, assign, transfer, encumber, pledge, contract to sell, grant an option to
purchase or otherwise dispose of, other than by operation of law, any shares of
Common Stock or any securities convertible into or exercisable or exchangeable
for Common Stock or any other rights to purchase Common Stock (including,
without limitation, Beneficially Owned Shares) whether now owned or hereafter
acquired by such person or with respect to which such person has or hereafter
acquires the power of disposition, or file any registration statement under the
Act, with respect to any of the foregoing or (ii) enter into any swap or any
other agreement or any transaction that transfers, in whole or in part, directly
or indirectly, the economic consequence of ownership of Common Stock or any
Beneficially Owned Shares, whether any such swap or transaction is to be settled
by delivery of Common Stock or other securities, in cash or otherwise.
5. Payment of Expenses. The Company will pay (directly or by reimbursement)
all expenses incident to the performance of the obligations of the Company and
of the Selling Stockholders under this Agreement, including but not limited to
all expenses and taxes incident to delivery of the Stock to the Representatives,
all expenses incident to the registration of the Stock under the Act and the
printing of copies of the Registration Statement, each Preliminary Prospectus,
the Prospectus, any amendments or supplements thereto including any term sheet
delivered by the Company pursuant to Rule 434 of the Rules and Regulations, the
"Blue Sky" memorandum, the Selling Stockholders' Powers of Attorney, the Custody
Agreement, the Agreement Among Underwriters, Underwriters' Questionnaire and
this Agreement and furnishing the same to the Underwriters and dealers except as
otherwise provided in Sections 4(d) and 4(e), the fees and disbursements of the
Company's counsel and
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accountants, all filing and printing fees and expenses (including legal fees and
disbursements of counsel for the Underwriters) incurred in connection with
qualification of the Stock for sale under the laws of such jurisdictions as the
Representatives may designate, all fees and expenses (including legal fees and
disbursements of counsel for the Underwriters) paid or incurred in connection
with filings made with the National Association of Securities Dealers, Inc. (the
"NASD"), the fees and expenses incurred in connection with the listing of the
Stock on the Nasdaq National Market, the costs of preparing stock certificates,
the costs and fees of any registrar or transfer agent and all other costs and
expenses incident to the performance of their obligations hereunder which are
not otherwise specifically provided for in this Section.
If this Agreement is terminated by the Representatives in accordance with
the provisions of Section 3 or Section 8 hereof, the Company shall reimburse the
Underwriters for all of their out-of-pocket expenses, including the fees and
disbursements of Willkie Farr & Gallagher, counsel for the Underwriters.
6. Indemnification and Contribution. (a) The Company agrees to indemnify
and hold harmless each Underwriter, each employee, officer, partner, director
and agent of the Underwriter, and each person, if any, who controls such
Underwriter within the meaning of the Act, against any losses, claims, damages,
liabilities or expenses (including the reasonable cost of investigating and
defending against any claims therefor and counsel fees incurred in connection
therewith), joint or several, as incurred, which may be based upon the Act, or
any other federal or state statute or at common law, arising out of any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement (or any amendment thereto), including the information
deemed to be part of the Registration Statement pursuant to Rule 430A(b) or Rule
434 of the Rules and Regulations, if applicable, or the omission or alleged
omission therefrom of a material fact required to be stated therein or necessary
to make the statements therein not misleading or arising out of any untrue
statement or alleged untrue statement of a material fact contained in the
Prospectus (or any amendment or supplement thereto) or the omission or alleged
omission therefrom of a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, unless such statement or omission was made in reliance upon, and in
conformity with, written information furnished to the Company by such
Underwriter, directly or through the Representatives, specifically for use in
the preparation thereof; provided that the Company shall not be
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<PAGE>
liable with respect to any claims made against any Underwriter or any such
employee, officer, partner, director or agent or any such controlling person
under this subsection unless such Underwriter or employee, officer, partner,
director or agent or controlling person shall have notified the Company in
writing within a reasonable time after the summons or other first legal process
giving information of the nature of the claim shall have been served upon such
Underwriter or employee, officer, partner, director or agent or controlling
person (such notification by an Underwriter shall suffice as notification on
behalf of its officers, partners, directors, employees, agents and controlling
persons), but failure to notify the Company of any such claim shall not relieve
it from any liability which it may have to such Underwriter or employee,
officer, partner, director or agent or controlling person otherwise than on
account of the indemnity agreement contained in this Section 6(a).
The Company shall be entitled to participate at its own expense in the
defense, or, if it so elects, to assume the defense of any suit brought to
enforce any such liability, but, if the Company elects to assume the defense,
such defense shall be conducted by counsel chosen by it and reasonably
satisfactory to such Underwriter or indemnified person, as the case may be. In
the event the Company elects to assume the defense of any such suit and retain
such counsel, the Underwriter or Underwriters or other indemnified person or
persons, defendant or defendants in the suit, may retain additional counsel but
shall bear the fees and expenses of such counsel unless (i) the Company shall
have specifically authorized the retaining of such counsel or (ii) the parties
to such suit include such Underwriter or Underwriters other indemnified or
person or persons, and such Underwriter or Underwriters or other indemnified
person or persons have been advised by counsel that one or more legal defenses
may be available to it or them which may not be available to the Company, in
which case the Company shall not be entitled to assume the defense of such suit
notwithstanding its obligation to bear the fees and expenses of such counsel (it
being understood, however, that in connection with such suit, the Company shall
not be liable for the expenses of more than one separate counsel (in addition to
local counsel) representing the indemnified parties in any one action or
separate but substantially similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances). The Company will
not, without the prior written consent of each Underwriter, settle or compromise
or consent to the entry of any judgment in any pending or threatened claim,
action, suit or proceeding in respect of which indemnification may be sought
hereunder (whether or not such Underwriter or other indemnified party is a party
to such claim, action, suit or proceeding), unless such settlement, compromise
or consent (i) includes an unconditional release of such Underwriter and each
such other indemnified person or persons from all liability arising out of such
claim, action, suit or proceeding and (ii) does not include a statement as to or
as admission of fault, culpability or a failure to act by or on behalf of any
indemnified party. The Company agrees that a breach of the preceding sentence
shall cause irreparable harm to the Underwriters and that the Underwriters shall
be entitled to injunctive relief from any appropriate court ordering specific
performance of said provision. This indemnity agreement will be in addition to
any liability which the Company might otherwise have.
(b) Each Selling Stockholder, severally and not jointly, agrees to
indemnify and hold harmless each Underwriter, each employee, officer, partner,
director and agent of the Underwriter and each person, if any, who controls such
Underwriter with the meaning of the Act, against any losses, claims, damages,
liabilities or expenses (including the reasonable cost of investigating and
defending against any claims therefor and counsel fees
26
<PAGE>
incurred in connection therewith), joint or several, as incurred, which may be
based upon the Act, or any other statute or at common law, arising out of any
untrue statement or alleged untrue statement of a material fact contained in the
Registration Statement (or any amendment thereto), including the information
deemed to be part of the Registration Statement pursuant to Rule 430A(b) of the
Rules and Regulations, if applicable, or the omission or alleged omission
therefrom of a material fact required to be stated therein or necessary to make
the statements therein not misleading or arising out of any untrue statement or
alleged untrue statement of a material fact contained in the Prospectus (or any
amendment or supplement thereto) or the omission or alleged omission therefrom
of a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading, unless
such statement or omission was made in reliance upon, and in conformity with,
written information furnished to the Company by such Underwriter, directly or
through the Representatives, specifically for use in the preparation thereof;
provided, however, that such Selling Stockholder shall not be liable with
respect to any claims made against any Underwriter or any such employee,
officer, partner, director or agent or any such controlling person under this
subsection unless such Underwriter or employee, officer, partner, director or
agent or controlling person shall have notified such Selling Stockholder in
writing within a reasonable time after the summons or other first legal process
giving information of the nature of the claim shall have been served upon such
Underwriter or employee or agent or controlling person (such notification by an
Underwriter shall suffice as notification on behalf of its officers, partners,
directors, employees, agents or controlling persons), but failure to notify such
Selling Stockholder of such claim shall not relieve such Selling Stockholder
from any liability which such Selling Stockholder may have to such Underwriter
or employee or agent or controlling person otherwise than on account of its
indemnity agreement contained in this Section 6(b); and provided, further, that
each Selling Stockholder shall only be liable under this paragraph for that
proportion of any such losses, claims, damages, liabilities or expenses which
the number of shares of the Stock set forth opposite his name in Schedule B
hereto bears to the total number of shares of Stock sold hereunder.
Such Selling Stockholder shall be entitled to participate at his own
expense in the defense, or, if he so elects, to assume the defense of any suit
brought to enforce any such liability, but, if such Selling Stockholder elects
to assume the defense, such defense shall be conducted by counsel chosen by him
and reasonably satisfactory to such Underwriter or indemnified person, as the
case may be. In the event that any Selling Stockholder elects to assume the
defense of any such suit and retain such counsel, the Underwriter or
Underwriters or other indemnified person or persons, defendant or defendants in
the suit, may retain additional counsel but shall bear the fees and expenses of
such counsel unless (i) such Selling Stockholder shall have specifically
authorized the retaining of such counsel or (ii) the parties to such suit
include such Underwriter or Underwriters or other indemnified person or persons
and such Selling Stockholder and such Underwriter or Underwriters or other
indemnified person or persons have been advised by counsel that one or more
legal defenses may be available to it or them which may not be available to such
Selling Stockholder, in which case such Selling Stockholder shall not be
entitled to assume the defense of such suit notwithstanding its obligation to
bear the fees an expenses of such counsel (it being understood, however, that in
connection with such suit, the Company and the Selling Stockholders, as
appropriate, shall not be liable for the expenses of more than one separate
counsel (in addition to local counsel) representing, the indemnified parties in
any one action or separate but substantially similar or related actions in the
same jurisdiction arising out of the same general allegations or circumstances).
This indemnity agreement will be in addition to any liability which such Selling
Stockholder might otherwise have.
(c) Each Underwriter severally agrees to indemnify and hold harmless the
Company, each of its directors, each of its officers who have signed the
Registration Statement, each of its employees, officers, directors and agents
and each person, if any, who controls the Company within the meaning of the Act
and each Selling Stockholder and each person, if any, who controls a
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Selling Stockholder within the meaning of the Act, against any losses, claims,
damages, liabilities or expenses (including the reasonable cost of investigating
and defending against any claims therefor and counsel fees incurred in
connection therewith), joint or several, as incurred, which may be based upon
the Act, or any other statute or at common law, arising out of any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement (or any amendment thereto), including the information
deemed to be part of the Registration Statement pursuant to Rule 430A(b) of the
Rules and Regulations, if applicable, or the omission or alleged omission
therefrom of a material fact required to be stated therein or necessary to make
the statements therein not misleading or arising out of any untrue statement or
alleged untrue statement of a material fact contained in the Prospectus (or any
amendment or supplement thereto) or the omission or alleged omission therefrom
of a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading, but only
insofar as any such statement or omission was made in reliance upon, and in
conformity with, written information furnished to the Company by such
Underwriter, directly or through the Representatives, specifically for use in
the preparation thereof; provided, however, that in no case is such Underwriter
to be liable with respect to any claims made against the Company or any person
against whom the action is brought unless the Company or such person shall have
notified such Underwriter in writing within a reasonable time after the summons
or other first legal process giving information of the nature of the claim shall
have been served upon the Company or such person, but failure to notify such
Underwriter of such claim shall not relieve it from any liability which it may
have to the Company or such person otherwise than on account of its indemnity
agreement contained in this Section 6(c).
Such Underwriter shall be entitled to participate at its own expense in the
defense, or, if it so elects, to assume the defense of any suit brought to
enforce any such liability, but, if such Underwriter elects to assume the
defense, such defense shall be conducted by counsel chosen by it and reasonably
satisfactory to the Company or such person, as the case may be. In the event
that any Underwriter elects to assume the defense of any such suit and retain
such counsel, the Company, said employees, agents, officers and directors and
any other Underwriter or Underwriters or employee or employees or agent or
agents or controlling person or persons, defendant or defendants in the suit,
shall bear the fees and expenses of any additional counsel retained by them,
respectively. The Underwriter against whom indemnity may be sought shall not be
liable to indemnify any person for any settlement of any such claim effected
without such Underwriter's consent. This indemnity agreement will be in addition
to any liability which such Underwriter might otherwise have.
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(d) If the indemnification provided for in this Section 6 is unavailable or
insufficient to hold harmless an indemnified party under subsection (a), (b) or
(c) above in respect of any losses, claims, damages, liabilities or expenses (or
actions in respect thereof) referred to herein, then each indemnifying party
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages, liabilities or expenses (or actions in
respect thereof), as incurred, in such proportion as is appropriate to reflect
the relative benefits received by the Company and the Selling Stockholders on
the one hand and the Underwriters on the other from the offering of the Stock.
If, however, the allocation provided by the immediately preceding sentence is
not permitted by applicable law, then each indemnifying party shall contribute
to such amount paid or payable by such indemnified party, as incurred, in such
proportion as is appropriate to reflect not only such relative benefits but also
the relative fault of the Company and the Selling Stockholders on the one hand
and the Underwriters on the other in connection with the statements or omissions
which resulted in such losses, claims, damages, liabilities or expenses (or
actions in respect thereof), as well as any other relevant equitable
considerations. The relative benefits received by the Company and the Selling
Stockholders on the one hand and the Underwriters on the other shall be deemed
to be in the same proportion as the total net proceeds from the offering (before
deducting expenses) received by the Company and the Selling Stockholders bear to
the total underwriting discounts and commissions received by the Underwriters,
in each case as set forth in the table on the cover page of the Prospectus. The
relative fault shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the
Company, the Selling Stockholders or the Underwriters and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The Company, the Selling Stockholders and the
Underwriters agree that it would not be just and equitable if contribution were
determined by pro rata allocation (even if the Underwriters were treated as one
entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to above. The amount paid
or payable by an indemnified party as a result of the losses, claims, damages,
liabilities or expenses (or actions in respect thereof) referred to above shall
be deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with
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investigating or defending any such claim. Notwithstanding the provisions of
this subsection (d), no Underwriter shall be required to contribute any amount
in excess of the amount by which the total price at which the shares of the
Stock underwritten by it and distributed to the public were offered to the
public exceeds the amount of any damages which such Underwriter has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute are several in
proportion to their respective underwriting obligations and not joint.
7. Survival of Indemnities, Representations, Warranties, etc. The
respective indemnities, covenants, agreements, representations, warranties and
other statements of the Company, the Selling Stockholders and the several
Underwriters, as set forth in this Agreement or made by them respectively,
pursuant to this Agreement, shall remain in full force and effect, regardless of
any investigation made by or on behalf of any Underwriter, the Selling
Stockholders, the Company or any of its officers or directors or any controlling
person, and shall survive delivery of and payment for the Stock.
8. Conditions of Underwriters' Obligations. The respective obligations of
the several Underwriters hereunder shall be subject to the accuracy, at and
(except as otherwise stated herein) as of the date hereof, the Representation
Date and the Closing Date or the Option Closing Date, as the case may be, of the
representations and warranties made herein by the Company and the Selling
Stockholders, to the accuracy of the statements of the Company's officers or
directors in any certificate furnished pursuant to the provisions hereof, to
compliance at and as of such Closing Date by the Company and the Selling
Stockholders with their covenants and agreements herein contained and other
provisions hereof to be satisfied at or prior to such Closing Date, and to the
following additional conditions:
(a) The Registration Statement shall become effective not later than 3:00
P.M., New York City time, on the date hereof or, with the consent of the
Representatives, at a later time and
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date, not later, however, than 5:30 P.M., New York City time on the first
business day following the date hereof, or at such later date as may be approved
by a majority in interest of the Underwriters, and at such Closing Date (i) no
stop order suspending the effectiveness thereof shall have been issued and no
proceedings for that purpose shall have been initiated or, to the knowledge of
the Company or the Selling Stockholders, threatened by the Commission, and any
request for additional information on the part of the Commission (to be included
in the Registration Statement or the Prospectus or otherwise) shall have been
complied with to the reasonable satisfaction of the Representatives, and (ii)
there shall not have come to the attention of the Representatives any facts that
would cause them to believe that the Prospectus, at the time it was required to
be delivered to a purchaser of the Stock, contained any untrue statement of a
material fact or omitted to state any material fact necessary in order to make
the statements therein, in the light of the circumstances under which they were
made, not misleading. If the Company has elected to rely upon Rule 430A of the
Rules and Regulations, the price of the Stock and any price related information
previously omitted from the effective Registration Statement pursuant to Rule
430A shall have been transmitted to the Commission for filing pursuant to Rule
424(b) of the Rules and Regulations within the prescribed time period, and
before the Closing Date the Company shall have provided evidence satisfactory to
the Representatives of such timely filing, or a post-effective amendment
providing such information shall have been promptly filed and declared effective
in accordance with the requirements of Rule 430A of the Rules and Regulations.
(b) At the time of execution of this Agreement, the Representatives shall
have received from KPMG Peat Marwick LLP a letter, dated the date of such
execution, in form and substance previously approved by the Representatives, and
to the effect that:
(i) They are independent certified public accountants with respect to
the Company and Medialink PR within the meaning of the Act and the Rules
and Regulations.
(ii) In their opinion, the financial statements and supporting
schedule(s) examined by them and included in the Registration Statement
comply as to form in all material
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respects with the applicable accounting requirements of the Act and the
related published Rules and Regulations thereunder and, if applicable, they
have made a review in accordance with standards established by the American
Institute of Certified Public Accountants of the unaudited consolidated
interim financial statements, selected financial data, pro forma financial
information, prospective financial statements and/or condensed financial
statements derived from audited financial statements of the Company for the
periods specified in such letter, as indicated in their reports thereon,
copies of which have been furnished to the Representatives;
(iii) The unaudited selected financial information with respect to the
consolidated results of operations and financial position of the Company
for the five most recent fiscal years included in the Prospectus agrees
with the corresponding amounts (after restatement where applicable) in the
audited consolidated financial statements for the five such fiscal years;
(iv) On the basis of limited procedures, not constituting an
examination in accordance with generally accepted auditing standards,
consisting of a reading of the unaudited financial statements and other
information referred to below, a reading of the latest available interim
financial statements of the Company and Medialink PR, inspection of the
minute books of the Company and Medialink PR since the date of the latest
audited financial statements included or incorporated by reference in the
Prospectus, inquiries of officials of the Company and Medialink PR
responsible for financial and accounting matters and such other inquiries
and procedures as may be specified in such letter, nothing came to their
attention that caused them to believe that:
(A) the unaudited condensed statements of income, consolidated
balance sheets and consolidated statements of cash flows included in
the Prospectus do not comply as to form in all material respects with
the applicable accounting requirements of the Act and the related
published rules and regulations thereunder, or are not in conformity
with generally accepted
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accounting principles applied on a basis substantially consistent with
the basis for the audited statements of income, balance sheets and
statements of cash flows included in the Prospectus;
(B) any other unaudited income statement data and balance sheet
items included in the Prospectus do not agree with the corresponding
items in the unaudited financial statements from which such data and
items were derived, and any such unaudited data and items were not
determined on a basis substantially consistent with the basis for the
corresponding amounts in the audited financial statements included in
the Prospectus;
(C) the unaudited financial statements which were not included in
the Prospectus but from which were derived the unaudited condensed
financial statements referred to in clause (A) and any unaudited
income statement data and balance sheet items included in the
Prospectus and referred to in clause (B) were not determined on a
basis substantially consistent with the basis for the audited
financial statements included in the Prospectus;
(D) any unaudited pro forma condensed financial statements
included in the Prospectus do not comply as to form in all material
respects with the applicable accounting requirements of the Act and
the published rules and regulations thereunder or the pro forma
adjustments have not been properly applied to the historical amounts
in the compilation of those statements;
(E) as of a specified date not more than three days prior to the
date of such letter, there has been any change in the consolidated
capital stock of the Company (other than issuances of capital stock
upon exercise of options, upon earn-outs of performance shares] and
upon conversions of convertible securities, in each case which were
outstanding on the date of the latest balance sheet included in the
Prospectus) or any increase in the consolidated long-term debt of the
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Company and consolidated subsidiaries, any decrease in the
consolidated net current assets, net assets or other items specified
by the Representatives, or any change in any other items specified by
the Representatives, in each case as compared with amounts shown in
the latest balance sheet included in the Prospectus, except in each
case for changes, increases or decreases which the Prospectus
discloses have occurred or may occur or which are described in such
letter; and
(F) for the period from the date of the latest financial
statements included in the Prospectus to the specified date referred
to in Clause (E) there was any decrease in consolidated net revenues
or operating profit or the total or per share amounts of consolidated
net income or other items specified by the Representatives, or any
increases in any items specified by the Representatives, in each case
as compared with the comparable period of the preceding year and with
any other period of corresponding length specified by the
Representatives, except in each case for increases or decreases which
the Prospectus discloses have occurred or may occur or which are
described in such letter; and
(v) In addition to the examination referred to in their reports
included in the Prospectus and the limited procedures, inspection of minute
books, inquiries and other procedures referred to in paragraphs (ii) and
(iv) above, they have carried out certain specified procedures, not
constituting an examination in accordance with generally accepted auditing
standards, with respect to certain amounts, percentages and financial
information specified by the Representatives which are derived from the
general accounting records of the Company and Medialink PR, which appear in
the Prospectus or in Part II of, or in exhibits and schedules to, the
Registration Statement specified by the Representatives, and have compared
certain of such amounts, percentages and financial information with the
accounting records of the Company and Medialink PR or reports or
Company-prepared schedules and have found them to be in agreement.
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(vi) On the basis of a reading of the unaudited condensed pro forma
financial statements included in the Registration Statement and the
Prospectus, carrying out certain specified procedures and inquiries of
certain officials of the Company and Medialink PR who have responsibility
for financial and accounting matters, and proving the arithmetic accuracy
of the application of the pro forma adjustments to the historical amounts
in the unaudited consolidated condensed pro forma financial statements,
nothing came to their attention that caused them to believe that the
unaudited consolidated condensed pro forma financial statements do not
comply as to form in all material respects with the applicable accounting
requirements of Rule 11-02 of Regulation S-X or that the pro forma
adjustments have not been properly applied to the historical amounts in the
compilation of such statements.
(c) The Representatives shall have received from KPMG Peat Marwick LLP a
letter, dated the Closing Date, to the effect that such accountants reaffirm, as
of such Closing Date, and as through made on such Closing Date, the statements
made in the letter furnished by such accountants pursuant to paragraph (b) of
this Section 8, except that the specified date will be a date not more than
three business days prior to the Closing Date.
(d) The Representatives shall have received from Tashlik, Kreutzer &
Goldwyn P.C., counsel for the Company and the Selling Stockholders, their
opinion or opinions, dated the Closing Date, to the effect that:
(i) The Company has been duly incorporated, is validly existing as a
corporation in good standing under the laws of Delaware and has power and
authority (corporate and other) to own or lease its properties and conduct
its business as described in the Prospectus; the Company is in possession
of and is operating in compliance with all franchises, grants,
authorizations, licenses, permits, easements, consents, certificates and
orders required for the conduct of its business, all of which are valid and
in full force and effect; and the Company is duly qualified as a foreign
corporation in good standing in all other jurisdictions where its ownership
or leasing of properties or the conduct of its business requires such
qualification.
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(ii) The Company has an authorized and outstanding capital stock after
giving effect to the offering as set forth under the heading
"Capitalization" in the Prospectus; all outstanding shares of Common Stock
(including the Stock) conform to the description thereof in the Prospectus
and have been duly authorized and validly issued and are fully paid and
nonassessable, and the stockholders of the Company have no preemptive
rights with respect to any shares of capital stock of the Company.
(iii) To the best of such counsel's knowledge, there are no legal or
governmental proceedings pending to which the Company or Medialink PR is a
party or of which any property of the Company or Medialink PR is the
subject, which individually or in the aggregate are material; and to the
best of such counsel's knowledge no such proceedings are threatened by
governmental authorities or others.
(iv) Neither the Company not Medialink PR is in violation of its
respective certificate of incorporation or by-laws. This Agreement and the
Pricing Agreement have been duly authorized, executed and delivered by the
Company; and the performance of this Agreement and the Pricing Agreement
and the consummation of the transactions herein and therein contemplated
will not result in a breach or violation of any of the terms or provisions
of or constitute a default under any statute, contract, indenture,
mortgage, deed of trust, loan agreement, note, lease or other agreement or
instrument known to such counsel to which the Company is a party or by
which it is bound, the Company's Amended and Restated Certificate of
Incorporation or Amended and Restated By-laws, or any order, rule or
regulation known to such counsel of any court or governmental agency or
body having jurisdiction over the Company or any of its properties.
(v) No consent, approval, authorization or order of any court or
governmental agency or body is required for the consummation by the Company
of the transactions contemplated by this Agreement and the Pricing
Agreement, except such as may be required and has been obtained under the
Act and the Exchange Act, or as may be required under the securities or
Blue Sky laws of any jurisdiction or by the NASD in
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<PAGE>
connection with the purchase and distribution of the Stock by the
Underwriters.
(vi) The Registration Statement has become effective under the Act
and, to the best of the knowledge of such counsel, no stop order suspending
the effectiveness thereof has been issued and no proceedings for that
purpose have been instituted or are pending or contemplated under the Act.
(vii) The Common Stock has been approved for listing on the Nasdaq
National Market. The Registration Statement on Form 8-A relating to the
Common Stock has become effective under the Exchange Act.
(viii) The Registration Statement and the Prospectus (other than the
financial statements and supporting schedules included therein, as to which
no opinions need be rendered), and each amendment or supplement thereto, as
of their respective effective or issue dates and as of the Closing Date
complied as to form in all material respects with the requirements of the
Act and the Rules and Regulations. The Rule 434 Prospectus conforms to the
requirements of Rule 434 in all material respects.
(ix) The descriptions in the Registration Statement and Prospectus of
contracts and other documents are accurate in all material respects and
such descriptions fairly present in all material respects the information
required to be shown; and such counsel does not know of any legal or
governmental proceedings or of any contracts or documents of a character
required to be described in the Registration Statement or Prospectus or to
be filed as exhibits to the Registration Statement or Prospectus which are
not described and filed as required.
(x) The Company is not, and will not be as a result of the
consummation of the transactions contemplated by this Agreement, an
"investment company" or a company "controlled" by an "investment company"
within the meaning of the Investment Company Act of 1940, as amended.
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<PAGE>
(xi) Nothing has come to such counsel's attention that would lead such
counsel to believe that the Registration Statement or Prospectus, at the
time the Registration Statement became effective or at the Representation
Date, contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading or that the Prospectus, at the
Representation Date (unless the term "Prospectus" refers to a prospectus
which has been provided to the Underwriters by the Company for use in
connection with the offering of the Stock which differs from the prospectus
on file at the Commission at the time the Registration Statement became
effective, in which case at the time it was first provided to the
Underwriters for such use) or at the Closing Date, included any untrue
statement of a material fact or omitted to state any material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
(xii) Medialink PR has been duly incorporated, is validly existing as
corporation in good standing under the laws of Delaware and has power and
authority (corporate and other) to own its respective properties and
conduct its respective businesses as described in the Prospectus; Medialink
PR is in possession of and is operating in compliance with all franchises,
grants, authorizations, licenses, permits, easements, consents,
certificates and orders required for the conduct of its business, all of
which are valid and in full force and effect; and Medialink PR is duly
qualified as a foreign corporation in good standing and in all other
jurisdictions where its ownership or leasing of properties or the conduct
of its businesses requires such qualification.
(xiii) All outstanding shares of capital stock of Medialink PR have
been duly authorized and validly issued, are fully paid and nonassessable,
and are owned by the Company free and clear of any liens, encumbrances,
equities and claims.
(xiv) Each Selling Stockholder has full right, power and authority to
enter into this Agreement, the Pricing Agreement and the Custody Agreement.
Each Selling Stockholder has duly executed and delivered this Agreement and
the Pricing Agreement. The Custody Agreement has been duly executed and
delivered on behalf of each Selling Stockholder and constitutes the valid
and binding agreement of such Selling Stockholder enforceable against such
Selling Stockholder in accordance with its terms subject, as to
enforcement, to
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<PAGE>
applicable bankruptcy, insolvency, reorganization and moratorium laws and
other laws affecting the enforcement of creditors' rights generally and to
equitable principles.
(xv) Each Selling Stockholder has full right, power and authority to
sell, transfer, assign and deliver the Optional Stock being sold by such
Selling Stockholder hereunder. Immediately prior to the delivery of the
shares of Optional Stock being sold by such Selling Stockholder, such
Selling Stockholder was the sole registered owner of such shares of
Optional Stock and, upon registration of such shares of Optional Stock in
the names of the Underwriters or their nominees, assuming that such
purchasers purchased such shares of Optional Stock in good faith without
notice of any adverse claims as defined in Section 8-302 of the Uniform
Commercial Code, such purchasers will have acquired all the rights of such
Selling Stockholder in such shares of Optional Stock free of any adverse
claim, any lien in favor of the Company or restrictions on transfer imposed
by the Company.
(xvi) The performance of this Agreement, the Pricing Agreement and the
Custody Agreement and the consummation of the transactions herein and
therein contemplated will not, with the giving of notice of passage of time
or both, result in a breach or violation of any of the terms or provisions
of or constitute a default under any statute, rule or regulation applicable
to any Selling Stockholder, or, to the best of such counsel's knowledge,
any indenture, mortgage, deed of trust, note or loan agreement or other
agreement or instrument to which any Selling Stockholder is a party or by
which it is bound, or any judgment, order or decree known to such counsel
after due inquiry of any court or governmental agency or body having
jurisdiction over any Selling Stockholder or any of their properties or, if
any Selling Stockholder is a corporation, limited partnership, limited
liability company or trust, the certificate or articles of incorporation or
other organizational documents and bylaws of any Selling Stockholder.
(xvii) No consent, approval, authorization or order of any court or
governmental agency or body is required for the consummation by any of the
Selling Stockholders of the transactions contemplated by this Agreement and
the Pricing Agreement, except such as may be required under the Act or
Exchange Act or as may be required under the securities or
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<PAGE>
Blue Sky laws of any jurisdiction in connection with the purchase and
distribution of the Stock by the Underwriters.
(xviii) Any transfer taxes which are required to be paid in connection
with the sale and delivery of the Stock to the Underwriters hereunder have
been paid and all laws imposing such taxes have been fully complied with.
(e) The Representatives shall have received from Willkie Farr & Gallagher,
counsel for the Underwriters, their opinion or opinions dated the Closing Date
with respect to the validity of the Stock, the Registration Statement, the
Prospectus and such other related matters as the Representatives may require. In
giving such opinion, such counsel may rely, as to all matters governed by the
laws of jurisdictions other than the law of the State of New York and the
federal law of the United States, upon opinions of counsel satisfactory to the
Representatives. The Company and the Selling Stockholders shall have furnished
to such counsel such documents as they may request for the purpose of enabling
them to pass upon such matters.
(f) The Representatives shall have received a certificate, dated such
Closing Date, of the Chief Executive Officer or the President and the Chief
Financial or Accounting Officer of the Company to the effect that: (i) no stop
order suspending the effectiveness of the Registration Statement has been
issued, and no proceedings for that purpose have been instituted or are pending
or contemplated under the Act; (ii) subsequent to the respective dates as of
which information is given in the Prospectus, neither the Company nor Medialink
PR has incurred any liabilities or obligations, direct or contingent, nor
entered into any transactions, not in the ordinary course of business, which in
either case are material to the Company and Medialink PR considered as a whole,
whether or not arising in the ordinary course of business, and there has not
been any material adverse change in the condition (financial or otherwise),
business, prospects or results of operations of the Company and Medialink PR
considered as a whole, or any change in the capital stock or long-term debt of
the Company and Medialink PR considered as a whole; (iii) the Company has
complied with all agreements and satisfied all conditions on its part to be
performed or satisfied at or before the Closing Date; (iv) the representations
and warranties of the Company in this Agreement are true and correct at and as
of the Closing Date; and (v) between the execution of this Agreement and the
Closing Date, the
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<PAGE>
business and operations conducted by the Company and Medialink PR have not
sustained a loss by strike, fire, flood, accident or other calamity (whether or
not insured) of such a character as to interfere materially with the conduct of
the business and operations of the Company and Medialink PR considered as a
whole. As used in this Section 8(f), the term "Prospectus" means the Prospectus
in the form first used to confirm sales of Stock.
(g) The Company shall have furnished to the Representatives such additional
certificates as the Representatives may have reasonably requested as to the
accuracy, at and as of the Closing Date, of the representations and warranties
made herein by it as to compliance at and as of the Closing Date by it with its
covenants and agreements herein contained and other provisions hereof to be
satisfied at or prior to the Closing Date and as to other conditions to the
obligations of the Underwriters hereunder.
(h) The Stock shall have been approved for listing on Nasdaq National
Market.
(i) In the event the Underwriters exercise the option granted in Section 3
hereof to purchase all or any portion of the Optional Shares, the
representations and warranties of the Company and the Selling Stockholders
contained herein and the statements in any certificates furnished by the Company
hereunder shall be true and correct as of the Option Closing Date, and you shall
have received:
(i) A letter from KPMG Peat Marwick LLP, in form and substance
satisfactory to you and dated the Option Closing Date, substantially the
same in scope and substance as the letter furnished to you pursuant to
Section 8(b), except that the specified date in the letter furnished
pursuant to this Section 8(i) shall be a date not more than five days prior
to the Option Closing Date.
(ii) A certificate, dated the Option Closing Date, of the Chief
Executive Officer or President and the Chief Financial or Accounting
Officer of the Company confirming that the certificate delivered at the
First Closing Date
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pursuant to Section 8(f) remains true as of the Option Closing Date.
(iii) The opinion of Tashlik, Kreutzer & Goldwyn, P.C., counsel for
the Company and the Selling Stockholders, in form and substance
satisfactory to counsel for the Underwriters, dated the Option Closing
Date, relating to the Optional Stock and otherwise to the same effect as
the opinion required by Section 8(d).
(iv) The opinion of Willkie Farr & Gallagher, counsel for the
Underwriters, dated the Option Closing Date, relating to the Optional Stock
and otherwise to the same effect as the opinion required by Section 8(e).
If any of the conditions hereinabove provided for in this Section shall not
have been satisfied when and as required by this Agreement, this Agreement may
be terminated by the Representatives by notifying the Company of such
termination in writing or by telegram at or prior to the First Closing Date, but
the Representatives shall be entitled to waive any of such conditions.
9. Termination. This Agreement may be terminated by the Representatives by
notice to the Company if at or prior to the First Closing Date or the Option
Closing Date, as the case may be, (i) trading in securities on the New York or
American Stock Exchanges shall have been suspended or minimum or maximum prices
shall have been established on either such exchange, or a banking moratorium
shall have been declared by New York or United States authorities; (ii) there
shall have been any adverse change in the financial markets in the United
States, Japan or Europe or any outbreak or escalation of hostilities between the
United States and any foreign power, or of any other insurrection or armed
conflict involving the United States that, in the judgment of the
Representatives, makes it impracticable or inadvisable to offer, sell or deliver
the Firm Stock or the Optional Stock as applicable, on the terms contemplated by
the Prospectus or this Agreement; (iii) there shall have been since the
execution of this Agreement or since the respective dates as of which
information is given in the Prospectus any material adverse change in the
condition (financial or otherwise), or business, prospects or results of
operations of the Company and Medialink PR considered as a whole; (iv) there
shall have been any development involving the business or properties or
securities of the Company or Medialink PR or the transactions contemplated by
this Agreement, which, in the judgment of the Representatives,
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makes it impracticable or inadvisable to offer, sell or deliver the Firm Stock
or Optional Stock, as applicable, on the terms contemplated by the Prospectus or
this Agreement or (v) if there shall be any litigation, pending or threatened,
which, in the judgment of the Representatives, makes it impracticable or
inadvisable to offer or deliver the Firm Stock or the Optional Stock, as
applicable, on the terms contemplated by the Prospectus or this Agreement. As
used in this Section 9, the term "Prospectus" means the Prospectus in the form
first used to confirm sales of Stock.
10. Reimbursement of Underwriters. Notwithstanding any other provisions
hereof, if this Agreement shall be terminated by the Representatives under
Section 8, Section 9 or Section 12, the Company will bear and pay the expenses
specified in Section 5 hereof and, in addition to their obligations pursuant to
Section 6, hereof, the Company will reimburse the reasonable out-of-pocket
expenses of the several Underwriters (including reasonable fees and
disbursements of counsel for the Underwriters) incurred in connection with this
Agreement and the proposed purchase of the Stock, and promptly upon demand the
Company will pay such amounts to you as Representatives. In addition, the
provisions of Section 6 shall survive any such termination.
11. Default By Underwriters. If any Underwriter or Underwriters shall
default in its or their obligations to purchase shares of Firm Stock hereunder
on the Closing Date and the aggregate number of shares of Firm Stock which such
defaulting Underwriter or Underwriters agreed but failed to purchase does not
exceed 10% of the total number of shares which the Underwriters are obligated to
purchase at the Closing Date, the other Underwriters shall be obligated
severally, in proportion to their respective commitments hereunder, to purchase
the shares of Firm Stock which such defaulting Underwriter or Underwriters
agreed but failed to purchase. If any Underwriter or Underwriters shall so
default and the aggregate number of shares of Firm Stock with respect to which
such default or defaults occur is more than 10% of the total number of shares
underwritten and arrangements satisfactory to the Representatives and the
Company for the purchase of such shares of Firm Stock by other persons are not
made within 48 hours after such default, this Agreement shall terminate.
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If the remaining Underwriters or substituted underwriters are required
hereby or agree to take up all or part of the shares of Firm Stock of a
defaulting Underwriter or Underwriters as provided in this Section 11, (i) the
Company shall have the right to postpone the Closing Date for a period of not
more than five full business days, in order that the Company may effect whatever
changes may thereby be made necessary in the Registration Statement or the
Prospectus, or in any other documents or arrangements, and the Company agrees
promptly to file any amendments to the Registration Statement or supplements to
the Prospectus which may thereby be made necessary, and (ii) the respective
numbers of shares of Firm Stock to be purchased by the remaining Underwriters or
substituted underwriters shall be taken as the basis of their underwriting
obligation for all purposes of this Agreement. Nothing herein contained shall
relieve any defaulting Underwriter of its liability to the Company or the
Underwriters for damages occasioned by its default hereunder. Any termination of
this Agreement pursuant to this Section 11 shall be without liability on the
part of any non-defaulting Underwriter or the Company, except for expenses to be
paid or reimbursed pursuant to Section 5 and except for the provisions of
Section 6.
12. Default By the Company.
If the Company shall fail at the Closing Date to sell and deliver the
number of shares of Stock which it is obligated to sell hereunder, then this
Agreement shall terminate without any liability on the part of any
non-defaulting party.
No action taken pursuant to this Section shall relieve the Company so
defaulting from liability, if any, in respect of such default.
13. Notices. All communications hereunder shall be in writing and, if sent
to the Underwriters shall be mailed, delivered or telegraphed and confirmed to
you, as their Representatives c/o Dean Witter Reynolds Inc. at Two World Trade
Center, 65th Floor, Corporate Finance, New York, New York 10048, Attn: Samuel H.
Wolcott, III, except that notices given to an Underwriter pursuant to Section 6
hereof shall be sent to such Underwriter at the address provided to the
Representatives or, if sent to the Company, shall be mailed, delivered or
telegraphed and confirmed c/o Medialink Worldwide Incorporated, 708 Third
Avenue, Ninth Floor, New York, New York 10017, Attn: Graeme McWhirter.
14. Successors. This Agreement shall inure to the benefit of and be binding
upon the several Underwriters, the Company and the Selling Stockholders and
their respective successors and legal representatives. Nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any person
other than the persons mentioned in the preceding sentence any legal or
equitable right, remedy or claim under or in respect of this Agreement, or any
provisions herein contained, this Agreement and all conditions and provisions
hereof being
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intended to be and being for the sole and exclusive benefit of such persons and
for the benefit of no other person; except that the representations, warranties,
covenants, agreements and indemnities of the Company and the Selling
Stockholders contained in this Agreement shall also be for the benefit of the
person or persons, if any, who control any Underwriter or Underwriters within
the meaning of Section 15 of the Act, and the indemnities of the several
Underwriters shall also be for the benefit of each director of the Company, each
of its officers who has signed the Registration Statement and the person or
persons, if any, who control the Company or any Selling Stockholder within the
meaning of Section 15 of the Act.
15. APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAWS. The Company and the Selling Stockholders hereby consent to
personal jurisdiction in the State of New York and voluntarily submit to the
jurisdiction of the courts of such state, including the federal district courts
located in such state, in any proceeding with respect to this Agreement.
16. Counterparts. This Agreement may be executed by one or more parties
hereto in any number of counterparts each of which shall be deemed to be an
original, but all such counterparts shall together constitute one and the same
instrument.
17. Authority of the Representatives. In connection with this Agreement,
the Representatives will act for and on behalf of the several Underwriters, and
any action taken under this Agreement by the Representatives jointly or by Dean
Witter Reynolds Inc., as Representatives of the several Underwriters, will be
binding on all the Underwriters ; and any action taken under this Agreement by
the Attorneys-in-fact will be binding on the related Selling Stockholders.
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Any person executing and delivering this Agreement as Attorney-in-fact for
a Selling Stockholder represents by so doing that he has been duly appointed as
Attorney-in-fact by such Selling Stockholder pursuant to a validly existing and
binding Power of Attorney which authorizes such Attorney-in-fact to take such
action.
If the foregoing correctly sets forth our understanding, please indicate
your acceptance thereof in the space provided below for that purpose, whereupon
this letter and your acceptance shall constitute a binding agreement between us.
Very truly yours,
MEDIALINK WORLDWIDE INCORPORATED
By_______________________________
[Vice] President
SELLING STOCKHOLDERS LISTED IN
SCHEDULE B
By_______________________________
Attorney-in-fact
_________________________________
Attorney-in-fact
Acting on [its] own behalf
and on behalf of the Selling Stockholders
listed in Schedule B.
Accepted and delivered, as of the
date first above written:
DEAN WITTER REYNOLDS INC.
WHEAT, FIRST SECURITIES, INC.
Acting on their own behalf and as
Representatives of the several
Underwriters referred to in the
foregoing Agreement.
BY DEAN WITTER REYNOLDS INC.
By____________________________________
Authorized Signature
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SCHEDULE A
Number of Shares of
Name Stock to be Purchased
- ---- ---------------------
Total...................................................
<PAGE>
SCHEDULE B
Number of Shares of
Selling Stockholders Stock to be Purchased
- -------------------- ---------------------
Total...................................................
<PAGE>
EXHIBIT A
2,000,000 Shares
MEDIALINK WORLDWIDE INCORPORATED
Common Stock
PRICING AGREEMENT
December __, 1996
DEAN WITTER REYNOLDS INC.
WHEAT, FIRST SECURITIES, INC.
As Representative of the several Underwriters
c/o Dean Witter Reynolds Inc.
2 World Trade Center
65th Floor
New York, New York 10048
Dear Sirs:
Reference is made to the Underwriting Agreement, dated December __, 1996
(the "Underwriting Agreement"), relating to the purchase by the several
Underwriters named in Schedule A thereto, for whom Dean Witter Reynolds Inc. and
Wheat, First Securities, Inc. are acting as representatives (the
"Representatives"), of the above shares of Common Stock (the "Common Stock") of
Medialink Worldwide Incorporated (the "Company").
Pursuant to Section 3 of the Underwriting Agreement, the Company agrees
with each underwriter as follows:
1. The initial public offering price per share for the Stock, determined as
provided in Section 3, shall be $_______________.
2. The purchase price per share for the Stock to be paid by the several
Underwriters shall be $_______________.
<PAGE>
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to the Company a counterpart hereof, whereupon this
instrument, along with all counterparts, will become a binding agreement between
the Underwriters and the Company in accordance with its terms.
Very truly yours,
MEDIALINK WORLDWIDE INCORPORATED
By: _____________________________
[Vice] President
SELLING STOCKHOLDERS LISTED ON
SCHEDULE B TO THE UNDERWRITING
AGREEMENT
By_______________________________
Attorney-in-fact
_________________________________
Attorney-in-fact
Acting on [its] own behalf
and on behalf of the Selling Stockholders
listed on Schedule B to the Underwriting
Agreement.
Accepted and delivered, as of
the date first above written:
DEAN WITTER REYNOLDS INC.
Wheat, First Securities, Inc.
Acting on their own behalf and as
Representatives of the several
Underwriters referred to in the
foregoing Agreement.
BY DEAN WITTER REYNOLDS INC.
By__________________________________
Authorized Signature
2
<PAGE> [FORM]
FORM OF AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
MEDIALINK WORLDWIDE INCORPORATED
It is hereby certified that:
1. (a) The present name of the corporation
(hereinafter called the "Corporation") is MEDIALINK WORLDWIDE INCORPORATED.
(b) The name under which the Corporation was
originally incorporated is Video Broadcasting Corporation and the dates of
filing of the original Certificate of Incorporation of the Corporation and the
six Certificates of Amendment of Certificate of Incorporation, with the
Secretary of State of the State of Delaware are September 24, 1986, October 20,
1986, May 11, 1987, November 10, 1987, October 31, 1989, December 10, 1991 and
August 23, 1996, respectively.
2. The original Certificate of Incorporation of the
Corporation is hereby amended by striking out Articles SECOND, FIFTH and NINTH
thereof and by substituting in lieu thereof new Articles SECOND, FIFTH and
NINTH which are set forth in the Amended and Restated Certificate of
Incorporation hereinafter provided for. New Articles TWELFTH and THIRTEENTH
have been inserted in the Amended and Restated Certificate of Incorporation.
3. The provisions of the certificate of incorporation of the
Corporation as heretofore amended, restated and supplemented, and as herein
amended, are hereby restated and integrated into the single instrument which is
hereinafter set forth, and which is entitled Amended and Restated Certificate
of Incorporation of MEDIALINK WORLDWIDE INCORPORATED without any further
amendments other than the amendments herein certified and without any
discrepancy between the provisions of the certificate of incorporation as
heretofore amended, restated and supplemented and the provisions of said single
instrument hereinafter set forth.
4. The amendments and the restatement of the certificate of
incorporation herein certified have been duly adopted by the stockholders in
accordance with the provisions of Sections 228, 242 and 245 of the General
Corporation Law of the State of Delaware. Prompt written notice of the adoption
of the amendments and of the restatement of the certificate of incorporation
herein certified has been given to those stockholders who have not consented in
writing thereto, as provided in Section 228 of the General Corporation Law of
the State of Delaware.
5. The certificate of incorporation of the Corporation,
as amended and restated herein, shall read as follows:
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<PAGE>
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
MEDIALINK WORLDWIDE INCORPORATED
FIRST. The name of the corporation is Medialink Worldwide
Incorporated (the "Corporation").
SECOND. The location of its registered office in the State of
Delaware is Corporation Trust Center, 1209 Orange Street, in the City of
Wilmington, County of New Castle. The name of its registered agent at such
address is The Corporation Trust Company.
THIRD. The nature of the business or purposes to be conducted
or promoted is to engage in, and to do any lawful act for which corporations may
be incorporated under the General Corporation Law of Delaware.
FOURTH. The Corporation is to have perpetual existence.
FIFTH. The Corporation is authorized to issue two classes of
shares to be designated, respectively, "Common Stock" and "Preferred Stock." The
total number of shares which the Corporation is authorized to issue is seventeen
million seven hundred seventy-six thousand and fifty-seven (17,776,057) shares.
The number of shares of Common Stock authorized is fifteen million (15,000,000)
shares, par value $0.01 per share. The number of shares of Preferred Stock
authorized is two million seven hundred seventy-six thousand and fifty-seven
(2,776,057) shares. The Preferred Stock shall be issued in four (4) series. The
first such series shall be "Series A Preferred" and shall consist of six hundred
fifty-five thousand four hundred
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<PAGE>
seventeen (655,417) shares, par value $1.50 per share. The second such series
shall be "Series B Preferred" and shall consist of four hundred seventy-five
thousand one hundred eighty-five (475,185), par value $1.35 per share. The
third such series shall be "Series C Preferred" and shall consist of six
hundred forty-five thousand four hundred fifty-five (645,455) shares, par value
$2.75 per share. The fourth such series shall be "Preferred Stock" and shall
consist of one million (1,000,000) shares, par value $0.01 per share. The
Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock
shall be issued with such further qualifications, powers, preferences, rights
and such qualifications, limitations or restrictions thereof as the Board of
Directors, or any committee appointed by the Board of Directors for such
purpose, shall fix by resolution, as provided by Section 151 of the General
Corporation Law of the State of Delaware, for any such series of Preferred
Stock, provided that the aggregate number of all shares of Preferred Stock
issued does not exceed the number of shares of Preferred Stock authorized
hereby.
The designations, voting powers, preferences and relative,
participating, optional or other special rights and qualifications, limitations
of restrictions of each class of Stock of the Corporation are as follows:
I. Preferred Stock
1. Issuance of Series. Shares of Preferred Stock may be
issued in one or more series at such time or times, and for such consideration
or considerations as the Board of Directors may determine. All shares of any
one series of Preferred Stock will be identical with each other in all respects
except that shares of one series
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<PAGE>
issued at different times may differ as to dates from which dividends thereon
may be cumulative. All series will rank equally and be identical in all
respects, except as permitted by the following provisions of paragraph 2 of
this Division I.
2. Authority of the Board with Respect to Series.
The Board of Directors is authorized, at any time and
from time to time, to provide for the issuance of the shares of Preferred Stock
in one or more series with such designations, preferences and relative,
participating, optional or other special rights and qualifications, limitations
or restrictions thereof as are stated and expressed in the resolution or
resolutions providing for the issue thereof adopted by the Board of Directors,
and as are not stated and expressed in or inconsistent with this Certificate of
Incorporation or any amendment hereto including, but not limited to,
determination of any of the following:
(i) The number of shares constituting that
series and the distinctive designation of that series;
(ii) The dividend rate or rates on the shares of
that series, whether dividends shall be cumulative, and, if
so from which date or dates, the payment date or dates for
dividends and the relative rights of priority, if any, of
payment of dividends on shares of that series;
(iii) Whether that series shall have voting rights,
in addition to the voting rights provided by law, and, if so,
the terms of such voting rights;
(iv) Whether that series shall have conversion
privileges, and, if so, the terms and conditions of such
conversion, including provision for
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<PAGE>
adjustment of the conversion rate in such events as the Board
of Directors shall determine;
(v) Whether or not the shares of that series shall
be redeemable, and, if so, the terms and conditions of such
redemption, including the date or dates upon or after which
they shall be redeemable, and the amount per share payable in
case of redemption, which amount may vary under different
conditions and at different redemption dates;
(vi) Whether that series shall have a sinking or
retirement fund for the redemption or purchase of shares of
that series, and, if so, the terms and amount of such sinking
or retirement fund;
(vii) The rights of the shares of that series in the
event of voluntary or involuntary liquidation, dissolution or
winding up of the Company, and the relative rights of
priority, if any, of payment of shares of that series;
(viii) Any other preferences, privileges and powers,
and relative participating, optional or other special rights,
and qualifications, limitations or restrictions of a series
as the Board of Directors may deem advisable and are not
inconsistent with the provisions of this Certificate of
Incorporation.
3. Dividends. Dividends on outstanding shares of
Preferred Stock shall be paid or declared and set apart for payment in
accordance with their respective preferential and relative rights before any
dividends shall be paid or declared and set
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<PAGE>
apart for payment on the outstanding shares of Common Stock with respect to the
same dividend period.
4. Liquidation. If upon any voluntary or involuntary
liquidation, dissolution or winding up of the Corporation, the assets available
for distribution to holders of shares of Preferred Stock of all series shall be
insufficient to pay such holders the full preferential amount to which they are
entitled, then such assets shall be distributed ratably among the shares of all
series of Preferred Stock in accordance with the respective preferential and
relative amounts (including unpaid cumulative dividends, if any) payable with
respect thereto.
5. Reacquired Shares. Shares of Preferred Stock which have
been issued and reacquired in any manner by the Corporation (excluding, until
the Corporation elects to retire them, shares which are held as treasury shares
but including shares redeemed, shares purchased and retired, and shares which
have been converted into shares of Common Stock) will have the status of
authorized and unissued shares of Preferred Stock and may be reissued.
6. Voting Rights. Unless and except to the extent otherwise
required by law or provided in the resolution or resolutions of the Board of
Directors creating any series of Preferred Stock pursuant to this Division I,
the holders of the Preferred Stock shall have no voting power with respect to
any matter whatsoever.
6
<PAGE>
II. Common Stock
1. Dividends. Subject to the preferential rights of the
Preferred Stock, the holders of the Common Stock are entitled to receive, to the
extent permitted by law, such dividends as may be declared from time to time by
the Board of Directors.
2. Liquidation. In the event of the voluntary or involuntary
liquidation, dissolution, distribution of assets or winding up of the
Corporation, after distribution in full of the preferential amounts, if any, to
be distributed to the holders of shares of Preferred Stock, holders of Common
Stock shall be entitled to receive all of the remaining assets of the
Corporation of whatever kind available for distribution to stockholders ratably
in proportion to the number of shares of Common Stock held by them
respectively. The Board of Directors may distribute in kind to the holders of
Common Stock such remaining assets of the Corporation or may sell, transfer or
otherwise dispose of all or any part of such remaining assets to any other
corporation, trust or other entity and receive payment therefor in cash, stock
or obligations of such other corporation, trust or other entity, or any
combination thereof, and may sell all or any part of the consideration so
received and distribute any balance thereof in kind to holders of Common Stock.
The merger or consolidation of the Corporation into or with any other
corporation or the merger of any other corporation into it, or any purchase or
redemption of shares of stock of the Corporation of any class, shall not be
deemed to be a dissolution, liquidation or winding up of the Corporation for
the purposes of this paragraph.
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<PAGE>
3. Voting Rights. Except as may be otherwise required
by law or this Certificate of Incorporation, each holder of Common Stock has one
vote in respect of each share of stock held by him of record on the books of the
Company on all matters voted upon by the stockholders.
SIXTH. The Corporation may issue shares, option rights, or
securities having conversion or option rights, without first offering them to
shareholders of any class or classes.
SEVENTH. In furtherance and not in limitation of the powers
conferred by statute, the Board of Directors is expressly authorized to make,
alter or repeal the by-laws of the Corporation.
EIGHTH. Elections of directors need not be by written ballot
unless the by-laws of the Corporation shall so provide. Meetings of
shareholders may be held within or without the State of Delaware as the by-laws
may provide. The books of the Corporation may be kept outside the State of
Delaware at such place or places as may be designated from time to time by the
Board of Directors, subject to the provisions of law.
NINTH. 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
such 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
Corporation Law or (iv) for any transaction from which such director derived an
improper personal benefit. If the Delaware General Corporation Law is amended
after approval by the stockholders of this Article to authorize corporate
8
<PAGE>
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. No modification or repeal of the provisions of this Article
shall adversely affect any right or protection of any director of the
Corporation existing at the date of such modification or repeal or create any
liability or adversely affect any such right or protection for any acts or
omissions of such director occurring prior to such modification or repeal.
TENTH. The Corporation reserves the right to amend, alter,
change or repeal any provision contained in this certificate of incorporation,
in the manner now or hereafter prescribed by statute, and all rights conferred
upon shareholders herein are granted subject to this reservation.
ELEVENTH. The name and mailing address of each incorporator
is as follows:
Name Mailing Address
John F. Egan 14th Floor, Packard Building
15th & Chestnut Streets
Philadelphia, PA 19102
TWELFTH. The Corporation shall, to the fullest extent
permitted by the provisions of Section 145 of the General Corporation Law of
the State of Delaware, as the same may be amended and supplemented, indemnify
any and all persons whom it shall have power to indemnify under such section
from and against any and all of the expenses, liabilities, or other matters
referred to in or covered by such section, and the indemnification provided for
herein shall not be deemed exclusive of any other rights to which those
indemnified may be entitled under any Bylaw, agreement, vote of
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<PAGE>
stockholders or disinterested directors or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office, and shall continue as to a person who has ceased to be a director,
officer, employee, or agent and shall inure to the benefit of the heirs,
executors, and administrators of such a person.
THIRTEENTH.
(i) At each annual meeting of stockholders, directors of the
Corporation shall be elected to hold office until the expiration of the term
for which they are elected, and until their successors have been duly elected
and qualified; except that if any such election shall be not so held, such
election shall take place at stockholders' meeting called and held in
accordance with the Delaware General Corporation Law. The directors of the
Corporation shall be classified into three classes as nearly equal in size as
is practicable, hereby designed Class I, Class II and Class III. The term of
office of the initial Class I directors shall expire at the next succeeding
annual meeting of stockholders of the Corporation; the term of office of the
initial Class II directors shall expire at the second succeeding annual meeting
of stockholders of the Corporation; and the term of office of the initial Class
III directors shall expire at the third succeeding annual meeting of the
stockholders of the Corporation. For the purposes hereof, the initial Class I,
Class II and Class III directors shall be those directors so designated and
elected at the first annual meeting of stockholders of the Corporation. At each
annual meeting after the first annual meeting of stockholders of the
Corporation, directors to replace those of a Class whose terms expire at such
annual meeting shall be elected to hold office until the third succeeding
annual meeting and until their respective successors shall have been
10
<PAGE>
duly elected and qualified. If the number of directors is hereafter changed,
any newly created directorships or decrease in directorships shall be so
apportioned among the classes as to make all classes as nearly equal in number
as if practicable.
(ii) The number of directors which constitute the whole Board
of Directors of the Corporation shall be designed in the Bylaws of the
Corporation.
(iii) Vacancies occurring on the Board of Directors for any
reason may be filled by vote of a majority of the remaining members of the
Board of Directors, although less than a quorum, at any meeting of the Board of
Directors. A person so elected by the Board of Directors to fill a vacancy
shall hold office until the next succeeding annual meeting of stockholders of
the Corporation and until his or her successor shall have been duly elected and
qualified.
IN WITNESS WHEREOF, this Amended and Restated Certificate of
Incorporation of the Corporation as executed by its President and attested by
its Secretary this ____ day of ____________, 1996.
MEDIALINK WORLDWIDE INCORPORATED
By:
-----------------------------------
Attest:
By:
-----------------------------------
11
<PAGE>
REGISTRATION AND PREEMPTIVE RIGHTS AGREEMENT
REGISTRATION AND PREEMPTIVE RIGHTS AGREEMENT (the
"Agreement") made and entered into this 31st day of October 1989, by and among
VIDEO BROADCASTING CORPORATION, a Delaware corporation (the "Company"), NEW
YORK STATE BUSINESS VENTURE PARTNERSHIP, a New York limited partnership
("NYSBVP"), AMERICAN RESEARCH & DEVELOPMENT II, L.P., a Delaware limited
partnership ("ARD"), and the parties executing the signature page hereof being
holders of the Company's Series A Unsecured Convertible Debentures Due 1992
(the "Series A Debentures") and Series B Subordinate Unsecured Convertible
Debentures Due 1992 (the "Series B Debentures", and collectively with the
Series A Debentures, the "Debentures"). NYSBVP, ARD and such holders of the
Debentures are sometimes hereinafter referred to collectively as, the
"Purchasers."
W I T N E S S E T H :
WHEREAS, the Company wishes to induce each of NYSBVP and ARD
to enter into a certain stock purchase agreement to be dated of even date
herewith, pursuant to which NYSBVP and ARD intend, among other things,, to
subscribe for the purchase of 345,455 and 200,000 shares, respectively, of the
Company's Series C 10% Cumulative Convertible Preferred Stock, $2.75 par value
per share (the "Series C Preferred Stock");
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<PAGE>
WHEREAS, the Company wishes to induce the holders of the
Debentures to convert their Debentures into shares of the Company's Series A
10% Cumulative Convertible Preferred Stock, $1.50 par value per share (the
"Series A Preferred Stock"), and Series B 10% Cumulative Convertible Preferred
Stock, $1.35 par value per share (the "Series B Preferred Stock", and
collectively with the Series A Preferred Stock and Series C Preferred Stock,
the "Preferred Stock"), for the aggregate conversion price and for such number
of shares of Series A Preferred Stock or Series B Preferred Stock, as the case
may be set forth opposite the names of such holders on Annex I hereto; and
WHEREAS, the shares of Preferred Stock are convertible on a
share-for-share basis (subject to adjustment) into shares of the Company's
common stock, $.01 par value per share (the "Common Stock");
NOW, THEREFORE, in consideration of the premises and the
mutual covenants contained herein, each of the Company and the Purchasers,
intending to be legally bound, hereby agree as follows:
1. REGISTRATION RIGHTS.
(a) Registration Upon Request. At any time (and
from time to time) from and after the earlier to occur of (i) the closing of the
initial issuance, offering and sale to the public of the Company's securities
pursuant to an effective registration statement under the Securities Act of
1933, as amended (the "Securities Act"), or (ii) October 31, 1991, and upon the
written request of any Qualified Holder(s) (as defined below) of Registrable
Securities (as defined below) requesting that the Company effect the
registration under the Securities Act and the rules and regulations
2
<PAGE>
thereunder of any Registrable Securities then held-by such Qualified Holder(s)
(which request shall state the intended method of disposition by such Qualified
Holder(s)) the Company shall provide prompt written notice of such requested
registration to all holders of Registrable Securities, and thereupon, the
Company shall, as expeditiously as may be practicable, use its best efforts to
effect the registration under the Securities Act of (i) the Registrable
Securities which the Company has been so requested to register, for disposition
in accordance with the intended method of disposition stated in such request;
and (ii) all other Registrable Securities the registered holders of which shall
have requested to be registered within 30 days after the receipt of the
aforementioned written notice by the Company; all to the extent requisite to
permit the disposition by the holder of the shares constituting Registrable
Securities to be so sold. The Company shall not be required to effect more than
two registrations of Registrable Securities pursuant to this Section 1(a) (the
"Requested Registration Limit") and shall not be required to effect any such
registration if the anticipated aggregate offering price of the Registrable
securities to be registered (net of underwriting discounts, commissions and
spreads), is less than $5,000,000 in the aggregate; provided, however, should
the Company fail to comply, with Section 1(c)(ii) hereof, any such registration
shall not be counted in determining the number of available registration
requests which remain under the Requested Registration Limit; and, provided,
further, anything to the contrary in this Section 1 notwithstanding, and
irrespective of the Requested Registration Limit, in the event the Company is
eligible to effect a registration under the Securities Act using Form S-3 (or
other comparable short-form registration statement), the holders of Registrable
Securities having a fair
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value of at least $750,000 shall be entitled to request, and the Company shall
be required to use its best efforts to effect, an unlimited number of
registrations of such Registrable Securities by use of Form S-3 (or other
comparable short-form Registration Statement).
As used in this Agreement, the term "Qualified Holder(s)"
means as of any date of the determination thereof, the registered holder(s) of
(i) not less than 20% of the then outstanding shares of any series of Preferred
Stock, or (ii) not less than 20% of the then outstanding shares of Preferred
Stock, taken as a whole and without regard to series.
As used in this Agreement, the term "Registrable Securities"
means any and all shares of Common Stock into which shares of Preferred Stock
have been converted (or will be converted immediately prior to the filing of
any registration statement).
(b) Incidental Registration.
(i) If the Company at any time proposes to
register under the Securities Act any of its Equity
Securities (as defined in Section 3(a)(11) of the
Securities Exchange Act of 1934, as amended (the
"Exchange Act")) (other than pursuant to Section
1(a) or on Form S-4 or S-8 or any successor form
thereto or a form of registration statement not
available for the general registration of
securities) whether or not for sale for its own
account, and if the registration form proposed to be
used may be used to effect the general registration
of Registrable Securities,
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<PAGE>
the Company shall notify promptly in writing all
holders of Registrable Securities of its intention
to effect such registration. Upon the written
request of any holder of Registrable Securities made
within 20 days after the receipt of the
aforementioned notice by the Company (which request
shall specify the Registrable Securities intended to
be disposed of by such holder), the Company shall
use its best efforts to cause all such Registrable
Securities (the holders of which shall have
requested the registration thereof), to be
registered under the Securities Act together with
the securities which the Company at the time
proposes to register, all to the extent requisite to
permit the sale or other disposition (in accordance
with the intended methods thereof as aforesaid) by
the holders of the Registrable Securities to be
registered; provided, however, that the Company
shall have the right to postpone or withdraw in good
faith any such registration without any obligation
to any holder.
(ii) No incidental registration effected
pursuant to this Section 1(b) shall be deemed to
have been effected pursuant to Section 1(a).
(iii) If the Company shall previously have
received a request for registration pursuant to
Section 1(a) or pursuant to this Section 1(b) and if
such previous registration shall not have been
terminated, withdrawn or abandoned, the Company
shall not effect
5
<PAGE>
any registration of any of its Equity Securities
under the Securities Act other than on Form S-4 or
Form S-8 (or any successor form thereto or a form of
registration statement not available for the general
registration of securities) whether or not for sale
for its own account, until the earlier of (i) the
date all securities included in such previous
registration are sold, or (ii) the six month
anniversary of the effective date of such previous
registration; and the Company shall so provide in
any registration or similar agreements hereinafter
entered into with any person with respect to any of
its securities.
(c) Registration Procedures. If and whenever
the Company is required by the provisions of this Agreement to effect or cause
the registration of any Registrable Securities under the Securities Act as
provided in this Agreement, the Company shall, as expeditiously as may be
practicable:
(i) prepare and file with the securities
and Exchange Commission (it being understood that if
a request for registration pursuant to Section 1(a)
is made prior to the end of the Company's then
current fiscal year and such registration is to be
effected other than on Form S-3 (or other comparable
short-form registration statement), the Company
shall be entitled to delay the effectiveness of such
registration until the earlier of (x) such time as
the Company receives audited financial statements
for said fiscal year or (y) the expiration of 90
days after the end of such
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fiscal year), a registration statement with respect
to such Registrable Securities (including such
audited financial statements as the Board of
Directors may in good faith deem appropriate) and
use its best efforts to cause such registration
statement to become and remain effective under the
Securities Act for not less than 180 days;
(ii) prepare and file with the Securities
and Exchange Commission such amendments and
supplements to such registration statement and the
prospectus included therein and used in connection
therewith as may be necessary to keep such
registration statement effective for such period
(not to exceed 180 days) as shall be necessary to
complete the offering and the distribution of the
securities covered thereby, in each case, exclusive
of any period during which the prospectus included
in and used in connection with such registration
statement shall not comply with the requirements of
Section 10 of the Securities Act; and to comply with
the provisions of the Securities Act and the rules
and regulations thereunder with respect to the sale
or other disposition of all securities covered by
such registration statement during such period in
accordance with the intended methods of disposition
by the seller or sellers thereof set forth in such
registration statement;
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<PAGE>
(iii) furnish to each seller of Registrable
Securities and each underwriter of the securities
being sold by such seller, such number of copies
(including manually executed and conformed copies)
of such registration statement and of each such
amendment and supplement thereto (in each case,
including all appendices, schedules and exhibits
thereto), such number of copies of the prospectus
included in and used in connection with such
registration statement (including each preliminary
prospectus), and such number of copies of the final
prospectus as filed by the Company pursuant to Rule
424(b), in conformity with the requirements of the
Securities Act and the rules and regulations
thereunder, and such other documents, as such seller
and underwriter may reasonably request in order to
facilitate the public sale or other disposition of
the Registrable Securities owned by such seller;
(iv) use its best efforts to register or
qualify the Registrable Securities covered by such
registration statement under such other securities
or Blue Sky laws of such jurisdictions as any seller
and each underwriter of the Registrable Securities
being sold by such seller shall reasonably request,
and do any and all other acts and things which may
be necessary or desirable to enable such seller and
underwriter to consummate the offering and
disposition in such jurisdictions of the Registrable
Securities
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<PAGE>
owned by such seller, except that the Company shall
not for any such purpose be required to qualify
generally to do business as a foreign corporation in
any jurisdiction wherein it would not, but for the
requirements of this paragraph 1(c), be obligated to
be qualified, subject itself to taxation, or consent
to general service of process;
(v) use its best efforts to cause the
Registrable Securities covered by such registration
statement to be registered with, or approved by,
such other United States public, governmental or
regulatory agencies, bodies, authorities or
instrumentalities as may be necessary to enable the
seller or sellers thereof to consummate the
disposition of such Registrable Securities in the
manner intended by such seller or sellers;
(vi) notify each seller of any Registrable
Securities covered by such registration statement,
at any time when a prospectus relating thereto is
required to be delivered under the Securities Act,
of the Company's knowledge that the prospectus
included in and used in connection with such
registration statement (or deemed to be included in
such registration statement if the registration
statement, at the time it is declared effective,
omits certain information as permitted by Rule 430A
of the Securities Act), as then in effect, includes
an untrue statement of a material fact or omits to
state any material fact required to be
9
<PAGE>
stated therein or necessary to make the statements
therein, in light of the circumstances under which
they were made, not misleading, and promptly prepare
and furnish to such seller and each underwriter a
reasonable number of copies of a prospectus
supplemented or amended such that, as thereafter
delivered to the purchasers of such Registrable
Securities, 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 are made, not
misleading;
(vii) otherwise use its best efforts to
comply with all applicable rules and regulations of
the Securities and Exchange Commission, as the same
may be amended from time to time, and make available
to its security holders, as expeditiously as may be
practicable, an earnings statement covering the
period of at least twelve months (but not more than
eighteen months), beginning with the first day of
the Company's fiscal quarter next succeeding the
effective date of the registration statement, which
earnings statement shall satisfy the provisions of
Section 11(a) of the Securities Act;
(viii) upon the reasonable request of any
Managing Underwriter (as defined in Rule 12b-2 under
the Exchange Act) of the Registrable Securities, use
its best efforts to cause all such
10
<PAGE>
Registrable Securities covered by such registration
statement to be listed on each securities exchange
on which similar securities issued by the Company
are then listed, if the listing of such Registrable
Securities is then permitted under the rules and
regulations of such exchange;
(ix) engage and provide a transfer agent
and registrar for all Registrable Securities covered
by such registration statement not later than the
effective date of such registration statement;
(x) enter into an underwriting agreement
(in customary form and substance) and take all such
other actions as the seller or sellers of at least
66 2/3% of the aggregate Registrable Securities to
be registered and sold shall reasonably request in
order to expedite or facilitate the disposition of
such Registrable Securities; it being hereby
acknowledged and agreed that in the case of any
registration effected pursuant to Section 1(a), the
selection of any Managing Underwriter(s) shall be
made by the holders of at least 66 2/3% of the
aggregate amount of Registrable Securities to be
registered, subject to the consent of the Company
(which consent shall not be unreasonably withheld);
(xi) obtain an opinion from the Company's
counsel and a "cold comfort" letter from the
Company's independent certified public accountants
in customary form and covering such matters of the
type customarily covered by such opinions and "cold
11
<PAGE>
comfort" letters as the seller or sellers of
Registrable Securities holding at least 66 2/3% of
the aggregate shares thereof shall reasonably
request;
(xii) make available for inspection by any
seller of Registrable Securities covered by such
registration statement, by any Managing
Underwriter(s) or other underwriters participating
in any disposition to be effected pursuant to such
registration statement, and by any attorney,
accountant or other agent, consultant or advisor
retained by any such seller or underwriter, all
pertinent financial and other records, corporate
documents and properties of the Company; and cause
all of the Company's officers, directors and
employees to supply all information reasonably
requested by any such seller, underwriter, attorney,
accountant, agent or advisor in connection with such
registration statement; and
(xiii) permit any holder of Registrable
Securities who, in the sole and exclusive judgment
of such holder, might be deemed to be a controlling
person of the Company, to participate in the
preparation of such registration or comparable
statement and include therein material furnished by
such holder to the Company in writing which, in the
reasonable judgment of such holder, subject to the
consent of the Company (which consent shall not be
unreasonably withheld), should be included therein;
it being
12
<PAGE>
hereby acknowledged and agreed that each holder of
Registrable Securities shall be deemed to have
agreed by acquisition of such Registrable Securities
that upon the receipt of any notice from the Company
of the occurrence of any event of the kind described
in Section 1(c)(vi), such holder shall forthwith
discontinue such holder's offer and disposition of
Registrable Securities pursuant to the registration
statement covering such Registrable Securities until
such holder's receipt of the copies of the
"stickered," supplemented or amended prospectus
and/or registration statement contemplated by
Section 1(c)(vi) and, if so directed by the Company,
shall deliver to the Company (at the Company's
expense) all copies, other than permanent file
copies, of the prospectus covering such Registrable
Securities then in such holder's possession; and it
being hereby further acknowledged and agreed that in
the event the Company shall provide any such notice,
the 180-day period specified in Section l(c)(ii)
shall be extended by the number of days during the
period from and including the date such notice is
provided, to and including the date when each seller
of any Registrable Securities covered by such
registration statement shall have received the
copies of the "stickered", supplemented or amended
prospectus and/or registration statement
contemplated by Section 1(c)(vi).
13
<PAGE>
(xiv) If any registration or comparable
statement refers to any holder by name or otherwise
as the holder of any securities of the Company, and
if such holder reasonably believes it is or may be
deemed to be a controlling person in relation to, or
an Affiliate (as such term is defined in Rule 12b-2
under the Exchange Act) of, the Company, then such
holder shall have the right to require (1) the
inclusion in such registration or comparable
statement of language, in form and substance
satisfactory to such holder, to the effect that the
ownership by such holder of such securities is not
to be construed as and is not intended to be a
recommendation by such holder of the investment
quality of, or the relative merits and risks
attendant to the purchase of, the Company's
securities covered thereby, and that such ownership
does not imply that such holder will assist in
meeting any future financial operating requirements
of the Company, or (2) (in the case where the
reference to such holder by name or otherwise is not
required by the Securities Act or any similar
federal or state statute then in force), the
deletion of the reference to such holder.
(xv) If any registration under Section 1(a)
which is proposed by the Company to be on Form S-3
(or any similar short-form registration statement
which is a successor to Form S-3) shall be used in
connection with an underwritten public offering, and
if the Managing Underwriter(s) shall advise the
14
<PAGE>
Company in writing that in their opinion the use of
another permitted form is of material importance to
the success of the offering, then such registration
shall be effected by the use of such other permitted
form.
(d) Registration Expenses. The Company shall,
whether or not any registration pursuant to this Agreement shall become
effective (except where a registration effected under Section 1(a) hereof is
terminated, withdrawn or abandoned at the request of the holders of the
Registrable Securities to be registered), pay any and all expenses incident to
its performance of, or compliance with, this Agreement, including, without
limitation, any allocation of Company personnel or other general overhead
expenses of the Company, or other expenses for the preparation of historical
and pro forma financial statements or other data normally prepared by the
Company in the ordinary course of its business; all registration, application,
filing, listing, transfer agent and registrar fees; fees and expenses of
compliance with securities or Blue Sky laws; printing expenses; messenger and
delivery expenses; fees and out-of-pocket expenses of counsel for the Company
and all independent certified public accountants (including the expenses of any
audit, review and/or "cold comfort" letter) and other persons retained by the
Company; the reasonable fees and out-of-pocket expenses of one counsel or firm
of counsel selected by the holders of at least 66 2/3% of the Registrable
Securities covered by the registration in question; and any fees and
disbursements of Managing Underwriters, underwriters, brokers and dealers
customarily paid by issuers of securities, excluding underwriting commissions
and discounts.
15
<PAGE>
(e) Indemnification; Contribution.
(i) The Company hereby indemnifies, to the
fullest extent permitted by law, each holder of
Registrable Securities, its officers and directors,
if any, and each person, if any, who controls such
holder within the meaning of Section 15 of the
Securities Act, against all losses, claims, damages,
liabilities (or proceedings in respect thereof) and
expenses (under the Securities Act or common law or
otherwise), joint or several, caused by any untrue
statement or alleged untrue statement of a material
fact contained in any registration statement,
prospectus (as amended or supplemented if the
Company shall have furnished any amendments or
supplements thereto) or preliminary prospectus, or
caused by 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; provided, however, that such
indemnification shall not extend to any such losses,
claims, damages, liabilities (or proceedings in
respect thereof) or expenses which are caused solely
by any untrue statement or alleged untrue statement
contained in, or by any omission or alleged omission
from, information furnished in writing to the
Company by such holder expressly for use therein.
(ii) If the offering pursuant to any
registration statement provided for under this
Section 1 is effected by underwriters, the
16
<PAGE>
Company agrees to enter into an underwriting
agreement in customary form and substance with such
underwriters and to indemnify such underwriters,
their officers and directors, if any, and each
person, if any, who controls such underwriters
within the meaning of Section 15 of the Securities
Act to the same extent as provided in the preceding
paragraph (i) of this Section 1(e) with respect to
the indemnification of the holders of Registrable
Securities; provided, however, the Company shall not
be required to indemnity any such underwriter, or
any officer or director of such underwriter or any
person who controls such underwriter within the
meaning of Section 15 of the Securities Act, to the
extent that the loss, claim, damage, liability (or
proceedings in respect thereof) or expense for which
indemnification is sought results from such
underwriter's failure to deliver or otherwise
provide a copy of the final prospectus to the person
asserting an untrue statement or omission or alleged
untrue statement or omission at or prior to the
written confirmation of the sale of Registrable
Securities to such person, if such statement or
omission was corrected in such final prospectus.
(iii) In connection with any registration
statement with respect to which a holder of
Registrable Securities is participating, each such
holder shall furnish to the Company in writing such
information as shall be reasonably requested by the
Company for
17
<PAGE>
use in any such registration statement or prospectus
and shall indemnify severally and not jointly, to
the fullest extent permitted by law, the Company,
its officers and directors and each person, if any,
who controls the Company within the meaning of
Section 15 of the Securities Act, against any
losses, claims, damages, liabilities (or proceedings
in respect thereof) and expenses resulting from any
untrue statement or alleged untrue statement of a
material fact or any omission or alleged omission of
a material fact required to be stated or necessary
to make the statements in the registration statement
or prospectus or preliminary prospectus or any
amendment thereof or supplement thereto, not
misleading; provided, however, that each such holder
shall be liable hereunder in any such case if and
only to the extent that any such loss, claim, damage
or liability arises solely out of or is based solely
upon an untrue statement or alleged untrue statement
or omission or alleged omission made in reliance
upon and in conformity with information pertaining
to such holder, as such, furnished in writing to the
Company by such holder specifically for use in such
registration statement or prospectus; and provided,
further, however, that the liability of each holder
hereunder shall be limited solely to such amount of
any such loss, claim, damage, liability or expense
which is equal to the proportion that the public
offering price of the Registrable Securities sold by
such holder under such
18
<PAGE>
registration statement bears to the total public
offering price of all Registrable Securities sold
thereunder, which liability, in no event shall
exceed the net proceeds received by such holder from
the sale of Registrable Securities covered by such
registration statement.
(iv) If the offering pursuant to any
registration statement with respect to which holders
of Registrable Securities are participating, is
effected by underwriters, each such holder agrees to
enter into an underwriting agreement in customary
form and substance with such underwriters, and to
indemnify such underwriters, their officers and
directors, if any, and each person, if any, who
controls such underwriters within the meaning of
Section 15 of the Securities Act to the same extent
as provided in the preceding paragraph with respect
to indemnification by such holder of the Company,
but subject to the same limitation as set forth in
the proviso to paragraph (ii) of this Section 1(e)
with respect to indemnification by the Company of
such underwriters, officers, directors and
controlling persons.
(v) Any person seeking indemnification
under provision of this Section 1(e) shall, promptly
after receipt by such person of notice of the
commencement of any action, suit, claim or
proceeding, notify each party against whom
indemnification is to be sought in writing of the
commencement thereof; provided,
19
<PAGE>
however, the failure so to notify an indemnifying
party shall not relieve the indemnifying party from
any liability which it may have under this Section
1(e) (except to the extent that it has been
prejudiced in any material respect by such failure)
or from any liability which the indemnifying party
may otherwise have. In case any such action, suit,
claim or proceeding is brought against any
indemnified party, and it notifies an indemnifying
party of the commencement thereof, the indemnifying
party shall be entitled to participate therein and,
to the extent it may elect by written notice
delivered to the indemnified party promptly after
receiving the aforesaid notice from such indemnified
party, to assume the defense thereof with counsel
satisfactory to such indemnified party.
Notwithstanding the foregoing, the indemnified party
or parties shall have the right to employ its or
their own counsel in any such case, but the fees and
expenses of such counsel shall be at the expense of
such indemnified party or parties unless (i) the
employment of such counsel shall have been
authorized in writing by one of the indemnifying
parties (provided that in the case of
indemnification pursuant to paragraphs (iii) or (iv)
of this Section 1(e), the employment of such counsel
shall have been authorized by not less than 66 2/3%
of the holders of Registrable Securities who are
participating in the registration in respect of
which indemnification is sought) in connection with
the defense of
20
<PAGE>
such suit, action, claim or proceeding; (ii) the
indemnifying parties shall not have employed counsel
to take charge of the defense of such action, suit,
claim or proceeding within a reasonable time after
notice of commencement of the action, suit, claim or
proceeding; or (iii) such indemnified party or
parties shall have reasonably concluded that there
may be defenses available to it or them which are
different from or additional to those available to
one or all of the indemnifying parties (in which
case the indemnifying parties shall not have the
right to direct the defense of such action, suit,
claim or proceeding on behalf of the indemnified
party or parties), in any of which events the fees
and expenses of one counsel or firm of counsel
selected by the indemnified party or parties shall
be borne by the indemnifying parties. Anything in
this paragraph (v) to the contrary notwithstanding,
an indemnifying party shall not be liable for the
settlement of any action, suit, claim or proceeding
effected without its prior written consent (which
consent shall not be unreasonably withheld). Such
indemnification shall remain in full force and
effect regardless of any investigation made by or on
behalf of a participating holder of Registrable
Securities, its officers, directors or any person,
if any, who controls such holder as aforesaid, and
shall survive the sale, transfer or other
disposition of such securities by such holder.
21
<PAGE>
(vi) If for any reason the foregoing
indemnification is unavailable, or is insufficient
to hold harmless, an indemnified party, then the
indemnifying party shall contribute to the amount
paid or payable by the indemnified party as a result
of such losses, claims, damages, liabilities or
expenses (x) in such proportion as is appropriate to
reflect the relative benefits received by the
indemnifying party on the one hand and the
indemnified party on the other hand, or (y) if the
allocation provided by clause (x) above is not
permitted by applicable law or provides a lesser sum
to the indemnified party than the amount hereinafter
calculated, in such proportion as is appropriate to
reflect not only the relative benefits received by
the indemnifying party on the one hand (taking into
consideration the fact that the registration rights
provided in this Section 1 are intended and hereby
understood to be a material inducement to the
Purchasers to purchase the Registrable Securities
and, in respect of this Agreement, constitutes good
and valuable consideration) and the indemnified
party on the other, but also the relative fault of
the indemnifying party and the indemnified party in
addition to any other relevant equitable
considerations. Notwithstanding the foregoing, no
underwriter shall be required to contribute any
amount in excess of the amount by which the
aggregate price at which the Registrable Securities
underwritten by it and distributed to the
22
<PAGE>
public exceeds the amount of any damages which such
underwriter has otherwise been required to pay by
reason of such untrue statement or omission or
alleged untrue statement or omission; and no person
guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person
who was not guilty of such fraudulent
misrepresentation. The obligation of any
underwriters to provide contribution pursuant to
this Section 1(e) shall be several and not joint in
proportion to their respective underwriting
commitments.
(f) Certain Limitations on Registration
Rights. In the case of a registration under Section 1(b), if the holders of at
least 66 2/3% of the Registrable Securities to be included therein determine to
enter into an underwriting agreement in connection therewith, or, in the case of
a registration under Section 1(a), if the holders of securities initially
requesting such registration have determined to enter into an underwriting
agreement in connection therewith, all Registrable Securities to be included in
such registration shall be subject to such underwriting agreement and no person
may participate in such registration unless such person agrees to sell such
person's securities on the basis provided in the underwriting arrangements and
completes and/or executes all questionnaires, powers of attorney,
indemnification agreements, underwriting agreements and other reasonable
documents which must be executed under the terms of such underwriting
arrangements; it being hereby acknowledged and agreed that the selection of any
Managing Underwriter(s) shall be
23
<PAGE>
made by the holders of at least 66 2/3% of the Registrable Securities to be
registered, subject to the consent of the Company (which consent shall not be
unreasonably withheld).
(g) Reduction of Securities Included in
Registration Statement. If any Managing Underwriter shall advise the Company
and the holders of Registrable Securities in writing that, in its reasonable
judgment, the inclusion in any registration statement pursuant to Section 1 of
some or all of the Registrable Securities sought to be registered by the
holders requesting such registration creates a substantial risk that the
proceeds or price per share the Company or such holders of Registrable
Securities will derive from such registration will be materially reduced or
that the number of securities to be registered (including those sought to be
registered at the instance of the Company and any other party entitled to
participate in such registration as well as those sought to be registered by
the holders of Registrable Securities) is too large a number to be reasonably
sold, the Company shall include in such registration (to the extent of the
number of securities which the Company is so advised can be sold in such
offering):
(i) (in the case of a registration pursuant
to Section 1(a) of this Agreement), the number of
securities sought to be registered by each seller,
pro rata, among the sellers as provided in paragraph
(h) below; or
(ii) (in the case of a registration
pursuant to Section l(b) of this Agreement), (x)
First, Registrable Securities requested to be
included in such registration, pro rata, among the
holders
24
<PAGE>
thereof as provided in paragraph (h) below, and (y)
Second, those securities sought to be registered at
the instance of the Company.
(h) With respect to the pro rata allocation
referred to in each of clause (i) and (ii) of Section 1(g) above, the number of
Registrable Securities which each holder shall be permitted to have included in
a registration pursuant to Section 1(a) or 1(b), as the case may be, shall be
determined by multiplying the total number of Registrable Securities which each
holder thereof seeks to register by a fraction, the numerator of which shall be
the sum of (i) the product of (x) the total number of shares of Series A
Preferred Stock issued by the Company to such holder, if any, and (y) $1.50;
(ii) the product of (x) the total number of shares of Series B Preferred Stock
issued by the Company to such holder, if any, and (y) $1.35; and (iii) the
total number of shares of Series C Preferred Stock issued by the Company to
such holder, if any, and (y) $2.75, and the denominator of which shall be the
sum of (i) the product of (x) the total number of shares of Series A Preferred
Stock issued to all holders of Registrable Securities who have elected to have
their securities registered pursuant to Section 1(a) or 1(b) and, in respect of
which election, the calculation pursuant to this Section 1(h) is being made,
and (y) $1.50; (ii) the product of (x) the total number of shares of Series B
Preferred Stock issued to all holders of Registrable Securities who have
elected to have their securities registered pursuant to Section 1(a) or 1(b)
and, in respect of which election, the calculation pursuant to this Section
1(h) is being made, and (y) $1.35, and (iii) the product of (x) the total
number of shares of Series C Preferred Stock issued to all holders of
Registrable Securities who have elected to have their securities registered
pursuant to Section l(a) or l(b)
25
<PAGE>
and, in respect of which election, the calculation pursuant to this Section
1(h) is being made, and (y) $2.75; provided, however, any shares of Preferred
Stock issued to holders of Registrable Securities which shares have been
redeemed by the Company (prior to the date the pro rata allocation pursuant to
this Section 1(h) is being made), shall be excluded from the calculation of the
number of shares of Series A Preferred Stock, Series B Preferred Stock and
Series C Preferred Stock, as the case may be, in clauses (i), (ii) and (iii) of
the numerator and denominator, respectively.
(i) Limitations on Sale or Distribution of
Other Securities; Conditioning the Market. If any registration under this
Section 1 shall be in connection with an underwritten public offering, each
holder of Registrable Securities shall be deemed to have agreed by acquisition
of such Registrable Securities not to effect any public sale or distribution,
including any sale pursuant to Rule 144 under the Securities Act, of any
Registrable Securities, and to use such holder's bet efforts not to effect any
such public sale or distribution of any other Equity Security of the Company or
of any security convertible into, or exchangeable or exercisable for, any
Equity Security of the Company (other than as part of such underwritten public
offering) within 15 days prior to or 120 days after the effective date of such
registration statement, and the Company hereby also agrees to cause each holder
of any Equity Security, or of any security convertible into, or exchangeable or
exercisable for, any Equity Security of the Company purchased from the Company
at any time other than in a public offering, so to agree.
(j) Rule 144. If the Company shall have filed
with the Securities and Exchange Commission a registration statement pursuant
to the
26
<PAGE>
requirements of Section 12 of the Exchange Act or a registration statement
pursuant to the requirements of the Securities Act, the Company agrees that it
shall timely file the reports required to be filed by it under the Securities
Act or the Exchange Act (including, without limitation, the reports under
Sections 13 and 15(d) of the Exchange Act referred to in paragraph (c)(1) of
Rule 144 under the Securities Act), and shall take such further actions as any
holder of Registrable Securities may reasonably request, all to the extent
requisite from time to time to enable such holder to sell Registrable
Securities without registration under the Securities Act within the resale
limitations prescribed by Rule 144 under the Securities Act as such Rule may be
amended from time to time, or otherwise pursuant to any transactional exemption
from the requirements of Section 5 of the Securities Act provided by any rule
or regulation now existing or hereinafter adopted by the Securities and
Exchange Commission. Upon the request of any holder of Registrable Securities,
the Company shall deliver to such holder a written statement as to whether it
has complied with such requirements.
(k) Nominees for Beneficial Owners. In the
event that Registrable Securities are held by a nominee for the beneficial
owner thereof, the beneficial owner thereof may, at its option, be treated as
the holder of such Registrable Securities for the purpose of any request or
other action by any holder or holders of Registrable Securities pursuant to
this Agreement (or any determination of any number or percentage of shares
constituting Registrable Securities held by any holder or holders of
Registrable Securities contemplated by this Agreement).
(l) Most Favored Nations. If at any time from
and after the date hereof, the Company grants to any Purchaser any demand,
"piggyback" or other
27
<PAGE>
similar registration rights with respect to any Registrable Securities which
rights are more favorable to such Purchaser than those set forth in this
Section 1, then the Company shall forthwith grant identical demand, "piggyback"
or such other similar registration rights to all other purchasers of
Registrable Securities.
2. PREEMPTIVE RIGHTS.
(a) Prior to any issuance, sale or exchange of
its Equity Securities, the Company shall offer to each Purchaser (by written
notice) the right, for a period of 20 days, to purchase all of such securities
for cash at an amount equal to the price or other consideration for which such
securities are to be issued; provided, however, that the Purchasers' preemptive
rights pursuant to this Paragraph 2 shall not apply to securities issued (i)
upon the conversion of any shares of the Preferred Stock; (ii) as a stock
dividend, stock split or similar subdivision of shares of Preferred Stock or
Common Stock, so long as the securities issued pursuant to such stock dividend,
stock split or subdivision consist exclusively of additional shares of
Preferred Stock or Common Stock; (iii) pursuant to subscriptions, warrants,
options, rights, contracts or commitments which are outstanding on the date
hereof; (iv) pursuant to an effective registration statement under the
Securities Act in an underwritten public offering; (v) as the sole
consideration for the acquisition (whether by merger, consolidation or
otherwise) by the Company of all or substantially all the capital stock or
assets of any other person; (vi) pursuant to any employee stock option,
incentive or other benefit plant provided that the number of shares issued
thereunder do not exceed, in the aggregate, 259,007 shares (adjusted
appropriately to reflect stock splits, stock dividends, subdivisions of shares
and the like with respect to the Common Stock) less
28
<PAGE>
the number of shares (adjusted as aforesaid) issued pursuant to options
outstanding on the date of this Agreement pursuant to clause (iii) above; (vii)
(at any time and from time to time) as all or a portion of the consideration
paid by the Company to one or more of its officers, key employees or
consultants for services furnished to the Company, provided that the number of
shares so issued (whether at one time or from time to time) does not exceed, in
the aggregate, 35,078 shares; and (viii) upon the exercise of any right issued
in a manner not in violation of the terms of this Paragraph 2. The Company's
written notice to the Purchasers shall describe the securities proposed to be
issued, sold or exchanged by the Company and shall specify the number, price
and payment terms thereof. Each Purchaser may accept the Company's offer as to
the full number of securities offered to it or any lesser number, by written
notice furnished to the Company prior to the expiration of the aforesaid 20-
day period, in which event, the Company shall sell promptly and such Purchaser
shall buy, upon the terms specified, the number of securities agreed to be
purchased by such Purchaser.
(b) Notwithstanding the foregoing, if the
Purchasers agree, in the aggregate, to purchase more than the full number of
securities offered by the Company, then each Purchaser desiring to accept the
Company's offer shall be allocated such amount of securities which is obtained
by multiplying the number of securities which such Purchaser has notified the
Company that it intends to purchase by a fraction, the numerator of which shall
be the sum of (i) the product of (x) the total number of shares of Series A
Preferred Stock issued by the Company to such holder, if any, and (y) $1.50;
(ii) the product of (x) the total number of shares of Series B
29
<PAGE>
Preferred Stock issued by the Company to such holder, if any, and (y) $1.35;
and (iii) the total number of shares of Series C Preferred Stock issued by the
Company to such holder, if any, and (y) $2.75, and the denominator of which
shall be the sum of (i) the product of (x) the total number of shares of Series
A Preferred Stock issued to all holders of Registrable Securities who have
notified the Company that they intend to exercise their preemptive rights, and
(y) $1.50; (ii) the product of (x) the total number of shares of Series B
Preferred Stock issued to all holders of Registrable Securities who have
notified the Company that they intend to exercise their preemptive rights, and
(y) $1.35, and (iii) the product of (x) the total number of shares of Series C
Preferred Stock issued to all holders of Registrable Securities who have
notified the Company that they intend to exercise their preemptive rights, and
(y) $2.75; provided, however, any shares of Preferred Stock issued to holders
of Registrable Securities which shares have been redeemed by the Company (prior
to the date the pro rata allocation pursuant to this Section 2(b) is being
made), shall be excluded from the calculation of the number of shares of Series
A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock, as
the case may be, in clauses (i), (ii) and (iii) of the numerator and
denominator, respectively; and provided, further, however, no Purchaser shall
be allocated more than the number of securities which such Purchaser agreed to
purchase and, in cases covered by this sentence, all Purchasers shall be
allocated among them the full number of securities offered by the Company. The
Company shall be free at any time prior to the expiration of the 60-day period
commencing on the day next succeeding the expiration of the aforementioned
20-day notice period, to offer and sell to any third party or parties the
number of such
30
<PAGE>
securities, if any, not agreed by the Purchasers to be purchased by them, at a
price and on payment terms no less favorable to the Company than those
specified in such notice of offer to the Purchasers. However, if such third
party sale or sales are not consummated within such 60-day period, the Company
shall not be permitted to sell the securities, if any, which have been
purchased within such 60-day period without again complying with the preemptive
rights procedure specified in this Section 2.
(c) The rights of the Purchasers set forth in
this Section shall terminate at such time as the Company shall effect the
initial public offering, issuance, sale and delivery of securities pursuant to
an effective registration statement under the Securities Act.
3. NOTICES.
All notices required to be provided pursuant to
Sections 1 or 2 of this Agreement shall be in writing, either delivered in
person with receipt acknowledged or sent by registered or certified mail,
return receipt requested, postage prepaid, and shall be effective upon the
receipt thereof by the intended recipient.
4. ENTIRE AGREEMENT.
This Agreement, together with all annexes, schedules
and exhibits hereto, represents the entire agreement and understanding among
the parties hereto with respect to the subject matter hereof and supersedes any
and all prior oral and written contracts, arrangements and understandings among
the parties hereto with respect to such subject matter; and can be amended,
supplemented or changed, and any provision hereof can be waived, only by a
written instrument making specific reference to this Agreement signed by the
Company on the one hand and the holders
31
<PAGE>
of at least 66 2/3% of the aggregate number of outstanding shares of Preferred
Stock on the other hand.
5. SUCCESSORS AND ASSIGNS.
This Agreement shall be binding upon and shall inure
to the benefit of the parties hereto and their respective successors and
assigns; provided, however, that no party may assign its rights hereunder
without the prior written consent of the other parties hereto, except that
without obtaining such consent, (i) each Purchaser may assign its rights and
obligations hereunder to any of its subsidiaries or Affiliates, and (ii) the
shares of Common Stock issued or issuable upon the conversion of the Preferred
Stock are transferable, subject to compliance with applicable federal and state
securities laws.
6. PARAGRAPH HEADINGS.
The paragraph headings contained in this Agreement
are for general reference purposes only and shall not affect in any manner the
meaning or interpretation of the terms or other provisions of the this
Agreement.
7. APPLICABLE LAW.
This Agreement shill be governed by, construed and
enforced in accordance with the laws of the State of New York, applicable to
contracts to be made, executed, delivered and performed wholly within such
state, but without regard to the conflicts of law principles of such state.
8. SEVERABILITY.
If at any time subsequent to the date hereof, any
provision of this Agreement shall be held by any court of competent
jurisdiction to be illegal, void or
32
<PAGE>
unenforceable, such provision shall be of no force and effect, but the
illegality or unenforceability of such provision shall have no effect upon and
shall not impair the enforceability of any other provision of this Agreement.
9. EQUITABLE REMEDIES.
The parties hereto agree that irreparable harm would
occur in the event that any of the agreements and provisions of this Agreement
were not performed fully by the parties hereto in accordance with their
specific terms or conditions or were otherwise breached, and that money damages
are an inadequate remedy for breach of this Agreement because of the difficulty
of ascertaining and quantifying the amount of damage that will be suffered by
the parties hereto in the event that this Agreement is not performed in
accordance with its terms or conditions or is otherwise breached. It is
accordingly hereby agreed that the parties hereto shall be entitled to an
injunction or injunctions to restrain, enjoin and prevent breaches of this
Agreement by the other parties and to enforce specifically the terms and
provisions hereof in any court of the United States or any state having
jurisdiction, such remedy being in addition to and not in lieu of, any other
rights and remedies to which the other parties are entitled to at law or in
equity.
10. NO WAIVER.
The failure of any party at any time or times to
require performance of any provision hereof shall not affect the right at a
later time to enforce the same. No waiver by any party of any condition, and no
breach of any provision, term, covenant, representation or warranty contained
in this Agreement, whether by conduct or otherwise, in any one or more
instances, shall be deemed to be construed
33
<PAGE>
as a further or continuing waiver of any such condition or of the breach of any
other provision, term, covenant, representation or warranty of this Agreement.
11. COUNTERPARTS.
This Agreement may be executed in counterparts, each
of which shall be deemed an original, but all of which together shall
constitute but one and the same original instrument.
IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Agreement, as of the day and year first above written.
VIDEO BROADCASTING CORPORATION
By:________________________________
Name: Laurence Moskowitz
Title: President and
Chief Executive Officer
NEW YORK STATE BUSINESS
VENTURE PARTNERSHIP
By: /s/ Douglas S. Lure, Jr.
_________________________________
Name: Douglas S. Lure, Jr.
Title: General Partner
AMERICAN RESEARCH &
DEVELOPMENT II, L. P.
By:__________________________________
Name:
Title:
34
<PAGE>
[REGISTRATION AND PREEMPTIVE RIGHTS AGREEMENT SIGNATURE PAGE]
IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Agreement, as of the day and year first above written.
VIDEO BROADCASTING CORPORATION
By:_________________________________
Name: Laurence Moskowitz
Title: President and
Chief Executive Officer
NEW YORK STATE BUSINESS
VENTURE PARTNERSHIP
By:_________________________________
Name:
Title:
AMERICAN RESEARCH &
DEVELOPMENT II, L. P.
By: /s/ Charles J. Cuelter
__________________________________
Name:
Title:
[DEBENTUREHOLDERS]
By:________________________________
Name:
35
<PAGE>
[REGISTRATION AND PREEMPTIVE RIGHTS AGREEMENT SIGNATURE PAGE)
IN WITNESS WHEREOF the parties hereto have duly executed and
delivered this Agreement, as of the day and year first above written.
VIDEO BROADCASTING CORPORATION
By: /s/ Laurence Moskowitz
_________________________________
Name: Laurence Moskowitz
Title: President and Chief
Executive Officer
NEW YORK STATE BUSINESS
VENTURE PARTNERSHIP
By:_________________________________
Name:
Title:
AMERICAN RESEARCH &
DEVELOPMENT II, L. P.
By:__________________________________
Name:
Title:
By: /s/ Mrs. Mary Lou Rodeen
___________________________________
Name: Mrs. Mary Lou Rodeen
36
<PAGE>
[REGISTRATION AND PREEMPTIVE RIGHTS AGREEMENT SIGNATURE PAGE]
IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Agreement, as of the day and year first above written.
VIDEO BROADCASTING CORPORATION
By: /s/ Laurence Moskowitz
_________________________________
Name: Laurence Moskowitz
Title: President and Chief
Executive Officer
NEW YORK STATE BUSINESS
VENTURE PARTNERSHIP
By:_________________________________
Name:
Title:
AMERICAN RESEARCH &
DEVELOPMENT II, L. P.
By:__________________________________
Name:
Title:
By: /s/ Mr. Michael J. Katz
___________________________________
Name: Mr. Michael J. Katz
37
<PAGE>
[REGISTRATION AND PREEMPTIVE RIGHTS AGREEMENT SIGNATURE PAGE]
IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Agreement, as of the day and year first above written.
VIDEO BROADCASTING CORPORATION
By:_________________________________
Name: Laurence Moskowitz
Title: President and Chief
Executive Officer
NEW YORK STATE BUSINESS
VENTURE PARTNERSHIP
By:_________________________________
Name:
Title:
AMERICAN RESEARCH &
DEVELOPMENT II, L. P.
By:__________________________________
Name:
Title:
By: /s/ Theodore Wm. Tashlik, Trustee
___________________________________
Name: Tashlik & Associates P.C.,
Defined Benefit Plan
38
<PAGE>
[REGISTRATION AND PREEMPTIVE RIGHTS AGREEMENT SIGNATURE PAGE]
IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Agreement, as of the day and year first above written.
VIDEO BROADCASTING CORPORATION
By: /s/ Laurence Moskowitz
_________________________________
Name: Laurence Moskowitz
Title: President and Chief
Executive Officer
NEW YORK STATE BUSINESS
VENTURE PARTNERSHIP
By:_________________________________
Name:
Title:
AMERICAN RESEARCH &
DEVELOPMENT II, L. P.
By:__________________________________
Name:
Title:
By: /s/ Mark Manoff
___________________________________
Name: Mr. Mark Manoff
39
<PAGE>
[REGISTRATION AND PREEMPTIVE RIGHTS AGREEMENT SIGNATURE PAGE]
IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Agreement, as of the day and year first above written.
VIDEO BROADCASTING CORPORATION
By: /s/ Laurence Moskowitz
_________________________________
Name: Laurence Moskowitz
Title: President and Chief
Executive Officer
NEW YORK STATE BUSINESS
VENTURE PARTNERSHIP
By:_________________________________
Name:
Title:
AMERICAN RESEARCH &
DEVELOPMENT II, L. P.
By:__________________________________
Name:
Title:
By: /s/ Gerald P. Rodeen
___________________________________
Name: Mr. Gerald P. Rodeen
40
<PAGE>
[REGISTRATION AND PREEMPTIVE RIGHTS AGREEMENT SIGNATURE PAGE]
IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Agreement, as of the day and year first above written.
VIDEO BROADCASTING CORPORATION
By: /s/ Laurence Moskowitz
_________________________________
Name: Laurence Moskowitz
Title: President and Chief
Executive Officer
NEW YORK STATE BUSINESS
VENTURE PARTNERSHIP
By:_________________________________
Name:
Title:
AMERICAN RESEARCH &
DEVELOPMENT II, L. P.
By:__________________________________
Name:
Title:
By: /s/ Steven L. Shaefer
/s/ Karol K. Shaefer
___________________________________
Name: Mr. & Mrs. Steven L. Shaefer
41
<PAGE>
[REGISTRATION AND PREEMPTIVE RIGHTS AGREEMENT SIGNATURE PAGE]
IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Agreement, as of the day and year first above written.
VIDEO BROADCASTING CORPORATION
By:_________________________________
Name: Laurence Moskowitz
Title: President and Chief
Executive Officer
NEW YORK STATE BUSINESS
VENTURE PARTNERSHIP
By:_________________________________
Name:
Title:
AMERICAN RESEARCH &
DEVELOPMENT II, L. P.
By:__________________________________
Name:
Title:
By:/s/ Martin Himmel
___________________________________
Name: Mr. Martin Himmel
42
<PAGE>
[REGISTRATION AND PREEMPTIVE RIGHTS AGREEMENT SIGNATURE PAGE]
IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Agreement, as of the day and year first above written.
VIDEO BROADCASTING CORPORATION
By:_________________________________
Name: Laurence Moskowitz
Title: President and Chief
Executive Officer
NEW YORK STATE BUSINESS
VENTURE PARTNERSHIP
By:_________________________________
Name:
Title:
AMERICAN RESEARCH &
DEVELOPMENT II, L. P.
By:__________________________________
Name:
Title:
By: /s/ Jeffrey B. Stone
___________________________________
Name: Mr. Jeffrey Stone
43
<PAGE>
[REGISTRATION AND PREEMPTIVE RIGHTS AGREEMENT SIGNATURE PAGE]
IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Agreement, as of the day and year first above written.
VIDEO BROADCASTING CORPORATION
By:_________________________________
Name: Laurence Moskowitz
Title: President and Chief
Executive Officer
NEW YORK STATE BUSINESS
VENTURE PARTNERSHIP
By:_________________________________
Name:
Title:
AMERICAN RESEARCH &
DEVELOPMENT II, L. P.
By:__________________________________
Name:
Title:
By: /s/ Henry Kimelman, Trustee
___________________________________
Name: Henry L. Kimelman Trust
44
<PAGE>
[REGISTRATION AND PREEMPTIVE RIGHTS AGREEMENT SIGNATURE PAGE]
IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Agreement, as of the day and year first above written.
VIDEO BROADCASTING CORPORATION
By:_________________________________
Name: Laurence Moskowitz
Title: President and Chief
Executive Officer
NEW YORK STATE BUSINESS
VENTURE PARTNERSHIP
By:_________________________________
Name:
Title:
AMERICAN RESEARCH &
DEVELOPMENT II, L. P.
By:__________________________________
Name:
Title:
By: /s/ Henry Kimelman, Trustee
___________________________________
Name: JDS Realty, Profit Plan
45
<PAGE>
[REGISTRATION AND PREEMPTIVE RIGHTS AGREEMENT SIGNATURE PAGE]
IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Agreement, as of the day and year first above written.
VIDEO BROADCASTING CORPORATION
By:_________________________________
Name: Laurence Moskowitz
Title: President and Chief
Executive Officer
NEW YORK STATE BUSINESS
VENTURE PARTNERSHIP
By:_________________________________
Name:
Title:
AMERICAN RESEARCH &
DEVELOPMENT II, L. P.
By:__________________________________
Name:
Title:
By: /s/ Henry Kimelman, Chairman
___________________________________
Name: JDS Realty Corp.
46
<PAGE>
[REGISTRATION AND PREEMPTIVE RIGHTS AGREEMENT SIGNATURE PAGE]
IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Agreement, as of the day and year first above written.
VIDEO BROADCASTING CORPORATION
By:_________________________________
Name: Laurence Moskowitz
Title: President and Chief
Executive Officer
NEW YORK STATE BUSINESS
VENTURE PARTNERSHIP
By:_________________________________
Name:
Title:
AMERICAN RESEARCH &
DEVELOPMENT II, L. P.
By: /s/ Charles J. Cuelter
__________________________________
Name:
Title:
[DEBENTUREHOLDERS]
By:___________________________________
Name:
47
<PAGE>
[REGISTRATION AND PREEMPTIVE RIGHTS AGREEMENT SIGNATURE PAGE]
IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Agreement, as of the day and year first above written.
VIDEO BROADCASTING CORPORATION
By:_________________________________
Name: Laurence Moskowitz
Title: President and Chief
Executive Officer
NEW YORK STATE BUSINESS
VENTURE PARTNERSHIP
By:_________________________________
Name:
Title:
AMERICAN RESEARCH &
DEVELOPMENT II, L. P.
By: /s/ Charles J. Cuelter
__________________________________
Name:
Title:
By: /s/ Laurence Moskowitz
___________________________________
Name: Laurence Moskowitz
By: /s/ J. Graeme McWhirter
___________________________________
Name: Graeme McWhirter
48
<PAGE>
[REGISTRATION AND PREEMPTIVE RIGHTS AGREEMENT SIGNATURE PAGE]
IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Agreement, as of the day and year first above written.
VIDEO BROADCASTING CORPORATION
By: /s/ Laurence Moskowitz
_________________________________
Name: Laurence Moskowitz
Title: President and Chief
Executive Officer
NEW YORK STATE BUSINESS
VENTURE PARTNERSHIP
By:_________________________________
Name:
Title:
AMERICAN RESEARCH &
DEVELOPMENT II, L. P.
By:__________________________________
Name:
Title:
By: /s/ Samuel Douglass
___________________________________
Name: Mr. Samuel Douglass
49
<PAGE>
[REGISTRATION AND PREEMPTIVE RIGHTS AGREEMENT SIGNATURE PAGE]
IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Agreement, as of the day and year first above written.
VIDEO BROADCASTING CORPORATION
By: /s/ Laurence Moskowitz
_________________________________
Name: Laurence Moskowitz
Title: President and Chief
Executive Officer
NEW YORK STATE BUSINESS
VENTURE PARTNERSHIP
By:_________________________________
Name:
Title:
AMERICAN RESEARCH &
DEVELOPMENT II, L. P.
By:__________________________________
Name:
Title:
By: /s/ Robert L. Drogin
___________________________________
Name: Mr. Robert L. Drogin
50
<PAGE>
[REGISTRATION AND PREEMPTIVE RIGHTS AGREEMENT SIGNATURE PAGE]
IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Agreement, as of the day and year first above written.
VIDEO BROADCASTING CORPORATION
By: /s/ Laurence Moskowitz
_________________________________
Name: Laurence Moskowitz
Title: President and Chief
Executive Officer
NEW YORK STATE BUSINESS
VENTURE PARTNERSHIP
By:_________________________________
Name:
Title:
AMERICAN RESEARCH &
DEVELOPMENT II, L. P.
By:__________________________________
Name:
Title:
By: /s/ Jeffrey Himmel
___________________________________
Name: Mr. Jeffrey Himmel
51
<PAGE>
[REGISTRATION AND PREEMPTIVE RIGHTS AGREEMENT SIGNATURE PAGE]
IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Agreement, as of the day and year first above written.
VIDEO BROADCASTING CORPORATION
By: /s/ Laurence Moskowitz
_________________________________
Name: Laurence Moskowitz
Title: President and Chief
Executive Officer
NEW YORK STATE BUSINESS
VENTURE PARTNERSHIP
By:_________________________________
Name:
Title:
AMERICAN RESEARCH &
DEVELOPMENT II, L. P.
By:__________________________________
Name:
Title:
By: /s/ Betram Korn, Jr.
___________________________________
Name: Mr. Betram W. Korn, Jr.
52
<PAGE>
[REGISTRATION AND PREEMPTIVE RIGHTS AGREEMENT SIGNATURE PAGE]
IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Agreement, as of the day and year first above written.
VIDEO BROADCASTING CORPORATION
By: /s/ Laurence Moskowitz
_________________________________
Name: Laurence Moskowitz
Title: President and Chief
Executive Officer
NEW YORK STATE BUSINESS
VENTURE PARTNERSHIP
By:_________________________________
Name:
Title:
AMERICAN RESEARCH &
DEVELOPMENT II, L. P.
By:__________________________________
Name:
Title:
By: /s/ Mrs. Claire Moskowitz
___________________________________
Name: Mrs. Claire Moskowitz
53
<PAGE>
[REGISTRATION AND PREEMPTIVE RIGHTS AGREEMENT SIGNATURE PAGE]
IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Agreement, as of the day and year first above written.
VIDEO BROADCASTING CORPORATION
By: /s/ Laurence Moskowitz
_________________________________
Name: Laurence Moskowitz
Title: President and Chief
Executive Officer
NEW YORK STATE BUSINESS
VENTURE PARTNERSHIP
By:_________________________________
Name:
Title:
AMERICAN RESEARCH &
DEVELOPMENT II, L. P.
By:__________________________________
Name:
Title:
By: /s/ Paul Nemiroff
___________________________________
Name: Mr. Paul Nemiroff
54
<PAGE>
[REGISTRATION AND PREEMPTIVE RIGHTS AGREEMENT SIGNATURE PAGE]
IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Agreement, as of the day and year first above written.
VIDEO BROADCASTING CORPORATION
By: /s/ Laurence Moskowitz
_________________________________
Name: Laurence Moskowitz
Title: President and Chief
Executive Officer
NEW YORK STATE BUSINESS
VENTURE PARTNERSHIP
By:_________________________________
Name:
Title:
AMERICAN RESEARCH &
DEVELOPMENT II, L. P.
By:__________________________________
Name:
Title:
By: /s/ Rod Nordland
___________________________________
Name: Mr. Rod Nordland
55
<PAGE>
[REGISTRATION AND PREEMPTIVE RIGHTS AGREEMENT SIGNATURE PAGE]
IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Agreement, as of the day and year first above written.
VIDEO BROADCASTING CORPORATION
By: /s/ Laurence Moskowitz
_________________________________
Name: Laurence Moskowitz
Title: President and Chief
Executive Officer
NEW YORK STATE BUSINESS
VENTURE PARTNERSHIP
By:_________________________________
Name:
Title:
AMERICAN RESEARCH &
DEVELOPMENT II, L. P.
By:__________________________________
Name:
Title:
By: /s/ Mary Lou Rodeen
___________________________________
Name: Mrs. Mary Lou Rodeen
56
<PAGE>
[REGISTRATION AND PREEMPTIVE RIGHTS AGREEMENT SIGNATURE PAGE]
IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Agreement, as of the day and year first above written.
VIDEO BROADCASTING CORPORATION
By: /s/ Laurence Moskowitz
_________________________________
Name: Laurence Moskowitz
Title: President and Chief
Executive Officer
NEW YORK STATE BUSINESS
VENTURE PARTNERSHIP
By:_________________________________
Name:
Title:
AMERICAN RESEARCH &
DEVELOPMENT II, L. P.
By:__________________________________
Name:
Title:
By: /s/ Theodore Wm. Tashlik, Trustee
___________________________________
Name: Tashlik & Associates P.C.,
Defined Benefit Plan
57
<PAGE>
EMPLOYMENT AGREEMENT (the "Agreement"), dated as of November
18, 1996, by and between MEDIALINK WORLDWIDE INCORPORATED, a Delaware
corporation with offices at 708 Third Avenue, New York, New York 10017 (the
"Corporation"), and LAURENCE MOSKOWITZ, an individual residing at 37 Halsted
Place, Rye, New York (the "Employee").
W I T N E S S E T H:
WHEREAS, the Corporation has filed a registration statement
("1996 Registration Statement") with the Securities and Exchange Commission
("SEC") and making a public offering of shares of its Common Stock;
WHEREAS, the Corporation desires to continue the services of
the Employee upon the terms and conditions hereinafter set forth; and
WHEREAS, the Employee desires to render services to the
Corporation upon the terms and conditions hereinafter set forth.
NOW, WHEREFORE, the parties mutually agree as follows:
Section 1. Effective Date. This Agreement shall become
effective only upon the consummation of the proposed public offering pursuant
to the 1996 Registration Statement. In the event for any reason whatsoever such
public offering is not consummated, then this Agreement shall be void and of no
legal force or effect. The date of the first closing of the public offering
pursuant to the 1996 Registration Statement shall be the Effective Date.
Section 2. Employment. On the Effective Date the Corporation
employs the Employee and the Employee on the Effective Date accepts such
1
<PAGE>
employment, as an executive of the Corporation, subject to the terms and
conditions set forth in this Agreement.
Section 3. Duties. The Employee shall be employed as
Chairman, President and Chief Executive Officer. The Employee shall properly
perform such duties as may be assigned to him from time to time by the
Corporation's Board of Directors. During the term of this Agreement, the
Employee shall devote all of his available business time to the performance of
his duties hereunder.
Section 4. Term of Employment. The term of the Employee's
employment shall commence on the Effective Date and shall continue for three
(3) years or until terminated pursuant to Section 6 hereof.
Section 5. Compensation of Employee.
5.1. Compensation. The Corporation shall pay to
the Employee as annual compensation for his services hereunder a salary
("Salary") in an amount equal to One Hundred Fifty Thousand ($150,000) Dollars.
The Salary shall be reviewed every June 1st for merit increases and shall in all
events be increased on the anniversary date of this Agreement by the percentage
increase, if any, in the Consumer Price Index, as defined herein, for the most
recent calendar month for which the Consumer Price Index has been published over
the Consumer Price Index for the same calendar month in the immediately
preceding year. As used herein, the "Consumer Price Index" shall mean the
Consumer Price Index for All Urban Consumers, New York - Northeastern New Jersey
area (1982-84=100) issued by the Bureau of Labor Statistics of the United States
Department of Labor; provided that in the event the Consumer Price Index shall
hereafter be converted to a different standard reference base or otherwise
revised, the determination of the salary increase
2
<PAGE>
shall be made with the use of such conversion factor, formula or table for
converting the Consumer Price Index as may be published by the Bureau of Labor
Statistics. The Salary shall be payable bi-weekly less such deductions as shall
be required to be withheld by applicable law and regulations. The Employee
shall be eligible to participate in the Corporation's bonus plan. Such bonus
shall be determined by the Corporation's Compensation Committee.
Notwithstanding the foregoing, the minimum annual bonus potential shall be 25%
of the Employee's Salary; provided, however, that Employee shall only be
entitled to receive such bonus in the event the Company attains the annual
goals set by the Compensation Committee. The goals set by the Compensation
Committee shall be consistent with the goals set by the Compensation Committee
in prior years.
5.2. Expenses. The Corporation shall pay or
reimburse the Employee for all reasonable and necessary business, travel or
other expenses incurred by him with the prior consent of the Corporation, upon
proper documentation thereof, which may be incurred by him in connection with
the rendition of the services contemplated hereunder.
5.3. Benefits. During the term of this
Agreement, the Employee shall be entitled to participate in such pension, profit
sharing, group insurance, option plans, hospitalization, group health benefit
plans and all other benefits and plans as the Corporation provides to its
employees. Provided that the Corporation files a registration statement on Form
S-1 covering the registration of shares of its Common Stock, $.01 par value
("Common Stock"), the Corporation intends to file a registration statement on
Form S-8 to register the shares of Common Stock underlying the stock options
granted pursuant to its option plans. In the event such registration statement
3
<PAGE>
on Form S-8 is filed, the Corporation agrees to use its best efforts to keep
such registration statement on Form S-8 in full force and effect.
Section 6. Termination.
6.1. Termination of Employment. This Agreement
shall terminate upon the death, Disability, as hereinafter defined, termination
of employment of the Employee For Cause, as hereinafter defined, termination of
the employment of Employee without cause or because Employee wrongfully leaves
his employment hereunder.
6.2. Termination For Cause. In the event of a
termination For Cause or because Employee wrongfully leaves his employment
hereunder, the Corporation shall pay Employee all accrued and unpaid Salary and
vacation through the date of termination.
6.3. Termination Without Cause. In the event of
a termination without cause, the Employee shall be entitled to continue to
participate in the hospitalization, group health benefit and disability plans of
the Corporation on the same terms and conditions as immediately prior to his
termination and shall receive his Salary, both for a period equal to the earlier
of (i) the date the Employee commences employment elsewhere; (ii) one (1) year;
or (iii) the date the term would have expired pursuant to Section 3 of this
Agreement had the Employee not been terminated.
6.4. Termination Upon Death. In the event of a
termination upon the death of Employee, the Corporation shall pay to the
Employee, any person designated by the Employee in writing or if no such person
is designated, to his estate, as the case may be, the Salary which would
otherwise be payable to the
4
<PAGE>
Employee for a period of six (6) months from the date of such death. In the
event of a termination upon the death of Employee, the Corporation shall pay
for a period of six (6) months after such death, on behalf of the Employee's
surviving dependents, the COBRA insurance premiums of such dependents.
6.5. Termination Upon Disability. In the event
of a termination upon the Disability of Employee, the Corporation shall pay to
the Employee or any person designated by the Employee, (i) during the first
month immediately after the termination of employment due to such Disability,
the Salary which would otherwise by payable to the Employee and (ii) during the
second and third months immediately after the termination of employment due to
such Disability, the difference between the Salary which would otherwise be
payable to the Employee and the disability insurance payments received by
Employee for such period.
6.6. Definition of "For Cause". As used herein,
the term "For Cause" shall mean (i) Employee's indictment, plea or conviction in
a court of law of any crime or offense involving willful misappropriation of
money or other property or any other crime involving moral turpitude which
constitutes felony, whether or not involving the Corporation; or (ii)
disobedience of a directive, other than a directive to relocate to an office of
the Corporation more than fifty (50) miles from the office where Executive is
employed pursuant to this Agreement, from the Chief Executive Officer or Board
of Directors of the Corporation consistent with Employee's duties hereunder or
(iii) breach of his responsibilities under this Agreement.
5
<PAGE>
Section 7. Disability
7.1. Definition. In the event the Employee is
mentally or physically incapable or unable to perform his regular and customary
duties of employment with the Corporation for a period of seventy-five (75) days
in any one hundred twenty (120) day period during the term, the Employee shall
be deemed to be suffering from a "Disability".
7.2. Payment During Disability. In the event the
Employee is unable to perform his duties hereunder by reason of a disability,
which disability does not constitute a Disability, the Corporation shall
continue to pay the Employee his Salary and benefits during the continuance of
such disability.
Section 8. Vacations and Personal Days. The Employee shall be
entitled to vacation and personal days in accordance with Corporation policy.
The Employee's Salary shall be paid in full during his vacation and personal
days. The Employee shall take his vacation at such time or times as the
Employee and the Corporation shall determine is mutually convenient.
Section 9. Disclosure of Confidential oInformation.
(a) The Employee hereby acknowledges
that the principal business of the Corporation is the production of video and
audio public relations materials for distribution to news media and the
distribution by satellite or other means to television and radio stations and
news media services; distribution of public relations text, audio and video to
news media and the general public via satellite, cassette, wire or other means;
distribution of press releases by mail and facsimile; the maintenance of
databases of media contacts for and on behalf of clients; analysis and written
appraisal of public relations and public affairs campaigns as
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determined through press clipping review, either on paper, video or audio tape
or electronic database searches and such other businesses as the Corporation
may conduct from time to time (the "Business"). Employee acknowledges that he
will be acquiring confidential information concerning the Corporation and the
Business and that, among other things, his knowledge of the Business will be
enhanced through his employment by the Corporation. Employee acknowledges that
such information is of great value to the Corporation, is the sole property of
the Corporation, and has been and will be acquired by him in confidence. In
consideration of the obligations undertaken by the Corporation herein, Employee
will not, at any time, during or after the term of this Agreement, reveal,
divulge or make known to any person, any information which is treated as
confidential by the Corporation and not otherwise in the public domain or
previously known to him.
(b) The provisions of this Section 9
shall survive Employee's employment hereunder.
Section 10. Covenant Not To Compete.
(a) Employee recognizes that the
services to be performed by him hereunder are special, unique and extraordinary.
The parties confirm that it is reasonably necessary for the protection of the
Corporation that Employee agrees, and, accordingly, Employee does hereby agree,
that he will not, directly or indirectly, in the Territory, as hereinafter
defined, at any time during the Restricted Period, as hereinafter defined:
(i) engage in the Business for his
account or render any services which constitute engaging in
the Business, in any capacity to any entity; or become
interested in any entity engaged in the Business
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either on his own behalf or as an officer, director,
stockholder, partner, principal, consultant, associate,
employee, owner, agent, creditor, independent contractor, or
co-venturer of any third party or in any other relationship
or capacity; or
(ii) employ or engage, or cause to
authorize, directly or indirectly, to be employed or engaged,
for or on behalf of himself or any third party, any employee,
representative or agent of the Corporation; or
(iii) solicit, directly or
indirectly, on behalf of himself or any third party, any
client or vendor of the Corporation and its affiliates; or
(iv) have an interest as an owner,
lender, independent contractor, co-venturer, partner,
participant, associate or in any other capacity, render
services to or participate in the affairs of, any business
which is competitive with, or substantially similar to, the
Business of the Corporation and its affiliates as presently
conducted and as may be conducted by the Corporation during
the Restricted Period.
(b) If any of the restrictions contained
in this Section 10 shall be deemed to be unenforceable by reason of the extent,
duration or geographical scope thereof, or otherwise, then after such
restrictions have been reduced so as to be enforceable, in its reduced form this
Section shall then be enforceable in the manner contemplated hereby.
(c) This Section 10 shall not be
construed to prevent Employee from owning, directly and indirectly, in the
aggregate, an amount not
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exceeding two percent (2%) of the issued and outstanding voting securities of
any class of any corporation whose voting capital stock is traded on a national
securities exchange or in the over-the-counter market.
(d) Notwithstanding anything to the
contrary set forth in this Section 10, (i) the Employee shall not be prohibited
from rendering services for news organizations, or public relations departments
or public relations agencies; (ii) the Employee may act as a news reporter or
manager for an entity whose primary function is journalism; (iii) the Employee
may act as a member of the internal public relations staff of any corporation or
entity who performs services for only that corporation or its affiliates,
including parent corporations, subsidiaries, and joint ventures; and/or (iv) the
Employee may act as an account executive or manager at a public relations agency
directly serving that agency's clients. Notwithstanding the prior sentence,
however, the Employee may not, render services, directly or indirectly, (i) for
any organization, department, or affiliate of such news organizations, corporate
public relations departments, or public relations agencies, whose primary
purpose is to provide the production and distribution of video or audio news
releases that are competitive with, or substantially similar to, the Business,
and (ii) for any organization, department, or affiliate of such news
organizations, corporate public relations departments, or public relations
agencies, whose primary purpose is to provide the research and analysis of
public relations and public affairs campaigns as determined through press
clipping review, either on paper, video or audio tape or electronic database
searches that are competitive with or substantially similar to the Business.
(e) The term "Restricted Period", as
used in this Section 10, shall mean (i) the term of this Agreement plus one (1)
year; (ii) in the
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event of a termination For Cause, two (2) years from the date of termination;
or (iii) in the event of a termination without cause, one (1) year from the
date of termination. Employee acknowledges that the Corporation markets its
Business worldwide and therefore, the term "Territory" as used herein shall
mean the entire world.
(f) The provisions of this Section 10
shall survive the termination of Employee's employment hereunder and until the
end of the Restricted Period as provided in Section 10 (e) hereof.
Section 11. Rights and Remedies Upon Breach of Sections
9 or 10.
11.1. Return of Benefits. If the Employee
breaches, or threatens to commit a breach of, any of the provisions of Sections
9 or 10 (the "Restrictive Covenants"), the Corporation shall have the right and
remedy to require the Employee to account for and pay over to the Corporation
all compensation, profits, monies, accruals, increments or other benefits
(collectively, "Benefits") derived or received by him as the result of any
transactions constituting a breach of the Restrictive Covenants, and the
Employee shall account for and pay over such Benefits to the Corporation. In
addition, if the Employee breaches or threatens to commit a breach of any of
the Restrictive Covenants, (i) the Employee's unvested stock options shall
immediately lapse and (ii) the Corporation shall have the right to purchase
from the Employee the Employee's vested stock options for the book value of the
shares of Common Stock underlying such vested options less the exercise price
of such vested options. The Corporation may set off any amounts due to the
Corporation under this Section 11.1 against any amounts owed to the Employee by
the Corporation.
11.2. Injunctive Relief. Employee acknowledges
that the services to be rendered under the provisions of this Agreement are of a
special, unique and
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extraordinary character and that it would be difficult or impossible to replace
such services. Accordingly, Employee agrees that any breach or threatened
breach by him of Sections 9 or 10 of this Agreement shall entitle the
Corporation, in addition to all other legal remedies available to it, to apply
to any court of competent jurisdiction to enjoin such breach or threatened
breach without posting a bond or showing special damages. The parties
understand and intend that each restriction agreed to by Employee hereinabove
shall be construed as separable and divisible from every other restriction,
that the unenforceability of any restriction shall not limit the
enforceability, in whole or in part, of any other restriction, and that one or
more of all of such restrictions may be enforced in whole or in part as the
circumstances warrant. In the event that any restriction in this Agreement is
more restrictive than permitted by law in the jurisdiction in which the
Corporation seeks enforcement thereof, such restriction shall be limited to the
extent permitted by law.
Section 12. Miscellaneous.
12.1. Assignment. The Employee may not assign or
delegate any of his rights or duties under this Agreement.
12.2. Entire Agreement. This Agreement
constitutes and embodies the full and complete understanding and agreement of
the parties with respect to the Employee's employment by the Corporation,
supersedes all prior understandings and agreements, including employment
agreements, non-compete agreements and confidentiality agreements, if any,
whether oral or written, between the Employee and the Corporation and shall not
be amended, modified or changed except by an instrument in writing executed by
the party to be charged. The invalidity or partial invalidity of one or more
provisions of this Agreement shall not invalidate any
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other provision of this Agreement. No waiver by either party of any provision
or condition to be performed shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or any prior or subsequent time.
12.3. Binding Effect. This Agreement shall inure
to the benefit of, be binding upon and enforceable against, the parties hereto
and their respective successors and permitted assigns.
12.4. Captions. The captions contained in this
Agreement are for convenience of reference only and shall not affect in any way
the meaning or interpretation of this Agreement.
12.5. Notices. All notices, requests, demands and
other communications required or permitted to be given hereunder shall be in
writing and shall be deemed to have been duly given when personally delivered or
sent by certified mail, postage prepaid, or overnight delivery to the party at
the address set forth above or to such other address as either party may
hereafter give notice of in accordance with the provisions hereof.
12.6. Governing Law. This Agreement shall be
governed by and interpreted under the laws of the State of New York applicable
to contracts made and to be performed therein without giving effect to the
principles of conflict of laws thereof. Except in respect of any action
commenced by a third party in another jurisdiction, the parties hereto agree
that any legal suit, action, or proceeding against them arising out of or
relating to this Agreement shall be brought exclusively in the United States
Federal Courts or New York County Supreme Court, in the State of New York. The
parties hereto hereby accept the jurisdictions of such courts for the purpose of
any such action or proceeding and agree that venue for any action or
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<PAGE>
proceeding brought in the State of New York shall lie in the Southern District
of New York or Supreme Court, New York County, as the case may be. Each of the
parties hereto hereby irrevocably consents to the service of process in any
action or proceeding in such courts by the mailing thereof by United States
registered or certified mail postage prepaid at its address set forth herein.
12.7. Counterparts. This Agreement may be
executed simultaneously in two or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date set forth above.
MEDIALINK WORLDWIDE INCORPORATED
By: /s/ J. Graeme McWhirter
------------------------------
/s/ Laurence Moskowitz
-------------------------------
LAURENCE MOSKOWITZ
13
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EMPLOYMENT AGREEMENT (the "Agreement"), dated as of November
18, 1996, by and between MEDIALINK WORLDWIDE INCORPORATED, a Delaware
corporation with offices at 708 Third Avenue, New York, New York 10017 (the
"Corporation"), and J. GRAEME MCWHIRTER, an individual residing at 22 Eglantine
Avenue, Pennington, New Jersey (the "Employee").
W I T N E S S E T H:
WHEREAS, the Corporation has filed a registration statement
("1996 Registration Statement") with the Securities and Exchange Commission
("SEC") and making a public offering of shares of its Common Stock;
WHEREAS, the Corporation desires to continue the services of
the Employee upon the terms and conditions hereinafter set forth; and
WHEREAS, the Employee desires to render services to the
Corporation upon the terms and conditions hereinafter set forth.
NOW, WHEREFORE, the parties mutually agree as follows:
Section 1. Effective Date. This Agreement shall become
effective only upon the consummation of the proposed public offering pursuant
to the 1996 Registration Statement. In the event for any reason whatsoever such
public offering is not consummated, then this Agreement shall be void and of no
legal force or effect. The date of the first closing of the public offering
pursuant to the 1996 Registration Statement shall be the Effective Date.
Section 2. Employment. On the Effective Date the Corporation
employs the Employee and the Employee on the Effective Date accepts such
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employment, as an executive of the Corporation, subject to the terms and
conditions set forth in this Agreement.
Section 3. Duties. The Employee shall be employed as
Executive Vice President and Chief Financial Officer. The Employee shall
properly perform such duties as may be assigned to him from time to time by the
Corporation's Chief Executive Officer or the Board of Directors of the
Corporation as the case may be. During the term of this Agreement, the Employee
shall devote all of his available business time to the performance of his
duties hereunder.
Section 4. Term of Employment. The term of the Employee's
employment shall commence on the Effective Date and shall continue for
three (3) years or until terminated pursuant to Section 6 hereof.
Section 5. Compensation of Employee.
5.1. Compensation. The Corporation shall pay to
the Employee as annual compensation for his services hereunder a salary
("Salary") in an amount equal to One Hundred Thirty-Five Thousand ($135,000)
Dollars. The Salary shall be reviewed every June 1st for merit increases and
shall in all events be increased on the anniversary date of this Agreement by
the percentage increase, if any, in the Consumer Price Index, as defined herein,
for the most recent calendar month for which the Consumer Price Index has been
published over the Consumer Price Index for the same calendar month in the
immediately preceding year. As used herein, the "Consumer Price Index" shall
mean the Consumer Price Index for All Urban Consumers, New York - Northeastern
New Jersey area (1982-84=100) issued by the Bureau of Labor Statistics of the
United States Department of Labor; provided that in the event the Consumer Price
Index shall hereafter be converted to a different
2
<PAGE>
standard reference base or otherwise revised, the determination of the salary
increase shall be made with the use of such conversion factor, formula or table
for converting the Consumer Price Index as may be published by the Bureau of
Labor Statistics. The Salary shall be payable bi-weekly less such deductions as
shall be required to be withheld by applicable law and regulations. The
Employee shall be eligible to participate in the Corporation's bonus plan. Such
bonus shall be determined by the Corporation's Compensation Committee.
Notwithstanding the foregoing, the minimum annual bonus potential shall be 25%
of the Employee's Salary; provided, however, that Employee shall only be
entitled to receive such bonus in the event the Company attains the annual
goals set by the Compensation Committee. The goals set by the Compensation
Committee shall be consistent with the goals set by the Compensation Committee
in prior years.
5.2. Expenses. The Corporation shall pay or
reimburse the Employee for all reasonable and necessary business, travel or
other expenses incurred by him with the prior consent of the Corporation, upon
proper documentation thereof, which may be incurred by him in connection with
the rendition of the services contemplated hereunder.
5.3. Benefits. During the term of this
Agreement, the Employee shall be entitled to participate in such pension, profit
sharing, group insurance, option plans, hospitalization, group health benefit
plans and all other benefits and plans as the Corporation provides to its
employees. Provided that the Corporation files a registration statement on Form
S-1 covering the registration of shares of its Common Stock, $.01 par value
("Common Stock"), the Corporation intends to file a registration statement on
Form S-8 to register the shares of Common Stock underlying the stock
3
<PAGE>
options granted pursuant to its option plans. In the event such registration
statement on Form S-8 is filed, the Corporation agrees to use its best efforts
to keep such registration statement on Form S-8 in full force and effect.
Section 6. Termination.
6.1. Termination of Employment. This Agreement
shall terminate upon the death, Disability, as hereinafter defined, termination
of employment of the Employee For Cause, as hereinafter defined, termination of
the employment of Employee without cause or because Employee wrongfully leaves
his employment hereunder.
6.2. Termination For Cause. In the event of a
termination For Cause or because Employee wrongfully leaves his employment
hereunder, the Corporation shall pay Employee all accrued and unpaid Salary and
vacation through the date of termination.
6.3. Termination Without Cause. In the event of
a termination without cause, the Employee shall be entitled to continue to
participate in the hospitalization, group health benefit and disability plans of
the Corporation on the same terms and conditions as immediately prior to his
termination and shall receive his Salary, both for a period equal to the earlier
of (i) the date the Employee commences employment elsewhere; (ii) one (1) year;
or (iii) the date the term would have expired pursuant to Section 3 of this
Agreement had the Employee not been terminated.
6.4. Termination Upon Death. In the event of a
termination upon the death of Employee, the Corporation shall pay to the
Employee, any person designated by the Employee in writing or if no such person
is designated, to his
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<PAGE>
estate, as the case may be, the Salary which would otherwise be payable to the
Employee for a period of six (6) months from the date of such death. In the
event of a termination upon the death of Employee, the Corporation shall pay
for a period of six (6) months after such death, on behalf of the Employee's
surviving dependents, the COBRA insurance premiums of such dependents.
6.5. Termination Upon Disability. In the event
of a termination upon the Disability of Employee, the Corporation shall pay to
the Employee or any person designated by the Employee, (i) during the first
month immediately after the termination of employment due to such Disability,
the Salary which would otherwise by payable to the Employee and (ii) during the
second and third months immediately after the termination of employment due to
such Disability, the difference between the Salary which would otherwise be
payable to the Employee and the disability insurance payments received by
Employee for such period.
6.6. Definition of "For Cause". As used herein,
the term "For Cause" shall mean (i) Employee's indictment, plea or conviction in
a court of law of any crime or offense involving willful misappropriation of
money or other property or any other crime involving moral turpitude which
constitutes felony, whether or not involving the Corporation; or (ii)
disobedience of a directive, other than a directive to relocate to an office of
the Corporation more than fifty (50) miles from the office where Executive is
employed pursuant to this Agreement, from the Chief Executive Officer or Board
of Directors of the Corporation consistent with Employee's duties hereunder or
(iii) breach of his responsibilities under this Agreement.
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Section 7. Disability
7.1. Definition. In the event the Employee is
mentally or physically incapable or unable to perform his regular and customary
duties of employment with the Corporation for a period of seventy-five (75) days
in any one hundred twenty (120) day period during the term, the Employee shall
be deemed to be suffering from a "Disability".
7.2. Payment During Disability. In the event the
Employee is unable to perform his duties hereunder by reason of a disability,
which disability does not constitute a Disability, the Corporation shall
continue to pay the Employee his Salary and benefits during the continuance of
such disability.
Section 8. Vacations and Personal Days. The Employee shall be
entitled to vacation and personal days in accordance with Corporation policy.
The Employee's Salary shall be paid in full during his vacation and personal
days. The Employee shall take his vacation at such time or times as the
Employee and the Corporation shall determine is mutually convenient.
Section 9. Disclosure of Confidential Information.
(a) The Employee hereby acknowledges
that the principal business of the Corporation is the production of video and
audio public relations materials for distribution to news media and the
distribution by satellite or other means to television and radio stations and
news media services; distribution of public relations text, audio and video to
news media and the general public via satellite, cassette, wire or other means;
distribution of press releases by mail and facsimile; the maintenance of
databases of media contacts for and on behalf of clients; analysis and written
appraisal of public relations and public affairs campaigns as
6
<PAGE>
determined through press clipping review, either on paper, video or audio tape
or electronic database searches and such other businesses as the Corporation
may conduct from time to time (the "Business"). Employee acknowledges that he
will be acquiring confidential information concerning the Corporation and the
Business and that, among other things, his knowledge of the Business will be
enhanced through his employment by the Corporation. Employee acknowledges that
such information is of great value to the Corporation, is the sole property of
the Corporation, and has been and will be acquired by him in confidence. In
consideration of the obligations undertaken by the Corporation herein, Employee
will not, at any time, during or after the term of this Agreement, reveal,
divulge or make known to any person, any information which is treated as
confidential by the Corporation and not otherwise in the public domain or
previously known to him.
(b) The provisions of this Section 9
shall survive Employee's employment hereunder.
Section 10. Covenant Not To Compete.
(a) Employee recognizes that the
services to be performed by him hereunder are special, unique and extraordinary.
The parties confirm that it is reasonably necessary for the protection of the
Corporation that Employee agrees, and, accordingly, Employee does hereby agree,
that he will not, directly or indirectly, in the Territory, as hereinafter
defined, at any time during the Restricted Period, as hereinafter defined:
(i) engage in the Business for his
account or render any services which constitute engaging in
the Business, in any capacity to any entity; or become
interested in any entity engaged in the Business
7
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either on his own behalf or as an officer, director,
stockholder, partner, principal, consultant, associate,
employee, owner, agent, creditor, independent contractor, or
co-venturer of any third party or in any other relationship
or capacity; or
(ii) employ or engage, or cause to
authorize, directly or indirectly, to be employed or engaged,
for or on behalf of himself or any third party, any employee,
representative or agent of the Corporation; or
(iii) solicit, directly or
indirectly, on behalf of himself or any third party, any
client or vendor of the Corporation and its affiliates; or
(iv) have an interest as an owner,
lender, independent contractor, co-venturer, partner,
participant, associate or in any other capacity, render
services to or participate in the affairs of, any business
which is competitive with, or substantially similar to, the
Business of the Corporation and its affiliates as presently
conducted and as may be conducted by the Corporation during
the Restricted Period.
(b) If any of the restrictions contained
in this Section 10 shall be deemed to be unenforceable by reason of the extent,
duration or geographical scope thereof, or otherwise, then after such
restrictions have been reduced so as to be enforceable, in its reduced form this
Section shall then be enforceable in the manner contemplated hereby.
(c) This Section 10 shall not be
construed to prevent Employee from owning, directly and indirectly, in the
aggregate, an amount not
8
<PAGE>
exceeding two percent (2%) of the issued and outstanding voting securities of
any class of any corporation whose voting capital stock is traded on a national
securities exchange or in the over-the-counter market.
(d) Notwithstanding anything to the
contrary set forth in this Section 10, (i) the Employee shall not be prohibited
from rendering services for news organizations, or public relations departments
or public relations agencies; (ii) the Employee may act as a news reporter or
manager for an entity whose primary function is journalism; (iii) the Employee
may act as a member of the internal public relations staff of any corporation or
entity who performs services for only that corporation or its affiliates,
including parent corporations, subsidiaries, and joint ventures; and/or (iv) the
Employee may act as an account executive or manager at a public relations agency
directly serving that agency's clients. Notwithstanding the prior sentence,
however, the Employee may not, render services, directly or indirectly, (i) for
any organization, department, or affiliate of such news organizations, corporate
public relations departments, or public relations agencies, whose primary
purpose is to provide the production and distribution of video or audio news
releases that are competitive with, or substantially similar to, the Business,
and (ii) for any organization, department, or affiliate of such news
organizations, corporate public relations departments, or public relations
agencies, whose primary purpose is to provide the research and analysis of
public relations and public affairs campaigns as determined through press
clipping review, either on paper, video or audio tape or electronic database
searches that are competitive with or substantially similar to the Business.
(e) The term "Restricted Period", as
used in this Section 10, shall mean (i) the term of this Agreement plus one (1)
year; (ii) in the
9
<PAGE>
event of a termination For Cause, two (2) years from the date of termination;
or (iii) in the event of a termination without cause, one (1) year from the
date of termination. Employee acknowledges that the Corporation markets its
Business worldwide and therefore, the term "Territory" as used herein shall
mean the entire world.
(f) The provisions of this Section 10
shall survive the termination of Employee's employment hereunder and until the
end of the Restricted Period as provided in Section 10 (e) hereof.
Section 11. Rights and Remedies Upon Breach of Sections
9 or 10.
11.1. Return of Benefits. If the Employee
breaches, or threatens to commit a breach of, any of the provisions of Sections
9 or 10 (the "Restrictive Covenants"), the Corporation shall have the right and
remedy to require the Employee to account for and pay over to the Corporation
all compensation, profits, monies, accruals, increments or other benefits
(collectively, "Benefits") derived or received by him as the result of any
transactions constituting a breach of the Restrictive Covenants, and the
Employee shall account for and pay over such Benefits to the Corporation. In
addition, if the Employee breaches or threatens to commit a breach of any of
the Restrictive Covenants, (i) the Employee's unvested stock options shall
immediately lapse and (ii) the Corporation shall have the right to purchase
from the Employee the Employee's vested stock options for the book value of the
shares of Common Stock underlying such vested options less the exercise price
of such vested options. The Corporation may set off any amounts due to the
Corporation under this Section 11.1 against any amounts owed to the Employee by
the Corporation.
11.2. Injunctive Relief. Employee acknowledges
that the services to be rendered under the provisions of this Agreement are of a
special, unique and
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extraordinary character and that it would be difficult or impossible to replace
such services. Accordingly, Employee agrees that any breach or threatened
breach by him of Sections 9 or 10 of this Agreement shall entitle the
Corporation, in addition to all other legal remedies available to it, to apply
to any court of competent jurisdiction to enjoin such breach or threatened
breach without posting a bond or showing special damages. The parties
understand and intend that each restriction agreed to by Employee hereinabove
shall be construed as separable and divisible from every other restriction,
that the unenforceability of any restriction shall not limit the
enforceability, in whole or in part, of any other restriction, and that one or
more of all of such restrictions may be enforced in whole or in part as the
circumstances warrant. In the event that any restriction in this Agreement is
more restrictive than permitted by law in the jurisdiction in which the
Corporation seeks enforcement thereof, such restriction shall be limited to the
extent permitted by law.
Section 12. Miscellaneous.
12.1. Assignment. The Employee may not assign or
delegate any of his rights or duties under this Agreement.
12.2. Entire Agreement. This Agreement
constitutes and embodies the full and complete understanding and agreement of
the parties with respect to the Employee's employment by the Corporation,
supersedes all prior understandings and agreements, including employment
agreements, non-compete agreements and confidentiality agreements, if any,
whether oral or written, between the Employee and the Corporation and shall not
be amended, modified or changed except by an instrument in writing executed by
the party to be charged. The invalidity or partial invalidity of one or more
provisions of this Agreement shall not invalidate any
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other provision of this Agreement. No waiver by either party of any provision
or condition to be performed shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or any prior or subsequent time.
12.3. Binding Effect. This Agreement shall inure
to the benefit of, be binding upon and enforceable against, the parties hereto
and their respective successors and permitted assigns.
12.4. Captions. The captions contained in this
Agreement are for convenience of reference only and shall not affect in any way
the meaning or interpretation of this Agreement.
12.5. Notices. All notices, requests, demands and
other communications required or permitted to be given hereunder shall be in
writing and shall be deemed to have been duly given when personally delivered or
sent by certified mail, postage prepaid, or overnight delivery to the party at
the address set forth above or to such other address as either party may
hereafter give notice of in accordance with the provisions hereof.
12.6. Governing Law. This Agreement shall be
governed by and interpreted under the laws of the State of New York applicable
to contracts made and to be performed therein without giving effect to the
principles of conflict of laws thereof. Except in respect of any action
commenced by a third party in another jurisdiction, the parties hereto agree
that any legal suit, action, or proceeding against them arising out of or
relating to this Agreement shall be brought exclusively in the United States
Federal Courts or New York County Supreme Court, in the State of New York. The
parties hereto hereby accept the jurisdictions of such courts for the purpose of
any such action or proceeding and agree that venue for any action or
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proceeding brought in the State of New York shall lie in the Southern District
of New York or Supreme Court, New York County, as the case may be. Each of the
parties hereto hereby irrevocably consents to the service of process in any
action or proceeding in such courts by the mailing thereof by United States
registered or certified mail postage prepaid at its address set forth herein.
12.7. Counterparts. This Agreement may be
executed simultaneously in two or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date set forth above.
MEDIALINK WORLDWIDE INCORPORATED
By: /s/ Laurence Moskowitz
----------------------------
/s/ J. Graeme McWhirter
----------------------------
J. GRAEME MCWHIRTER
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EMPLOYMENT AGREEMENT (the "Agreement"), dated as of November
18, 1996, by and between MEDIALINK WORLDWIDE INCORPORATED, a Delaware
corporation with offices at 708 Third Avenue, New York, New York 10017 (the
"Corporation"), and NICHOLAS F. PETERS, an individual residing at 62 Montclair
Avenue, Montclair, New Jersey 07042 (the "Employee").
W I T N E S S E T H:
WHEREAS, the Corporation has filed a registration statement
("1996 Registration Statement") with the Securities and Exchange Commission
("SEC") and making a public offering of shares of its Common Stock;
WHEREAS, the Corporation desires to continue the services of
the Employee upon the terms and conditions hereinafter set forth; and
WHEREAS, the Employee desires to render services to the
Corporation upon the terms and conditions hereinafter set forth.
NOW, WHEREFORE, the parties mutually agree as follows:
Section 1. Effective Date. This Agreement shall become
effective only upon the consummation of the proposed public offering pursuant
to the 1996 Registration Statement. In the event for any reason whatsoever such
public offering is not consummated, then this Agreement shall be void and of no
legal force or effect. The date of the first closing of the public offering
pursuant to the 1996 Registration Statement shall be the Effective Date.
Section 2. Employment. On the Effective Date the Corporation
employs the Employee and the Employee on the Effective Date accepts such
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employment, as an executive of the Corporation, subject to the terms and
conditions set forth in this Agreement.
Section 3. Duties. The Employee shall be employed as Senior
Vice President of Operations and Marketing. The Employee shall properly perform
such duties as may be assigned to him from time to time by the Corporation's
Chief Executive Officer or the Board of Directors of the Corporation as the
case may be. During the term of this Agreement, the Employee shall devote all
of his available business time to the performance of his duties hereunder.
Section 4. Term of Employment. The term of the Employee's
employment shall commence on the Effective Date and shall continue for
two (2) years or until terminated pursuant to Section 6 hereof.
Section 5. Compensation of Employee.
5.1. Compensation. The Corporation shall pay to the
Employee as annual compensation for his services hereunder a salary ("Salary")
in an amount equal to One Hundred Eight Thousand One Hundred Fifty ($108,150)
Dollars. The Salary shall be reviewed every January 1st for merit increases and
shall in all events be increased on the anniversary date of this Agreement by
the percentage increase, if any, in the Consumer Price Index, as defined
herein, for the most recent calendar month for which the Consumer Price Index
has been published over the Consumer Price Index for the same calendar month in
the immediately preceding year. As used herein, the "Consumer Price Index"
shall mean the Consumer Price Index for All Urban Consumers, New York -
Northeastern New Jersey area (1982-84=100) issued by the Bureau of Labor
Statistics of the United States Department of Labor; provided that in the event
the Consumer Price Index shall hereafter be converted to a different
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standard reference base or otherwise revised, the determination of the salary
increase shall be made with the use of such conversion factor, formula or table
for converting the Consumer Price Index as may be published by the Bureau of
Labor Statistics. The Salary shall be payable bi-weekly less such deductions as
shall be required to be withheld by applicable law and regulations. The
Employee shall be eligible to participate in the Corporation's bonus plan. Such
bonus shall be determined by the Corporation's Compensation Committee.
Notwithstanding the foregoing, the minimum annual bonus potential shall be 25%
of the Employee's Salary; provided, however, that Employee shall only be
entitled to receive such bonus in the event the Company attains the annual
goals set by the Compensation Committee. The goals set by the Compensation
Committee shall be consistent with the goals set by the Compensation Committee
in prior years.
5.2. Expenses. The Corporation shall pay or
reimburse the Employee for all reasonable and necessary business, travel or
other expenses incurred by him with the prior consent of the Corporation, upon
proper documentation thereof, which may be incurred by him in connection with
the rendition of the services contemplated hereunder.
5.3. Benefits. During the term of this
Agreement, the Employee shall be entitled to participate in such pension, profit
sharing, group insurance, option plans, hospitalization, group health benefit
plans and all other benefits and plans as the Corporation provides to its
employees. Provided that the Corporation files a registration statement on Form
S-1 covering the registration of shares of its Common Stock, $.01 par value
("Common Stock"), the Corporation intends to file a registration statement on
Form S-8 to register the shares of Common Stock underlying the stock
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options granted pursuant to its option plans. In the event such registration
statement on Form S-8 is filed, the Corporation agrees to use its best efforts
to keep such registration statement on Form S-8 in full force and effect.
Section 6. Termination.
6.1. Termination of Employment. This Agreement
shall terminate upon the death, Disability, as hereinafter defined, termination
of employment of the Employee For Cause, as hereinafter defined, termination of
the employment of Employee without cause or because Employee wrongfully leaves
his employment hereunder.
6.2. Termination For Cause. In the event of a
termination For Cause or because Employee wrongfully leaves his employment
hereunder, the Corporation shall pay Employee all accrued and unpaid Salary and
vacation through the date of termination.
6.3. Termination Without Cause. In the event of
a termination without cause, the Employee shall be entitled to continue to
participate in the hospitalization, group health benefit and disability plans of
the Corporation on the same terms and conditions as immediately prior to his
termination and shall receive his Salary, both for a period equal to the earlier
of (i) the date the Employee commences employment elsewhere; (ii) six (6)
months; or (iii) the date the term would have expired pursuant to Section 3 of
this Agreement had the Employee not been terminated.
6.4. Termination Upon Death. In the event of a
termination upon the death of Employee, the Corporation shall pay to the
Employee, any person designated by the Employee in writing or if no such person
is designated, to his
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estate, as the case may be, the Salary which would otherwise be payable to the
Employee for a period of six (6) months from the date of such death. In the
event of a termination upon the death of Employee, the Corporation shall pay
for a period of six (6) months after such death, on behalf of the Employee's
surviving dependents, the COBRA insurance premiums of such dependents.
6.5. Termination Upon Disability. In the event
of a termination upon the Disability of Employee, the Corporation shall pay to
the Employee or any person designated by the Employee, (i) during the first
month immediately after the termination of employment due to such Disability,
the Salary which would otherwise by payable to the Employee and (ii) during the
second and third months immediately after the termination of employment due to
such Disability, the difference between the Salary which would otherwise be
payable to the Employee and the disability insurance payments received by
Employee for such period.
6.6. Definition of "For Cause". As used herein,
the term "For Cause" shall mean (i) Employee's indictment, plea or conviction in
a court of law of any crime or offense involving willful misappropriation of
money or other property or any other crime involving moral turpitude which
constitutes felony, whether or not involving the Corporation; or (ii)
disobedience of a directive, other than a directive to relocate to an office of
the Corporation more than fifty (50) miles from the office where Executive is
employed pursuant to this Agreement, from the Chief Executive Officer or Board
of Directors of the Corporation consistent with Employee's duties hereunder or
(iii) breach of his responsibilities under this Agreement.
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Section 7. Disability
7.1. Definition. In the event the Employee is
mentally or physically incapable or unable to perform his regular and customary
duties of employment with the Corporation for a period of seventy-five (75) days
in any one hundred twenty (120) day period during the term, the Employee shall
be deemed to be suffering from a "Disability".
7.2. Payment During Disability. In the event the
Employee is unable to perform his duties hereunder by reason of a disability,
which disability does not constitute a Disability, the Corporation shall
continue to pay the Employee his Salary and benefits during the continuance of
such disability.
Section 8. Vacations and Personal Days. The Employee shall be
entitled to vacation and personal days in accordance with Corporation policy.
The Employee's Salary shall be paid in full during his vacation and personal
days. The Employee shall take his vacation at such time or times as the Employee
and the Corporation shall determine is mutually convenient.
Section 9. Disclosure of Confidential Information.
(a) The Employee hereby acknowledges
that the principal business of the Corporation is the production of video and
audio public relations materials for distribution to news media and the
distribution by satellite or other means to television and radio stations and
news media services; distribution of public relations text, audio and video to
news media and the general public via satellite, cassette, wire or other means;
distribution of press releases by mail and facsimile; the maintenance of
databases of media contacts for and on behalf of clients; analysis and written
appraisal of public relations and public affairs campaigns as
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determined through press clipping review, either on paper, video or audio tape
or electronic database searches and such other businesses as the Corporation
may conduct from time to time (the "Business"). Employee acknowledges that he
will be acquiring confidential information concerning the Corporation and the
Business and that, among other things, his knowledge of the Business will be
enhanced through his employment by the Corporation. Employee acknowledges that
such information is of great value to the Corporation, is the sole property of
the Corporation, and has been and will be acquired by him in confidence. In
consideration of the obligations undertaken by the Corporation herein, Employee
will not, at any time, during or after the term of this Agreement, reveal,
divulge or make known to any person, any information which is treated as
confidential by the Corporation and not otherwise in the public domain or
previously known to him.
(b) The provisions of this Section 9
shall survive Employee's employment hereunder.
Section 10. Covenant Not To Compete.
(a) Employee recognizes that the
services to be performed by him hereunder are special, unique and extraordinary.
The parties confirm that it is reasonably necessary for the protection of the
Corporation that Employee agrees, and, accordingly, Employee does hereby agree,
that he will not, directly or indirectly, in the Territory, as hereinafter
defined, at any time during the Restricted Period, as hereinafter defined:
(i) engage in the Business for his
account or render any services which constitute engaging in
the Business, in any capacity to any entity; or become
interested in any entity engaged in the Business
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either on his own behalf or as an officer, director,
stockholder, partner, principal, consultant, associate,
employee, owner, agent, creditor, independent contractor, or
co-venturer of any third party or in any other relationship
or capacity; or
(ii) employ or engage, or cause to
authorize, directly or indirectly, to be employed or engaged,
for or on behalf of himself or any third party, any employee,
representative or agent of the Corporation; or
(iii) solicit, directly or
indirectly, on behalf of himself or any third party, any
client or vendor of the Corporation and its affiliates; or
(iv) have an interest as an owner,
lender, independent contractor, co-venturer, partner,
participant, associate or in any other capacity, render
services to or participate in the affairs of, any business
which is competitive with, or substantially similar to, the
Business of the Corporation and its affiliates as presently
conducted and as may be conducted by the Corporation during
the Restricted Period.
(b) If any of the restrictions contained
in this Section 10 shall be deemed to be unenforceable by
reason of the extent, duration or geographical scope thereof,
or otherwise, then after such restrictions have been reduced
so as to be enforceable, in its reduced form this Section
shall then be enforceable in the manner contemplated hereby.
(c) This Section 10 shall not be cons
trued to prevent Employee from owning, directly and
indirectly, in the aggregate, an amount not
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exceeding two percent (2%) of the issued and outstanding voting securities of
any class of any corporation whose voting capital stock is traded on a national
securities exchange or in the over-the-counter market.
(d) Notwithstanding anything to the
contrary set forth in this Section 10, (i) the Employee shall not be prohibited
from rendering services for news organizations, or public relations departments
or public relations agencies; (ii) the Employee may act as a news reporter or
manager for an entity whose primary function is journalism; (iii) the Employee
may act as a member of the internal public relations staff of any corporation or
entity who performs services for only that corporation or its affiliates,
including parent corporations, subsidiaries, and joint ventures; and/or (iv) the
Employee may act as an account executive or manager at a public relations agency
directly serving that agency's clients. Notwithstanding the prior sentence,
however, the Employee may not, render services, directly or indirectly, (i) for
any organization, department, or affiliate of such news organizations, corporate
public relations departments, or public relations agencies, whose primary
purpose is to provide the production and distribution of video or audio news
releases that are competitive with, or substantially similar to, the Business,
and (ii) for any organization, department, or affiliate of such news
organizations, corporate public relations departments, or public relations
agencies, whose primary purpose is to provide the research and analysis of
public relations and public affairs campaigns as determined through press
clipping review, either on paper, video or audio tape or electronic database
searches that are competitive with or substantially similar to the Business.
(e) The term "Restricted Period", as
used in this Section 10, shall mean (i) the term of this Agreement plus one (1)
year; (ii) in the
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event of a termination For Cause, two (2) years from the date of termination;
or (iii) in the event of a termination without cause, one (1) year from the
date of termination. Employee acknowledges that the Corporation markets its
Business worldwide and therefore, the term "Territory" as used herein shall
mean the entire world.
(f) The provisions of this Section 10
shall survive the termination of Employee's employment hereunder and until the
end of the Restricted Period as provided in Section 10 (e) hereof.
Section 11. Rights and Remedies Upon Breach of Sections
9 or 10.
11.1. Return of Benefits. If the Employee
breaches, or threatens to commit a breach of, any of the provisions of Sections
9 or 10 (the "Restrictive Covenants"), the Corporation shall have the right and
remedy to require the Employee to account for and pay over to the Corporation
all compensation, profits, monies, accruals, increments or other benefits
(collectively, "Benefits") derived or received by him as the result of any
transactions constituting a breach of the Restrictive Covenants, and the
Employee shall account for and pay over such Benefits to the Corporation. In
addition, if the Employee breaches or threatens to commit a breach of any of
the Restrictive Covenants, (i) the Employee's unvested stock options shall
immediately lapse and (ii) the Corporation shall have the right to purchase
from the Employee the Employee's vested stock options for the book value of the
shares of Common Stock underlying such vested options less the exercise price
of such vested options. The Corporation may set off any amounts due to the
Corporation under this Section 11.1 against any amounts owed to the Employee by
the Corporation.
11.2. Injunctive Relief. Employee acknowledges
that the services to be rendered under the provisions of this Agreement are of a
special, unique and
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extraordinary character and that it would be difficult or impossible to replace
such services. Accordingly, Employee agrees that any breach or threatened
breach by him of Sections 9 or 10 of this Agreement shall entitle the
Corporation, in addition to all other legal remedies available to it, to apply
to any court of competent jurisdiction to enjoin such breach or threatened
breach without posting a bond or showing special damages. The parties
understand and intend that each restriction agreed to by Employee hereinabove
shall be construed as separable and divisible from every other restriction,
that the unenforceability of any restriction shall not limit the
enforceability, in whole or in part, of any other restriction, and that one or
more of all of such restrictions may be enforced in whole or in part as the
circumstances warrant. In the event that any restriction in this Agreement is
more restrictive than permitted by law in the jurisdiction in which the
Corporation seeks enforcement thereof, such restriction shall be limited to the
extent permitted by law.
Section 12. Miscellaneous.
12.1. Assignment. The Employee may not assign or
delegate any of his rights or duties under this Agreement.
12.2. Entire Agreement. This Agreement
constitutes and embodies the full and complete understanding and agreement of
the parties with respect to the Employee's employment by the Corporation,
supersedes all prior understandings and agreements, including employment
agreements, non-compete agreements and confidentiality agreements, if any,
whether oral or written, between the Employee and the Corporation and shall not
be amended, modified or changed except by an instrument in writing executed by
the party to be charged. The invalidity or partial invalidity of one or more
provisions of this Agreement shall not invalidate any
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other provision of this Agreement. No waiver by either party of any provision
or condition to be performed shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or any prior or subsequent time.
12.3. Binding Effect. This Agreement shall inure
to the benefit of, be binding upon and enforceable against, the parties hereto
and their respective successors and permitted assigns.
12.4. Captions. The captions contained in this
Agreement are for convenience of reference only and shall not affect in any way
the meaning or interpretation of this Agreement.
12.5. Notices. All notices, requests, demands and
other communications required or permitted to be given hereunder shall be in
writing and shall be deemed to have been duly given when personally delivered or
sent by certified mail, postage prepaid, or overnight delivery to the party at
the address set forth above or to such other address as either party may
hereafter give notice of in accordance with the provisions hereof.
12.6. Governing Law. This Agreement shall be
governed by and interpreted under the laws of the State of New York applicable
to contracts made and to be performed therein without giving effect to the
principles of conflict of laws thereof. Except in respect of any action
commenced by a third party in another jurisdiction, the parties hereto agree
that any legal suit, action, or proceeding against them arising out of or
relating to this Agreement shall be brought exclusively in the United States
Federal Courts or New York County Supreme Court, in the State of New York. The
parties hereto hereby accept the jurisdictions of such courts for the purpose of
any such action or proceeding and agree that venue for any action or
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proceeding brought in the State of New York shall lie in the Southern District
of New York or Supreme Court, New York County, as the case may be. Each of the
parties hereto hereby irrevocably consents to the service of process in any
action or proceeding in such courts by the mailing thereof by United States
registered or certified mail postage prepaid at its address set forth herein.
12.7. Counterparts. This Agreement may be
executed simultaneously in two or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date set forth above.
MEDIALINK WORLDWIDE INCORPORATED
By: /s/ J. Graeme McWhirter
--------------------------------
/s/ Nicholas F. Peters
--------------------------------
NICHOLAS F. PETERS
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EMPLOYMENT AGREEMENT (the "Agreement"), dated as of November
18, 1996, by and between MEDIALINK WORLDWIDE INCORPORATED a Delaware
corporation with offices at 708 Third Avenue, New York, New York 10017 (the
"Corporation"), and MARK MANOFF, an individual residing at 5612 Durbin Road,
Bethesda, Maryland 20814 (the "Employee").
W I T N E S S E T H:
WHEREAS, the Corporation has filed a registration statement
("1996 Registration Statement") with the Securities and Exchange Commission
("SEC") and making a public offering of shares of its Common Stock;
WHEREAS, the Corporation desires to continue the services of
the Employee upon the terms and conditions hereinafter set forth; and
WHEREAS, the Employee desires to render services to the
Corporation upon the terms and conditions hereinafter set forth.
NOW, WHEREFORE, the parties mutually agree as follows:
Section 1. Effective Date. This Agreement shall become
effective only upon the consummation of the proposed public offering pursuant
to the 1996 Registration Statement. In the event for any reason whatsoever such
public offering is not consummated, then this Agreement shall be void and of no
legal force or effect.
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The date of the first closing of the public offering pursuant to the 1996
Registration Statement shall be the Effective Date.
Section 2. Employment. On the Effective Date the Corporation
employs the Employee and the Employee on the Effective Date accepts such
employment, as an executive of the Corporation, subject to the terms and
conditions set forth in this Agreement.
Section 3. Duties. The Employee shall be employed as Senior
Vice President of Sales. The Employee shall properly perform such duties as may
be assigned to him from time to time by the Corporation's Chief Executive
Officer or the Board of Directors of the Corporation as the case may be. During
the term of this Agreement, the Employee shall devote all of his available
business time to the performance of his duties hereunder.
Section 4. Term of Employment. The term of the Employee's
employment shall commence on the Effective Date and shall continue for two (2)
years or until terminated pursuant to Section 6 hereof.
Section 5. Compensation of Employee.
5.1. Compensation. The Corporation shall pay to the
Employee as annual compensation for his services hereunder a salary ("Salary")
in an amount equal to One Hundred Eight Thousand One Hundred Fifty ($108,150)
Dollars. The Salary shall be reviewed every January 1st for merit increases and
shall in all events be increased on the anniversary date of this Agreement by
the percentage increase, if any, in the Consumer Price Index, as defined herein,
for the most recent calendar
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month for which the Consumer Price Index has been published over the Consumer
Price Index for the same calendar month in the immediately preceding year. As
used herein, the "Consumer Price Index" shall mean the Consumer Price Index for
All Urban Consumers, New York - Northeastern New Jersey area (1982-84=100)
issued by the Bureau of Labor Statistics of the United States Department of
Labor; provided that in the event the Consumer Price Index shall hereafter be
converted to a different standard reference base or otherwise revised, the
determination of the salary increase shall be made with the use of such
conversion factor, formula or table for converting the Consumer Price Index as
may be published by the Bureau of Labor Statistics. The Salary shall be payable
bi-weekly less such deductions as shall be required to be withheld by
applicable law and regulations. The Employee shall be eligible to participate
in the Corporation's bonus plan. Such bonus shall be determined by the
Corporation's Compensation Committee. Notwithstanding the foregoing, the
minimum annual bonus potential shall be 25% of the Employee's Salary; provided,
however, that Employee shall only be entitled to receive such bonus in the
event the Company attains the annual goals set by the Compensation Committee.
The goals set by the Compensation Committee shall be consistent with the goals
set by the Compensation Committee in prior years.
5.2. Expenses. The Corporation shall pay or
reimburse the Employee for all reasonable and necessary business, travel or
other expenses incurred by him with the prior consent of the Corporation, upon
proper documentation
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thereof, which may be incurred by him in connection with the rendition of the
services contemplated hereunder.
5.3. Benefits. During the term of this
Agreement, the Employee shall be entitled to participate in such pension, profit
sharing, group insurance, option plans, hospitalization, group health benefit
plans and all other benefits and plans as the Corporation provides to its
employees. Provided that the Corporation files a registration statement on Form
S-1 covering the registration of shares of its Common Stock, $.01 par value
("Common Stock"), the Corporation intends to file a registration statement on
Form S-8 to register the shares of Common Stock underlying the stock options
granted pursuant to its option plans. In the event such registration statement
on Form S-8 is filed, the Corporation agrees to use its best efforts to keep
such registration statement on Form S-8 in full force and effect.
Section 6. Termination.
6.1. Termination of Employment. This Agreement
shall terminate upon the death, Disability, as hereinafter defined, termination
of employment of the Employee For Cause, as hereinafter defined, termination of
the employment of Employee without cause or because Employee wrongfully leaves
his employment hereunder.
6.2. Termination For Cause. In the event of a
termination For Cause or because Employee wrongfully leaves his employment
hereunder, the Corporation shall pay Employee all accrued and unpaid Salary and
vacation through the date of termination.
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6.3. Termination Without Cause. In the event of
a termination without cause, the Employee shall be entitled to continue to
participate in the hospitalization, group health benefit and disability plans of
the Corporation on the same terms and conditions as immediately prior to his
termination and shall receive his Salary, both for a period equal to the earlier
of (i) the date the Employee commences employment elsewhere; (ii) six (6)
months; or (iii) the date the term would have expired pursuant to Section 3 of
this Agreement had the Employee not been terminated.
6.4. Termination Upon Death. In the event of a
termination upon the death of Employee, the Corporation shall pay to the
Employee, any person designated by the Employee in writing or if no such person
is designated, to his estate, as the case may be, the Salary which would
otherwise be payable to the Employee for a period of six (6) months from the
date of such death. In the event of a termination upon the death of Employee,
the Corporation shall pay for a period of six (6) months after such death, on
behalf of the Employee's surviving dependents, the COBRA insurance premiums of
such dependents.
6.5. Termination Upon Disability. In the event
of a termination upon the Disability of Employee, the Corporation shall pay to
the Employee or any person designated by the Employee, (i) during the first
month immediately after the termination of employment due to such Disability,
the Salary which would otherwise by payable to the Employee and (ii) during the
second and third months immediately after the termination of employment due to
such Disability, the difference between the
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Salary which would otherwise be payable to the Employee and the disability
insurance payments received by Employee for such period.
6.6. Definition of "For Cause". As used herein,
the term "For Cause" shall mean (i) Employee's indictment, plea or conviction in
a court of law of any crime or offense involving willful misappropriation of
money or other property or any other crime involving moral turpitude which
constitutes felony, whether or not involving the Corporation; or (ii)
disobedience of a directive, other than a directive to relocate to an office of
the Corporation more than fifty (50) miles from the office where Executive is
employed pursuant to this Agreement, from the Chief Executive Officer or Board
of Directors of the Corporation consistent with Employee's duties hereunder or
(iii) breach of his responsibilities under this Agreement.
Section 7. Disability
7.1. Definition. In the event the Employee is
mentally or physically incapable or unable to perform his regular and customary
duties of employment with the Corporation for a period of seventy-five (75) days
in any one hundred twenty (120) day period during the term, the Employee shall
be deemed to be suffering from a "Disability".
7.2. Payment During Disability. In the event the
Employee is unable to perform his duties hereunder by reason of a disability,
which disability does not constitute a Disability, the Corporation shall
continue to pay the Employee his Salary and benefits during the continuance of
such disability.
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Section 8. Vacations and Personal Days. The Employee shall be
entitled to vacation and personal days in accordance with Corporation policy.
The Employee's Salary shall be paid in full during his vacation and personal
days. The Employee shall take his vacation at such time or times as the
Employee and the Corporation shall determine is mutually convenient.
Section 9. Disclosure of Confidential Information.
(a) The Employee hereby acknowledges
that the principal business of the Corporation is the production of video and
audio public relations materials for distribution to news media and the
distribution by satellite or other means to television and radio stations and
news media services; distribution of public relations text, audio and video to
news media and the general public via satellite, cassette, wire or other means;
distribution of press releases by mail and facsimile; the maintenance of
databases of media contacts for and on behalf of clients; analysis and written
appraisal of public relations and public affairs campaigns as determined
through press clipping review, either on paper, video or audio tape or
electronic database searches and such other businesses as the Corporation may
conduct from time to time (the "Business"). Employee acknowledges that he will
be acquiring confidential information concerning the Corporation and the
Business and that, among other things, his knowledge of the Business will be
enhanced through his employment by the Corporation. Employee acknowledges that
such information is of great value to the Corporation, is the sole property of
the Corporation, and has been and will be acquired by him in confidence. In
consideration of the obligations
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undertaken by the Corporation herein, Employee will not, at any time, during or
after the term of this Agreement, reveal, divulge or make known to any person,
any information which is treated as confidential by the Corporation and not
otherwise in the public domain or previously known to him.
(b) The provisions of this Section 9
shall survive Employee's employment hereunder.
Section 10. Covenant Not To Compete.
(a) Employee recognizes that the
services to be performed by him hereunder are special, unique and extraordinary.
The parties confirm that it is reasonably necessary for the protection of the
Corporation that Employee agrees, and, accordingly, Employee does hereby agree,
that he will not, directly or indirectly, in the Territory, as hereinafter
defined, at any time during the Restricted Period, as hereinafter defined:
(i) engage in the Business for his
account or render any services which constitute engaging in
the Business, in any capacity to any entity; or become
interested in any entity engaged in the Business either on his
own behalf or as an officer, director, stockholder, partner,
principal, consultant, associate, employee, owner, agent,
creditor, independent contractor, or co-venturer of any third
party or in any other relationship or capacity; or
(ii) employ or engage, or cause to
authorize, directly or indirectly, to be employed or engaged,
for or on behalf of himself or
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any third party, any employee, representative or agent of the
Corporation; or
(iii) solicit, directly or
indirectly, on behalf of himself or any third party, any
client or vendor of the Corporation and its affiliates; or
(iv) have an interest as an owner,
lender, independent contractor, co-venturer, partner,
participant, associate or in any other capacity, render
services to or participate in the affairs of, any business
which is competitive with, or substantially similar to, the
Business of the Corporation and its affiliates as presently
conducted and as may be conducted by the Corporation during
the Restricted Period.
(b) If any of the restrictions contained
in this Section 10 shall be deemed to be unenforceable by
reason of the extent, duration or geographical scope thereof,
or otherwise, then after such restrictions have been reduced
so as to be enforceable, in its reduced form this Section
shall then be enforceable in the manner contemplated hereby.
(c) This Section 10 shall not be
construed to prevent Employee from owning, directly and indirectly, in the
aggregate, an amount not exceeding two percent (2%) of the issued and
outstanding voting securities of any class of any corporation whose voting
capital stock is traded on a national securities exchange or in the
over-the-counter market.
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(d) Notwithstanding anything to the
contrary set forth in this Section 10, (i) the Employee shall not be prohibited
from rendering services for news organizations, or public relations departments
or public relations agencies; (ii) the Employee may act as a news reporter or
manager for an entity whose primary function is journalism; (iii) the Employee
may act as a member of the internal public relations staff of any corporation or
entity who performs services for only that corporation or its affiliates,
including parent corporations, subsidiaries, and joint ventures; and/or (iv) the
Employee may act as an account executive or manager at a public relations agency
directly serving that agency's clients. Notwithstanding the prior sentence,
however, the Employee may not, render services, directly or indirectly, (i) for
any organization, department, or affiliate of such news organizations, corporate
public relations departments, or public relations agencies, whose primary
purpose is to provide the production and distribution of video or audio news
releases that are competitive with, or substantially similar to, the Business,
and (ii) for any organization, department, or affiliate of such news
organizations, corporate public relations departments, or public relations
agencies, whose primary purpose is to provide the research and analysis of
public relations and public affairs campaigns as determined through press
clipping review, either on paper, video or audio tape or electronic database
searches that are competitive with or substantially similar to the Business.
(e) The term "Restricted Period", as
used in this Section 10, shall mean (i) the term of this Agreement plus one (1)
year; (ii) in the event of a termination For Cause, two (2) years from the date
of termination; or (iii) in
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<PAGE>
the event of a termination without cause, one (1) year from the date of
termination. Employee acknowledges that the Corporation markets its Business
worldwide and therefore, the term "Territory" as used herein shall mean the
entire world.
(f) The provisions of this Section 10
shall survive the termination of Employee's employment hereunder and until the
end of the Restricted Period as provided in Section 10 (e) hereof.
Section 11. Rights and Remedies Upon Breach of Sections
9 or 10.
11.1. Return of Benefits. If the Employee
breaches, or threatens to commit a breach of, any of the provisions of Sections
9 or 10 (the "Restrictive Covenants"), the Corporation shall have the right and
remedy to require the Employee to account for and pay over to the Corporation
all compensation, profits, monies, accruals, increments or other benefits
(collectively, "Benefits") derived or received by him as the result of any
transactions constituting a breach of the Restrictive Covenants, and the
Employee shall account for and pay over such Benefits to the Corporation. In
addition, if the Employee breaches or threatens to commit a breach of any of the
Restrictive Covenants, (i) the Employee's unvested stock options shall
immediately lapse and (ii) the Corporation shall have the right to purchase from
the Employee the Employee's vested stock options for the book value of the
shares of Common Stock underlying such vested options less the exercise price of
such vested options. The Corporation may set off any amounts due to the
Corporation under this Section 11.1 against any amounts owed to the Employee by
the Corporation.
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11.2. Injunctive Relief. Employee acknowledges
that the services to be rendered under the provisions of this Agreement are of a
special, unique and extraordinary character and that it would be difficult or
impossible to replace such services. Accordingly, Employee agrees that any
breach or threatened breach by him of Sections 9 or 10 of this Agreement shall
entitle the Corporation, in addition to all other legal remedies available to
it, to apply to any court of competent jurisdiction to enjoin such breach or
threatened breach without posting a bond or showing special damages. The parties
understand and intend that each restriction agreed to by Employee hereinabove
shall be construed as separable and divisible from every other restriction, that
the unenforceability of any restriction shall not limit the enforceability, in
whole or in part, of any other restriction, and that one or more of all of such
restrictions may be enforced in whole or in part as the circumstances warrant.
In the event that any restriction in this Agreement is more restrictive than
permitted by law in the jurisdiction in which the Corporation seeks enforcement
thereof, such restriction shall be limited to the extent permitted by law.
Section 12. Miscellaneous.
12.1. Assignment. The Employee may not assign or
delegate any of his rights or duties under this Agreement.
12.2. Entire Agreement. This Agreement
constitutes and embodies the full and complete understanding and agreement of
the parties with respect to the Employee's employment by the Corporation,
supersedes all prior understandings and agreements, including employment
agreements, non-compete
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<PAGE>
agreements and confidentiality agreements, if any, whether oral or written,
between the Employee and the Corporation and shall not be amended, modified or
changed except by an instrument in writing executed by the party to be charged.
The invalidity or partial invalidity of one or more provisions of this
Agreement shall not invalidate any other provision of this Agreement. No waiver
by either party of any provision or condition to be performed shall be deemed a
waiver of similar or dissimilar provisions or conditions at the same or any
prior or subsequent time.
12.3. Binding Effect. This Agreement shall inure
to the benefit of, be binding upon and enforceable against, the parties hereto
and their respective successors and permitted assigns.
12.4. Captions. The captions contained in this
Agreement are for convenience of reference only and shall not affect in any way
the meaning or interpretation of this Agreement.
12.5. Notices. All notices, requests, demands and
other communications required or permitted to be given hereunder shall be in
writing and shall be deemed to have been duly given when personally delivered or
sent by certified mail, postage prepaid, or overnight delivery to the party at
the address set forth above or to such other address as either party may
hereafter give notice of in accordance with the provisions hereof.
12.6. Governing Law. This Agreement shall be
governed by and interpreted under the laws of the State of New York applicable
to contracts made and to be performed therein without giving effect to the
principles of conflict of laws
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<PAGE>
thereof. Except in respect of any action commenced by a third party in another
jurisdiction, the parties hereto agree that any legal suit, action, or
proceeding against them arising out of or relating to this Agreement shall be
brought exclusively in the United States Federal Courts or New York County
Supreme Court, in the State of New York. The parties hereto hereby accept the
jurisdictions of such courts for the purpose of any such action or proceeding
and agree that venue for any action or proceeding brought in the State of New
York shall lie in the Southern District of New York or Supreme Court, New York
County, as the case may be. Each of the parties hereto hereby irrevocably
consents to the service of process in any action or proceeding in such courts
by the mailing thereof by United States registered or certified mail postage
prepaid at its address set forth herein.
12.7. Counterparts. This Agreement may be
executed simultaneously in two or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date set forth above.
MEDIALINK WORLDWIDE INCORPORATED
By:
-----------------------------
-----------------------------
MARK MANOFF
14
<PAGE>
EMPLOYMENT AGREEMENT (the "Agreement"), dated as of November
18, 1996, by and between MEDIALINK WORLDWIDE INCORPORATED, a Delaware
corporation with offices at 708 Third Avenue, New York, New York 10017 (the
"Corporation"), and MARY BUHAY, an individual residing at 95 Linden Avenue,
Metuchen, New Jersey (the "Employee").
W I T N E S S E T H:
WHEREAS, the Corporation has filed a registration statement
("1996 Registration Statement") with the Securities and Exchange Commission
("SEC") and making a public offering of shares of its Common Stock;
WHEREAS, the Corporation desires to continue the services of
the Employee upon the terms and conditions hereinafter set forth; and
WHEREAS, the Employee desires to render services to the
Corporation upon the terms and conditions hereinafter set forth.
NOW, WHEREFORE, the parties mutually agree as follows:
Section 1. Effective Date. This Agreement shall become
effective only upon the consummation of the proposed public offering pursuant
to the 1996 Registration Statement. In the event for any reason whatsoever such
public offering is not consummated, then this Agreement shall be void and of no
legal force or effect. The date of the first closing of the public offering
pursuant to the 1996 Registration Statement shall be the Effective Date.
Section 2. Employment. On the Effective Date the Corporation
employs the Employee and the Employee on the Effective Date accepts such
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<PAGE>
employment, as an executive of the Corporation, subject to the terms and
conditions set forth in this Agreement.
Section 3. Duties. The Employee shall be employed as Vice
President of Sales and Special Services. The Employee shall properly perform
such duties as may be assigned to him from time to time by the Corporation's
Chief Executive Officer or the Board of Directors of the Corporation as the
case may be. During the term of this Agreement, the Employee shall devote all
of his available business time to the performance of his duties hereunder.
Section 4. Term of Employment. The term of the Employee's
employment shall commence on the Effective Date and shall continue for two (2)
years or until terminated pursuant to Section 6 hereof.
Section 5. Compensation of Employee.
5.1. Compensation. The Corporation shall pay to
the Employee as annual compensation for his services hereunder a salary
("Salary") in an amount equal to Eighty Thousand ($80,000) Dollars. The Salary
shall be reviewed every January 1st for merit increases and shall in all events
be increased on the anniversary date of this Agreement by the percentage
increase, if any, in the Consumer Price Index, as defined herein, for the most
recent calendar month for which the Consumer Price Index has been published over
the Consumer Price Index for the same calendar month in the immediately
preceding year. As used herein, the "Consumer Price Index" shall mean the
Consumer Price Index for All Urban Consumers, New York Northeastern New Jersey
area (1982-84=100) issued by the Bureau of Labor Statistics of the United States
Department of Labor; provided that in the event the Consumer Price Index shall
hereafter be converted to a different standard reference base or
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<PAGE>
otherwise revised, the determination of the salary increase shall be made with
the use of such conversion factor, formula or table for converting the Consumer
Price Index as may be published by the Bureau of Labor Statistics. The Salary
shall be payable bi-weekly less such deductions as shall be required to be
withheld by applicable law and regulations. The Employee shall receive
commission and bonus as mutually agreed upon by the Employee and the
Corporation.
5.2. Expenses. The Corporation shall pay or
reimburse the Employee for all reasonable and necessary business, travel or
other expenses incurred by him with the prior consent of the Corporation, upon
proper documentation thereof, which may be incurred by him in connection with
the rendition of the services contemplated hereunder.
5.3. Benefits. During the term of this
Agreement, the Employee shall be entitled to participate in such pension, profit
sharing, group insurance, option plans, hospitalization, group health benefit
plans and all other benefits and plans as the Corporation provides to its
employees. Provided that the Corporation files a registration statement on Form
S-1 covering the registration of shares of its Common Stock, $.01 par value
("Common Stock"), the Corporation intends to file a registration statement on
Form S-8 to register the shares of Common Stock underlying the stock options
granted pursuant to its option plans. In the event such registration statement
on Form S-8 is filed, the Corporation agrees to use its best efforts to keep
such registration statement on Form S-8 in full force and effect.
3
<PAGE>
Section 6. Termination.
6.1. Termination of Employment. This Agreement
shall terminate upon the death, Disability, as hereinafter defined, termination
of employment of the Employee For Cause, as hereinafter defined, termination of
the employment of Employee without cause or because Employee wrongfully leaves
his employment hereunder.
6.2. Termination For Cause. In the event of a
termination For Cause or because Employee wrongfully leaves his employment
hereunder, the Corporation shall pay Employee all accrued and unpaid Salary and
vacation through the date of termination.
6.3. Termination Without Cause. In the event of
a termination without cause, the Employee shall be entitled to continue to
participate in the hospitalization, group health benefit and disability plans of
the Corporation on the same terms and conditions as immediately prior to his
termination and shall receive his Salary, both for a period equal to the earlier
of (i) the date the Employee commences employment elsewhere; (ii) three (3)
months; or (iii) the date the term would have expired pursuant to Section 3 of
this Agreement had the Employee not been terminated.
6.4. Termination Upon Death. In the event of a
termination upon the death of Employee, the Corporation shall pay to the
Employee, any person designated by the Employee in writing or if no such person
is designated, to his estate, as the case may be, the Salary which would
otherwise be payable to the Employee for a period of six (6) months from the
date of such death. In the event of a termination upon the death of Employee,
the Corporation shall pay for a period of six
4
<PAGE>
(6) months after such death, on behalf of the Employee's surviving dependents,
the COBRA insurance premiums of such dependents.
6.5. Termination Upon Disability. In the event
of a termination upon the Disability of Employee, the Corporation shall pay to
the Employee or any person designated by the Employee, (i) during the first
month immediately after the termination of employment due to such Disability,
the Salary which would otherwise by payable to the Employee and (ii) during the
second and third months immediately after the termination of employment due to
such Disability, the difference between the Salary which would otherwise be
payable to the Employee and the disability insurance payments received by
Employee for such period.
6.6. Definition of "For Cause". As used herein,
the term "For Cause" shall mean (i) Employee's indictment, plea or conviction in
a court of law of any crime or offense involving willful misappropriation of
money or other property or any other crime involving moral turpitude which
constitutes felony, whether or not involving the Corporation; or (ii)
disobedience of a directive, other than a directive to relocate to an office of
the Corporation more than fifty (50) miles from the office where Executive is
employed pursuant to this Agreement, from the Chief Executive Officer or Board
of Directors of the Corporation consistent with Employee's duties hereunder; or
(iii) breach of his responsibilities under this Agreement.
Section 7. Disability
7.1. Definition. In the event the Employee is
mentally or physically incapable or unable to perform his regular and customary
duties of employment with the Corporation for a period of seventy-five (75) days
in any one
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<PAGE>
hundred twenty (120) day period during the term, the Employee shall be deemed
to be suffering from a "Disability".
7.2. Payment During Disability. In the event the
Employee is unable to perform his duties hereunder by reason of a disability,
which disability does not constitute a Disability, the Corporation shall
continue to pay the Employee his Salary and benefits during the continuance of
such disability.
Section 8. Vacations and Personal Days. The Employee shall be
entitled to vacation and personal days in accordance with Corporation policy.
The Employee's Salary shall be paid in full during his vacation and personal
days. The Employee shall take his vacation at such time or times as the
Employee and the Corporation shall determine is mutually convenient.
Section 9. Disclosure of Confidential Information.
(a) The Employee hereby acknowledges that the
principal business of the Corporation is the production of video and audio
public relations materials for distribution to news media and the distribution
by satellite or other means to television and radio stations and news media
services; distribution of public relations text, audio and video to news media
and the general public via satellite, cassette, wire or other means;
distribution of press releases by mail and facsimile; the maintenance of
databases of media contacts for and on behalf of clients; analysis and written
appraisal of public relations and public affairs campaigns as determined
through press clipping review, either on paper, video or audio tape or
electronic database searches and such other businesses as the Corporation may
conduct from time to time (the "Business"). Employee acknowledges that he will
be acquiring confidential information concerning the Corporation and the
Business and
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<PAGE>
that, among other things, his knowledge of the Business will be enhanced
through his employment by the Corporation. Employee acknowledges that such
information is of great value to the Corporation, is the sole property of the
Corporation, and has been and will be acquired by him in confidence. In
consideration of the obligations undertaken by the Corporation herein, Employee
will not, at any time, during or after the term of this Agreement, reveal,
divulge or make known to any person, any information which is treated as
confidential by the Corporation and not otherwise in the public domain or
previously known to him.
(b) The provisions of this Section 9 shall
survive Employee's employment hereunder.
Section 10. Covenant Not To Compete.
(a) Employee recognizes that the services to
be performed by him hereunder are special, unique and extraordinary. The parties
confirm that it is reasonably necessary for the protection of the Corporation
that Employee agrees, and, accordingly, Employee does hereby agree, that he will
not, directly or indirectly, in the Territory, as hereinafter defined, at any
time during the Restricted Period, as hereinafter defined:
(i) engage in the Business for
his account or render any services which constitute engaging
in the Business, in any capacity to any entity; or become
interested in any entity engaged in the Business either on his
own behalf or as an officer, director, stockholder, partner,
principal, consultant, associate, employee, owner, agent,
creditor, independent contractor, or co-venturer of any third
party or in any other relationship or capacity; or
7
<PAGE>
(ii) employ or engage, or cause to
authorize, directly or indirectly, to be employed or engaged,
for or on behalf of himself or any third party, any employee,
representative or agent of the Corporation; or
(iii) solicit, directly or
indirectly, on behalf of himself or any third party, any
client or vendor of the Corporation and its affiliates; or
(iv) have an interest as an owner,
lender, independent contractor, co-venturer, partner,
participant, associate or in any other capacity, render
services to or participate in the affairs of, any business
which is competitive with, or substantially similar to, the
Business of the Corporation and its affiliates as presently
conducted and as may be conducted by the Corporation during
the Restricted Period.
(b) If any of the restrictions contained
in this Section 10 shall be deemed to be unenforceable by reason of the extent,
duration or geographical scope thereof, or otherwise, then after such
restrictions have been reduced so as to be enforceable, in its reduced form this
Section shall then be enforceable in the manner contemplated hereby.
(c) This Section 10 shall not be
construed to prevent Employee from owning, directly and indirectly, in the
aggregate, an amount not exceeding two percent (2%) of the issued and
outstanding voting securities of any class of any corporation whose voting
capital stock is traded on a national securities exchange or in the
over-the-counter market.
8
<PAGE>
(d) Notwithstanding anything to the
contrary set forth in this Section 10, (i) the Employee shall not be prohibited
from rendering services for news organizations, or public relations departments
or public relations agencies; (ii) the Employee may act as a news reporter or
manager for an entity whose primary function is journalism; (iii) the Employee
may act as a member of the internal public relations staff of any corporation or
entity who performs services for only that corporation or its affiliates,
including parent corporations, subsidiaries, and joint ventures; and/or (iv) the
Employee may act as an account executive or manager at a public relations agency
directly serving that agency's clients. Notwithstanding the prior sentence,
however, the Employee may not, render services, directly or indirectly, (i) for
any organization, department, or affiliate of such news organizations, corporate
public relations departments, or public relations agencies, whose primary
purpose is to provide the production and distribution of video or audio news
releases that are competitive with, or substantially similar to, the Business,
and (ii) for any organization, department, or affiliate of such news
organizations, corporate public relations departments, or public relations
agencies, whose primary purpose is to provide the research and analysis of
public relations and public affairs campaigns as determined through press
clipping review, either on paper, video or audio tape or electronic database
searches that are competitive with or substantially similar to the Business.
(e) The term "Restricted Period", as
used in this Section 10, shall mean (i) the term of this Agreement plus one (1)
year; (ii) in the event of a termination For Cause, two (2) years from the date
of termination; or (iii) in the event of a termination without cause, one (1)
year from the date of termination.
9
<PAGE>
Employee acknowledges that the Corporation markets its Business worldwide and
therefore, the term "Territory" as used herein shall mean the entire world.
(f) The provisions of this Section 10
shall survive the termination of Employee's employment hereunder and until the
end of the Restricted Period as provided in Section 10 (e) hereof.
Section 11. Rights and Remedies Upon Breach of Sections
9 or 10.
11.1. Return of Benefits. If the Employee
breaches, or threatens to commit a breach of, any of the provisions of Sections
9 or 10 (the "Restrictive Covenants"), the Corporation shall have the right and
remedy to require the Employee to account for and pay over to the Corporation
all compensation, profits, monies, accruals, increments or other benefits
(collectively, "Benefits") derived or received by him as the result of any
transactions constituting a breach of the Restrictive Covenants, and the
Employee shall account for and pay over such Benefits to the Corporation. In
addition, if the Employee breaches or threatens to commit a breach of any of the
Restrictive Covenants, (i) the Employee's unvested stock options shall
immediately lapse and (ii) the Corporation shall have the right to purchase from
the Employee the Employee's vested stock options for the book value of the
shares of Common Stock underlying such vested options less the exercise price of
such vested options. The Corporation may set off any amounts due to the
Corporation under this Section 11.1 against any amounts owed to the Employee by
the Corporation.
11.2. Injunctive Relief. Employee acknowledges
that the services to be rendered under the provisions of this Agreement are of a
special, unique and extraordinary character and that it would be difficult or
impossible to replace such services. Accordingly, Employee agrees that any
breach or threatened breach by him
10
<PAGE>
of Sections 9 or 10 of this Agreement shall entitle the Corporation, in
addition to all other legal remedies available to it, to apply to any court of
competent jurisdiction to enjoin such breach or threatened breach without
posting a bond or showing special damages. The parties understand and intend
that each restriction agreed to by Employee hereinabove shall be construed as
separable and divisible from every other restriction, that the unenforceability
of any restriction shall not limit the enforceability, in whole or in part, of
any other restriction, and that one or more of all of such restrictions may be
enforced in whole or in part as the circumstances warrant. In the event that
any restriction in this Agreement is more restrictive than permitted by law in
the jurisdiction in which the Corporation seeks enforcement thereof, such
restriction shall be limited to the extent permitted by law.
Section 12. Miscellaneous.
12.1. Assignment. The Employee may not assign or
delegate any of his rights or duties under this Agreement.
12.2. Entire Agreement. This Agreement
constitutes and embodies the full and complete understanding and agreement of
the parties with respect to the Employee's employment by the Corporation,
supersedes all prior understandings and agreements, including employment
agreements, non-compete agreements and confidentiality agreements, if any,
whether oral or written, between the Employee and the Corporation and shall not
be amended, modified or changed except by an instrument in writing executed by
the party to be charged. The invalidity or partial invalidity of one or more
provisions of this Agreement shall not invalidate any other provision of this
Agreement. No waiver by either party of any provision or
11
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condition to be performed shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or any prior or subsequent time.
12.3. Binding Effect. This Agreement shall inure
to the benefit of, be binding upon and enforceable against, the parties hereto
and their respective successors and permitted assigns.
12.4. Captions. The captions contained in this
Agreement are for convenience of reference only and shall not affect in any way
the meaning or interpretation of this Agreement.
12.5. Notices. All notices, requests, demands and
other communications required or permitted to be given hereunder shall be in
writing and shall be deemed to have been duly given when personally delivered or
sent by certified mail, postage prepaid, or overnight delivery to the party at
the address set forth above or to such other address as either party may
hereafter give notice of in accordance with the provisions hereof.
12.6. Governing Law. This Agreement shall be
governed by and interpreted under the laws of the State of New York applicable
to contracts made and to be performed therein without giving effect to the
principles of conflict of laws thereof. Except in respect of any action
commenced by a third party in another jurisdiction, the parties hereto agree
that any legal suit, action, or proceeding against them arising out of or
relating to this Agreement shall be brought exclusively in the United States
Federal Courts or New York County Supreme Court, in the State of New York. The
parties hereto hereby accept the jurisdictions of such courts for the purpose of
any such action or proceeding and agree that venue for any action or proceeding
brought in the State of New York shall lie in the Southern District of New
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York or Supreme Court, New York County, as the case may be. Each of the parties
hereto hereby irrevocably consents to the service of process in any action or
proceeding in such courts by the mailing thereof by United States registered or
certified mail postage prepaid at its address set forth herein.
12.7. Counterparts. This Agreement may be
executed simultaneously in two or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date set forth above.
MEDIALINK WORLDWIDE INCORPORATED
By: /s/ J. Graeme McWhirter
------------------------------
/s/ Mary Buhay
------------------------------
MARY BUHAY
13
AP PRESS ASSOCIATION, INC.
Affiliated with The Associated Press
October 31, 1996
Mr. Laurence Moskowitz
President
Medialink Worldwide
708 Third Avenue
New York, New York 10017
Dear Larry:
This letter agreement ("Letter Agreement") supplements the amended and
restated AP Express Agreement dated November 1, 1992 (collectively, the
"Agreement") between Press Association ("PA") and Video Broadcasting Corporation
("Medialink").
Notwithstanding Section 6.2 of the Agreement, the parties agree to extend
the term of the Agreement until November 1, 1999.
This Letter Agreement will also confirm Medialink's corporate name change
from Video Broadcasting Corporation to Medialink Worldwide.
All other terms and conditions of the Agreement remain in full force and
effect.
READ AND AGREED TO BY:
MEDIALINK WORLDWIDE, INC. PRESS ASSOCIATION, INC.
BY: /s/ Laurence Moskowitz By: /s/ Gregory E. Groce
- -------------------------- ------------------------
Name: Laurence Moskowitz Name: Gregory E. Groce
Title: President Title: Asst. Secretary
Date: Nov. 7, 1996 Date: 11/18/96
- -------------------------- -------------------------
Executive Offices o 1825 K Street, N.W. Suite 710 o Washington, DC 20006 o
202-736-1100 o Fax 202-736-1124
<PAGE>
TOWER PLACE OFFICE LEASE
by and between
TOWER PLACE, L.P.
a Georgia Limited Partnership
and
MEDIALINK WORLDWIDE INCORPORATED
a Delaware corporation
_____________,1996
Atlanta, Georgia
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE I FUNDAMENTAL PROVISIONS, EXHIBITS AND DEFINITIONS.......................................... 4
1.1 FUNDAMENTAL PROVISIONS................................................................ 4
1.2 EXHIBITS.............................................................................. 5
1.3 DEFINITIONS........................................................................... 5
ARTICLE II GRANT AND TERM............................................................................ 7
2.1 PREMISES.............................................................................. 7
2.2 TERM.. ............................................................................... 7
ARTICLE III RENT..................................................................................... 7
3.1 BASE RENTAL........................................................................... 7
3.2 BASE RENTAL ADJUSTMENT............................................................... 7
3.3 OPERATING EXPENSES INCREASE........................................................... 7
3.4 GENERAL PROVISIONS REGARDING RENT..................................................... 8
3.5 INITIAL INSTALLMENT................................................................... 9
3.6 SECURITY DEPOSIT...................................................................... 9
3.7 LANDLORD'S SECURITY INTEREST.......................................................... 9
ARTICLE IV RIGHTS AND DUTIES DURING LEASE TERM....................................................... 9
4.1 PREPARATION OF THE PREMISES........................................................... 9
4.2 SERVICES.............................................................................. 10
4.3 LIABILITY OF LANDLORD................................................................. 10
4.4 REPAIRS BY LANDLORD................................................................... 10
4.5 RIGHTS OF LANDLORD TO ENTER PREMISES.................................................. 10
4.6 AGREEMENTS OF TENANT.................................................................. 10
4.7 SIGNS................................................................................. 11
4.8 BUILDING NAME........................................................................ 12
4.9 HAZARDOUS MATERIALS.................................................................. 12
4.10 INSURANCE............................................................................. 12
4.11 LIENS................................................................................. 13
ARTICLE V ASSIGNMENT AND SUBLETTING.................................................................. 13
5.1 ASSIGNMENT AND SUBLETTING............................................................. 13
ARTICLE VI DEFAULT AND REMEDIES...................................................................... 14
6.1 EVENTS OF DEFAULT..................................................................... 14
6.2 REMEDIES.............................................................................. 14
ARTICLE VII DESTRUCTION OR DAMAGE; CONDEMNATION...................................................... 15
7.1 DESTRUCTION OF OR DAMAGE TO PREMISES.................................................. 15
7.2 EMINENT DOMAIN........................................................................ 15
7.3 DETERMINATION OF TIME REQUIRED TO REBUILD............................................. 15
7.4 PARTIAL DESTRUCTION OR TAKING......................................................... 16
ARTICLE VIII ADDITIONAL PROVISIONS................................................................... 16
8.1 ADDRESSES - NOTICES................................................................... 16
8.2 MANAGER............................................................................... 17
8.3 SURRENDER OF PREMISES................................................................. 17
8.4 HOLDING OVER.......................................................................... 17
8.5 BROKER................................................................................ 17
8.6 WAIVER OF RIGHTS...................................................................... 17
</TABLE>
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<TABLE>
<S> <C>
8.7 WAIVER OF HOMESTEAD AND EXEMPTION; BANKRUPTCY OF TENANT:.............................. 17
8.8 NO ESTATE IN LAND: RELATIONSHIP OF THE PARTIES........................................ 18
8.9 RECORDING............................................................................. 18
8.10 GOVERNMENTAL REGULATIONS.............................................................. 18
8.11 SUBORDINATION AND ATTORNMENT.......................................................... 19
8.12 ESTOPPEL CERTIFICATION................................................................ 19
8.13 SEVERABILITY.......................................................................... 19
8.14 CAPTIONS.............................................................................. 20
8.15 SUCCESSORS AND ASSIGNS................................................................ 20
8.16 SALE OF BUILDING...................................................................... 20
8.17 TRANSFER OF TENANTS................................................................... 20
8.18 GOVERNING LAW.............. .......................................................... 20
8.19 TIME IS OF ESSENCE.................................................................... 20
8.20 LIMITATION OF LIABILITY............................................................... 20
8.21 WAIVER OF RIGHTS...................................................................... 20
8.22 MULTIPLE TENANTS...................................................................... 20
8.23 FORCE MAJEURE......................................................................... 20
8.24 QUIET ENJOYMENT....................................................................... 20
8.25 ATTORNEYS' FEES....................................................................... 20
8.26 ALTERATIONS IN COMPOSITION OF COMMON AREAS............................................ 20
8.27 PARKING............................................................................... 21
8.28 SPECIAL STIPULATIONS.................................................................. 21
8.29 AUTHORIZATION......................................................................... 21
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
SPECIAL STIPULATION................................................................................. 23
EXHIBIT "A"......................................................................................... 24
EXHIBIT "B"......................................................................................... 25
EXHIBIT "C"......................................................................................... 26
EXHIBIT "D"......................................................................................... 27
EXHIBIT "E"......................................................................................... 28
EXHIBIT "F"......................................................................................... 29
EXHIBIT "G"......................................................................................... 31
</TABLE>
<PAGE>
TOWER PLACE OFFICE LEASE
THIS TOWER PLACE OFFICE LEASE (this "Lease") is made as of
this ___day of __________, 199__, by and between TOWER PLACE, L.P., a Georgia
Limited Partnership (herein called "Landlord"), and MediaLink Worldwide
Incorporated, a Delaware Corporation (herein called "Tenant").
ARTICLE I
FUNDAMENTAL PROVISIONS, EXHIBITS AND DEFINITIONS
FUNDAMENTAL PROVISIONS: The following is a summary of certain Fundamental
provisions of the Lease:
<TABLE>
<S> <C>
(a) Landlord: Tower Place, L.P., a Georgia Limited Partnership;
(b) Tenant: MEDIALINK Worldwide Incorporated, a Delaware Corporation;
(c) Premises: Suite 1520;
(d) Building: 3340 Peachtree Road, Tower Place, Atlanta, Georgia;
(e) Stipulated Square
Footage (Premises): Approximately 1,147 rentable square feet;
(f) Stipulated Square
Footage (Building): 602,574 rentable square feet;
(g) Base Rental: Subject to adjustment in accordance with the provisions of Section 3.2
hereof, Twenty-Three Thousand Two Hundred Eighty-Four and 10/100
DOLLARS ($23,284.10) per annum, payable monthly in advance in
equal installments of One Thousand Nine-Hundred Forty and 34/100
DOLLARS ($1,940.34.) per month;
(h) Initial Installment: One Thousand Nine-Hundred Forty 34/100 DOLLARS
($1,940.34);
(i) Security Deposit: One Thousand Nine-Hundred Forty 34/100 DOLLARS ($1,940.34);
(j) Base Year: Calendar year 1996;
(k) Tenant's Share: .19 percent (.19%);
(l) Anticipated
Commencement Date: November 15, 1996; the actual Commencement Date shall
be determined in accordance with the provisions of Section 2.2
and confirmed in the Commencement Date Agreement;
(m) Expiration Date: Five (5) years and (0) months after the Commencement Date (unless
the Commencement Date occurs on other than the first day of a
calendar month, in which case the Expiration Date shall be the
last day of the calendar month in which foregoing date occurs);
<PAGE>
(n) Tenant's Address
for Notices: MEDIALINK WORLDWIDE
INCORPORATED
708 3rd Avenue
New York, NY 10017
ATTN: J. Graeme McWhirter
MEDIALINK WORLDWIDE
INCORPORATED
Suite 1520
3340 Peachtree Road, NE
Atlanta, Georgia 30326
Attn: Michael J. Katz
With a copy to counsel for default notices
Tashik, Kreutzer & Goldwin, P.C.
833 Northern Blvd., New York, NY 11021
Attn: Jeffery Herz, Atty.
(o) Manager: Regent Partners, Inc., a Georgia Corporation;
(p) Landlord's Broker: Regent Partners, Inc., a Georgia Corporation;
(q) Tenant's Broker: N/A, and
(r) Maximum Number of
Parking Spaces Available
to Tenant as of the
Commencement Date: Four (4).
</TABLE>
It is understood that the foregoing is intended as a summary of certain
portions of the Lease and is intended for convenience only. If there is a
conflict between the above summary and any provisions of this Lease hereafter
set forth, the latter shall govern and control.
1.2 EXHIBITS: The following exhibits are attached to this Lease, are
by this reference incorporated into the Lease and made a part hereof and are to
be construed as part of this Lease:
Special Stipulations
EXHIBIT "A" - Floor Plan(s) of Premises;
EXHIBIT "B" - Legal description - Tower Place Complex;
EXHIBIT "C" - Commencement Date Agreement (form);
EXHIBIT "D" - Operating Expenses;
EXHIBIT "E" - Work Schedule;
EXHIBIT "F" - Rules and Regulations; and
EXHIBIT "G" - Estoppel Certificate
1.3 DEFINITIONS: The following terms, as defined below, are used
generally in this Lease, in addition to other terms defined herein:
(a) Base Rental means the annual rental provided in Section 1.1(g)
above which is payable pursuant to Section 3.1 and as same may be adjusted
in accordance with the provisions of Section 3.2;
<PAGE>
(b) Base Year means the calendar year stipulated in Section
1.1(j);
(c) Building means the 29-story office building located in the Tower
Place Complex and having a street address of 3340 Peachtree Road, Atlanta,
Georgia, together with any additions, replacements or alterations to same;
(d) Commencement Date means the date on which the Lease Term begins
as determined in accordance with the provisions of Section 2.2 and as
memorialized by Landlord and Tenant in the Commencement Date Agreement. The
Anticipated Commencement Date is as set forth in Section 1.1(1) above;
(e) Commencement Date Agreement means the agreement to be executed by
Landlord and Tenant to memorialize the Commencement Date. The Commencement Date
Agreement shall be in the form attached as Exhibit "C", with the blanks
appearing thereon completed in accordance with the provisions hereof;
(f) Common Area or Common Areas means all areas, whether improved or
unimproved, within the exterior boundaries of the Tower Place Complex which are
now or hereafter made available for the nonexclusive use, convenience and
benefit of Landlord and Tenant and other tenants of the Tower Place Complex,
their employees, agents, customers, invitees and licensees, including, without
limiting the generality of the foregoing, malls, walkways, driveways, curbs,
gutters, sidewalks, corridors, loading zones, service areas, signs, courts,
paving, lighting and landscaped and planted areas. The meaning of "Common Area"
or "Common Areas" may be expanded, contracted or otherwise altered in
accordance with the provisions of Section 8.26;
(g) CPI means the "Consumer Price Index for All Urban Consumers, U.S.
Cities Average, All Items (1982-84 100)" issued by the Bureau of Labor
Statistics of the United States Department of Labor. If the manner in which
such index is determined by said Bureau of Labor Statistics shall be
substantially revised, an adjustment shall be made by Landlord to such index as
revised which would produce results equivalent, as nearly as possible, to those
which would have been obtained if such index had not been so revised. If the
1982-84 average shall no longer be used as an index of 100, such change shall
constitute a substantial revision. If the Consumer Price Index published by the
Bureau of Labor Statistics of the United States Department of Labor is
discontinued, then the Consumer Price Index published by the United States
Department of Commerce shall be substituted (with proper adjustment); and if
the United States Department of Commerce Index is also discontinued, then
Landlord shall designate a suitable substitute;
(h) Estimated Operating Expense Increase means Landlord's estimate of
(a) the amount by which the Operating Expenses for an Expense Increase year
will be in excess of the Operating Expense Base multiplied by (b) Tenant's
Share;
(i) Estimated Operating Statement means a statement rendered to
Tenant setting forth: (A) Landlord's reasonable estimate of the projected
Operating Expenses for the then-current Expense Year, (B) a computation of the
Estimated Operating Expense Increase due for the then-current Expense Increase
Year, (C) a computation of the monthly Estimated Operating Expense Increase
installments to be paid by Tenant pursuant to the Estimated Operating
Statement, being one-twelfth (1/12) of the amount determined pursuant to clause
(B) above, and (D) a computation of the amount due Landlord, or credit due
Tenant, in respect of the lapsed months of the then-current Expense Increase
year;
(j) Expense Increase Year means each calendar year, commencing with
the calendar year following the Base Year, falling, in whole or in part, within
the Lease Term;
(k) Expiration Date means the date provided or determined as set
forth in Section 1.1(m) above;
(l) Initial Installment means the amount stipulated in Section
1.1(h), equal to one monthly installment of the initial Base Rental, which has
been paid by Tenant to Landlord under the provisions of Section 3.5;
(m) Landlord's Broker means the entity designated in Section 1.1(p);
(n) Landlord's Mortgage means any or all mortgages, deeds to secure
debt, deeds of trust or other instruments in the nature thereof which may now
or hereafter affect or encumber Landlord's title to the Tower Place Complex,
the
<PAGE>
Building or the Premises, and all modifications, renewals, consolidations,
extensions or replacements thereof,
(o) Lease Term means that period of time beginning on the Commencement
Date and ending on the Expiration Date, as same may be extended or renewed in
accordance with any renewal or extension option expressly provided by this
Lease;
(p) Manager means any entity appointed by Landlord to manage the
Building and/or perform all or certain of Landlord's obligations under this
Lease. The Manager as of the date hereof is stated in Section 1.1(o);
(q) Operating Expense Base means, subject to Section 3.3(d) hereof,
Operating Expenses for the Building for the Base Year;
(r) Operating Expense Increase means the payments to be made by
Tenant to Landlord in the amounts, at the times and in the manner provided for
by Section 3.3;
(s) Operating Expenses are defined in Exhibit "D", which is attached
hereto, and are subject to Section 3.3(d) hereof;
(t) Operating Statement means a statement setting forth (1) the
Operating Expenses for an Expense Increase Year, (2) a computation of the total
Operating Expense Increase payable by Tenant for such Expense Increase Year,
(3) an accounting for Estimated Operating Expense Increase payments, if any,
made during such Expense Increase Year and (4) the amount of Operating Expense
Increase then payable to Landlord, or the credit in respect thereof to which
Tenant is entitled, for such Expense Increase Year, taking into account (with
respect to any such credit) any increase in Estimated Operating Expense
Increase payments due Landlord pursuant to any Estimated Operating Statement
also rendered with respect to the then-current Expense Increase Year;
(u) Percentage Increase means, when computed with respect to the
adjustment to Base Rental to occur as of January 1 of any calendar year, as
outlined in article 3.2 of this lease, stated as a percentage, derived by using
the published CPI with respect to the December immediately preceding such
adjustment date (or, if no CPI is published for such December, the CPI most
recently published prior to the date of the adjustment) divided by the
published CPI with respect to the December prior to the Commencement Date (or,
if no CPI is published for such December, the CPI most recently published prior
to the January 1 immediately preceding the Commencement Date).
(v) Premises means that space in the Building described in Section
1.1(c) and more particularly identified by diagonal lines or shaded area on the
floor plan(s) attached as Exhibit "A" to this Lease;
(w) Rules and Regulation mean the agreements of Tenant concerning the
operation and/or use of the Building and/or the Tower Place Complex contained
in the attached Exhibit "F", as same may be modified or replaced from time to
time by Landlord in its sole, but reasonable, discretion;
(x) Security Deposit means the amount stipulated in Section 1.1(i),
which sum has been deposited by Tenant with Landlord under the provisions of
Section 3.6;
(y) Tenant's Broker means the entity, if any, designated in Section
1.1(q);
(z) Tenant's Share means that number, stated as a percentage,
determined by dividing the number of rentable square feet in the Premises
(which, for purposes of this provision, Landlord and Tenant stipulate to be as
set forth in Section 1.1 (e) as of the date hereof) by the number of rentable
square feet in the Building (which, for purposes of this provision, Landlord
and Tenant stipulate to be as set forth in Section 1.1(f) (as of the date
hereof). Therefore, Tenant's Share shall be as stated in Section 1.1(k) as of
the date hereof;
(aa) Total Rent means, collectively, the Base Rental and the
Operating Expense Increase;
<PAGE>
(bb) Tower Place Complex means that certain mixed-use development
situated on the property more particularly described in Exhibit "B" attached
hereto, which development includes, without limitation, a twenty-nine (29)-story
office building, a five (5)-story office building, retail facilities, a six
(6)-story hotel, surface and deck parking and associated plazas, sidewalks and
other Common Areas, facilities and improvements, as same may be altered,
enlarged or reconfigured from time to time. The Building is a portion of the
Tower Place Complex; and
(cc) Work Schedule means Exhibit "E" which is attached to this Lease.
ARTICLE II
GRANT AND TERM
2.1 PREMISES: Landlord, for and in consideration of the rents,
covenants, agreements and stipulations herein contained to be paid, kept and
performed by Tenant, has leased and rented, and by these presents leases and
rents the Premises to Tenant, and Tenant hereby leases the Premises from
Landlord upon all the terms and conditions hereof. No easement for light or air
is included in the Premises or given by this Lease. The Premises shall be used
for the purpose of general office use and for no other purposes.
2.2 TERM: Tenant takes and accepts the Premises from Landlord upon
the terms and conditions herein contained, to have and to hold the same for the
Lease Term, unless this Lease terminates earlier. The Lease Term shall begin on
the Commencement Date, which shall be, subject to the provisions of the Work
Schedule, the later of the Anticipated Commencement Date or the date upon which
initial improvements to the Premises, if any, to be made by Landlord in
accordance with the Work Schedule have been substantially completed. To the
extent any improvements are to be made by Landlord in the Premises in
accordance with the Work Schedule, such improvements shall be deemed to be
"substantially completed" when Landlord, in its reasonable judgment and in
consultation with its architects and/or contractors, certifies to Tenant that
(i) such improvements have been substantially completed (notwithstanding punch
list items) and (ii) any certificate of occupancy necessary for Tenant's
occupancy of the Premises in accordance with the provisions of this Lease has
been duly issued.
ARTICLE III
RENT
3.1 BASE RENTAL: Tenant covenants and agrees to pay to Landlord the
Base Rental stipulated in Section 1.1(g), as same may be adjusted in
accordance, with Section 3.2 below. The Base Rental (as so adjusted from time
to time) shall be payable monthly in advance in equal installments (initially
as set out in Section 1.1(g), but as hereafter adjusted in accordance with
Section 3.2) on the first (1st) day of every calendar month during the Lease
Term, prorated as appropriate to partial months. If the Lease Term commences on
other than the first day of any calendar month, the first installment of Base
Rental shall be a prorated amount based upon the actual number of days in such
month and shall be due and payable on the Commencement Date.
3.2 BASE RENTAL ADJUSTMENT: intentionally omitted
<PAGE>
*SEE SPECIAL STIPULATION #1
3.3 OPERATING EXPENSE INCREASE:
(a) Tenant covenants and agrees to pay to Landlord, as
Operating Expense Increase for each Expense Increase Year during the Lease
Term, a sum computed by subtracting the Operating Expense Base from the
Operating Expenses shown on the Operating Statement for the Expense Increase
Year in question, and multiplying the result by Tenant's Share. Under no
circumstances shall Tenant be entitled to any refund of or credit against
Operating Expenses for any Expense Increase Year should Operating Expenses ever
be less than the Operating Expense Base. Within one hundred twenty (120) days
after the expiration of each Expense Increase Year, Landlord shall furnish
Tenant with an Operating Statement. The Operating Expense Increase shall,
except as provided in paragraph (b) of this Section 3.3, be due from Tenant
thirty (30) days after the rendering of the Operating Statement for such
Expense Increase Year.
(b) Landlord may render an Estimated Operating Statement for
any Expense Increase Year. If and when so rendered from time to time, Tenant
shall pay to Landlord in advance on the first day of each calendar month the
monthly Estimated Operating Expense Increase installments provided for in such
Estimated Operating Statement, such payments to continue until another
Estimated Operating Statement or actual reconciliation is rendered. Upon the
rendering of an Operating Statement for any Expense Increased year for which
Estimated Operating Expense Increase installments were paid by Tenant, Tenant
shall, within thirty (30) days thereafter, pay to Landlord the sum of (x) the
excess, if any, of the Operating Expense Increase due for such Expense Increase
Year over the monthly Estimated Operating Expense Increase installments paid by
Tenant in respect of such Expense Increase Year and (y) the excess, if any, of
the Estimated Operating Expense Increase installments due for the current
Expense Increase Year, as shown on the current Estimated Operating Statement,
over the Estimated Operating Expense Increase installments then being paid by
Tenant multiplied by the number of months which shall have elapsed, in whole or
in part, since the commencement of the current Expense Increase Year. If
Tenant's Estimated Operating Expense Increase installments for prior or current
Expense Year shall exceed the Operating Expense Increase year, respectively,
such excess shall first be credited against any amounts shown due on the
Operating Statement and the Estimated Operating Statement and the balance, if
any, shall be credited against the next succeeding installment or installments
of Operating Expense Increase or Estimated Operating Expense Increase becoming
due hereunder; provided, however, that if the Lease Term shall expire or this
Lease shall terminate prior to full application of such credit, any balance due
Tenant shall be refunded to Tenant by Landlord if Tenant is not in default
under this Lease (and, if Tenant is in default hereunder, such balance shall be
held as additional security for Tenant's performance, may be applied by
Landlord toward the cure of any such default and shall not be refunded until
any such default is completely cured by Tenant).
(c) Operating Expense Increase shall be prorated on a daily
basis for any Expense Increase Year not wholly failing within the Lease Term.
(d) Tenant acknowledges that certain Operating Expenses will
vary depending on overall occupancy levels in the Building. If the average
occupancy level of the Building was less than ninety-five percent (95%) of the
total rentable square footage of the Building during the Base Year or any
Expense Increase Year, the actual Operating Expenses for the Base Year or
Expense Increase Year in question, as applicable, shall be adjusted to equal
Landlord's reasonable estimate of Operating Expenses had ninety-five percent
(95%) of the total rentable square footage of the Building been occupied.
Landlord and Tenant further acknowledge that the Building is part of the larger
Tower Place Complex, and that certain of the costs of management, operation,
maintenance, repair and security of the Tower Place Complex from time to time
shall be allocated among and shared by two or more of the improvements in the
Tower Place Complex (including the Building). It is also understood that
certain costs incurred with respect to various facilities surrounding the
Building may, from time to time, be allocated (if appropriate) entirely to the
Building. The determination of all such costs and their allocation shall be
made by Landlord in accordance with sound accounting principles. Accordingly,
the term "Operating Expenses", as used in this Lease with respect to the
Building, shall from time to time include some of the costs, expenses, and
taxes enumerated in Exhibit "D" to this Lease which were incurred with respect
to and allocated to or shared by the Building in accordance with the foregoing.
Notwithstanding the foregoing or anything else contained in this Lease to the
contrary, Tenant understands
<PAGE>
and agrees that its rights to use other portions of the Tower Place Complex of
which the Building is a part (including the Common Areas) are those available
to the general public and that this Lease does not grant to it additional
rights of use. Specifically, but without limitation, nothing in this Lease
affords Tenant any rights of parking within the Tower Place Complex except as
may be expressly provided in Section 8.27 hereof.
3.4 GENERAL PROVISIONS REGARDING RENT:
(a) The provisions of this Article concerning the payment of
Operating Expense Increase shall survive the expiration or earlier termination
of the Lease Term as to any and all sums due Landlord up to the date thereof,
including Operating Expense Increase due for the last Expense Increase Year, or
portion thereof, failing within the Lease Term, which sum shall be paid
promptly by Tenant in accordance with the terms of this Article III. Within one
hundred twenty (120) days following the expiration or earlier termination of
the Lease Term, Landlord shall render a final Operating Statement, certified by
Landlord, and Landlord and Tenant shall adjust the Operating Expense Increase
payment or credit due Landlord or Tenant, as the case may be, for the last
Expense Increase Year of the Lease Term, all in accordance with the foregoing
provisions of Section 3.3.
(b) It is understood and agreed that Tenant's payments of
Operating Expense Increase shall not be deemed payments of rental as that term
is construed in relation to governmental wage and price control or analogous
governmental actions affecting the amount of rental which Landlord may charge
Tenant. Notwithstanding the foregoing, in the event that such governmental
actions or controls prevent the application of all or any part of the
provisions of this Article III regarding the payment of Operating Expense
Increase, Tenant hereby agrees to pay as monthly rent hereunder the monthly
Base Rental plus one-twelfth (1/12) of the Operating Expense Increase which was
due for the Expense Increase Year preceding the year of the institution of such
actions or controls, but in no case to exceed the maximum rent permitted by
such actions or controls.
(c) Tenant covenants and agrees to be liable for and to pay
in a timely manner all taxes and assessments levied or assessed against
personal property, furniture and fixtures placed by Tenant in the Premises.
Further, and in addition to the Base Rental and Operating Expense Increase,
Tenant shall reimburse Landlord, within the thirty (30) days after written
demand, for any and all taxes payable by Landlord (other than net income
taxes), whether or not now customary or within the contemplation of the parties
hereto, (i) upon, measured by or reasonably attributable to the cost or value
of Tenant's equipment, furniture, fixtures, or personal property located in the
Premises, or any leasehold improvements made in or to the Premises by or for
Tenant, regardless of whether such improvements were constructed by Landlord or
Tenant and regardless of whether title to such improvements shall be in the
name of Landlord or Tenant; (ii) upon, measured by or reasonably attributable
to the Total Rent payable hereunder, or any component thereof, levied by any
governmental body with respect to the receipt of such Total Rent; (iii) upon or
with respect to the possession, leasing, operation, management, maintenance,
alteration, repair, use or occupancy by Tenant of the Premises or any portion
thereof; and, (iv) upon this transaction or any document to which Tenant is a
party creating or transferring rights, an interest or an estate in the
Premises. In the event that it shall not be lawful for Tenant so to reimburse
Landlord, the monthly Base Rental payable to Landlord under this Lease shall,
to the maximum extent pertained by law, be revised to net Landlord the same net
Base Rental after imposition of any such tax upon Landlord as would have been
payable to Landlord prior to the imposition of any such tax. Tenant shall also
be solely liable for any taxes, including rental, sales and use taxes, assessed
directly against Tenant by any governmental authority.
(d) It is understood and agreed that Base Rental and
Operating Expense Increase shall be due and payable as provided herein, without
set off or deduction whatsoever. Base Rental, Operating Expense Increase and
each and every other charge, fee, cost or expense which Tenant is obligated or
liable to pay to, refund to or reimburse Landlord shall, for the purposes of the
dafault provisions of this Lease, be deemed additional rental due from Tenant,
and Tenant's failure to so pay, refund or reimburse when due shall entitle
Landlord to all the remedies provided for herein and at law or in equity on
account of failure to pay rent.
(e) Base Rental, Operating Expense Increase and other sums
due hereunder shall be paid in legal tender at Manager's address set forth in
Section 8.1, or to such other address as may be specified by Landlord by notice
given from time to time as provided in such Section 8.1. No payment by Tenant
or receipt by Landlord of a lesser amount
<PAGE>
than the monthly installment of Base Rental or any other component of Total Rent
due under this Lease shall be deemed to be other than on account of the earliest
Base Rental or other such component of Total Rent due hereunder, nor shall any
endorsement or statement on any check or any letter accompanying any check or
payment of Total Rent (or any portion thereof) be deemed an accord and
satisfaction, and Landlord may accept such check or payment without prejudice to
Landlord's right to recover the balance of such Total Rent or to pursue any
other remedy provided in this Lease or under applicable law.
(f) Delay by Landlord in providing Tenant with any
statements regarding Operating Expense Increase shall not relieve Tenant from
the obligation to pay Operating Expense Increase upon the rendering of such
statements.
3.5 INITIAL INSTALLMENT: Simultaneously with the execution of this
Lease, Tenant has paid to Landlord, and Landlord hereby acknowledges the
receipt of, the Initial Installment. Such sum shall be applied by Landlord to
the first monthly installment(s) of Base Rental as they become due hereunder.
In the event Tenant fails to take possession of the Premises in accordance with
all the terms hereof, such sum shall be retained by Landlord for application in
reduction, but not in satisfaction, of damages suffered by Landlord as a result
of such breach by Tenant.
3.6 SECURITY DEPOSIT: Landlord acknowledges that it has received the
Security Deposit from Tenant, simultaneously with the execution of this Lease.
The Security Deposit shall be security for the full and faithful performance
and observance by Tenant of the covenants, terms and conditions of this Lease,
including, without limitation, the payment of Total Rent, on the part of Tenant
to be kept and performed. No interest shall be payable on the Security Deposit,
and the Security Deposit need not be held in a segregated account and may be
commingled with Landlord's separate funds. It is agreed and acknowledged by
Tenant that the Security Deposit is not an advance payment of rent or a measure
of Landlord's damages in the case of default by Tenant. Upon the occurrence of
an Event of Default under this Lease, Landlord may use, apply or retain the
whole or any part of the Security Deposit to the extent required for the
payment of all or any part or component of Total Rent or any other sum as to
which Tenant is in default or for the payment of any other injury, expense or
liability resulting from any Event of Default. Use, application or retention of
the Security Deposit by Landlord shall not prohibit or limit Landlord's
exercise of any other remedies Landlord may have for Tenant's default.
Following any such application of the Security Deposit, Tenant shall pay to
Landlord on demand an amount necessary to restore the Security Deposit to its
original amount. In the event that Tenant shall fully and faithfully comply
with all of the terms, provisions, covenants and conditions of this Lease, the
Security Deposit shall be returned to Tenant within thirty (30) days after the
Expiration Date and after delivery of possession of the Premises to Landlord in
accordance with the terms hereof. Upon every sale or lease of the Building,
Landlord shall be released from all liability for the return of the Security
Deposit, and Tenant shall look to the new landlord for its return, so long as
the transferring Landlord assigns or transfers the Security Deposit to the
acquiring landlord or provides the acquiring landlord a credit for same. The
Security Deposit shall not be assigned or encumbered by Tenant, and any such
assignment or encumbrance shall be void.
3.7 LANDLORD'S SECURITY INTEREST: intentionally omitted
<PAGE>
ARTICLE IV
RIGHTS AND DUTIES DURING LEASE TERM
4.1 PREPARATION OF THE PREMISES:
(a) Tenant acknowledges that it has inspected the Premises,
that Landlord has made no representations or warranties whatsoever respecting
the condition thereof or otherwise and that, except as may be expressly
provided to the contrary in the Work Schedule, Landlord has no obligation or
duty to make any alterations, improvements or repairs whatsoever in and to the
Premises to make same ready for Tenant's use and occupancy and Tenant takes and
accepts the Premises in their present "as is" condition. By occupying the
Premises, Tenant shall be deemed conclusively to have accepted the Premises as
complying fully with Landlord's covenants and obligations.
(b) Initial improvements to the Premises, if any, shall be
governed by the Work Schedule.
(c) If the installation of improvements in the Premises
causes an increase in the ad valorem taxes levied or assessed on the Building,
Tenant shall reimburse any such increase to Landlord within thirty (30) days
following written demand by Landlord as contemplated by Section 3.4(c).
(d) Within thirty (30) days after the Commencement Date,
Tenant will execute and deliver to Landlord the Commencement Date Agreement.
4.2 SERVICES: Landlord agrees to provide to Tenant, as Landlord deems
reasonably necessary, the following services (the cost of which, unless
specifically required to be paid for directly by Tenant, shall be included
within Operating Expenses):
(a) General cleaning and janitorial service during the times
and in the manner such janitorial service is customarily furnished in similar
office buildings in the metropolitan Atlanta, Georgia, area;
(b) Heating, air-conditioning and elevator service daily on
Mondays through Fridays, inclusive, from 8:00 A.M. to 6:00 P.M. and on
Saturdays from 8:00 A.M. to 1:00 P.M., with New Year's Day, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day, Christmas Day and other days
observed generally as holidays by a majority of the privately owned businesses
in Atlanta, Georgia excepted. At least one elevator per elevator bank shall be
operated at all other hours and on all other days. Should Tenant desire either
heating or air conditioning at other times, Landlord agrees to provide same
upon written request by Tenant delivered to the Building Manager during normal
business hours at least twenty-four (24) hours prior to the time when such
service is desired. Any additional service so provided shall be at Tenant's
expense at such hourly rates as may be determined from time to time by
Landlord, which charge Tenant shall promptly pay upon being billed therefor.
Landlord reserves the right to prohibit the use of heat generating machines and
equipment unless and until Tenant makes arrangements, acceptable to Landlord,
to install and maintain supplementary air-conditioning equipment in the
Premises at Tenant's cost and expense, and the costs of operation of such shall
be paid by Tenant on the Base Rental payment dates at such rates as are
established by Landlord; provided, however, that the maintenance of such
supplementary air-conditioning equipment shall be
<PAGE>
solely Tenant's, and not Landlord's, duty and responsibility;
(c) 110 volt electric current for lighting and for usual and
normal electric power for office space, all from existing electric circuits
designated by Landlord for Tenant's use. Landlord reserves the right to meter
the Premises or any portion thereof separately, and if the Premises (or any
portions thereof) are so separately metered, Tenant shall pay for all
electricity furnished to the Premises which is so separately metered. Tenant
shall not, without Landlord's prior written consent, use any equipment,
including, without limitation, electronic data processing machines, punch card
machines, duplicating machines, main frame computers, photocopiers, printers or
any other machines which use electric current in excess of 110 volts, which
will increase the amount of electricity ordinarily furnished for the use of the
Premises as general office space or which require clean circuits or other
special distribution circuits. If Tenant desires additional 110 volt
electrical power beyond that supplied by Landlord as provided above, electric
current in excess of 110 volts, or other special power requirements or
circuits, then Tenant may request Landlord to provide such supplemental power
to the Premises, which request Landlord may grant or withhold in its reasonable
discretion. If Landlord furnishes such power or circuits, Tenant shall pay
Landlord, on demand, the cost of the design, installation, and maintenance of
the facilities required to provide such additional or special electric power or
circuits and the cost of all electric current so provided at a rate not to
exceed that which would be charged by Georgia Power Company, or its successor,
if Tenant were a direct customer thereof. Landlord may require separate
electrical metering of such supplemental electrical power or circuits to the
Premises, and Tenant shall pay, on demand, the cost of the design,
installation, and maintenance of such metering facilities. In no event shall
Tenant have access to any electrical closets in the Building, it being agreed
that any electrical engineering design or contract work shall be performed by
Landlord or an electrical engineer and/or electrical contractor designated by
Landlord at Tenant's expense;
(d) Common use restrooms and toilets with hot and cold
running water; and
(e) Drinking water available on each floor of the Building.
4.3 LIABILITY OF LANDLORD: Landlord shall not be liable to Tenant in
any manner whatsoever for failure to furnish or delay in furnishing any service
or services provided for in this Lease and no such failure or delay shall
constitute actual or constructive eviction of Tenant or operate to relieve
Tenant from the prompt and punctual performance of each and all the covenants
to be performed herein by Tenant. Landlord shall also not be liable to Tenant
for damage to person or property caused by defects in, or repairs to, the
cooling, heating, electric, water, elevator or other apparatus or systems or by
water discharged from sprinkler systems, if any, in the Building; likewise,
Landlord shall not be liable to Tenant for the theft, mysterious
disappearance, or loss of any property of Tenant whether from the Premises or
any part of the Building or Tower Place Complex. Landlord agrees to make
reasonable efforts to protect Tenant from interference or disturbance by third
persons, including other tenants; however, Landlord shall not be liable, and
Tenant shall not be relieved from its obligations other persons.
4.4 REPAIRS BY LANDLORD: Landlord shall have no duty to make any
repairs or improvements to the Premises except structural repairs and repairs
to the Building's base electrical, mechanical and plumbing systems necessary
for safety and tenant ability, the necessity for which (i) Landlord is notified
in writing by Tenant, and (ii) is not brought about by any act or neglect of
Tenant, its agents, employees or visitors. Landlord shall not be liable for any
failure to make repairs or to perform any maintenance required hereunder unless
such
4.5 RIGHTS OF LANDLORD TO ENTER PREMISES: Tenant shall not change the
locks on any entrance to the Premises. Upon Tenant's written request to
Landlord, Landlord agrees to make a reasonable change of locks on behalf of
Tenant and at Tenant's sole cost and expense. Landlord and its agents,
employees and contractors may enter the Premises at such times as Landlord
deems reasonably necessary or desirable to inspect and examine same provided
Landlord gives reasonable notice except in the case of an emergency, to make
such repairs, additions, alterations, and improvements as Landlord desires
to make to the Building, including, without limitation, the erection, use and
maintenance of pipes and conduits, to supply janitorial service and any other
service to be provided by Landlord to Tenant hereunder, and to exhibit the
Premises to prospective purchasers or tenants. In the event of emergency, or if
otherwise necessary to prevent injury to persons or damage to property, such
entry to the Premises may be made by force without any liability whatsoever on
the part of Landlord for any resulting damage. Landlord may also take any and
all needed materials into and through the Premises that may be required to make
such repairs, additions, alterations, and improvements, all without being
liable to Tenant in any manner whatsoever. During such time as such work is
being carried on, provided such work is carried out in a manner so as not
unreasonably to interfere with the use and occupancy of the Premises by Tenant,
Total Rent (nor any portion thereof)
<PAGE>
shall in no way abate, and, regardless of Landlord's fault, Tenant waives any
claim and cause of action against Landlord for damages by reason of loss or
interruption to Tenant's business and profits therefrom because of the
prosecution of any such work.
4.6 AGREEMENTS OF TENANTS: Tenant agrees that it shall:
(a) at its own expense and except for the obligations of
Landlord expressly stated 4.4 of this Lease, keep the Premises in good repair
and tenantable condition and indemnify Landlord against any loss, damage, or
expense arising by any failure of Tenant so to do or due to any act or neglect
of Tenant, its employees, agents or visitors;
(b) make no alterations or additions of any kind in or to
the Premises or the Building without first obtaining Landlord's written consent
which shall not be unreasonably withheld; all such work, including additions,
fixtures and leasehold improvements (but not including moveable office
furniture and equipment and other personal property of Tenant), made or placed
in or upon the Premises or the Building either by Tenant or Landlord shall be
and become Landlord's property at the end of the Lease Term, all without
compensation or payment to Tenant, and shall remain upon and in the Premises,
during and at the termination of the Lease Term;
(c) not use the Premises for any illegal purpose or violate
any statute, regulation, rule or order of any governmental body, nor create or
allow to exist any nuisances or trespasses, nor do any act in or about the
Premises or bring anything onto or into the Premises which will in any way
increase the rate of insurance on the Premises or reduce the value of the
Building or its attractiveness to other tenants, nor will Tenant deface or
injure the Premises or commit or allow waste to be committed on any portion
thereof or overload any floor of the Premises;
(d) at its sole expense comply, as to its use of the
Premises, with all statutes, regulations, rules, ordinances and orders of any
governmental body, department or agency thereof, and abide by and observe the
Rules and Regulations;
(e) indemnify and hold Landlord harmless from and against
any and all loss, cost, damage, expense, or liability whatsoever, including,
without limitation, court costs and reasonable attorneys' fees, imposed on
Landlord by any person whomsoever, caused in whole or in part by an act or
omission of Tenant or its agents, employees, invitees, licensees, contractors,
subtenants or assignees (the provisions of this Subsection to survive
expiration or termination of this Lease with respect to any act or omission
occurring prior to such expiration or termination);
(f) intentionally omitted
(g) pay interest to Landlord on demand, at the rate of one
and one-half percent (1 1/2%) per month or the maximum rate permitted by law,
whichever is lower, on any installment of Total Rent not paid within seven (7)
days from the due date, accruing from the due date until paid;
(h) pay to Landlord on demand, in the event that Landlord
elects to accept a payment of any part of the Total Rent which is not received
by Landlord within seven (7) days of its due date, a late charge in an amount
equal to the greater of Fifty Dollars ($50.00) or five percent (5%) of the
total outstanding amount due (which late charge represents an agreed upon
charge for Landlord's administrative expenses in processing late payments, and
is not a payment for the use of money or a penalty); provided, however, nothing
contained herein shall be deemed to require Landlord to accept any payment of
Total Rent received by Landlord after the due date;
(i) pay to Landlord a processing and handling fee of Fifty
Dollars ($50.00) for any check of Tenant's which is returned to Landlord
because of insufficient funds, as liquidated damages to compensate Landlord for
its additional administrative costs and expenses in handling such items, it
being agreed that the exact amount thereof would be difficult or impossible to
ascertain;
(j) cooperate with Landlord in complying with all regulations
of the United States Department of Energy and of any governmental agency having
jurisdiction of the Building and/or Tower Place Complex, relating to the
conservation of energy, including, without limitation, any regulations requiring
the production of information regarding the consumption of energy within the
Building and/or Tower Place Complex, and Tenant shall indemnify and hold
Landlord harmless from and against any loss, cost, damage, or liability arising
out of any violation of any such regulations by Tenant, its employees, agents,
contractors, invites, licensees, subtenants and assignees; and
(k) install telephone service to the Premises only from the
telephone circuits designated by Landlord in writing as those serving the
Premises; if Tenant requires additional telephone service capacity for the
Premises, such capacity must be provided by Southern Bell Telephone Co., at no
cost to Landlord, and the design and installation of such supplemental capacity
shall be subject to the reasonable approval of Landlord.
4.7 SIGNS: Tenant shall obtain the written approval of Landlord prior
to placing and maintaining, or causing or permitting to be placed and
maintained, any sign, advertising matter or other thing of any kind, on the
exterior of the premises, or any decorating, lettering or advertising matter on
any exterior door to the Premises. Tenant shall not affix or attach anything to
windows in the Premises or, without Landlord prior written consent in each
instance (which may be given on such condition as Landlord may reasonably
elect), place signs or similar matter on the Premises which will be visible
from outside the Premises. All exterior and elevator lobby signs shall, unless
Landlord otherwise specifically consents in writing, confirm to uniform
Building sign specifications promulgated by Landlord shall provide and install
same at Tenant's cost and expense.
4.8 BUILDING NAME: Tenant acknowledges that the Building is part
of the Tower Place Complex known generally as "Tower Place." Tenant covenants
and agrees to cause all directory listings, advertising and all other printed
or written material containing Tenant address at the Premises accurately to
refer to "Tower Place" or any other name given the Building and/or Tower Place
Complex by Landlord in accordance herewith; however, Tenant shall not, without
the prior written consent of Landlord, use the name Tower Place or any other
name given the Building or Tower Place Complex, or any other deceptively
similar name, or any associated service mark or logo of the Building and/or
Tower Place Complex for any purpose other than Tenant's business address and
Tenant, under no circumstances, shall use the word "Courtyard" in any sign age
or advertisement. Upon written notice to Tenant, Landlord reserves the right,
from time to time and at its sole option, to name or change the name of the
Building and/or Tower Place Complex and to change the street address of the
Building.
4.9 HAZARDOUS MATERIALS:
(a) Tenant hereby covenants that, from and after the date
hereof and thereafter during the Lease Term, Tenant shall not cause or permit
any "Hazardous Substances" (as hereinafter defined) to be placed, held, located
or disposed of in or about the Premises or the Tower Place Complex or any part
of either and that neither the Premises nor the Tower Place Complex, nor any
part of either, shall ever be used by Tenant or persons claiming under Tenant
as a storage site (whether permanent or temporary) for any Hazardous
Substances. For purposes of this Section 4.9, "Hazardous Substances" shall mean
and include those elements or compounds which are contained in the list of
hazardous substances adopted by the United States Environmental Protection
Agency (EPA) or the list of toxic pollutants designated by Congress or the EPA
or which are defined as hazardous, toxic, pollutant, infectious or radioactive
by any other federal, state or local statute, law, ordinance, code, rule,
regulation, order or decree regulating, relating to or imposing liability
(including, without limitation, strict liability) or standards of conduct
concerning, any hazardous, toxic or dangerous waste, substance or material, as
now or at any time hereafter in effect (collectively "Environmental Laws").
(b) Tenant hereby agrees to comply with all Environmental
Laws with regard to its use and occupancy of the Premises and to indemnify
Landlord and hold Landlord hardness from and against any and all losses,
liabilities, including strict liability, damages, injuries, expenses, including
reasonable attorneys' fees, costs of any settlement or judgment and claims of
any and every kind whatsoever paid, incurred or suffered by, or asserted
against, Landlord by any person, entity or governmental agency for, with
respect to, or as a direct or indirect result of Tenants failure so to comply
or the presence in, or the escape, leakage, spillage, discharge, emission, or
release from, the Premises of any Hazardous Substance (including, without
limitation, any losses, liabilities, including strict liability, damages,
injuries, expenses, including reasonable attorneys' fees, costs of any
settlement or judgment or claims asserted or arising under the Comprehensive
Environmental Response, Compensation and Liability Act, any so-called federal,
State or local "Superfund" or "Superintendent" laws or any other Environmental
Law);
<PAGE>
provided, however, that the foregoing indemnity is limited to matters arising
solely from Tenant's violation of the covenant contained in Subsection 4.9(a)
above.
(c) In the event Landlord suspects, in its reasonable
opinion, that Tenant has violated any of the covenants contained in this
Section 4.9, or that the Premises, Retail Complex or Tower Place Complex are
not in compliance with the Environmental Laws for any reason as to which Tenant
is responsible hereunder, or that the Premises, Retail Complex or Tower Place
Complex are not free of Hazardous Substances for any reason as to which Tenant
is responsible hereunder, Tenant shall take such steps as Landlord requires by
written notice to Tenant in order to confirm or deny such occurrences,
including, without limitation, the preparation of environmental studies,
audits, surveys or reports. In the event that Tenant fails to take such action,
Landlord may take such action and shall have such access to the Premises as
Landlord deems necessary, and the costs and expenses of all such actions taken
by Landlord, including, without limitation, Landlord's attorneys' fees, shall
be due and payable by Tenant upon demand therefor from Landlord as additional
rent hereunder. If any lender or governmental agency shall ever require testing
to ascertain whether or not there has been any release of hazardous materials,
then the reasonable costs thereof shall be reimbursed by Tenant to Landlord
upon demand as additional charges if such requirement applies to the Premises.
In addition, Tenant shall execute affidavits, representations and the like from
time to time at Landlord's request concerning Tenant's best knowledge and
belief concerning the presence of hazardous substances or materials on the
Premises. Further, Landlord reserves the right at any time and from time to
time to enter the Premises following reasonable advance notice thereof to
Tenant (except in cases of emergency) in order to perform periodic
environmental studies, audits, surveys and reports and in order to determine
whether Tenant is in compliance with the terms of this Section 4.9.
(d) The obligations and liabilities of Tenant under this
Section 4.9 shall survive the expiration or earlier termination of this Lease
or other enforcement of Landlord's remedies under this Lease.
4.10 INSURANCE:
(a) Tenant hereby covenants that, from and after the date
hereof and thereafter during the Lease term, Tenant shall not cause or permit
any "Hazardous Substances" (as hereinafter defined) to be placed, held, located
or disposed of in or about the Premises or the Tower Place Complex or any part
of either and that neither the Premises not the Tower Place Complex, nor any
part of either, shall ever by used by Tenant or persons claiming under Tenant as
a storage site (whether permanent or temporary) for any Hazardous Substances.
For purposes of this Section 4.9, "Hazardous Substances" shall mean and inlucde
those elements or compounds which are contained in the list of hazardous
substances adopted by the United States Environmental Protection Agency (EPA) or
the list of toxic pollutants designated by Congress or the EPA or which are
defined as hazardous, toxic, pollutant, infectious or radioactive by any other
federal, state or local statute, law, ordinance, code, rule, regulation, order
or decree regulating, relating to or imposing liability (including, without
limitation, strict liability) or standards of conduct concerning, any hazardous,
toxic or dangerous waste, substance or material, as now or at any time hereafter
in effect (collectively "Environmental Laws").
(b) Tenant hereby agrees to comply with all Environmental
Laws with regard to its use and occupancy of the Premises and to indemnify
Landlord and hold Landlord harmless from and against any and all losses,
liabilities, including strict liability, damages, injuries, expenses, including
reasonable attorneys' fees, costs of any settlement or judgment and claims of
any and every kind whatsoever paid, incurred or suffered by, or asserted
against, Landlord by any person, entity or governmental agency for, with respect
to, or as a direct or indirect result of Tenant's failure to comply or the
presence in, or the escape, leakage, spillage, discharge, emission, or release
from, the Premises of any hazardous Substance (including, without limitation,
any losses, liabilities, including strict liability, damages, injuries,
expenses, including reasonable attorneys' fees, costs of any settlement or
judgment or claims asserted or arising under the Comprehensive Environmental
Response, Compensation and Liability Act, any so-called federal, State or local
"Superfund" or "Superlien" laws or any other Environmental Law); provided,
however, that the foregoing indemnity is limited to matters arising solely from
Tenant's violation of the covenant contained in Subsection 4.9(a) above.
(c) Tenant shall also procure and maintain throughout the
Lease Tenant a policy or policies of insurance, insuring Tenant, Landlord,
Manager and any other persons reasonably designated by Landlord, against any
and all liability for injury to or death of a person or persons and for damage
to property occasioned by or arising out of any construction work being done on
the Premises, or arising out of the condition, use, or occupancy of the
Premises, or in any way occasioned by or arising out of the activities of
Tenant, its agents, employees, or licensees in the Premises, or other portions
of the Building or Tower Place
<PAGE>
Complex, in amounts not less than $500,000 with respect to injuries to
or death of any one person, $1,000,000 with respect to any one casualty
or occurrence and $100,000 with respect to property damage, or such
higher limits as Landlord may reasonably require from time to time
during the Lease Term. Tenant shall also carry or procure any other form
or forms of insurance or any changes or endorsements to the insurance
required herein as Landlord or any Mortgagee (as hereinafter defined) or
lessor of Landlord may reasonably require, from time to time, in form or
in amounts.
(d) Landlord and Tenant shall each have included in all
policies of insurance respectively obtained by them with respect to
the Building and/or the Premises a waiver by the insurer of all right
of subrogation against the other in connection with any loss or
damage thereby insured against. So long as both Landlord's and Tenant's
policies then in force include such mutual waiver of subrogation,
Landlord and Tenant, to the fullest extent permitted by law, each waive all
right of recovery against the other for and agree to release the other from
liability for, loss or damage to the extent such loss or damage is covered by
valid and collectible insurance in effect at the time of such loss or damage.
If such waiver of subrogation shall not be obtainable or shall be obtainable
only at a premium over that chargeable without such waiver, the party seeking
such waiver shall notify the other thereof in writing, and the latter shall
have ten (10) days in which either (1) to procure on behalf of the notifying
party insurance with such waiver from a company or companies reasonably
satisfactory to the notifying party or (ii) to agree to pay such additional
premium (in Tenant case, in the proportion which the rentable area of the
Premises bears to the area covered by the insurance policy of Landlord in
question).
(e) All insurance policies procured and maintained
by Tenant pursuant to this Subsection 4.10 shall be carried with companies
licensed to do business in the State of Georgia reasonably satisfactory
to Landlord and shall be noncancelable except after thirty (30) days'
written notice to Landlord and any designees of Landlord. Such policies
or duly executed certificates of insurance with respect thereto
shall be delivered to Landlord prior to the date that Tenant takes possession
of the Premises, and renewals thereof as required shall be delivered to
Landlord at least thirty (30) days prior to the expiration of each respective
policy term. If Tenant shall fail to procure or maintain any insurance required
of Tenant hereunder and after reasonable notice has been given to Tenant,
Landlord may, at its sole option, but shall not be required to, procure and
maintain the at the cost and expense of Tenant and Tenant agrees to reimburse
Landlord for same as additional rent due hereunder within fifteen (15) days
after receiving notice of the amount thereof from Landlord.
4.11 LIENS: No work performed by Tenant in the Premises, whether
pursuant to this Lease or otherwise, whether in the nature of erection,
construction, alteration, addition, improvement, remodeling or repair, shall be
deemed to be for the immediate use and benefit of Landlord, and no mechanic's,
material or other lien shall be allowed against the estate of Landlord by
reason of any consent given by Landlord to Tenant to improve the Premises.
Tenant shall pay promptly all persons furnishing labor or materials with
respect to any work performed by Tenant or its contractor on or about the
Premises and Tenant shall discharge of record within twenty (20) days following
the filing thereof, by payment or bonding, any mechanic's lien filed against
the Premises, the Building or the Tower Place Complex for work or materials
claimed to have been famished to Tenant.
ARTICLE V
ASSIGNMENT AND SUBLETTING
5.1 ASSIGNMENT AND SUBLETTING
(a) Tenant shall not, without the prior written consent of
Landlord, which shall not be unreasonably withheld, *assign, hypothecate, or
otherwise transfer this Lease or any interest hereunder, or sublet the Premises
or any part thereof, or permit the use of the Premises by any party other than
Tenant. Landlord's consent or refusal to consent to a proposed assignment or
sublease must be an action which is taken reasonably and in good faith. For the
purposes of the immediately preceding sentence, Landlord shall be deemed to be
acting reasonably and in good faith in determining whether to consent to a
proposed assignment or sublease when Landlord considers such factors as,
without limitation, the identity and business reputation of the proposed
assignee or subtenant, the relationship of the proposed assignee or subtenant
to the tenant mix in the Building and/or the Tower Place Complex, the type or
nature of the proposed assignee's or subtenant's business, the creditworthiness
of the proposed assignee or subtenant, and any agreement or leasing
restrictions with existing tenants or other third parties that prohibit or
restrict Landlord from leasing to the proposed assignee or subtenant. Tenant
agrees to pay to Landlord as additional rental, on demand, a Five Hundred
Dollar ($500.00) administrative processing fee in connection with any request
by Tenant for consent
<PAGE>
to a proposed assignment or subletting and, in addition, reasonable
out-of-pocket costs incurred by Landlord (including, without limitation,
reasonable attorneys' fees) in connection with any request by Tenant for
Landlord to consent to any assignment or subletting by Tenant. All monies so
paid shall be non-refundable in any event, regardless of whether Landlord
consents to the proposed assignment or subletting. Any assignment or sublease
shall not nullify these provisions, and all later assignments or subleases shall
be made likewise only after the prior written consent of Landlord is obtained in
each instance.
*An initial public offering of Tenant's stock shall not be deemed an assignment
under this Lease.
(b) No sublease or assignment by Tenant shall relieve Tenant of
any liability hereunder. Without limiting the foregoing, if, with the consent
of Landlord, this Lease is assigned or the Premises or any part thereof is
sublet or occupied by any party other than Tenant, Landlord may, after default
by Tenant, collect rent from the assignee, subtenant or occupant, and apply the
net amount collected to the Total Rent herein reserved, but no such assignment,
subletting, occupancy, or collection shall be deemed (i) a waiver of any of
Tenant's covenants contained in this Lease, (ii) the acceptance by Landlord of
the assignee, subtenant, or occupancy as Tenant hereunder, or (iii) the release
of Tenant from further performance by Tenant of its covenants under this Lease.
(c) The occupancy of the Premises by any successor firm or
entity of the Tenant or by any firm or entity into which or with which the
Tenant may become merged or consolidated shall be deemed an assignment of this
Lease requiring the prior written consent of Landlord.
(d) Notwithstanding the giving by Landlord of its
consent to any assignment or sublease with respect to the Premises, no such
assignee or sublessee may exercise any expansion option, right of first refusal
option, or renewal option under this Lease, nor shall any such party have the
benefit of any specific signage or other similar privileges or rights which may
be provided to Tenant under this Lease except in accordance with a separate
written agreement entered into directly between such assignee or sublessee and
Landlord. After a permitted assignment or subletting, the original Tenant shall
have no right to exercise on behalf of a permitted assignee or sublessee as to
the space assigned or sublet any expansion option, right of first refusal option
or renewal or extension option.
(e) Should Landlord permit any assignment or subletting
by Tenant and should the monies received as a result of such assignment or
subletting (when compared to the monies still payable by Tenant to Landlord) be
greater than Landlord would have received hereunder had not Landlord permitted
such assignment or subletting, then fifty percent (50%) of the "Gross Profit",
shall be payable by Tenant to Landlord, it being the parties' intention that
Landlord, in consideration of Landlord's permitting such assignment or
subletting, shall receive fifty percent (50%) of any Gross Profit from any such
assignment or subletting. Further, should the assignment or subletting giving
rise to the Gross Profit be arranged by Landlord (or its Manager) on Tenant's
behalf (it being understood that neither Landlord nor its Manager shall have any
obligation to arrange for same), one hundred percent (100%) of the Gross Profit
shall be paid to Landlord.
ARTICLE VI
DEFAULT AND REMEDIES
6.1 EVENTS OF DEFAULT: The occurrence of any of the following
shall constitute "Events of Default" (each an "Event of Default"):
(a) Any part, portion or component of the Total Rent, or any
other sums payable under this Lease as set forth in Subsection 3.4(c) are not
received within seven (7) days from the due date;
(b) intentionally omitted
(c) Any petition is filed by or against Tenant under any
section or chapter of the Federal Bankruptcy Code, and, in the case of
a petition filed against Tenant, such petition is not dismissed within
sixty (60) days after the date of such filing;
<PAGE>
(d) Tenant becomes insolvent or transfers property in
fraud of creditors;
(e) Tenant makes an assignment for the benefit of creditors;
(f) A receiver is appointed for any of the Tenants assets; or
(g) Tenant breaches or fails to comply with any term,
provision, condition or covenant of this Lease, other than the payment of
Total Rent, or any of the Rules and Regulations.
6.2 REMEDIES:
(a) Upon the occurrence of an event of default, Landlord shall
have the option to do and perform any one or more of the following, in addition
to, and not in limitation of, any other right or remedy available to Landlord
at law or in equity or elsewhere under this Lease if the events of default
described in Subsection 6.1(a) are not cured within five (5) days after written
notice by Landlord or such default, if the events described in Subsection 6.1
(g) are not cured within twenty (20) days after written notice of such default
(unless such default gives rise to immediate threat to person or property , in
which case such event of default shall immediately entitle Landlord to its
rights and remedies) or if any of the other events of default are not cured
immediately:
(i) terminate this Lease, in which event Tenant shall immediately
surrender the Premises to Landlord, but if Tenant shall fail to
do so, Landlord may, without further notice and without prejudice
to any other remedy Landlord may have for possession or arrearage
in Total Rent, enter upon the Premises and expel or remove Tenant
and Tenant's effects, by force if necessary, without being
subject to prosecution or liable for any claim for damages
therefor; and Tenant agrees to indemnify Landlord for all loss
and damage which Landlord may suffer by reason of such
termination, whether through inability to relet the Premises, or
through decrease in rent, or otherwise (such agreement to survive
any such termination of this Lease); and/or
(ii) terminate Tenant's right of possession of the Premises without
terminating this Lease, and enter the Premises as the agent of
Tenant, by force if necessary, without being subject to
prosecution or liable for any claim for damages therefor,
and relet the Premises as the agent of Tenant
without advertisement and by private negotiations
and or any term Landlord deems proper, and receive the
rent therefor, and Tenant shall pay Landlord upon demand
any deficiency that may arise by reason of such reletting, but
Tenant shall not be entitled to any surplus funds generated by
such reletting; Tenant shall reimburse landlord for all costs
of reletting the Premises, including, but not limited to,
advertising expenses, commissions, and the costs of improvements
reasonably required in order to relet the Premise; and/or
(iii) as agent of Tenant, do whatever Tenant is obligated to do by
the provisions of this Lease and Enter the Premises, by force
if necessary, without being subject to prosecution or liable
for any claims for damages therefor, in order to accomplish
this purpose; Tenant agrees to reimburse Landlord immediately
upon demand for any* expenses which Landlord may incur
in thus effecting compliance with this Lease on behalf of
Tenant, and Tenant further agrees that Landlord shall not be
liable for any damages resulting to Tenant from such action,
unless causes by the gross negligence of Landlord or
otherwise; and or
*reasonable
(iv) collect as liquidated damages and not as a penalty, and in
addition to all Total Rent and other amounts previously due
and unpaid under the terms and conditions of the Lease, the
accelerated present value of the Total Rent and all other sums
provided herein to be paid by Tenant during the remainder
of the Lease Term (the "Rent Balance"), less the Net
Rental Value of the Premises, as hereinafter defined; the
term "Net Rental Value" shall mean the fair rental value
of the Premises for the remainder of the Lease Term reduced
to present value, less the Landlord's costs, expenses and
*attorneys' fees in connection with the preparation of the
Premises for reletting and for the
<PAGE>
reletting itself; provided, however, the parties agree that in no
event shall the Net Rental Value exceed the Rent Balance; the
parties further agree that the damages caused by the Tenant's
default would be difficult or impossible accurately to estimate
and that this measure of damages is a reasonable pre-estimate of
the Landlord's probable loss resulting from Tenant's breach; the
acceptance of the liquidated damages set forth in this paragraph
shall not constitute a waiver of any failure of Tenant thereafter
occurring to comply with any term, provision, condition or
covenant of this Lease.
*reasonable
(b) If Landlord exercises any of the remedies set forth in
Section 6.2(a) or under Georgia law, in addition to all other costs and expenses
Landlord shall be entitled to recover under this Lease, Landlord shall also be
entitled to recover:
(i) the cost of performing any other covenants which would have
otherwise been performed by Tenant;
(ii) the amount of any rental abatement or other rental concession
provided by Landlord to Tenant; provided, however, that in no
event shall Tenant's liability hereunder exceed the Total Rent
due under this Lease;
(iii) all sums expended by Landlord, and not previously reimbursed to
Landlord by Tenant, connection with improving or
repairing the Premises to Tenant's specifications; and
(iv) all costs and expenses incurred by Landlord in connection with
the termination of this Lease and eviction of Tenant.
ARTICLE VII
DESTRUCTION OR DAMAGE CONDEMNATION
7.1 DESTRUCTION OF OR DAMAGE TO PREMISES: If because of fire, the
elements, or Act of God, the Premises or the Building is either destroyed or
damaged so as to render the Premises wholly unfit for occupancy, or if, in the
judgment of Landlord, the damage resulting cannot be repaired within one
hundred eighty (180) days from such damage, then at the option of Landlord or
Tenant to be exercised by giving written notice to the other within sixty (60)
days following the date of such damage, this Lease shall terminate on the date
of such election, and Tenant shall immediately surrender the Premises to
Landlord. In such event, and regardless of whether Landlord elects to
terminate this Lease, Tenant shall continue to owe and pay Total Rent up to
but not beyond the time of such surrender, but Total Rent shall abate in
proportion to the number of square feet of rentable area of the Premises
rendered unusable by such damage*. Under no circumstances shall Landlord be
liable to Tenant for inconvenience, annoyance, loss of profits, expenses, or
any other type of injury or damage resulting from the repair of any such
damage, or from any repair, modification, arranging, or rearranging of any
portion of the Premises or any part or all of the Building or for termination
of this Lease as provided above. Tenant assumes the risks of any and all damage
to its personal property in or on the Premises and from any casualty
whatsoever.
*In the event that more than half of the space is rendered
unusable, the total rent shall abate.
7.2 EMINENT DOMAIN: If all of the Premises or the Building is
taken, or if such a part of either is taken so as to render the remainder
thereof unsuitable for Landlord's or Tenant's purposes, for any public or
quasi-public use by eminent domain or by private purchase in lieu thereof, this
Lease shall terminate at the option of either Landlord or Tenant on the date
that the condemning authority actually takes possession of the part condemned.
If this Lease is not so terminated, or upon a taking not within the scope of the
foregoing, Total Rent shall abate for the period of such taking in proportion to
the area of the Premises taken. In no event shall Tenant have any right or claim
to any part of any award made to or received by Landlord for such taking, or
against Landlord or the condemning authority for the value of any unexpired term
of this Lease, and Tenant hereby assigns any such claim to Landlord. Nothing
herein contained, however, shall preclude Tenant from claiming, proving
<PAGE>
and receiving from the condemning authority a separate award for the value of
any of Tenant's personal property taken which Tenant could have rightfully
removed from the Premises hereunder and for relocation and moving expenses, so
long as the Landlord's award is not thereby reduced.
7.3 DETERMINATION OF TIME REQUIRED TO REBUILD: Within ten (10)
business days following any casualty described in Section 7.1, or any taking
described in Section 7.2, Landlord shall give Tenant a notice stating (a)
Landlord's estimate of the portion of the Premises rendered untenantable as a
result of such cacualty or taking and (b) Landlord's estimate of time required
for restoration. If Landlord and Tenant do not agree within ten (10) days after
the casualty or taking as to the length of time which would be reuired for
restoration, the issue shall be submitted, promptly, by both parties, or either
party, to the president or principal officer of the Atlanta, Georgia, Chapter of
the American Institute or Architects (or successor thereto) whose determination
shall be binding upon the parties. Landlord and Tenant shall share equally in
the cost of obtaining of said person.
7.4 PARTIAL DESTRUCTION OR TAKING: If the Premises are damaged as
a result of a casualty described in Section 7.1 or a taking described in Section
7.2 but this Lease is not terminated as a result of such casualty or taking,
all rental shall abate in proportion to the amount of the Premises which shall
have been rendered unusable; provided, however, that Tenant's obligation to pay
Total Rent shall not cease or abate if the damage to the Premises or the
Building was caused through the negligence or willful misconduct of Tenant, its
agents, employees, contractors, invitees, licensees, subtenants, or assignees.
Further, in such a case, Landlord will promptly, at its sole cost and expense,
restore, replace or rebuild the same as nearly as possible to the structural
and architectural condition existing immediately prior to such casualty or
taking and as expeditiously as practicable but within a period beginning on the
earliest date upon which the time required for restoration 'has been determined
and any options of Landlord or Tenant to terminate this Lease, if any, have
expired, and having a length not exceeding one hundred twenty-five percent
(125%) of the length of time required to rebuild as determined pursuant to
Section 7.3 as the same may be extended pursuant to Section 8.23, whereupon
full rental shall recommence. If the damage or seizure affects more than
twenty-five percent (25%) of the area of the Premises, or such a fraction
that would leave the remainder of the Premises untenable and Landlord fails to
complete such restoration, replacement or rebuilding within such period, Tenant
shall be entitled at any time up to the earlier of ten (10) days following the
expiration of the time permitted for restoration or the actual date of
completion of restoration, replacement or rebuilding, by notice to Landlord, to
terminate this Lease as of a date not more than sixty (60) days following the
date of such notice. Notwithstanding anything herein contained to the contrary,
Landlord shall have no obligation to repair any improvements to the Premises
constructed by Tenant or Tenant's agents or contractors or, if constructed or
installed by Landlord, any improvements required to be insured by Tenant in
accordance with the provisions of this Lease (unless insurance proceeds for
repair are made available to Landlord) and Tenant shall, upon substantial
completion by Landlord of its repairs required hereunder, promptly and
diligently and at its sole cost and expense, repair and restore any
improvements to the Premises made by Tenant, as well as Tenant's contents, to
the condition thereof prior to such destruction or damage.
ARTICLE VIII
ADDITIONAL PROVISION
8.1 ADDRESSES-NOTICES
(a) Except for legal process which may also be served
as provided by law, all notices required or desired to be given with
respect to this Lease shall be in writing and shall be delivered (a)
by certified or registered mail, return receipt requested, with proper
postage prepaid and addressed to the party as set out below, or (b) by hand
delivery to the address set out below. Any such notice or demand shall be
effective and deemed delivered and received on the date given by hand
delivery, or on the date of deposit with the United States mail in the manner
aforesaid for notices given by registered or certified mail; provided that the
period of time in which a response to a mailed notice must be given or taken
shall run from the date of receipt as indicated on the return postal receipt.
Rejection or other refusal to accept or the inability to deliver because of
changed address of which no notice was given shall be deemed receipt of the
notice, demand or request sent. Any party may change its address for notices to
any other location within the continental United States by notifying the other
parties of the new address in the manner provided herein for the giving of
notices, with such change to become effective ten (10) days after notice of the
change of address is given. For the purposes hereof, notices to Tenant shall be
sent to the addresses set out in Section 1. I (n). Notices to Landlord and
Manager shall be sent to the following addresses:
<PAGE>
(i) To Landlord:
Tower Place, L.P.
c/o Regent Partners, Inc.
3340 Peachtree Road, NE
Suite 1500
Atlanta, Georgia 30326
Attn: Debra Cobbs
(With a copy of any notice sent to Landlord sent also to
Manager at Manager's address set forth as provided herein);
and
(ii) To Manager:
Regent Partners, Inc.
Tower Place
Suite 1500
3340 Peachtree Road, NE Atlanta, Georgia 30326
Attn: Building Manager
(b) Tenant hereby designates and appoints as its agent to
receive notice of all dispossessory or distraint proceedings the person in
charge of or occupying the Premises at the time such notice is given, or, if
there is no such person, then such service of notice may be made by attaching it
on the main entrance of the Premises.
(c) In the event Landlord gives notice to Tenant of the
name and address of any holder of a Landlord's Mortgage (such holder being
herein referred to as a "Mortgagee"), Tenant agrees to; send to any such
Mortgagee, by certified mail, a copy of any notice of default given by Tenant to
Landlord. Tenant further agrees that if such default is not cured by Landlord,
the Mortgagee shall be allowed thirty (30) days in which to cure the default or,
if the default cannot be cured within the thirty (30)-day period, to begin
diligently pursuing such cure. Nothing herein contained shall in any way
obligate the Mortgage to cure or pursue the cure of any such default.
8.2 MANAGER: Landlord shall have the right to delegate any and
all of its obligations under this Lease to an entity engaged in the
operation and management of office buildings in the metropolitan area
of Atlanta, Georgia (any such entity herein referred to as "Manager").
Such delegation shall not, however, relieve Landlord of any such
obligations. The initial Manager is as stated in Section 1. I (0) and such
Manager's address is set out in Section 8. 1 (a) above. Landlord may designate a
replacement Manager at any time and from time to time by notice to Tenant.
8.3 SURRENDER OF PREMISES: Upon the expiration or other termination of
the Lease Term, as the same may have been extended, Tenant shall promptly quit
and surrender to Landlord the Premises (and the keys thereto), together with all
improvements belonging to Landlord, free of debris, broom clean, ordinary wear
and tear excepted, and Tenant shall remove all of its personal property required
or permitted to be removed hereunder. All such property not promptly removed by
Tenant shall be deemed abandoned by Tenant, and title to the same shall pass to
Landlord under this Lease as by a bill of sale.
8.4 HOLDING OVER: Should Tenant remain in possession of the Premises
after the expiration or other termination of the Lease Term, Tenant shall be a
tenant at sufferance (absent a written agreement to the contrary signed by
Landlord) at a rental rate equal to two hundred percent (200%) of the Total
Rent then applicable hereunder, and otherwise on the same terms and conditions
as herein provided as applicable to a tenancy at sufferance. In addition,
Tenant shall indemnify and hold harmless Landlord from all loss or damage which
may result from Tenant's holding over. Without limiting the foregoing, Tenant
shall indemnify Landlord against all claims made by any other tenant or
prospective tenant against Landlord
<PAGE>
resulting from such delay by Landlord in delivering possession of the Premises
to such tenant or prospective tenant. Nothing Landlord herein shall be construed
as constituting Landlord's consent or approval to any such holdover, nor operate
to preclude or inhibit the exercise by Landlord of all of its rights and
remedies hereunder or available under applicable law to dispossess or evict
Tenant. There shall be no renewal of this Lease by operation of law.
8.5 BROKERS: Except with respect to Landlord's Broker (whose
commission Landlord shall pay) and Tenant's Broker, if any, (to whom Landlord's
Broker is obligated to pay a portion of such commission in accordance with a
separate written agreement between Landlord's Broker and Tenant's Broker),
Tenant and Landlord each represents and warrants to the other that no broker,
agent, commission salesman or other person has represented the warranting party
in the negotiations for and procurement of this Lease and of the Premises, and
that no commissions, fees or compensation of any kind are due and payable in
connection herewith to any such person or entity. The individual(s) executing
this Agreement on behalf of Tenant hereby swear to and for the benefit of
Landlord, any lender of Landlord holding a lien or security title interest in
and to all or any portion of the Building, any attorney certifying title to the
Building and any title insurance company insuring title to all or any portion
of the Building that (a) except for Tenant's Broker, if any, (i) all fees,
commissions, compensation or other amounts payable to any and all real estate
brokers engaged by Tenant in connection with the Lease have been paid in full,
or (ii) the rights of any and all real estate brokers engaged by Tenant to file
any lien, notice of lien or claim of lien under O.C.G.A. I 44-14-600 et seq.
have been waived in writing by such broker, and (b) except for the commission
payable by Landlord to Tenant's Broker, in accordance with the separate written
agreement between Landlord's Broker and Tenant's Broker, if any, all fees,
commissions, compensation or other amounts payable to Tenant's broker in
connection with this Agreement have been paid in full. Each party further
warrants that any compensation arrangement with the parties excepted from the
foregoing warranty has been reduced to writing in its entirety in a separate
agreement signed simultaneously with or before this Lease by the party against
whom the commission or compensation is charged. Each party agrees to indemnify
and hold the other harmless from and against any claim for any such
commissions, fees, or other form of compensation by any such third party
claiming through the indemnifying party, including, without limitation, any and
all claims, causes of action, damages, costs and expenses (including attorneys'
fees) associated therewith.
8.6 WAIVER OF RIGHTS: No failure or delay by Landlord to exercise any
right or power given it or to insist upon strict compliance by Tenant with any
obligation imposed on it, and no custom or practice of either party hereto at
variance with any term hereof shall constitute a waiver or a modification of
the terms hereof by Landlord or any right it has herein to demand strict
compliance with the terms hereof by Tenant. This Lease contains the sole and
entire agreement of Landlord and Tenant and no prior or contemporaneous oral or
written representation or agreement between the parties and affecting the
Premises shall have legal effect. No representative, agent or employee of
Landlord has or shall have any authority to waive any provision of this Lease
unless such waiver is expressly made in writing and signed by an authorized
representative of Landlord.
8.7 WAIVER OF HOMESTEAD AND EXEMPTION: BANKRUPTCY OF TENANT
(a) Tenant hereby waives and renounces all homestead or
exemption rights which Tenant may have under or by virtue of the Constitution
and Laws of the United States, Georgia, or any other State as against any debt
Tenant may owe Landlord under this Lease, and hereby transfers, conveys, and
assigns to Landlord all homestead or exemption rights which may be allowed or
set apart to Tenant, including such as may be set apart in any bankruptcy
proceeding, to pay any debt owing by Tenant to Landlord hereunder.
(b) Tenant acknowledges that this Lease is a lease of
nonresidential real property and therefore agrees that Tenant, as the debtor in
possession, or the trustee for Tenant (collectively, the "Trustee") in any
proceeding under Title 11 of the United States Bankruptcy Code, as amended (the
"Bankruptcy Code"), relating to bankruptcy, shall not seek or request any
extension of time to assume or reject this Lease or to perform any obligations
of this Lease which arise from or after the order of relief. Further, Tenant
agrees as follows:
(i) If the Trustee proposes to assume or to assign this
Lease or sublet the Premises (or any portion
thereof) to any person or entity which shall have
made a bona fide offer to accept an assignment of
this Lease or a subletting on terms acceptable to
the Trustee, then the Trustee shall give written
notice to Landlord and any Mortgage of which Tenant
has notice, setting forth the name and address of
such person or entity and the terms and conditions of
such offer, no later than twenty (20) days after
receipt of such offer, but in any event no later
than ten (10) days prior to the date on which the
Trustee makes
<PAGE>
application to the Bankruptcy Court for authority and
approval to enter into such assumption and assignment
or subletting. Landlord shall have the prior right
and option, to be exercised by written notice to the
Trustee given at any time prior to the effective date
of such proposed assignment or subletting, to accept
an assignment of this Lease or subletting of the
Premises upon the same terms and conditions and for
the same consideration, if any, as the bona fide
offer made by such person or entity, less any
brokerage commissions which may be payable out of the
consideration to be paid by such person or entity for
the assignment or subletting of this Lease.
(ii) The Trustee shall have the right to assume
Tenant's rights and obligations under this
Lease only if the Trustee: (i) promptly cures
or provides adequate assurance that the
Trustee will promptly cure any default under the
Lease; (ii) compensates or provides adequate
assurance that the Trustee will promptly compensate
Landlord for any actual pecuniary loss incurred by
Landlord as a result of Tenant's default under this
Lease; and, (iii) provides adequate assurance of
future performance under the Lease. Adequate
assurance of future performance by any proposed
assignee or subtenant shall include, at a minimum,
assurance that: (a) any proposed assignee or
subtenant shall deliver to Landlord a security
deposit in an amount equal to at least three (3)
months' Base Rental accruing under the Lease; (b)
any proposed assignee or subtenant shall provide to
Landlord an audited financial statement, dated no
later than six (6) months prior to the effective
date of such proposed assignment or sublease with no
material change therein as of the effective date,
which financial statement shall show the proposed
assignee or subtenant to have a net worth equal to
at least twelve (12) months' Base Rental accruing
under the Lease, or, in the alternative, the
proposed assignee or subtenant shall provide a
guarantor of such proposed assignee's or subtenant's
obligations under the Lease, which guarantor shall
provide an audited financial statement meeting the
requirements of this subpart and shall execute and
deliver to Landlord a guaranty agreement in form and
substance acceptable to Landlord; and, (c) any
proposed assignee or subtenant shall grant to
Landlord a security interest in favor of Landlord in
all furniture, fixtures, and other personal property
to be used by such proposed assignee or subtenant in
the Premises. All payments of Total Rent required of
Tenant under this Lease, whether or not expressly
denominated as such in this Lease, shall constitute
rent for the purposes of Title II of the Bankruptcy
Code.
(iii) For the purposes of the Bankruptcy Code relating to
(i) the obligation of the Trustee to provide
adequate assurance that the Trustee will "promptly"
cure defaults and compensate for actual pecuniary
loss, the word "promptly" shall mean that cure of
defaults and compensation will occur no later than
sixty (60) days following the filing of any motion
or application to assume this Lease; and (ii) the
obligation of the Trustee to compensate or to
provide adequate assurance that the Trustee will
promptly compensate Landlord for "actual pecuniary
loss" shall mean Landlord's damages upon default,
including but not limited to payments of past due
Total Rent, including (without limitation) interest
at the rate provided for in Section 4.6(g), all
attorneys' fees, and all related costs and expenses
of Landlord incurred in connection with any default
of Tenant and in connection with Tenant bankruptcy
proceedings.
(iv) Any person or entity to which this Lease is assigned
pursuant to the provisions of the Bankruptcy Code
shall be deemed, without further act or deed, to
have assumed all obligations arising under this
Lease and each of the conditions and provisions
hereof on and after the date of such assignment. Any
such assignee shall, upon the request of Landlord,
forthwith execute and deliver to Landlord an
instrument, in form and substance acceptable to
Landlord, confirming such assumption.
<PAGE>
8.8 NO ESTATE IN LAND: RELATIONSHIP OF THE PARTIES: This Lease
creates the relationship of landlord and tenant between Landlord and Tenant. No
estate shall pass out of Landlord, and Tenant has only a usufruct which is not
subject to levy and sale. Further, nothing contained herein shall be deemed or
construed by the parties hereto, or by any third party, as creating the
relationship of principal and agent, or of partnership, or of joint venture,
between the parties hereto, it being understood and agreed that no provision
contained herein, nor any acts of the parties hereto, shall be deemed to create
any relationship between such parties other than the relationship of landlord
and tenant.
8.9 RECORDING: This Lease shall not be recorded by Tenant without
Landlord's consent endorsed hereon.
8.10 GOVERNMENTAL REGULATIONS
(a) Tenant waives the benefits of all existing and future
rent control legislation and statutes and similar governmental rules and
regulations, whether in time of war or not, to the full extent permitted by
law.
(b) Except as provided in paragraph (c) of this Section 8.10,
if, in order to maintain the Building as an office building, or otherwise, or
the Premises for the use stipulated in Section 2.1, Landlord shall be required
by any governmental authority to repair, alter, remove, construct, reconstruct,
or improve any part or all of the Premises or the building, such action shall
be performed by Landlord but shall in no way affect Tenant's obligations under
this Lease. Tenant waives all claim for injury, damage or abatement of rent
because of such repair, alterations, removal, construction, reconstruction, or
improvement; provided, however, that if such action by Landlord renders the
Premises untenantable, or if Landlord cannot reasonably complete such acts
within sixty (60) days after notice to it to perform such acts by the
governmental authority, either Landlord or Tenant, by written notice to the
other delivered not later than seventy (70) days after the date of notice to
Landlord by such governmental authority, may terminate this Lease, in which
event Total Rent shall be apportioned and paid up to and including the date the
Premises become untentantable if terminated by Landlord, but up to and
including the date of termination if terminated by Tenant.
(c) Without limiting the provisions of Section 4.6(d), Tenant
shall, at Tenant's sole cost and expense but subject to Landlord's prior
written approval, which approval shall not be unreasonably withheld, make each
and every alteration or addition to the Premises required to bring the Premises
into compliance with the requirements imposed by the Americans with
Disabilities Act, (42 U.S.C. [] 12101 et seq.) and any regulations promulgated
pursuant thereto ("ADA Requirements") effective from time to time during the
Lease Term, and any period of holding over by Tenant if
(a) the requirement for such alteration or addition
arises as a result of
(1) any alteration or addition by Tenant; or
(2) any violation by Tenant of any ADA
Requirements; or
(3) a special use of the Premises or
any part thereof by Tenant or any
assignee or subtenant of Tenant
(including, but not limited to, use
for a facility which constitutes,
or, if open to the public
generally, would constitute, a
"place of public accommodation"
under the ADA Requirements); or
(4) the special needs of the employee(s) of
Tenant or any assignee or subtenant
of Tenant; or
(b) the ADA Requirements would otherwise make Tenant,
rather than Landlord, primarily responsible for making such
alteration or addition.
8.11 SUBORDINATION AND ATTORNMENT:
<PAGE>
(a) Except as provided in Subsection (c) below and subject to
the provisions of subsection (d) below, this Lease and all rights of Tenant
hereunder are and shall be subject and subordinate to the lien of Landlord's
Mortgage.
(b) While Subsection (a) of this Section 8.11 is
self-operative, and no further instrument of subordination shall be necessary,
Tenant shall, in confirmation of such subordination, upon demand, at any time or
times, execute, acknowledge and deliver to Landlord or a holder of Landlord's
Mortgage any and all instruments requested by either of them to evidence such
subordination.
(c) Tenant shall, upon demand, at any time or times,
execute, acknowledge, and deliver to Landlord or to a holder of Landlord's
Mortgage, without expense, any and all instruments that may be necessary
to make this Lease superior to the lien of Landlord's Mortgage.
(d) Tenant shall, at the option of any holder of
Landlord's Mortgage or any other purchaser at a foreclosure sale who shall
hereafter succeed to the rights of Landlord under this Lease (the "Purchaser"),
attorn to and recognize such Purchaser as Tenant's landlord under this Lease
from and after the foreclosure and for the balance of the Lease Term and
shall promptly execute and deliver any instrument that may be necessary
to evidence such attornment. Upon such attornment, this Lease shall
continue in full force and effect as a direct lease between such Purchaser
and Tenant, subject to all of the terms, covenants and conditions of
this Lease; provided, however, that the Purchaser (including its successors
and assigns) shall not be (i) liable for any act or omission of any
prior Landlord under the Lease, (ii) subject to any offsets or defenses
which Tenant might have against any prior Landlord under the Lease, (iii) bound
by any Base Rental or other payments which Tenant might have paid for more than
the current month to any prior Landlord under the Lease, or (iv) bound by any
amendment or modification of the Lease made after the date of the foreclosed
Landlord's Mortgage without the prior written consent of the Mortgagee
thereunder. The provisions of this subsection (d) shall survive any termination
of this Lease resulting from a foreclosure of Landlord's Mortgage.
(e) If Tenant fails at any time to execute, acknowledge
and deliver any of the instruments provided for by Subsections 8.11(b),
(c) and (d) above within ten (10) days after Landlord's demand so to do,
Landlord, in addition to the remedies allowed by Article VI, may execute,
acknowledge and deliver any and all of such instruments as the
attorney-in-fact of Tenant and in its name, place and stead, and Tenant
hereby irrevocably appoints Landlord, its successors and assigns, as
such attorney-in-fact.
8.12 ESTOPPEL CERTIFICATE: At any time and from time to time,
Tenant, on or before the date specified in a request therefor made
by Landlord, which date shall not be earlier than ten (10) days from the
making of such request, shall execute, acknowledge and deliver to Landlord
a certificate in substantially the same form as the Estoppel Certificate
which is attached hereto as Exhibit "G" and incorporated herein by
reference. Each certificate delivered pursuant to this Section may be
relied on by any prospective purchaser or transferee of Landlord's interest
hereunder or of any part of Landlord's property or by any holder or prospective
holder of Landlord's Mortgage, or a mortgage or prospective mortgage of any
part of Landlord's other property.
8.13 SEVERABILITY: Each clause and provision of this Lease shall be
valid and enforced to the fullest extent permitted by applicable law; however,
if any clause or provision of this Lease is or becomes illegal, invalid, or
unenforceable because of present or future laws or any rule or regulation of any
governmental body or entity, effective during its term, the intention of the
parties hereto is that the remaining provisions of this Lease and the
application of such clause or provision to persons or circumstances other than
those as to which it is held invalid or unenforceable, shall not be affected
thereby, unless the amount of Total Rent payable hereunder is thereby decreased,
in which event Landlord may terminate this Lease. Should any of the provisions
of this Lease require judicial interpretation, it is agreed that the court
interpreting or construing the same shall not apply a presumption that the terms
of any such provision shall be more strictly construed against one party by
reason of any rule of construction that a document is to be construed most
strictly against the party who itself or through its agent prepared the same, it
being agreed that the agents of all parties have participated in the negotiation
and preparation of this Lease.
8.14 CAPTIONS: The captions used in this Lease are for convenience
only and do not in any way limit or amplify the terms and provisions hereof.
8.15 SUCCESSORS AND ASSIGNS: The provisions of this Lease shall inure
to the benefit of and be binding upon Landlord and Tenant, and their respective
successors, heirs, legal representatives and assigns, subject, however,
<PAGE>
in the case of Tenant, to the provisions of Article V.
8.16 SALE OF BUILDING: In the event of any sale or sales of the
Building (and the property on which same is situated) or of any lease thereof,
the Landlord named herein above shall be and hereby is entirely freed and
relieved of all covenants and obligations of Landlord hereunder accruing
thereafter, and it shall be deemed without further agreement that the purchaser,
or the lessee, as the case may be, has assumed and agreed to carry out any and
all covenants and obligations of Landlord hereunder during the period such party
has possession of the Building. Should the entire Building and the property on
which same is situated be severed as to ownership by sale and/or lease, then the
owner of the entire Building or the lessee of the entire Building that has the
right to lease space in the Building to tenants shall be deemed the "Landlord".
Tenant shall be bound to any succeeding Landlord for all the terms, covenants
and conditions hereof and shall execute any attornment agreement not in conflict
herewith at the request of any succeeding Landlord. The provisions of this
Section 8.16 shall apply to each and every sale, lease or other transfer of the
Building or the property on which same is situated, or both, during the Lease
Term.
8.17 TRANSFER OF TENANTS: This Section 8.17 shall only be effective at
such times and from time to time as the Premises contain a rentable area of
3,000 square feet or less. Landlord hereby reserves the right, at its sole
option and upon giving at least sixty (60) calendar days written notice in
advance to Tenant, to transfer and remove Tenant from the Premises from time to
time to any other available space in the Tower Place Complex of substantially
equal area, which space shall, once Tenant has been relocated therein, be deemed
the "Premises" for purposes of this Lease. Landlord hereby agrees to bear the
expense of such transfer and removal, as well as the expense of any renovations
or alterations which are necessary to make the new space conform substantially
in layout and appointment with the Premises. Failure of Tenant to cooperate with
Landlord pursuant to this provision and to remove itself from the Premises shall
permit Landlord to enter the Premises and to remove Tenant and its property
therefrom and to relocate Tenant and its property in the new space provided by
Landlord pursuant to this provision, all without being liable to Tenant in any
manner whatsoever for such acts, except for the expenses which are expressly
provided in this Section 8.17 to be paid by Landlord.
8.18 GOVERNING LAW: The laws of the State of Georgia shall govern the
interpretation, validity, performance and enforcement of this Lease.
8.19 TIME IS OF THE ESSENCE: Except as otherwise specifically provided
herein, time is of the essence of this Lease.
8.20 LIMITATION OF LIABILITY: Landlord's obligations and liability to
Tenant with respect to this Lease shall be limited solely to Landlord's interest
in the Building, and Tenant shall look solely to Landlord's interest in the
Building for satisfaction of Tenant's remedies. Neither Landlord nor any
partner, officer, director, or shareholder of Landlord or of any partner of
Landlord shall have any personal liability whatsoever with respect to this
Lease.
8.21 EXECUTION: This Lease may be executed in any number of
counterparts, each of which shall be deemed an original and any of which shall
be deemed to be complete in itself and shall be admissible into evidence or used
for any purpose without the production of the other counterparts.
8.22 MULTIPLE/TENANTS: If Tenant is composed of more than one
individual or entity, then all are jointly and severally liable for the due and
proper performance of Tenant's duties and obligations arising under or in
connection with this Lease.
8.23 FORCE MAJEURE: Landlord shall be excused from the performance of
any of its obligations for the period of any delay resulting from any cause
beyond its control, including, without limitation, all labor disputes,
governmental regulations or controls, fires or other casualties, inability to
obtain any material or services, or acts of God.
8.24 QUIET ENJOYMENT: Provided that Tenant fully and timely performs
all the terms of this Lease on Tenant's part to be performed, including payment
by Tenant of all Total Rent, Tenant shall have, hold and enjoy the Premises
during the Lease Term without hindrance or disturbance from or by Landlord;
subject, however, to all of the terms, conditions and provisions of this Lease,
Landlord's Mortgage and any and all ground leases, restrictive covenants,
easements, and other encumbrances now or hereafter affecting the Premises, the
Building or the Tower Place Complex (if applicable).
<PAGE>
8.25 ATTORNEYS' FEES: If any rent or other amount owing by Tenant to
Landlord under this Lease is collected by or through an attorney at law, Tenant
agrees to pay an additional amount equal to fifteen percent (15%) of such sum as
attorneys' fees.
8.26 ALTERATIONS IN COMPOSITION OF COMMON AREAS: Landlord reserves the
right in its sole discretion to redesign, change, rearrange, alter, reconstruct,
modify, expand, reduce or supplement any and all of the facilities designed for
the common use and convenience of all tenants of the Tower Place Complex and/or
the Building, including, without limitation, parking areas, driveways and other
Common areas, so long as access to the Premises is not materially adversely
affected thereby. In furtherance, and not in limitation, of the foregoing,
Landlord shall have the right to erect additional stores or other structures
in the Tower Place Complex, or to add to or otherwise modify buildings and
facilities now or hereafter existing in the Tower Place Complex, and, in
connection with any such activity and construction, to erect temporary scaffolds
and other aids to construction on the exterior of the Premises, provided that
access to the Premises shall not be denied Tenant and that there shall be no
encroachment upon the interior of the Premises. Landlord shall have the right to
close the Common Areas or any portion thereof (including, without limitation,
all roadways, driveways, access ways, sidewalks and parking areas and facilities
now or hereafter within the Tower Place Complex) at such time and in such manner
as is necessary or appropriate, in Landlord's sole opinion, to prevent their
deduction as public rights-of-way or streets, and to do and perform such other
acts in, to and with respect to the Common Areas as at the time in question in
accord with good and generally accepted standards of operation of mixed-use,
high-rise developments.
8.27 PARKING: Tenant shall have the right on the Commencement Date to
lease parking spaces in the parking facilities of the Tower Place Complex may
vary according to the location of spaces in the facilities and according to
whether or not spaces are reserved or unreserved. Tenant further acknowledges
and agrees that Landlord may designate certain spaces within the parking
facilities of the Tower Place Complex as reserved or assigned spaces for the
benefit of Landlord, visitors to the project or tenants therein, other tenants,
couriers and delivery services and other persons. Tenant shall comply and cause
its employees to comply with all rules and regulations established by Landlord
and/or the operator of the parking facilities, including, without limitation,
any card, sticker or other identification system, whether now or hereafter in
effect, and agrees to pay to Landlord a fifteen dollar ($15.00) deposit for each
parking card issued. All parking privileges granted pursuant to this Section
8.27 are non-assignable and nontransferable by Tenant; provided however, that
parking privileges may be assigned or transferred by Tenant in conjunction with
a transfer, assignment or subletting allowed by Article V of this Lease. Tenant
agrees to pay, as additional rent, the sum of $15.00 for any parking cards which
become lost, mutilated or destroyed.
8.28 SPECIAL STIPULATIONS: The Special Stipulations, if any, attached
hereto are made a part hereof by this reference, and to the extent they conflict
with any of the foregoing provisions, they shall control.
8.29 AUTHORIZATION: As a material inducement to Landlord to enter into
this Lease, Tenant, and each party executing this Lease on behalf of Tenant
intending that Landlord rely on each such representation and warranty,
represents and warrants to Landlord that:
(a) the execution, delivery and full performance of this
Lease by Tenant do not and shall not constitute a violation of any contract
agreement, undertaking, judgment, statute, regulation, governmental or court
order or other restriction of any kind to which Tenant is a party or by which
Tenant is or may be bound;
(b) Tenant has executed and entered into this Lease free
from fraud, undue influence, duress, coercion or other defenses to the
execution of this Lease;
(c) this Lease constitutes a valid and binding obligation of
Tenant, enforceable against Tenant in accordance with the terms of this Lease;
(d) Tenant is duly organized, validly existing and in good
standing under the laws of the state of Tenant's organization and has full
power and authority to enter into this Lease, to perform Tenant's obligations
under this Lease in accordance with the terms hereof, and to transact business
in the State of Georgia; and
(e) the execution and delivery of this Lease by the
individual or individuals executing this Lease on behalf of
<PAGE>
Tenant, and Tenant's performance of its obligations under this Lease, have been
duly authorized and approved by all necessary corporate or partnership action,
as the case may be, and Tenant's execution, delivery and performance of this
Lease are not in conflict with Tenant's bylaws or articles of incorporation (if
a corporation), agreement of partnership (if a partnership), or other charters,
agreements, rules or regulations governing Tenant's business, as any of the
foregoing may have been supplemented, modified, amended, or altered in any
manner.
[SIGNATURES BEGIN ON FOLLOWING PAGE]
<PAGE>
IN WITNESS WHEREOF, Landlord and Tenant have caused this Lease to be executed
under seal as of the date first above written.
LANDLORD:
TOWER PLACE, L.P.
a Georgia Limited Partnership
Signed and sealed by
Landlord in the presence of: By: REGENT PEACHTREE HOLDINGS, INC.
a Georgia Limited Partnership,
its sole General Partner
/s/ Mary Kay Ellis
- ------------------------
Unofficial Witness
By: /s/ David B. Allman
_____________________
Name: David B. Allman
Its: President
/s/ Jennifer Qiel
- ------------------------
(Notary Public)
Commission Expiration Date:
(NOTARIAL SEAL) (CORPORATE SEAL)
TENANT:
Signed and sealed by MediaLink Worldwide Incorporated
Tenant in the presence of: a Delaware corporation
- --------------------------
Unofficial Witness By: /s/ J. Graeme McWhirter
______________________
Name: Graeme McWhirter
Its: Chief Financial Officer
/s/ Theresa Weisgerber
- --------------------------
Notary Public
Commission Expiration Date:
11-7-96 Attest: /s/ Richard Brum
_________________________
Name: Richard Brum
Its: Controller
(NOTARIAL SEAL)
(CORPORATE SEAL)
<PAGE>
SPECIAL STIPULATIONS
These Special Stipulations are attached to and by this reference made a
part of that certain Tower Place Office Lease (the "Lease") between Tower
Place, L.P. and MediaLink Worldwide Incorporated. In the event that these
Special Stipulations conflict with any of the provisions contained in the
Lease, the Special Stipulations shall govern and control.
1. Notwithstanding anything contained in Article 3.2 of this lease to the
contrary, the Base Rental shall increase on each anniversary of the
Commencement Date to become an amount equal to three percent (3%) greater than
the amount in effective immediately prior to such adjustment.
2. Notwithstanding anything contained in Article 2.2 of this Lease to the
contrary, Landlord and Tenant agree to work expeditiously to complete any
necessary work in order to commence the Lease.
<PAGE>
EXHIBIT "A"
FLOOR PLAN
Drawings of Floor Plan
<PAGE>
EXHIBIT "B"
TOWER PLACE COMPLEX
(legal description)
All that tract or parcel of landlord situated, lying and being in Landlord Lot
62 of the 17th District of Fulton County, Georgia and being more particularly
described as follows:
To find the point of beginning commence at the intersection of the northeastern
right-of-way of Piedmont Road (variable width right-of-way) with the
northwestern right-of-way of Peachtree Road (variable width right-of-way) if
said intersections were extended to form an angle and running thence along the
extension of the northeast right-of-way of Piedmont Road North 24 degrees 31'
46" West 74.12 feet to a point on said northeastern right-of-way, continue
thence along said northeastern right of way the following courses and
distances: North 24 degrees 31'46" West 316.17 feet to a point, along the arc
of a 8,044.51 foot radius curve to the left an arc distance of 319.54 feet
(said arc being subtended by a chord lying to the southwest having a bearing of
North 23 degrees 23' 29" West and being 319.52 feet in length) to a point and
along the arc of a 8,044.51 foot radius curve to the left an arc distance of
108.97 feet (said arc being subtended by chord lying to the southwest having a
bearing of North 21 degrees 51' 55" West and being 108.97 feet in length) to a
point, North 20 degrees 44' 09" West 15.30 feet to a point, and South 60
degrees 08' 35" West 6.34 feet to the TRUE POINT OF BEGINNING. From said TRUE
POINT OF BEGINNING as thus established continue thence along said northeast
right- of-way of Peachtree Road North 21 degrees 31' 42" West 621.62 feet to a
point; thence leaving said right-of-way run North 62 degrees 57' 37" East
483.73 feet to an iron pin found; thence North 62 degrees 57' 37" East 332.14
feet to a point thence South 26 degrees 43'47" East 230.88 feet to a point;
thence North 83 degrees 00' 54" East 45.49 feet to an iron pin found; thence
South 48 degrees 54' 02" East 464.17 feet to a point; thence South 32 degrees
05' 56" West 170.69 feet to a point; thence South 57 degrees 54' 18" East
292-05 feet to a point; thence along the arc of a 23.76 foot radius curve to
the left an arc distance of 27.29 feet (said arc being subtended by chord a
lying to the north having a bearing of North 89 degrees 11' 22" East and being
25.81 feet in length) to a point; thence North 56 degrees 17' 03" East 66.29
feet to a point on the northwest right-of-way of Peachtree Road; thence along
said northwest right-of-way South 14 degrees 34' 59" West 150.54 feet to a
point and South 13 degrees 38' 47" West 125.00 feet to a point; thence leaving
said right-of-way run North 58 degrees 01' 45" West 475.62 feet to an iron pin
set; thence North 32 degrees 03' 24" East 139.21 feet to an iron pin set; thence
North 58 degrees 01' 43" West 206.64 feet to an iron pin set; thence along the
arc of a 58.96 foot radius curve to the right an arc distance of 59.54 feet
(said arch being subtended by a chord lying to the northwest having a bearing
of South 66 degrees 04' 43" West and being 57.04 feet in length) to an iron pin
set; thence South 13 degrees 17' 54" West 26.14 feet to a point; thence South
60 degrees 31' 3 8" West 363.50 feet to an iron pin found; thence South 60
degrees 08'35" West 332.23 feet to the TRUE POINT OF BEGINNING.
Said property being more particularly shown as Tract I containing 15.255 acres
on that certain ALTA/ACSM Landlord Title Survey prepared for Regent Tower
Holdings, Inc., Regent Peachtree Holdings, Inc., Tower Place, L.P., Teachers
Insurance and Annuity Association of America and Chicago Title Insurance
Company by Makes, Sudderth & Etheredge, Inc. Bearing the seal and certificate
of George T. White, G.R.L.S. No. 1929 dated December 27, 1995. Said Survey being
incorporated herein by this reference.
<PAGE>
EXHIBIT "C"
COMMENCEMENT DATE AGREEMENT
Agreement made this ____ day of _____, 199 , between Tower Place, L.P.
(hereinafter referred to as "Landlord"), _____ (hereinafter referred to as
"Landlord") and ______ (hereinafter referred to as "Tenant").
WHEREAS, Landlord and Tenant entered into a lease dated___________,
199_____ (hereinafter referred to as the "Lease"), for space on the _______
Floor(s) in the Building having an address at 3340 Peachtree Road, Atlanta,
Georgia;
NOW, THEREFORE, pursuant to the provisions of Subsection 4.1(d) of the
Lease, Landlord and Tenant mutually agree as follows:
1. Tenant is in possession of, and has accepted, the Premises demised
by the Lease. Tenant further certifies that all conditions of the Lease
required of Landlord as of this date have been fulfilled and there are no
defenses or offsets against the enforcement of the Lease by Landlord.
2. The Commencement Date of the Least Term is _______, 199_____, and
the Expiration date of the Lease Term is __________, ________.
3. Terms used herein are defined in the Lease.
<PAGE>
IN WITNESS WHEREOF, Landlord and Tenant have caused this Lease to be executed
under seal as of the date first above written.
LANDLORD:
TOWER PLACE, L.P.
a Georgia Limited Partnership
Signed and sealed by
Landlord in the presence of: By: REGENCY PEACHTREE HOLDINGS, INC.
a Georgia Limited Partnership,
its sole General Partner
By: _____________________
Name: David B. Allman
Its: President
- ------------------------
Unofficial Witness
- ------------------------
Notary Public
Commission Expiration Date:
(NOTARIAL SEAL) (CORPORATE SEAL)
TENANT:
Signed and sealed by MediaLink Worldwide Incorporated
Tenant in the presence of: a Delaware corporation
- --------------------------
Unofficial Witness By: ______________________
Name: Graeme McWhirter
Its: Chief Financial Officer
- --------------------------
Notary Public
Commission Expiration Date:
Attest: _________________________
Name:
Its:
<PAGE>
(NOTARIAL SEAL) (CORPORATE SEAL)
By: ---------------------- By: _______________________
Name: David B. Allman Name:
Its:
Attest: ________________ Attest: _____________________
Name Name
Its: Its
[CORPORATE SEAL] [CORPORATE SEAL]
<PAGE>
EXHIBIT "D"
OPERATING EXPENSES
"Operating Expenses" shall mean the operating costs and expenses delineated
as follows:
1. Costs and expenses paid or incurred by Landlord for the maintenance
and repair of the Building and the personal property used in connection
therewith, including but not limited to (I) the heating, ventilating and air
conditioning equipment, (ii) plumbing and electrical systems and equipment
(iii) light bulbs and broken glass, including replacement thereof, and (iv)
elevators and escalators;
2. Cleaning and janitorial costs and expenses, including window
cleaning expenses, for the Building;
3. Landscaping and grounds maintenance costs and expenses;
4. Utility costs and expenses including, but not limited to, those for
electricity, gas, steam, other fuels and forms of power or energy, water
charges, sewer and waste disposal, heating and air-conditioning;
5. Costs and expenses of redecorating, painting and carpeting the
common areas of the Building;
6. Costs of all repairs, alterations, additions, changes, replacements
and other items required by any law or governmental regulation imposed after
the date of construction of the Building, regardless of whether such costs,
when incurred, are classified as capital expenditures;
7. Cost of wages and salaries of all persons engaged in the operation,
maintenance, repair and security of the Building (Excluding Senior Executive
positions), and so-called fringe benefits, including social security taxes,
unemployment insurance taxes, costs for providing coverage for disability
benefits, cost of any pensions, hospitalization, welfare or retirement plans, or
any other similar or like expense incurred under the provisions of any
collective bargaining agreement, costs of uniforms, and all other costs or
expenses that the Landlord pays to or on behalf of employees engaged in the
operation, maintenance, repair and security of the Building;
8. Charges of any independent contractor who, under contract with
the Landlord or its manager or representatives, does any of the work of
operating, maintaining, or repairing the Building;
9. Legal and accounting expenses, including, but not limited to, such
expenses as relate to seeking or obtaining reductions in and/or refunds of real
estate taxes;
*Legal expenses incurred to enforce or to negotiate a lease shall not be
included as part of operating expenses.
10. Amortization, with interest, of capital expenditures for capital
improvements made by Landlord after completion of the Building where such
capital improvements are for the purpose of, or result in, reducing Operating
Expenses;
11. Landlord's insurance costs and expenses for all types of
insurance carried by Landlord with respect to the Building;
12. Security service costs and expenses;
13. Management fees and expenses;
14. The cost of "Muzak" services, if any;
15. Expenses incurred in the purchase or acquisition of materials
and supplies in connection with all of foreregoing
<PAGE>
expenses;
16. Taxes, which shall mean (I) personal property taxes (attributable
to the year in which paid) imposed upon the furniture, fixtures, machinery,
equipment, apparatus, systems, and appurtenances used in connection with the
Building for the operation thereof, and (ii) real estate taxes, assessments,
sewer rents, rates and charges, transit taxes, taxes based upon the receipt of
rent and any other federal, state, or local governmental charge, general,
special, ordinary, or extraordinary (but not including income or franchise
taxes or any other taxes imposed upon or measured by Landlord's income or
profits, unless the same shall be imposed in lieu of real estate taxes) which
may now or hereafter be levied or assessed against the Building, the property
on which same is situated, any other improvements hereinafter constructed on
such property, or the rents derived from such property, the Building and such
other improvements (in the case of special taxes or assessments which may be
payable in installments, only the amount of each installment paid during a
calendar year shall be included in the Taxes for that year); and
17. Such other expenses paid by Landlord, from time to time, in
connection with the operation and maintenance of the Building and the property
on which same is situated as would be expected to be paid by a reasonable and
prudent operator and manager of a building and site comparable to the Building
and such property.
All costs of special services rendered to particular tenants of the Building,
which are paid by such tenants, shall not be included in Operating Expenses.
Payments by Landlord of interest and principal on any mortgage or similar
instrument secured by the Building or property on which same is situated shall
not be included in Operating Expenses. Except as specified in items 5, 6 and 10
hereof, the costs of structural changes to the Building which should be
capitalized in accordance with sound accounting principles shall not be
allocated or charged to the Premises without Tenant's approval.
<PAGE>
EXHIBIT "E"
WORK SCHEDULE
TO
TOWER PLACE OFFICE LEASE
by and between
TOWER PLACE, L.P.
and
MEDIALINK WORLDWIDE INCORPORATED
1. Premises Leased "As Is". Tenant and Landlord agree and Tenant
acknowledges that the Premises are in all respects being leased by Landlord to
Tenant, and shall be accepted by Tenant, in their current "AS IS/WHERE IS"
condition and that Landlord has and shall have no obligation or duty whatsoever
to make any alterations, repairs or improvements of any kind or nature in or to
the Premises in order to prepare same for Tenant's occupancy, except for such
alterations, repairs or improvements, if any, as may be expressly provided in
Paragraph 2 below.
2. Landlord's Work. Landlord agrees to construct the premises based
on mutually acceptable construction drawings provided by Loin Budded and
Associates at a cost not to exceed Ten Dollars ($10.00) per rentable square
foot inclusive of a five percent (5 %) construction management fee.
3. Delays in Occupancy. If for any reason, other than Tenant delay as
described in Paragraph 4 below, Landlord cannot or is unable to deliver
possession of the Premises to Tenant on or before the Anticipated Commencement
Date in accordance with and in the condition required by this Work Schedule and
the Lease, the Lease shall not be void or voidable except as provided in the
following sentence, and Landlord shall not be liable to Tenant for any loss or
damage resulting from Landlord's failure or delay in so delivering possession
of the Premises, but in such case (and subject to Paragraph 4 below) the
Commencement Date shall not occur until Landlord is able to deliver the
Premises in the condition required by this Lease; the Expiration Date, however,
shall not otherwise be affected by such delay. Further, if for any reason other
than strikes, casualties, Tenant delay, or other causes beyond the control of
Landlord, possession of the Premises is not delivered to Tenant within ninety
(90) days after the Anticipated Commencement Date, or if possession is not so
delivered for any reason whatsoever other than Tenant delay on or before six
(6) months following the Anticipated Commencement Date, then this Lease shall
be voidable by either party upon thirty (30) days' written notice to the other
given at any time prior to delivery of possession in accordance with this Work
Schedule and the Lease, provided that such notice shall be void if possession
is delivered within said thirty (30) day period. If the Lease is voided
pursuant to this provision, then any monies advanced by Tenant to Landlord
shall be returned and the parties hereto shall have no further rights, claims
or obligations under the Lease.
4. Tenant Delays. If on the Anticipated Commencement Date Landlord is
unable to deliver the Premises to Tenant in accordance with and in the
condition required by this Work Schedule and the Lease due to omission, delay
or default by Tenant or anyone acting under or for Tenant ("Tenant delay"),
then Tenant's obligations under this Lease (including, without limitation, the
obligation to pay Total Rent) shall nonetheless commence as of the Anticipated
Commencement Date (which shall in such case be the Commencement Date), except
that, in the event that Landlord cannot deliver possession of the Premises to
Tenant on the Anticipated Commencement Date because of Tenant delay, this Lease
shall be voidable at the sole option of Landlord at any time prior to Tenant's
performance of such obligations or payment of the Total Rent due under this
Lease; and, should Landlord so elect to void this Lease, all monies advanced by
Tenant to Landlord shall be retained by Landlord as liquidated damages (the
parties hereto recognizing and acknowledging the difficulty of determining such
damages), and thereafter the parties hereto shall have no further rights,
claims, or obligations under this Lease, except for such matters which by the
express terms of the Lease survive expiration or termination thereof.
<PAGE>
EXHIBIT "F"
RULES AND REGULATIONS
1. The sidewalks, and public portions of the Building, such as
entrances, passages, courts, elevators, vestibules, stairways, corridors or
halls shall not be obstructed or encumbered by Tenant or used for any purpose
other than ingress and egress to and from the Premises.
2. No awnings or other projections shall be attached to the outside
walls of the Building. No curtains, blinds, shades, louvered openings or
screens shall be attached to or hung in, or used in connection with, any window
or door of the Premises, without the prior written consent of Landlord.
3. No sign, advertisement, notice or other lettering shall be
exhibited, inscribed, painted or affixed by Tenant on any part of the outside
of the Premises or Building or on corridor walls. Signs on entrance door or
doors shall conform to building standard signs, samples of which are on display
in Landlord's rental office. Signs on doors shall, at Tenant's expense, be
inscribed, painted or affixed for each tenant by sign makers approved by
Landlord. In the event of the violation of the foregoing by Tenant, Landlord
may remove same without any liability, and may charge the expense incurred by
such removal to Tenant.
4. The sashes, sash doors, skylights, windows, heating, ventilating
and air conditioning vents and doors that reflect or admit light and air into
the halls, passageways or other public places in the Building shall not be
covered or obstructed by Tenant, nor shall any bottles, parcels, or other
articles be placed on the window sills.
5. No show cases or other articles shall be put in front of or
affixed to any part of the exterior of the Building, nor placed in the public
halls, corridors or vestibules without the prior written consent of Landlord.
6. The water and wash closets and other plumbing fixtures shall not
be used for any purposes other than those for which they were constructed, and
no sweepings, rubbish, rags, or other substances shall be thrown therein. All
damages resulting from any misuse of the fixtures shall be borne by Tenant, if
caused by it or its agents, employees, contractors, licensees or invitees.
7. Tenant shall not in any way deface any part of the Premises or
the Building. Tenant shall not lay linoleum, or other similar floor covering, so
that the same shall come in direct contact with the floor of the Premises, and,
if linoleum or other similar floor covering is desired to be used, an
interlining of builder's deadening felt shall be first affixed to the floor, by
a paste or other material, soluble in water, the use of cement or other similar
adhesive material being expressly prohibited.
8. No bicycles, vehicles or animals (except seeing eye dogs) of any
kind shall be brought into or kept in or about the Premises. No cooking shall be
done or permitted by Tenant on the Premises except in conformity with law and
then only in the utility kitchen, if any, as set forth in Tenant's layout,
which is to be primarily used by Tenant's employees for heating beverages and
light snacks. Tenant shall not cause or permit any unusual or objectionable
odors to be produced upon or permeate from the Premises.
9. No space in the Building shall be used for manufacturing,
distribution or storage of merchandise, or for the sale of merchandise, goods
or property of any kind at auction.
10. Tenant shall not make, or permit to be made, any unseemly or
disturbing noises or disturb or interfere with occupants of the Building or
neighboring buildings or premises or those having business with them, whether
by the use of any musical instrument, radio, talking machine, unmusical noise,
whistling, singing, or in any other way. Tenant shall not throw anything out of
the doors, windows or skylights or down the passageways.
11. Neither Tenant, nor any of Tenant's servants, employees, agents,
visitors or licensees, shall at any time bring or keep upon the Premises any
inflammable, combustible or explosive fluid, or chemical substance, other than
reasonable amounts of cleaning fluids or solvents required in the normal
operation of Tenant's business offices.
<PAGE>
12. No additional locks or bolts of any kind shall be placed upon any
of the doors or windows by Tenant, nor shall any changes be made in existing
locks or the mechanism thereof, without the prior written approval of Landlord
and unless and until a duplicate key is delivered to Landlord. Tenant shall,
upon termination of its tenancy, restore to Landlord all keys of stores,
offices and toilet rooms, either furnished to, or otherwise procured by,
Tenant, and in the event of the loss of any keys so furnished, Tenant shall pay
to Landlord the cost thereof.
13. All removals, or the carrying in or out of any safes, freight,
furniture or bulky matter of any description must take place during the hours
which Landlord or its agent may determine from time to time. Landlord reserves
the right to inspect all freight to be brought into the Building and to exclude
from the Building all freight which violates any of these Rules and Regulations
or the Lease of which these Rules and Regulations are a part.
14. Tenant shall be restricted in the use of the Premises as provided
in the Lease, but the Premises shall never be used for any of the following:
(a) public stenographic or typing services, (b) storage, manufacture or sale of
liquor, narcotics, tobacco or other restricted or regulated substances, except
where no license or permit is required and such business is conducted solely
with Tenant's employees or social guests, (c) public employment bureau or
agency, or (d) employment or payroll office, except as related to Tenant's
employees actually working on the Premises.
15. Landlord shall have the right to prohibit any advertising by
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 Landlord, Tenant shall refrain from or
discontinue such advertising.
16. Landlord reserves the right to exclude from the Building at all
times other than business hours till persons who do not present a pass to the
Building signed by Tenant. Tenant shall be responsible for all persons for whom
it issues such a pass and shall be liable to Landlord for all acts of such
persons.
17. intentionally omitted
18. The Premises shall not be used for lodging or sleeping or for
any immoral or illegal purpose.
19. The requirements of Tenant will be attended to only upon
application at the office of the Building. Building employees shall not
perform any work or do anything outside of their regular duties, unless under
special instructions from the office of Landlord.
20. Canvassing, soliciting and peddling in the Building are
prohibited and Tenant shall cooperate to prevent the
21. There shall not be used in any space, or in the public halls
of any building, either by Tenant or by its jobbers or others, in the delivery
or receipt of merchandise, any hand trucks, except those equipped with rubber
tires and side guards. No hand trucks shall be used in passenger elevators.
22. Tenant, in order to obtain maximum effectiveness of the cooling
system, shall lower and/or close Venetian or vertical blinds or drapes where
sun rays fall directly on windows of Premises.
23. All paneling, grounds or other wood products not considered
furniture shall be of fire retardant materials. Before installation of such
materials, certification of the materials' fire retardant characteristics shall
be submitted to Landlord or its agents, in a manner satisfactory to Landlord.
<PAGE>
EXHIBIT "G"
STATEMENT OF TENANT IN RE; LEASE
[Tenants Letterhead]
Date: _________________________
Teachers Insurance and Annuity
Association of America
730 Third Avenue
New York, New York 10071
RE: TIAA Appl.___________________________
Mortgage # ______________________________
Property Name ___________________________
Address (including ZIP CODE) ____________
Tenant Floor and Suite __________________
Ladies and Gentlemen:
It is our understanding that you have committed to place a mortgage upon the
subject premises and as a condition precedent thereof have required this
certification of the undersigned:
The undersigned, as Lessee, under that certain lease dated
___________________, made with __________, as Lessor, hereby ratifies the said
Lease and certifies that:
1 . The "Commencement Date" of said lease is _________________ .; and
2. the undersigned is presently solvent and free from reorganization and/or
bankruptcy and is in occupancy, open and conducting business with the
public in the premises; and
3. the operation and use of the premises do not involve the generation,
treatment, storage, disposal or release of a hazardous substance or a
solid waste into the environment other than to the extent necessary to
conduct its ordinary course of business in the premises and in
accordance with all applicable environmental laws, and that the
premises are being operated in accordance with all applicable
environmental laws, zoning ordinances and building codes; and
4. the current base rental payable pursuant to the terms of said lease is
$ per annum; and further, additional rental pursuant to said lease is
payable as follows; and
5. said lease is in full force and effect and has not been assigned,
modified, supplemented or amended in any way (except by agreement(s)
dated ________________), and neither party thereto is in default
thereunder, and
6. the lease described above represents the entire agreement between the
parties as to the leasing of the premises; and
7. the term of said leases expires on _____________ ; and
<PAGE>
8. all conditions under said lease to be performed by the lessor have been
satisfied, including, without limitation, all co-tenancy requirements
thereunder, if any; and
9. all required contributions by lessor to lessee on account of lessee's
improvements have been received; and
10. on this date there are no existing defenses or offsets, claims or
counterclaims which the undersigned has against the enforcement of said
lease by the lessor; and
11. no rental has been paid in advance and no security (except the security
deposit in the amount of $_______) has been deposited with lessor; and
12. lessee's floor area is - square feet; and
13. the most recent payment of current basis rental was for the payment due
on 19___, and all basic rental and additional rentable payable pursuant
to the terms of the lease have been paid up to said date; and
14. the undersigned acknowledges notice that lessor's interest under the lease
and the rent and all other ______ sums due thereunder will be assigned
to you as part of the security for the mortgage loan by you to lessor.
In the event the Teachers Insurance and Annuity Association of America,
as lender, notified the undersigned of a default under the mortgage and
demands that the undersigned pay its rent and all other sums due under
the lease to lender; lessee agrees that it shall pay its rent and all
such other sums to lender.
Very truly yours,
-------------------------------------
(Lessee)
BY: __________________________________
Its: ________________________________
<PAGE>
EXHIBIT 23.1
The Board of Directors
Medialink Worldwide Incorporated:
We consent to the use of our reports included herein and to the reference to our
firm under the heading 'Experts' in the prospectus.
KPMG PEAT MARWICK LLP
New York, New York
November 20, 1996
