SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 18, 1999
NFO WORLDWIDE, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
Delaware 0-21460 06-1327424
- --------------------------------------------------------------------------------
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
2 Pickwick Plaza, Greenwich, Connecticut 06830
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (203) 629-8888
<PAGE>
2
Item 5. Other Events
InsightExpress, L.L.C. has been formed by NFO Worldwide, Inc. to
provide automated market research via the internet. InsightExpress, L.L.C. has
obtained a $25,000,000 equity investment pursuant to the Securities Purchase
Agreement, dated October 18, 1999, between InsightExpress, L.L.C. and IX Holding
Co., Inc., an affiliate of General Atlantic Partners.
Item 7. Financial Statements and Exhibits
(c) Exhibits
Exhibit Number Description
-------------- -----------
10.1 Securities Purchase Agreement, dated
October 18, 1999, between
InsightExpress, L.L.C. and IX Holding
Co., Inc.
10.2 Amended and Restated Limited Liability
Company Operating Agreement of
InsightExpress, L.L.C., dated as of
October 18, 1999.
10.3 Master Investors Rights Agreement, dated
October 18, 1999, by and among IX, Inc.,
IX Holding Co., Inc., InsightExpress,
L.L.C. and the persons named therein.
99 Press Release of NFO Worldwide, Inc.
dated October 19, 1999.
<PAGE>
3
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
NFO WORLDWIDE, INC.
Date: October 19, 1999 By: /s/ Patrick G. Healy
--------------------
Patrick G. Healy
President - Australasia and the Middle
East, and Chief Financial Officer
(Authorized Officer of Registrant and
Principal Financial Officer)
<PAGE>
4
Exhibit Index
Exhibit Number Description
-------------- -----------
10.1 Securities Purchase Agreement, dated
October 18, 1999, between
InsightExpress, L.L.C. and IX Holding
Co., Inc.
10.2 Amended and Restated Limited Liability
Company Operating Agreement of
InsightExpress, L.L.C., dated as of
October 18, 1999.
10.3 Master Investors Rights Agreement, dated
October 18, 1999, by and among IX, Inc.,
IX Holding Co., Inc., InsightExpress,
L.L.C. and the persons named therein.
99 Press Release of NFO Worldwide, Inc.
dated October 19, 1999.
EXHIBIT 10.1
================================================================================
SECURITIES PURCHASE AGREEMENT
between
INSIGHTEXPRESS, L.L.C.
and
IX HOLDING CO., INC.
------------------------------
October 18, 1999
------------------------------
================================================================================
<PAGE>
TABLE OF CONTENTS
Page No.
--------
ARTICLE I DEFINITIONS............................................1
1.1 Definitions............................................1
ARTICLE II PURCHASE AND SALE OF CLASS A INTERESTS.................6
2.1 Purchase and Sale of Class A Interests.................6
2.2 Purchased Interests....................................6
2.3 Use of Proceeds........................................7
2.4 Closing................................................7
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE
COMPANY................................................7
3.1 Existence and Power....................................7
3.2 Authorization; No Contravention........................7
3.3 Governmental Authorization; Third Party Consents.......8
3.4 Binding Effect.........................................8
3.5 Litigation.............................................8
3.6 Compliance with Laws...................................9
3.7 Capitalization.........................................9
3.8 No Default or Breach; Contractual Obligations..........9
3.9 Title to Properties...................................10
3.10 FIRPTA................................................10
3.11 Financial Statements..................................10
3.12 Taxes.................................................10
3.13 Investment Company....................................11
3.14 Private Offering......................................11
3.15 Employees.............................................11
3.16 Employee Benefit Plans................................11
3.17 Title to Assets.......................................12
3.18 Liabilities...........................................12
3.19 Intellectual Property.................................12
3.20 Year 2000 Compliance..................................14
3.21 Privacy of Customer Information.......................14
3.22 Potential Conflicts of Interest.......................14
3.23 Outstanding Borrowing.................................14
3.24 Insurance.............................................15
3.25 Broker's, Finder's or Similar Fees....................15
3.26 Disclosure; ..........................................15
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE
PURCHASER.............................................15
4.1 Existence and Power...................................15
4.2 Authorization; No Contravention.......................15
i
<PAGE>
Page No.
--------
4.3 Governmental Authorization; Third Party Consents......16
4.4 Binding Effect........................................16
4.5 Purchase for Own Account..............................16
4.6 Broker's, Finder's or Similar Fees....................16
4.7 Accredited Investor...................................16
ARTICLE V CONDITIONS TO THE OBLIGATION OF THE
PURCHASER TO CLOSE....................................17
5.1 Secretary's Certificate...............................17
5.2 Transfer of Intellectual Property.....................17
5.3 Intellectual Property License Agreement...............17
5.4 Assignment Agreements.................................17
5.5 IX, LLC Operating Agreement...........................18
5.6 Filing of Certificate of Formation....................18
5.7 Master Investors Rights Agreement.....................18
5.8 Marketing Agreement...................................18
5.9 Panel Agreement.......................................18
5.10 Services Agreement....................................18
5.11 Indemnification Agreement.............................18
ARTICLE VI CONDITIONS TO THE OBLIGATION OF THE
COMPANY TO CLOSE .....................................19
6.1 Payment of Purchase Price.............................19
6.2 Master Investors Rights Agreement.....................19
6.3 Option Plan...........................................19
ARTICLE VII INDEMNIFICATION.......................................19
7.1 Indemnification.......................................19
7.2 Notification..........................................20
7.3 Limitations on Indemnification........................21
ARTICLE VIII AFFIRMATIVE COVENANTS.................................21
8.1 Financial Statements and Other Information............21
8.2 Books and Records.....................................22
8.3 Back-ups of Computer Software.........................22
8.4 Inspection............................................22
8.5 Tax Classification....................................23
ARTICLE IX MISCELLANEOUS.........................................23
9.1 Survival of Representations and Warranties............23
9.2 Notices...............................................23
9.3 Successors and Assigns; Third Party Beneficiaries.....24
9.4 Amendment and Waiver..................................25
9.5 Counterparts..........................................25
9.6 Headings..............................................25
9.7 GOVERNING LAW.........................................25
9.8 Severability..........................................25
9.9 Rules of Construction.................................26
ii
<PAGE>
Page No.
--------
9.10 Entire Agreement......................................26
9.11 Fees..................................................26
9.12 Publicity; Confidentiality............................26
9.13 Further Assurances....................................27
SCHEDULES
3.5 Litigation
3.7(a) List of Members and Holders of Interest Equivalents
3.8 Contractual Obligations
3.9 Real Property Leases
3.15 Employees
3.16 Employee Benefit Plans
3.18 Liabilities
3.19(a)(i) Intellectual Property
3.19(a)(ii) Intellectual Property Owned by Company
3.19(a)(iii)Intellectual Property Licenses, Sublicenses, Distributor Agreements
and Other Agreements
3.19(a)(iv) Potential Infringement
3.19(a)(v) Litigation and Claims Relating to Intellectual Property
3.19(b) Infringements of Intellectual Property of the Company
3.19(d) Licenses or Other Agreements Requiring Material Royalty Payments
3.22 Potential Conflict of Interest
3.23 Outstanding Borrowing
3.24 Insurance
3.25 Broker's, Finder's or Similar Fees
EXHIBITS
A-1 Form of Assignment Agreement (relating to the Intellectual Property
License Agreement)
A-2 Form of Assignment Agreement (relating to the Patent Application)
B Form of Intellectual Property License Agreement
C Form of Assignment Agreement (relating to the License Agreement)
D Form of Assignment Agreement (relating to the Strategic Alliance
Agreement)
E Form of Marketing Agreement
F Form of Panel Agreement
G Form of Services Agreement
H Form of Indemnification Agreement
iii
<PAGE>
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT, dated October 18, 1999 (this
"Agreement"), between InsightExpress, L.L.C., a Delaware limited liability
company (the "Company"), and IX Holding Co., Inc., a Delaware corporation (the
"Purchaser").
WHEREAS, upon the terms and conditions set forth in this Agreement,
the Company proposes to issue and sell to the Purchaser, for an aggregate
purchase price of $25,000,000, Class A Interests representing a 97.44%
membership interest in the Company (the "Class A Interests").
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein and for good and valuable consideration, the receipt
and adequacy of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. As used in this Agreement, and unless the context
requires a different meaning, the following terms have the meanings indicated:
"Affiliate" shall mean any Person who is an "affiliate" as defined
in Rule 12b-2 of the General Rules and Regulations under the Exchange Act.
"Agreement" means this Agreement as the same may be amended,
supplemented or modified in accordance with the terms hereof.
"Assets" has the meaning set forth in Section 3.18 of this
Agreement.
"Basket Amount" has the meaning set forth in Section 7.3 of this
Agreement.
"Board of Representatives" means the Board of Representatives of the
Company.
"Business Day" means any day other than a Saturday, Sunday or other
day on which commercial banks in the State of New York are authorized or
required by law or executive order to close.
"Cap" has the meaning set forth in Section 7.3 of this Agreement.
<PAGE>
2
"Certificate of Formation" means the Certificate of Formation of the
Company, as the same may be amended from time to time.
"Claims" has the meaning set forth in Section 3.5 of this Agreement.
"Class A Interests" has the meaning set forth in the recitals to
this Agreement.
"Class B Interests" means the Class B Interests of the Company.
"Closing" has the meaning set forth in Section 2.4 of this
Agreement.
"Closing Date" has the meaning set forth in Section 2.4 of this
Agreement.
"Code" means the Internal Revenue Code of 1986, as amended, or any
successor statute thereto.
"Commission" means the United States Securities and Exchange
Commission.
"Company" has the meaning set forth in the preamble to this
Agreement.
"Condition of the Company" means the assets, business, properties,
prospects, operations or financial condition of the Company.
"Contingent Obligation" means, as applied to any Person, any direct
or indirect liability of that Person with respect to any Indebtedness, lease,
dividend, guaranty, letter of credit or other obligation, contractual or
otherwise (the "primary obligation") of another Person (the "primary obligor"),
whether or not contingent, (i) to purchase, repurchase or otherwise acquire such
primary obligations or any property constituting direct or indirect security
therefor, or (ii) to advance or provide funds (a) for the payment or discharge
of any such primary obligation, or (b) to maintain working capital or equity
capital of the primary obligor or otherwise to maintain the net worth or
solvency or any balance sheet item, level of income or financial condition of
the primary obligor, or (iii) to purchase property, securities or services
primarily for the purpose of assuring the owner of any such primary obligation
of the ability of the primary obligor to make payment of such primary
obligation, or (iv) otherwise to assure or hold harmless the owner of any such
primary obligation against loss or failure or inability to perform in respect
thereof. The amount of any Contingent Obligation shall be deemed to be an amount
equal to the stated or determinable amount of the primary obligation in respect
of which such Contingent Obligation is made or, if not stated or determinable,
the maximum reason ably anticipated liability in respect thereof.
<PAGE>
3
"Contractual Obligations" means, as to any Person, any provision of
any security issued by such Person or of any agreement, undertaking, contract,
indenture, mortgage, deed of trust or other instrument to which such Person is a
party or by which it or any of its property is bound.
"Copyrights" means any foreign or United States copyright
registrations and applications for registration thereof, and any non-registered
copyrights.
"Defined Benefit Plan" means a defined benefit plan within the
meaning of Section 3(35) of ERISA or Section 414(j) of the Code, whether funded
or unfunded, qualified or non-qualified (whether or not subject to ERISA or the
Code).
"Engage" means Engage Technologies, Inc., a Delaware corporation.
"Environmental Laws" means federal, state, local and foreign laws,
principles of common laws, civil laws, regulations, and codes, as well as
orders, decrees, judgments or injunctions, issues, promulgated, approved or
entered thereunder relating to pollution, protection of the environment or
public health and safety.
"ERISA" means the Employee Retirement Income Security Act
of 1974, as amended.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission thereunder.
"GAAP" means United States generally accepted accounting principles
in effect from time to time.
"General Atlantic" means, collectively, General Atlantic Partners
57, L.P., a Delaware limited partnership, and GAP Coinvestment Partners II,
L.P., a Delaware limited partnership.
"Governmental Authority" means the government of any nation, state,
city, locality or other political subdivision thereof, any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government, and any corporation or other entity owned or
controlled, through stock or capital ownership or otherwise, by any of the
foregoing.
"Greenhill" means Greenhill & Co., LLC, a Delaware limited liability
company.
"Indebtedness" means, as to any Person, (i) all obligations of such
Person for borrowed money (including, without limitation, reimbursement and all
other obligations with respect to surety bonds, letters of credit and bankers'
<PAGE>
4
acceptances, whether or not matured), (ii) all obligations of such Person
evidenced by notes, bonds, debentures or similar instruments, (iii) all
obligations of such Person to pay the deferred purchase price of property or
services, except trade accounts payable and accrued commercial or trade
liabilities arising in the ordinary course of business, (iv) all interest rate
and currency swaps, caps, collars and similar agreements or hedging devices
under which payments are obligated to be made by such Person, whether
periodically or upon the happening of a contingency, (v) all indebtedness
created or arising under any conditional sale or other title retention agreement
with respect to property acquired by such Person (even though the rights and
remedies of the seller or lender under such agreement in the event of default
are limited to repossession or sale of such property), (vi) all obligations of
such Person under leases which have been or should be, in accordance with GAAP,
recorded as capital leases, (vii) all indebtedness secured by any Lien (other
than Liens in favor of lessors under leases other than leases included in clause
(vi)) on any property or asset owned or held by that Person regardless of
whether the indebtedness secured thereby shall have been assumed by that Person
or is non-recourse to the credit of that Person, and (viii) any Contingent
Obligation of such Person.
"Indemnified Party" has the meaning set forth in Section 7.1(a) of
this Agreement.
"Indemnifying Party" has the meaning set forth in Section 7.1(a) of
this Agreement.
"Intellectual Property" has the meaning set forth in Section 3.20 of
this Agreement.
"Interest Equivalents" means any security or obligation that is by
its terms convertible into or exchangeable for Interests or other securities of
the Company, and any option, warrant or other subscription or purchase right
with respect to Interests or such other securities.
"Interests" means, collectively, the Class A Interests and the Class
B Interests.
"Internet Assets" means any Internet domain names and other computer
user identifiers and any rights in and to sites on the worldwide web, including
rights in and to any text, graphics, audio and video files and html or other
code incorporated in such sites.
"IX, Inc." has the meaning set forth in Section 2.2 of this
Agreement.
"Knowledge" means the knowledge after reasonable inquiry of William
E. Lipner, Patrick G. Healy, Charles B. Hamlin, Michael Tsavaris, Lee Smith and
JB Wood.
<PAGE>
5
"Liabilities" has the meaning set forth in Section 3.19 of this
Agreement.
"Lien" means any mortgage, deed of trust, pledge, hypothecation,
assignment, encumbrance, lien (statutory or other) or preference, priority,
right or other security interest or preferential arrangement of any kind or
nature whatsoever (excluding preferred stock and equity related preferences).
"Losses" has the meaning set forth in Section 7.1(a) of this
Agreement.
"NFO" means NFO Worldwide, Inc., a Delaware corporation.
"Operating Agreement" has the meaning set forth in Section 2.2 of
this Agreement.
"Option Plan" means the option plan of the Purchaser pursuant to
which options to purchase non-voting capital stock of the Purchaser are reserved
and available for grant to officers, managers, employees and consultants of the
Company.
"Orders" has the meaning set forth in Section 3.2 of this Agreement.
"Patents" means any foreign or United States patents and patent
applications, including any divisions, continuations, continuations-in-part,
substitutions or reissues thereof, whether or not patents are issued on such
applications and whether or not such applications are modified, withdrawn or
resubmitted.
"Permits" has the meaning set forth in Section 3.6 of this
Agreement.
"Person" means any individual, firm, corporation, partnership,
trust, incorporated or unincorporated association, joint venture, joint stock
company, limited liability company, Governmental Authority or other entity of
any kind, and shall include any successor (by merger or otherwise) of such
entity.
"Plans" has the meaning set forth in Section 3.17 of this Agreement.
"Purchased Interests" has the meaning set forth in Section 2.1 of
this Agreement.
"Purchaser" has the meaning set forth in the preamble to this
Agreement.
"Real Property Leases" has the meaning set forth in Section 3.9 of
this Agreement.
"Requirements of Law" means, as to any Person, any law, statute,
treaty, rule, regulation, right, privilege, qualification, license or franchise
or
<PAGE>
6
determination of an arbitrator or stock exchange, in each case applicable or
binding upon such Person or any of its property or to which such Person or any
of its property is subject or pertaining to any or all of the transactions
contemplated or referred to herein.
"Securities Act" means the Securities Act of 1933, as amended, and
the rules and regulations of the Commission thereunder.
"Software" means any computer software programs, source code, object
code, data and documentation, including, without limitation, any computer
software programs that incorporate and run the Company's pricing models,
formulae and algorithms.
"Taxes" has the meaning set forth in Section 3.12 of this Agreement.
"Trade Secrets" means any trade secrets, research records,
processes, procedures, manufacturing formulae, technical know-how, technology,
blue prints, designs, plans, inventions (whether patentable and whether reduced
to practice), invention disclosures and improvements thereto.
"Trademarks" means any foreign or United States trademarks, service
marks, trade dress, trade names, brand names, designs and logos, corporate
names, product or service identifiers, whether registered or unregistered, and
all registrations and applications for registration thereof.
"Transaction Documents" means, collectively, (i) this Agreement,
(ii) the Operating Agreement, and (iii) the Master Investors Rights Agreement
referred to in Section 5.7 of this Agreement.
ARTICLE II
PURCHASE AND SALE OF CLASS A INTERESTS
2.1 Purchase and Sale of Class A Interests. Subject to the terms and
conditions herein set forth, the Company agrees to issue and sell to the
Purchaser, and the Purchaser agrees to purchase from the Company, on the Closing
Date, as hereinafter defined, Class A Interests representing a 97.44% membership
interest in the Company, for an aggregate purchase price of $25,000,000. The
Class A Interests being purchased pursuant hereto are referred to herein as the
"Purchased Interests".
2.2 Purchased Interests. The Purchased Interests shall have the
preferences and rights set forth in the InsightExpress, L.L.C. Amended and
Restated Operating Agreement, dated October 18, 1999 (the "Operating
Agreement"), by and
<PAGE>
7
among the Company, the Purchaser, Greenhill and IX, Inc., a Delaware corporation
("IX, Inc.").
2.3 Use of Proceeds. The Company shall use the proceeds from the
sale of the Purchased Interests to the Purchaser to fund the Company's working
capital and for other general corporate purposes.
2.4 Closing. The closing of the sale and purchase of the Purchased
Interests (the "Closing") shall take place at the offices of Paul, Weiss,
Rifkind, Wharton & Garrison, at 10:00 a.m., local time, on the date hereof, or
at such other time, place and date that the Company and the Purchaser may agree
in writing (the "Closing Date"). On the Closing Date, the Company shall issue to
the Purchaser the Purchased Interests against delivery by the Purchaser to the
Company of the aggregate purchase price therefor by wire transfer of immediately
available funds.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Purchaser, as of
the date hereof and as of the Closing Date, as follows:
3.1 Existence and Power. The Company (i) is a limited liability
company duly formed, validly existing and in good standing under the laws of the
jurisdiction of its formation, (ii) has all requisite power and authority to own
and operate its property, to lease the property it operates as lessee and to
conduct the business in which it is currently proposed to be engaged, (iii) is
licensed, duly qualified as a foreign limited liability company and in good
standing under the laws of each jurisdiction in which its ownership, lease or
operation of property or the conduct of its business requires such
qualification, except where the failure to be so qualified would not have a
material adverse effect on the properties, assets or financial condition of the
Company after giving effect to the transactions contemplated by this Agreement,
and (iv) has the requisite company power and authority to execute, deliver and
perform its obligations under this Agreement and each of the other Transaction
Documents. No jurisdiction, other than those referred to in clause (iii) above,
has claimed in writing that the Company is required to qualify as a foreign
limited liability company, and the Company has not, and does not presently
intend to, file any franchise, income or other tax returns in any other
jurisdiction based upon the ownership or use of property therein or the
derivation of income therefrom. The Company does not own or lease property in
any jurisdiction other than its jurisdiction of formation and the jurisdictions
referred to in clause (iii) above.
3.2 Authorization; No Contravention. The execution, delivery and
performance by the Company of this Agreement and each of the other Transaction
Documents and the transactions contemplated hereby and thereby (i) have been
duly
<PAGE>
8
authorized by all necessary action of the Company, (ii) do not contravene the
terms of the Certificate of Formation or the Operating Agreement, (iii) do not
violate, conflict with or result in any breach or contravention of, or the
creation of any Lien under, any Contractual Obligation of the Company or any
Requirement of Law applicable to the Company, and (iv) do not violate any
judgment, injunction, writ, award, decree or order of any nature (collectively,
"Orders") of any Governmental Authority against, or binding upon, the Company.
The Company is not party to, or bound by, any agreement that is currently in
effect, granting rights to any Person, which are inconsistent with the rights to
be granted to the Purchaser by the Company in this Agreement or the other
Transaction Documents.
3.3 Governmental Authorization; Third Party Consents. No approval,
consent, compliance, exemption, authorization or other action by, or notice to,
or filing with, any Governmental Authority or any other Person, and no lapse of
a waiting period under a Requirement of Law, is necessary or required in
connection with the execution, delivery or performance (including, without
limitation, the sale, issuance and delivery of the Purchased Interests) by, or
enforcement against, the Company of this Agreement and the other Transaction
Documents or the transactions contemplated hereby and thereby.
3.4 Binding Effect. This Agreement and each of the other Transaction
Documents have been duly executed and delivered by the Company, and constitute
the legal, valid and binding obligations of the Company, enforceable against the
Company in accordance with their terms, except as enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, fraudulent conveyance or
transfer, moratorium or similar laws affecting the enforcement of creditors'
rights generally and by general principles of equity relating to enforceability
(regardless of whether considered in a proceeding at law or in equity).
3.5 Litigation. Except as set forth on Schedule 3.5, there are no
actions, suits, proceedings, claims, complaints, disputes, arbitrations or
investigations (collectively, "Claims") pending or, to the Knowledge of the
Company, threatened, at law, in equity, in arbitration or before any
Governmental Authority against the Company. Except as set forth on Schedule 3.5,
to the Knowledge of the Company, there is no fact, event or circumstance that is
reasonably likely to give rise to any Claim, which could have a material adverse
effect on the Condition of the Company after giving effect to the transactions
contemplated by this Agreement. No Order has been issued by any court or other
Governmental Authority against the Company purporting to enjoin or restrain the
execution, delivery or performance of this Agreement and the other Transaction
Documents or the transactions contemplated hereby and thereby.
<PAGE>
9
3.6 Compliance with Laws.
(a) The Company is in compliance with all Requirements of Law
(except for instances of immaterial non-compliance) and all Orders issued by any
court or Governmental Authority against the Company in all respects.
(b) (i) The Company has all licenses, permits and approvals of
any Governmental Authority (collectively, "Permits") that are necessary for the
conduct of the business of the Company; (ii) such Permits are in full force and
effect; and (iii) no violations are or have been recorded in respect of any such
Permit.
(c) No material expenditure is presently required by the
Company to comply with any existing Requirement of Law or Order.
3.7 Capitalization.
(a) Schedule 3.7(a) sets forth, as of the Closing Date, a true
and complete list of (i) the members of the Company and, opposite the name of
each such member, the amount of outstanding Interests and Interest Equivalents
owned by such member, and (ii) the holders of Interest Equivalents and, opposite
the name of each such holder, the amount of all Interest Equivalents owned by
such member. Except as set forth on Schedule 3.7(a), there are no options,
warrants, conversion privileges, subscription or purchase rights or other rights
presently outstanding to purchase or otherwise acquire any Interests, Interest
Equivalents or other securities of the Company. The Purchased Interests, when
issued and sold to the Purchaser after payment therefor, will be duly
authorized, validly issued, fully paid and nonassessable and, subject to the
accuracy of the representations and warranties of the Purchaser set forth in
Article IV of this Agreement, will be issued in compliance with all applicable
Federal, state and foreign securities laws. The issued and outstanding Class B
Interests are all duly authorized, validly issued, fully paid and nonassessable,
and are issued in compliance with all applicable federal, state and foreign
securities laws.
(b) The Company does not directly or indirectly own or have
any investment in any of the capital stock of, or any other proprietary interest
in, any Person.
(c) Excluding the effect of the "put right" provided in
Section 9 of the Intellectual Property License Agreement (referred to in Section
5.3 of this Agreement), the Purchased Interests to be purchased by the Purchaser
hereunder represent, in the aggregate, on the Closing Date, 100% of the
outstanding Class A Interests on a fully-diluted basis and not less than 97.44%
of the outstanding Interests on a fully-diluted basis, in either case, assuming
the conversion, exercise or exchange of any outstanding securities into
Interests.
3.8 No Default or Breach; Contractual Obligations. The Company has
not received notice of a default and is not in default under, or with respect
to, any
<PAGE>
10
Contractual Obligation. Schedule 3.8 lists all of the Contractual Obligations to
which the Company is a party, whether written or oral (except for oral
Contractual Obligations that are not material to the Condition of the Company).
All such Contractual Obligations are valid, subsisting, in full force and effect
and binding upon the Company and, to the Knowledge of the Company, the other
parties thereto, and the Company has paid in full or accrued all amounts due
thereunder and has satisfied in full or provided for all of its liabilities and
obligations thereunder in all material respects. To the Knowledge of the
Company, no other party to any such Contractual Obligation is in default
thereunder, nor, to the Knowledge of the Company, does any condition exist that
with notice or lapse of time or both would constitute a default by such other
party thereunder.
3.9 Title to Properties. Except as set forth in Schedule 3.9, the
Company is not party to any leases, subleases or other agreements ("Real
Property Leases") under which the Company uses or occupies or has the right to
use or occupy, now or in the future, any real property. Each Real Property Lease
constitutes the valid and legally binding obligation of the Company, enforceable
in accordance with its terms, subject to bankruptcy, insolvency, reorganization,
moratorium or other laws now or hereafter in effect relating to creditors'
rights generally or to general principles of equity, and is in full force and
effect. The Company has a valid leasehold interest in each parcel of real
property leased by it, free and clear of all Liens, except those which do not in
any material respect interfere with the use of such real property in the conduct
of the business of the Company.
3.10 FIRPTA. The Company is not a "foreign person" within the
meaning of Section 1445 of the Code.
3.11 Financial Statements. The Company has delivered to the
Purchaser estimated balance sheets and statements of income of the Company, as
at the Closing Date and for the period from its date of formation through
September 30, 1999, in form and substance reasonably satisfactory to the
Purchaser, reflecting the consummation of the transactions contemplated by this
Agreement and the other Transaction Documents.
3.12 Taxes. (i) The Company has paid all federal, state, county,
local, foreign and other taxes, including, without limitation, income taxes,
estimated taxes, excise taxes, sales taxes, use taxes, gross receipts taxes,
franchise taxes, employment and payroll related taxes, property taxes and import
duties, whether or not measured in whole or in part by net income (hereinafter,
"Taxes" or, individu ally, a "Tax") which have come due and are required to be
paid by it through the date hereof, and all deficiencies or other additions to
Tax, interest and penalties owed by it in connection with any such Taxes, other
than Taxes being disputed by the Company in good faith for which adequate
reserves have been made in accordance with GAAP; (ii) the Company has timely
filed or caused to be filed all returns for Taxes that it is required to file on
and through the date hereof (including all applicable extensions), and all such
Tax returns are accurate and complete; (iii) with
<PAGE>
11
respect to all Tax returns of the Company, (a) there is no unassessed Tax
deficiency proposed or, to the Knowledge of the Company, threatened against the
Company, and (b) no audit is in progress with respect to any return for Taxes,
no extension of time is in force with respect to any date on which any return
for Taxes was or is to be filed and no waiver or agreement is in force for the
extension of time for the assessment or payment of any Tax; (iv) all provisions
for Tax liabilities of the Company with respect to the financial statements
(described in Section 3.11 of this Agreement) have been made in accordance with
GAAP consistently applied, and all liabilities for Taxes of the Company
attributable to periods prior to or ending on the Closing Date have been
adequately provided for on such financial statements; and (v) there are no Liens
for Taxes (other than Liens for Taxes not yet due and payable) on the assets of
the Company.
3.13 Investment Company. The Company is not an "investment company"
within the meaning of the Investment Company Act of 1940, as amended.
3.14 Private Offering. No form of general solicitation or general
advertising was used by the Company or its representatives in connection with
the offer or sale of the Purchased Interests. Subject to the accuracy of the
representations and warranties of the Purchaser set forth in Article IV of this
Agreement, no registration of the Purchased Interests, pursuant to the
provisions of the Securities Act or any state securities or "blue sky" laws,
will be required by the offer, sale or issuance of the Purchased Interests. The
Company agrees that neither it, nor anyone acting on its behalf, shall offer to
sell the Purchased Interests or any other securities of the Company so as to
require the registration of the Purchased Interests pursuant to the provisions
of the Securities Act or any state securities or "blue sky" laws, unless such
Purchased Interests or other securities are so registered.
3.15 Employees. Schedule 3.15 sets forth, as of the date hereof, a
true and complete list of all employees of the Company. All such employees have
entered into nondisclosure agreements with the Company.
3.16 Employee Benefit Plans. The Company does not have any actual or
contingent, direct or indirect, liability in respect of any employee plan or
arrangement, including any plan subject to ERISA, other than to make
contributions under or pay benefits pursuant to the plans listed on Schedule
3.16 (collectively, the "Plans"). All of the Plans are in compliance with all
applicable Requirements of Law. No Plan is subject to Title IV of ERISA, or is
otherwise a Defined Benefit Plan, or is a multiple employer plan (within the
meaning of Section 413(c) of the Code), or provides for post-retirement welfare
benefits. The execution and delivery of this Agreement and each of the other
Transaction Documents, the purchase and sale of the Purchased Interests and the
consummation of the transactions contemplated hereby and thereby will not result
in any prohibited transaction within the meaning of Section 406 of ERISA or
Section 4975 of the Code or give rise to any "parachute payment" (within the
meaning of Section 280G(b) of the Code).
<PAGE>
12
3.17 Title to Assets. The Company has good, valid, and marketable
title to all of its owned properties and assets used in its business or so
described in any Schedule hereto (collectively, the "Assets"), in each case free
and clear of all Liens, except those which do not in any material respect
interfere with the use of such Assets in the ordinary course of the business of
the Company.
3.18 Liabilities. The Company does not have any direct or indirect
obligation or liability (the "Liabilities") other than Liabilities fully and
adequately set forth on Schedule 3.18, reflected on the financial statements
referred to in Section 3.11 of this Agreement or incurred since September 30,
1999 in the ordinary course of business. The Company has no Knowledge of any
circumstance, condition, event or arrangement that could reasonably be expected
to give rise hereafter to any Liabilities of the Company except in the ordinary
course of business.
3.19 Intellectual Property.
(a) (i) The Company has the license or right to use, sell and
license all of, the Copyrights, Patents, Trade Secrets, Trademarks, Internet
Assets, Software and other proprietary rights (collectively, "Intellectual
Property") that are listed on Schedule 3.19(a)(i) and that are used in
connection with its business as presently conducted or contemplated, free and
clear of all Liens.
(ii) Except as set forth in Schedule 3.19(a)(ii), the
Company does not own any Intellectual Property.
(iii) Schedule 3.19(a)(iii) sets forth all Intellectual
Property licenses, sublicenses, distributor agreements and other agreements
under which the Company is either a licensor, licensee or distributor, except
such licenses, sublicenses and other agreements relating to off-the-shelf
software, which is commercially available on a retail basis and used solely on
the computers of the Company. The Company has substantially performed all
obligations imposed upon it thereunder, and is not, nor to the Knowledge of the
Company is any other party thereto, in breach of or default thereunder in any
respect, nor is there any event which with notice or lapse of time or both would
constitute a default thereunder. All of the Intellectual Property licenses
listed on Schedule 3.19(a)(iii) are valid, enforceable and in full force and
effect upon the Company and, to the knowledge of the Company, the other parties
thereto, and will continue to be so on identical terms immediately following the
Closing except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, fraudulent conveyance or transfer, moratorium or
similar laws affecting the enforcement of creditors' rights generally and by
general principles of equity relating to enforceability (regardless of whether
considered in a proceeding at law or in equity).
(iv) None of the Intellectual Property currently sold or
licensed by the Company to any Person infringes upon or otherwise violates any
Intellectual Property rights of others. Except as set forth in Schedule
3.19(a)(iv), to
<PAGE>
13
the Knowledge of the Company, none of the Intellectual Property used by or
licensed to the Company infringes upon or otherwise violates any Intellectual
Property rights of others.
(v) Except as set forth on Schedule 3.19(a)(v), no liti
gation is pending and no Claim has been made against the Company or, to the
Knowledge of the Company, is threatened, contesting the right of the Company to
sell or license to any Person or use the Intellectual Property presently sold or
licensed to such Person or used by the Company.
(b) Except as set forth on Schedule 3.19(b), to the Knowledge
of the Company, no Person is infringing upon or otherwise violating the
Intellectual Property rights of the Company.
(c) No former employer of any employee of the Company, and no
current or former client of any consultant of the Company, has made a claim
against the Company or, to the Knowledge of the Company, against any other
Person, that such employee or such consultant is utilizing Intellectual Property
of such former employer or client.
(d) Except as set forth on Schedule 3.19(d), the Company is
not a party to or bound by any license or other agreement requiring the payment
by the Company of any material royalty payment, excluding such agreements
relating to software licensed for use solely on the computers of the Company.
(e) To the Knowledge of the Company, no employee of the
Company is in violation of any term of any employment agreement, patent or
invention disclosure agreement or other contract or agreement relating to the
relationship of such employee with the Company.
(f) To the Knowledge of the Company, none of the Trade
Secrets, wherever located, the value of which is contingent upon maintenance of
confidentiality thereof, has been disclosed to any Person other than employees,
former employees, representatives and agents of the Company, NFO or IX, Inc.,
except as required pursuant to the filing of a patent application by the
Company.
(g) Except to the extent owned by NFO or IX, Inc. and made
available to the Company pursuant to the Panel Agreement (referred to in Section
5.9 of this Agreement) or the Intellectual Property License Agreement (referred
to in Section 5.3 of this Agreement), it is not necessary for the Company's
business to use any Intellectual Property owned by any manager; officer,
employee or consultant of the Company (or persons the Company presently intends
to hire). To the Company's Knowledge, at no time during the conception or
reduction to practice of any of the Company's Intellectual Property was any
developer, inventor or other contributor to such Intellectual Property operating
under any grants from any Governmental Authority or subject to any employment
agreement, invention assignment,
<PAGE>
14
nondisclosure agreement or other Contractual Obligation with any Person that
could adversely affect the Company's rights to its Intellectual Property.
(h) All present employees of the Company have executed and
delivered proprietary invention agreements with the Company, and are obligated
under the terms thereof to assign all inventions made by them during the course
of employment to the Company.
3.20 Year 2000 Compliance. The Software used by the Company will,
and no material expenditure is required by the Company to make such Software,
(i) accurately process date information before, during and after January 1,
2000, including, but not limited to, accepting date input, providing date output
and performing calculations on dates or portions of dates, (ii) function
accurately and without interruption before, during and after January 1, 2000
without any change in operations associated with the advent of the new century,
(iii) respond to two digit year date input in a way that resolves the ambiguity
as to century in a disclosed, defined and predetermined manner, and (iv) store
and provide output of date information in ways that are unambiguous as to
century.
3.21 Privacy of Customer Information. The Company does not use any
of the customer information it receives through its website in an unlawful
manner. The Company has customary security measures, consistent with industry
practice, in place to protect the customer information it receives through its
website from illegal use by third parties.
3.22 Potential Conflicts of Interest. Except as set forth on
Schedule 3.22, no manager, officer or member of the Company, no spouse of any
such manager, officer or member, and, to the Knowledge of the Company, no
relative of such spouse or of any such manager, officer or member and no
Affiliate of any of the foregoing (i) owns, directly or indirectly, any interest
in (excepting NFO and its subsidiaries and less than 3% stock holdings for
investment purposes in securities of publicly held and traded companies), or is
a manager, director, officer, employee or consultant of, any Person which is, or
is engaged in business as, a competitor, lessor, lessee, supplier, distributor,
sales agent or customer of, or lender to or borrower from, the Company, (ii)
owns, directly or indirectly, in whole or in part, any tangible or intangible
property that the Company has used, or that the Company will use, in the conduct
of its business, or (iii) has any cause of action or other claim whatsoever
against, or owes or has advanced any amount to, the Company, except for claims
in the ordinary course of business such as for accrued vacation pay, accrued
benefits under employee benefit plans, and similar matters and agreements
existing on the date hereof.
3.23 Outstanding Borrowing. Schedule 3.23 sets forth the amount of
all Indebtedness of the Company as of the date hereof, the Liens that relate to
such Indebtedness and that encumber the Assets and the name of each lender
thereof.
<PAGE>
15
3.24 Insurance. Schedule 3.24 lists all of the insurance policies
held by or on behalf of the Company, with the effective date and coverage
amounts indicated thereon. Such policies and binders are, to the Knowledge of
the Company, valid and enforceable in accordance with their terms and are in
full force and effect and cover all risks associated with the Company's business
that are customarily insured against in the industry in such amounts as are
customary in the industry. None of such policies will be affected by, or
terminate or lapse by reason of, any transaction contemplated by this Agreement
or any of the other Transaction Documents.
3.25 Broker's, Finder's or Similar Fees. Except as set forth on
Schedule 3.25, there are no brokerage commissions, finder's fees or similar fees
or commissions payable by the Company in connection with the transactions
contemplated hereby based on any agreement, arrangement or understanding with
the Company or any action taken by any Person.
3.26 Disclosure; Material Adverse Effects. There is no fact that the
Company has not disclosed to the Purchaser in writing, which materially
adversely affects, or insofar as the Company can reasonably foresee could
materially adversely affect, the Condition of the Company or the ability of the
Company to perform its obligations under this Agreement, any of the other
Transaction Documents or any document contemplated hereby or thereby.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to the Company as
follows:
4.1 Existence and Power. The Purchaser (i) is a corporation, duly
organized and validly existing under the laws of the jurisdiction of its
incorporation, and (ii) has the requisite corporate power and authority to
execute, deliver and perform its obligations under this Agreement and each of
the other Transaction Agreements to which it is a party.
4.2 Authorization; No Contravention. The execution, delivery and
performance by the Purchaser of this Agreement and each of the other Transaction
Agreements to which it is a party and the transactions contemplated hereby and
thereby, (i) have been duly authorized by all necessary corporate action, (ii)
do not contravene the terms of the Purchaser's organizational documents, or any
amendment thereof, and (iii) do not violate, conflict with or result in any
breach or contravention of, or the creation of any Lien under, any Contractual
Obligation of the Purchaser or any Requirement of Law applicable to the
Purchaser, and (iv) do not violate any Orders of any Governmental Authority
against, or binding upon, the Purchaser.
<PAGE>
16
4.3 Governmental Authorization; Third Party Consents. No approval,
consent, compliance, exemption, authorization or other action by, or notice to,
or filing with, any Governmental Authority or any other Person, and no lapse of
a waiting period under any Requirement of Law, is necessary or required in
connection with the execution, delivery or performance (including, without
limitation, the purchase of the Purchased Interests) by, or enforcement against,
the Purchaser of this Agreement and each of the other Transaction Documents to
which it is a party or the transactions contemplated hereby and thereby.
4.4 Binding Effect. This Agreement and each of the other Transaction
Documents to which it is a party have been duly executed and delivered by the
Purchaser and constitutes the legal, valid and binding obligations of the
Purchaser, enforceable against it in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, fraudulent conveyance or transfer, moratorium or similar laws
affecting the enforcement of creditors' rights generally or by equitable
principles relating to enforceability (regardless of whether considered in a
proceeding at law or in equity).
4.5 Purchase for Own Account. The Purchased Interests to be acquired
by the Purchaser pursuant to this Agreement are being or will be acquired for
its own account and with no intention of distributing or reselling such
Purchased Interests or any part thereof in any transaction that would be in
violation of the securities laws of the United States of America, or any state,
without prejudice, however, to the rights of such Purchaser at all times to sell
or otherwise dispose of all or any part of such Purchased Interests under an
effective registration statement under the Securities Act, or under an exemption
from such registration available under the Securities Act, and subject,
nevertheless, to the disposition of the Purchaser's property being at all times
within its control. If the Purchaser should in the future decide to dispose of
any of such Purchased Interests, the Purchaser understands and agrees that it
may do so only in compliance with the Securities Act and applicable state
securities laws, as then in effect. The Purchaser is able to fend for itself in
the transactions contemplated by this Agreement and the Purchaser has the
ability to bear the economic risks of the investment in the Purchased Interests
for an indefinite period of time.
4.6 Broker's, Finder's or Similar Fees. There are no brokerage
commissions, finder's fees or similar fees or commissions payable by the
Purchaser in connection with the transactions contemplated hereby based on any
agreement, arrangement or understanding with the Purchaser or any action taken
by the Purchaser.
4.7 Accredited Investor. The Purchaser has such knowledge and
experience in financial and business matters that it is capable of evaluating
the merits and risks with investment in the Purchased Interests. The Purchaser
is an "accredited investor" as defined in Rule 501 of Regulation D adopted under
the Securities Act.
<PAGE>
17
4.8 Action Pending. There is no action, suit, investigation or
proceeding pending or, to the knowledge of the Purchaser, threatened against the
Purchaser that in any manner challenges or seeks to prevent, enjoin, alter or
materially delay the consummation of the transactions contemplated hereby or
that could reasonably be expected to have a material adverse effect on the
Purchaser's ability to perform its obligations hereunder.
ARTICLE V
CONDITIONS TO THE OBLIGATION OF THE PURCHASER TO CLOSE
The obligation of the Purchaser to purchase the Purchased Interests,
to pay the purchase price therefor at the Closing and to perform any obligations
hereunder shall be subject to the satisfaction as determined by, or waiver by,
the Purchaser of the following conditions on or before the Closing Date:
5.1 Secretary's Certificate. The Purchaser shall have received a
certificate from the Company, in form and substance reasonably satisfactory to
the Purchaser, dated the Closing Date and signed by the Secretary or an
Assistant Secretary of the Company, certifying (i) that the attached copies of
the Certificate of Formation, the Operating Agreement and resolutions of the
Board of Representatives of the Company approving this Agreement and each of the
other Transaction Documents and the transactions contemplated hereby and
thereby, are all true, complete and correct and remain unamended and in full
force and effect, and (ii) as to the incumbency and specimen signature of each
officer of the Company executing this Agreement, each other Transaction Document
and any other document delivered in connection herewith or therewith on behalf
of the Company.
5.2 Transfer of Intellectual Property. Each of NFO and IX, Inc.
shall have duly executed and delivered (i) that certain Assignment Agreement
(relating to the Intellectual Property License Agreement referred to in Section
5.3 of this Agreement) in substantially the form attached hereto as Exhibit A-1,
and (ii) that certain Assignment Agreement (relating to the "Patent Application"
as defined in the License Agreement referred to in Section 5.3 of this
Agreement) in substantially the form attached hereto as Exhibit A-2.
5.3 Intellectual Property License Agreement. Each of IX, Inc. and
the Company shall have duly executed and delivered that certain Intellectual
Property License Agreement in substantially the form attached hereto as Exhibit
B.
5.4 Assignment Agreements.
(a) Each of Engage, NFO and the Company shall have duly
executed and delivered that certain Assignment Agreement in substantially the
form attached hereto as Exhibit C, pursuant to which the License Agreement,
dated
<PAGE>
18
April 30, 1999, as amended, between Engage and NFO shall be assigned by NFO to
the Company.
(b) Each of Engage, NFO and the Company shall have duly
executed and delivered that certain Assignment Agreement in substantially the
form attached hereto as Exhibit D, pursuant to which the Strategic Alliance
Agreement, dated July 14, 1999, between Engage and NFO shall be assigned by NFO
to the Company.
5.5 IX, LLC Operating Agreement. IX, Inc. shall have duly executed
and delivered the Operating Agreement in form and substance reasonably
satisfactory to Purchaser.
5.6 Filing of Certificate of Formation. The Certificate of Formation
of the Company shall have been duly filed with the Secretary of State of the
State of Delaware in accordance with the Limited Liability Company Law of the
State of Delaware, and the Purchaser shall have received evidence of such filing
in form and substance reasonably satisfactory to the Purchaser.
5.7 Master Investors Rights Agreement. Each of the Company, IX,
Inc., NFO and Greenhill shall have duly executed and delivered that certain
Master Investors Rights Agreement in form and substance reasonably satisfactory
to Purchaser.
5.8 Marketing Agreement. Each of NFO and the Company shall have duly
executed and delivered that certain Marketing Agreement in substantially the
form attached hereto as Exhibit E.
5.9 Panel Agreement. Each of NFO and the Company shall have duly
executed and delivered that certain Panel Agreement in substantially the form
attached hereto as Exhibit F.
5.10 Services Agreement. Each of NFO and the Company shall have duly
executed and delivered that certain Services Agreement in substantially the form
attached hereto as Exhibit G.
5.11 Indemnification Agreement. Each of NFO and the Company shall
have duly executed and delivered that certain Indemnification Agreement in
substantially the form attached hereto in Exhibit H.
<PAGE>
19
ARTICLE VI
CONDITIONS TO THE OBLIGATION OF THE COMPANY TO CLOSE
The obligation of the Company to issue and sell the Purchased
Interests and the obligation of the Company to perform its other obligations
hereunder shall be subject to the satisfaction as determined by, or waiver by,
the Company of the following condition on or before the Closing Date:
6.1 Payment of Purchase Price. The Purchaser shall be prepared to
pay the aggregate purchase price for the Purchased Interests.
6.2 Master Investors Rights Agreement. The Purchaser and General
Atlantic and Engage shall have duly executed and delivered that certain Master
Investors Rights Agreement (referred to in Section 5.7 of this Agreement) in
form and substance reasonably satisfactory to the Company.
6.3 Option Plan. The Purchaser shall have established the Option
Plan, such plan in form and substance reasonably satisfactory to the Company.
ARTICLE VII
INDEMNIFICATION
7.1 Indemnification.
(a) Except as otherwise provided in this Article VII, the
Company (the "Indemnifying Party") agrees to indemnify, defend and hold harmless
the Purchaser and its Affiliates and their respective directors, officers,
agents, employees, subsidiaries, partners, members and controlling persons
(each, an "Indemnified Party") to the fullest extent permitted by law from and
against any and all losses, Claims, or written threats thereof (including,
without limitation, any Claim by a third party), damages, expenses (including
reasonable fees, disbursements and other charges of counsel incurred by the
Indemnified Party in any action between the Indemnifying Party and the
Indemnified Party or between the Indemnified Party and any third party or
otherwise) or other liabilities (collectively, "Losses") resulting from or
arising out of any breach of any representation or warranty, covenant or
agreement by the Company in this Agreement or the Master Investors Rights
Agreement described in Section 5.7 of this Agreement; provided, however, that
the Indemnifying Party shall not be liable under this Article VII to an
Indemnified Party for any amount paid in settlement of claims without the
Company's consent (which consent shall not be unreasonably withheld) with
respect to Losses arising solely out of actions brought by stockholders of the
Purchaser against an Indemnified Party or by one Indemnified Party against
another, to the extent that it is finally judicially determined that such
<PAGE>
20
Losses resulted from the willful misconduct, bad faith or gross negligence of
such Indemnified Party or to the extent that it is finally judicially determined
that such Losses resulted or arose from the breach by such Indemnified Party of
any represen tation, warranty, covenant or other agreement of such Indemnified
Party contained in this Agreement or the other Transaction Documents; and
provided, further, however, that if and to the extent that such indemnification
is unenforceable for any reason, the Indemnifying Party shall make the maximum
contribution to the payment and satisfaction of such Losses which shall be
permissible under applicable laws. The amount of any payment to any Indemnified
Party herewith in respect of any Loss shall be of sufficient amount to make such
Indemnified Party whole. In connection with the obligation of the Indemnifying
Party to indemnify for expenses as set forth above, the Indemnifying Party
shall, upon presentation of appropriate invoices containing reasonable detail,
reimburse each Indemnified Party for all such expenses (including reasonable
fees, disbursements and other charges of counsel incurred by the Indemnified
Party in any action between the Indemnifying Party and the Indemnified Party or
between the Indemnified Party and any third party) as they are incurred by such
Indemnified Party; provided, however, that if an Indemnified Party is reimbursed
under this Article VII for any expenses, such reimbursement of expenses shall be
refunded to the extent it is finally judicially determined that the Indemnified
Party was not entitled to indemnification under this Article VII.
(b) The Indemnifying Party agrees to indemnify, defend and
hold harmless the Indemnified Parties to the fullest extent permitted by law
from and against any and all Losses resulting from, arising out of or otherwise
relating to the item set forth on Schedule 3.19(a)(v).
7.2 Notification. Each Indemnified Party under this Article VII
shall, promptly after the receipt of notice of the commencement of any Claim
against such Indemnified Party in respect of which indemnity may be sought from
the Indemnifying Party under this Article VII, notify the Indemnifying Party in
writing of the commencement thereof. The omission of any Indemnified Party to so
notify the Indemnifying Party of any such action shall not relieve the
Indemnifying Party from any liability which it may have to such Indemnified
Party (i) other than pursuant to this Article VII, or (ii) under this Article
VII unless, and only to the extent that, such omission results in the
Indemnifying Party's forfeiture of substantive rights or defenses. In case any
such Claim shall be brought against any Indemnified Party, and it shall notify
the Indemnifying Party of the commencement thereof, the Indemnifying Party shall
be entitled to assume the defense thereof at its own expense, with counsel
satisfactory to such Indemnified Party in its reasonable judgment; provided,
however, that any Indemnified Party may, at its own expense, retain separate
counsel to participate in such defense at its own expense. Notwithstanding the
foregoing, in any Claim in which both the Indemnifying Party, on the one hand,
and an Indemnified Party, on the other hand, are, or are reasonably likely to
become, a party, such Indemnified Party shall have the right to employ separate
counsel and to control its own defense of such Claim if, in the reasonable
opinion of counsel to such Indemnified Party, a conflict or potential conflict
exists between the Indemnifying
<PAGE>
21
Party, on the one hand, and such Indemnified Party, on the other hand, that
would make such separate representation advisable; provided, however, that the
Indemnifying Party (i) shall not be liable for the fees and expenses of more
than one counsel to all Indemnified Parties, and (ii) shall reimburse the
Indemnified Parties for all of such fees and expenses of such counsel incurred
in any action between the Indemnifying Party and the Indemnified Parties or
between the Indemnified Parties and any third party, as such expenses are
incurred. The Indemnifying Party agrees that it will not, without the prior
written consent of the Purchaser, settle, compromise or consent to the entry of
any judgment in any pending or threatened Claim relating to the matters
contemplated hereby (if any Indemnified Party is a party thereto or has been
actually threatened to be made a party thereto) unless such settlement,
compromise or consent includes an unconditional release of each Indemnified
Party from all liability arising or that may arise out of such Claim. The
Indemnifying Party shall not be liable for any settlement of any Claim effected
against an Indemnified Party without its written consent, which consent shall
not be unreasonably withheld. The rights accorded to an Indemnified Party
hereunder shall be in lieu of any rights that any Indemnified Party may have at
common law, by separate agreement or otherwise; provided, however, that
notwithstanding the foregoing or anything to the contrary contained in this
Agreement, nothing in this Article VII shall restrict or limit any rights that
any Indemnified Party may have to seek equitable relief.
7.3 Limitations on Indemnification. Notwithstanding any other
provision of this Article VII, the Indemnifying Party shall not be obligated to
make any payment or payments pursuant to this Article VII in an aggregate amount
in excess of $25,000,000 (the "Cap") and the indemnification obligation of the
Indemnifying Party hereunder shall be further limited as follows: the
Indemnifying Party shall not be obligated to make any payment for
indemnification pursuant to Section 7.1(a) until the aggregate amount of
indemnification payments under such Section exceeds $250,000 (the "Basket
Amount"), whereupon the Indemnifying Party shall be obligated to pay in full up
to the Cap all such amounts for indemnification, including the Basket Amount.
ARTICLE VIII
AFFIRMATIVE COVENANTS
The Company hereby covenants and agrees with the Purchaser that
until the earlier of (i) the "IPO Effectiveness Date" (as defined in the Master
Investors Rights Agreement referred to in Section 5.7 of this Agreement), and
(ii) the date on which the Purchaser has transferred to any Person or Persons
other than its Affiliates in excess of, in the aggregate, 60% of the Purchased
Interests:
8.1 Financial Statements and Other Information. The Company shall
deliver to the Purchaser, in form and substance satisfactory to the Purchaser:
<PAGE>
22
(a) as soon as available, but not later than ninety (90) days
after the end of each fiscal year of the Company commencing December 31, 2000, a
copy of the audited balance sheet of the Company as of the end of such fiscal
year and the related statements of operations and cash flows for such fiscal
year, setting forth in each case in comparative form the figures for the
previous year, all in reasonable detail and accompanied by a management summary
and analysis of the operations of the Company for such fiscal year and by the
opinion of a nationally recognized inde pendent certified public accounting firm
which report shall state without qualification that such financial statements
present fairly the financial condition as of such date and results of operations
and cash flows for the periods indicated in conformity with GAAP applied on a
consistent basis;
(b) commencing with the fiscal period ending on December 31,
1999, as soon as available, but in any event not later than forty-five (45) days
after the end of each of the first three fiscal quarters of each fiscal year,
the unaudited balance sheet of the Company, and the related statements of
operations and cash flows for such quarter and for the period commencing on the
first day of the fiscal year and ending on the last day of such quarter, all
certified by an appropriate officer of the Company as presenting fairly the
financial condition as of such date and results of operations and cash flows for
the periods indicated in conformity with GAAP applied on a consistent basis,
subject to normal year-end adjustments and the absence of footnotes required by
GAAP; and
(c) if requested by the Purchaser, as promptly as practicable,
but not later than five days after the end of each fiscal year of the Company, a
certificate signed by the Chief Executive Officer of the Company in customary
form certifying that the Company is not a "foreign person" within the meaning of
Section 1445 of the Code.
8.2 Books and Records. The Company shall keep proper books of record
and account, in which full and correct entries shall be made of all financial
transactions and the assets and business of the Company in accordance with GAAP
consistently applied.
8.3 Back-ups of Computer Software. The Company shall make back-ups
of all material computer software programs and databases and shall maintain such
software programs and databases at a secure off-site location.
8.4 Inspection. The Company shall permit representatives of the
Purchaser to visit and inspect any of its properties, to examine its company,
financial and operating records and make copies thereof or abstracts therefrom,
and to discuss its affairs, finances and accounts with their respective
managers, directors, officers and independent public accountants, all at such
reasonable times during normal business hours and as often as may be reasonably
requested upon reasonable advance notice to the Company.
<PAGE>
23
8.5 Tax Classification. The Company shall be treated as a
partnership for U.S. Federal tax purposes effective as of the date of this
Agreement. The Company shall not file any election for the Company to be taxable
as an association for U.S. Federal tax purposes.
ARTICLE IX
MISCELLANEOUS
9.1 Survival of Representations and Warranties. All of the
representations and warranties made herein shall survive the execution and
delivery of this Agreement until the date that is ninety days after the receipt
by the Purchaser of audited financial statements of the Company for the fiscal
year ending December 31, 2001 (or, if such fiscal year changes and no such
audited consolidated financial statements are available, then the successor
fiscal year), except for (i) Sections 3.1, 3.2, 3.4, 3.7, 3.14 and 3.25, which
representations and warranties shall survive until the third anniversary of the
Closing Date, and (ii) Section 3.12, which shall survive until the later to
occur of (a) the lapse of the statute of limitations with respect to the
assessment of any Tax to which such representation and warranty relates
(including any extensions or waivers thereof), and (b) sixty days after the
final administrative or judicial determination of the Taxes to which such
representation and warranty relates, and no claim with respect to Section 3.12
may be asserted thereafter with the exception of claims arising out of any fact,
circumstance, action or proceeding to which the party asserting such claim shall
have given notice to the other parties to this Agreement prior to the
termination of such period of reasonable belief that a tax liability will
subsequently arise therefrom.
9.2 Notices. All notices, demands and other communications provided
for or permitted hereunder shall be made in writing and shall be by registered
or certified first-class mail, return receipt requested, telecopier, courier
service or personal delivery:
if to the Company:
InsightExpress, L.L.C.
c/o NFO Worldwide, Inc.
2 Pickwick Plaza
Greenwich, CT 06830
Telecopy: (203) 629-8885
Attention: President
<PAGE>
24
with a copy to:
NFO Worldwide, Inc.
2 Pickwick Plaza
Greenwich, CT 06830
Telecopy: (203) 629-8885
Attention: Chief Financial Officer
and
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, NY 10019-6064
Telecopy: (212) 757-3990
Attention: James M. Dubin, Esq.
if to the Purchaser:
c/o General Atlantic Service Corporation
3 Pickwick Plaza
Greenwich, CT 06830
Telecopy: (203) 622-8818
Attention: Mr. David C. Hodgson
with a copy to:
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, NY 10019-6064
Telecopy: (212) 757-3990
Attention: Matthew Nimetz, Esq.
All such notices, demands and other communications shall be deemed
to have been duly given when delivered by hand, if personally delivered; when
delivered by courier, if delivered by commercial courier service; five Business
Days after being deposited in the mail, postage prepaid, if mailed; and when
receipt is mechanically acknowledged, if telecopied.
9.3 Successors and Assigns; Third Party Beneficiaries. This
Agreement shall inure to the benefit of and be binding upon the successors and
permitted assigns of the parties hereto. Subject to applicable securities laws
and the terms and conditions thereof, the Purchaser may assign any of its rights
under this Agreement or the other Transaction Documents to any of its respective
Affiliates. The Company may not assign any of its rights under this Agreement
without the written consent of the Purchaser. Except as provided in Article VII,
no Person other
<PAGE>
25
than the parties hereto and their successors and permitted assigns is intended
to be a beneficiary of this Agreement.
9.4 Amendment and Waiver.
(a) No failure or delay on the part of the Company or the
Purchaser in exercising any right, power or remedy hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right,
power or remedy preclude any other or further exercise thereof or the exercise
of any other right, power or remedy. The remedies provided for herein are
cumulative and are not exclusive of any remedies that may be available to the
Company or the Purchaser at law, in equity or otherwise.
(b) Any amendment, supplement or modification of or to any
provision of this Agreement, any waiver of any provision of this Agreement, and
any consent to any departure by the Company or the Purchaser from the terms of
any provision of this Agreement, shall be effective (i) only if it is made or
given in writing and signed by the Company and the Purchaser, and (ii) only in
the specific instance and for the specific purpose for which made or given.
Except where notice is specifically required by this Agreement, no notice to or
demand on the Company in any case shall entitle the Company to any other or
further notice or demand in similar or other circumstances.
9.5 Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
9.6 Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
9.7 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
PRINCIPLES OF CONFLICTS OF LAW THEREOF.
9.8 Severability. If any one or more of the provisions contained
herein, or the application thereof in any circumstance, is held invalid, illegal
or unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions hereof shall not be in any way impaired, unless the provisions held
invalid, illegal or unenforceable shall substantially impair the benefits of the
remaining provisions hereof.
<PAGE>
26
9.9 Rules of Construction. Unless the context otherwise requires,
references to sections or subsections refer to sections or subsections of this
Agreement.
9.10 Entire Agreement. This Agreement, together with the Schedules
hereto, and the other Transaction Documents are intended by the parties as a
final expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein and therein. There are no restrictions,
promises, representations, warranties or undertakings, other than those set
forth or referred to herein or therein. This Agreement, together with the
Schedules hereto, and the other Transaction Documents supersede all prior
agreements and understandings between the parties with respect to such subject
matter.
9.11 Fees. Upon the Closing, the Company shall reimburse the
Purchaser and General Atlantic for their documented fees, disbursements and
other charges of counsel incurred in connection with the transactions
contemplated by this Agreement, as provided in the Operating Agreement.
9.12 Publicity; Confidentiality.
(a) Following the Closing, the Company and the Purchaser shall
issue a joint press release concerning this Agreement and the transactions
contemplated hereby. Prior to issuing such press release, the parties shall
consult with each other, and provide each other the opportunity to review,
comment upon and concur with, such press release and shall not issue such press
release prior to such consultation, except to the extent required by applicable
Requirements of Law.
(b) Except as set forth in Section 9.12(a) of this Agreement
and as may be required by applicable Requirements of Law, none of the parties
hereto shall issue a publicity release or public announcement or otherwise make
any dis closure concerning this Agreement, the transactions contemplated hereby
or the Purchaser, without prior approval by the other parties hereto; provided,
however, that nothing in this Agreement shall restrict the Purchaser from
disclosing information (i) that is already publicly available, (ii) that was
known to the Purchaser on a non- confidential basis prior to its disclosure by
the Company, (iii) that may be required or appropriate in response to any
summons or subpoena or in connection with any litigation, provided that the
Purchaser will use reasonable efforts to notify the Company in advance of such
disclosure so as to permit the Company to seek a protective order or otherwise
contest such disclosure, and the Purchaser will use reasonable efforts to
cooperate, at the expense of the Company, with the Company in pursuing any such
protective order, (iv) to the extent that the Purchaser reasonably believes it
appropriate in order to protect its investment in the Purchased Interests in
order to comply with any Requirement of Law, (v) to the Purchaser's or the
Company's managers, directors, officers, shareholders, advisors, employees,
members, partners, controlling persons, auditors or counsel, or (vi) to Persons
from
<PAGE>
27
whom releases, consents or approvals are required, or to whom notice is required
to be provided, pursuant to the transactions contemplated by the Transaction
Documents; and provided, further, however, that General Atlantic Partners, LLC
may disclose on its worldwide web page, www.gapartners.com, the name of the
Company, the name of the Chief Executive Officer of the Company, a brief
description of the business of the Company and the aggregate amount of the
Purchaser's investment in the Company. If any announcement is required by law,
prior to making such announce ment such party will deliver a draft of such
announcement to the other party and shall give the other party reasonable
opportunity to comment thereon.
9.13 Further Assurances. Each of the parties shall execute such
documents and perform such further acts (including, without limitation,
obtaining any consents, exemptions, authorizations or other actions by, or
giving any notices to, or making any filings with, any Governmental Authority or
any other Person) as may be reasonably required or desirable to carry out or to
perform the provisions of this Agreement.
<PAGE>
28
IN WITNESS WHEREOF, the undersigned have executed, or have caused to
be executed, this Securities Purchase Agreement on the date first written above.
INSIGHTEXPRESS, L.L.C.
By: /s/ Patrick Healy
-----------------
Name: Patrick Healy
Title: Vice President
IX HOLDING CO., INC.
By: /s/ David Hodgson
-----------------
Name: David Hodgson
Title: President and Secretary
The undersigned hereby guarantees the obligation of the Purchaser
under Section 2.1 of this Agreement in an amount not to exceed $19,276,354, and
executes this Agreement as an acknowledgment of such guarantee and for no other
purpose.
GENERAL ATLANTIC PARTNERS 57, L.P.
By: GENERAL ATLANTIC PARTNERS, LLC,
its General Partner
By: /s/ David Hodgson
-----------------
Name: David Hodgson
Title: A Managing Member
<PAGE>
29
The undersigned hereby guarantees the obligation of the Purchaser
under Section 2.1 of this Agreement in an amount not to exceed $3,723,646, and
executes this Agreement as an acknowledgment of such guarantee and for no other
purpose.
GAP COINVESTMENT PARTNERS II, L.P.
By: /s/ David Hodgson
-----------------
Name: David Hodgson
Title: A General Partner
The undersigned hereby guarantees the obligation of the Purchaser
under Section 2.1 of this Agreement in an amount not to exceed $2,000,000, and
executes this Agreement as an acknowledgment of such guarantee and for no other
purpose.
ENGAGE TECHNOLOGIES, INC.
By: /s/ Michael Baker
-----------------
Name: Michael Baker
Title: VP & General Counsel
The undersigned hereby guarantees the obligations of the Company
under Section 7.1(b) of this Agreement, and executes this Agreement as an
acknowledgment of such guarantee and for no other purpose.
NFO WORLDWIDE, INC.
By: /s/ Patrick Healy
-----------------
Name: Patrick Healy
Title: Chief Financial Officer
EXHIBIT 10.2
================================================================================
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY OPERATING AGREEMENT
OF
INSIGHTEXPRESS, L.L.C.
Dated as of October 18, 1999
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
Article 1
Definitions .....................................................1
Section 1.1 Certain Definitions................................1
Section 1.2 Glossary...........................................6
Article 2
Continuation of Company..........................................8
Section 2.1 Continuation.......................................8
Section 2.2 Name...............................................8
Section 2.3 Effective Date; Term...............................8
Section 2.4 Principal Place of Business........................8
Section 2.5 Registered Office and Rent.........................8
Section 2.6 Filings............................................8
Section 2.7 Purpose............................................9
Section 2.8 Powers.............................................9
Article 3
Interests; Commitments; Closing; Contributions..................10
Section 3.1 Interests.........................................10
Section 3.2 Capital Contributions.............................11
Section 3.3 Additional Mandatory Capital Contributions........11
Article 4
Capital Accounts; Allocations; Distributions....................11
Section 4.1 Capital Accounts..................................11
Section 4.2 Allocation of Net Income..........................12
Section 4.3 Allocation of Net Loss............................12
Section 4.4 Additional Allocation Provisions..................13
Section 4.5 Distributions.....................................16
Section 4.6 Tax Distributions.................................16
Section 4.7 Distributions in Cash.............................16
Section 4.8 Restrictions on Distributions.....................16
Article 5
Board of Representatives........................................17
Section 5.1 General...........................................17
Section 5.2 The Board.........................................17
Section 5.3 Meetings..........................................18
Section 5.4 Quorum............................................18
Section 5.5 Voting; Proxies...................................18
Section 5.6 Fiduciary Duties. ...............................19
Section 5.7 Committees of the Board...........................19
i
<PAGE>
Page
----
Article 6
Officers........................................................20
Section 6.1 Executive Officers................................20
Section 6.2 Other Officers....................................20
Section 6.3 Term of Office....................................21
Section 6.4 Removal of Officers...............................21
Section 6.5 Vacancies.........................................21
Section 6.6 Compensation of Officers..........................21
Section 6.7 Chairman and Chief Executive Officer..............21
Section 6.8 Chairman Emeritus and Vice Chairmen of the Board..22
Section 6.9 President.........................................22
Section 6.10 Chief Operating Officer...........................22
Section 6.11 Executive Vice Presidents, Senior Vice Presidents
and Vice Presidents Elected by the Board..........23
Section 6.12 Secretary.........................................23
Section 6.13 Treasurer.........................................23
Section 6.14 Powers and Duties of Other Officers...............24
Article 7
Members.........................................................24
Section 7.1 Members...........................................24
Section 7.2 Admission of New Members..........................24
Section 7.3 Power of Members..................................24
Section 7.4 Meetings..........................................24
Section 7.5 Quorum and Voting.................................25
Section 7.6 Actions Without a Meeting.........................25
Section 7.7 Authorized Representatives........................25
Section 7.8 Resignation.......................................26
Article 8
Accounting; Financial and Tax Matters...........................26
Section 8.1 Accounting Method.................................26
Section 8.2 Accounting Records................................26
Section 8.3 Financial Statements..............................26
Section 8.4 Bank and Investment Accounts......................27
Section 8.5 Tax Matters Partner...............................27
Section 8.6 Taxes.............................................27
Section 8.7 Accounting Decisions..............................28
Article 9
Liability; Exculpation; Indemnification.........................28
Section 9.1 Liability of Members; Limitation of Liability.....28
Section 9.2 Exculpation.......................................29
Section 9.3 Duties and Liabilities of Covered Persons.........29
Section 9.4 Indemnification by IX, L.L.C......................30
ii
<PAGE>
Page
----
Section 9.5 Insurance.........................................31
Section 9.6 Notice and Opportunity to Defend..................32
Article 10
Certain Covenants...............................................32
Section 10.1 Other Businesses of the Members...................32
Article 11
Transfers.......................................................33
Section 11.1 General Restrictions..............................33
Section 11.2 Additional Conditions to Transfers................33
Section 11.3 Effect of Transfer................................33
Section 11.4 Endorsement of Certificates.......................33
Section 11.5 Improper Transfer.................................34
Article 12
Representations and Warranties..................................34
Section 12.1 Due Organization and Authority....................34
Section 12.2 Authority to Execute and Perform Agreement........35
Article 13
Termination; Dissolution; Liquidation and Winding-Up............35
Section 13.1 Termination of IX, L.L.C..........................35
Section 13.2 Events of Dissolution.............................35
Section 13.3 Liquidation and Winding-Up........................36
Section 13.4 Survival After Termination........................37
Section 13.5 Claims of the Members.............................37
Article 14
Miscellaneous...................................................37
Section 14.1 Governing Law.....................................37
Section 14.2 Consent to Jurisdiction and Service of Process....37
Section 14.3 Cooperation.......................................37
Section 14.4 Notice............................................38
Section 14.5 Assignment........................................38
Section 14.6 No Agency.........................................38
Section 14.7 Entire Agreement; No Waiver.......................38
Section 14.8 Preservation of Remedies..........................38
Section 14.9 No Right to Partition.............................39
Section 14.10 Severability......................................39
Section 14.11 Counterparts......................................39
Section 14.12 Fees and Expenses.................................39
Section 14.13 Amendments........................................39
Section 14.14 Interpretation....................................40
iii
<PAGE>
Page
----
Schedule IA Percentage Interests, Capital Contributions and Class
of Membership Interest
iv
<PAGE>
Amended and Restated Limited Liability Company Operating Agreement
(this "Agreement") of InsightExpress, L.L.C., a Delaware limited liability
company ("IX, L.L.C."), dated as of October 18, 1999, among IX, Inc., a Delaware
corporation ("IX, Inc."), IX Holding Co., Inc., a Delaware corporation ("IX
Holding"), and Greenhill & Co., LLC, a New York limited liability company
("Greenhill"). IX, Inc., IX Holding and Greenhill are hereinafter sometimes
referred to collectively, with all such other Persons who from time to time
become members pursuant to this Agreement, as the "Members."
WHEREAS, IX, L.L.C. was formed on August 12, 1999, pursuant to the
Delaware Limited Liability Company Act (6 Del. C. ss. 18-101, et seq.), as
amended from time to time (the "Act"), and the Members desire to amend and
restate that certain Limited Liability Company Operating Agreement of IX,
L.L.C., dated as of August 30, 1999 (the "Operating Agreement"), to set forth
the terms and conditions with respect to a new capital investment in IX, L.L.C.
by IX Holding; and
WHEREAS, IX, Inc. and IX Holding are establishing IX, L.L.C. to
engage in the business (the "Business") of exploiting certain software and
intellectual property which enables customers to conduct market research via the
Internet in an automated manner.
NOW, THEREFORE, in consideration of the mutual promises, covenants
and agreements contained herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the Members hereby
respectively covenant and agree that the Operating Agreement is amended and
restated in its entirety as follows:
Article 1
Definitions
Section 1.1 Certain Definitions. As used in this Agreement, the
following terms have the following meanings:
"Adjusted Capital Account Deficit" means, with respect to any
Member, the deficit balance, if any, in such Member's Capital Account as of the
end of the relevant fiscal year, after giving effect to the following
adjustments:
(A) decrease such deficit by any amounts which such Member is
obligated to restore pursuant to this Agreement or is deemed to be
obligated to restore pursuant to the penultimate sentence of each of ss.
1.704- 2(i)(5) and 1.704-2(g) of the Treasury Regulations; and
(B) increase such deficit by the items described in ss. 1.704
1(b)(2)(i)(d)(4), (5) and (6) of the Treasury Regulations.
<PAGE>
2
The foregoing definition of Adjusted Capital Account Deficit is
intended to comply with the provisions of ss. 1.704-1(b)(2)(ii)(d) of the
Treasury Regulations and shall be interpreted consistently therewith.
"Affiliate(s)" means, with respect to any specified Person, any
other Person directly or indirectly controlling or controlled by or under direct
or indirect common control with such specified Person. For the purposes of this
definition, "control" when used with respect to any specified Person means the
power to direct the management and business of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Business Day" means a day that is not a Saturday, Sunday or day on
which banking institutions in the State of New York are not required to be open.
"Certificate" means the certificate of formation of IX, L.L.C. and
any amendments thereto and restatements thereof filed on behalf of IX, L.L.C.
with the office of the Secretary of State of the State of Delaware pursuant to
the Act.
"Class A Interest" means an Interest which entitles its holder to
allocations under Sections 4.2(a) and 4.3(a).
"Class B Interest" means an interest other than a Class A Interest.
"Code" means the Internal Revenue Code of 1986, as the same may be
amended from time to time.
"Company Minimum Gain" means "partnership minimum gain," as defined
in ss. 1.704-2(b)(2) of the Treasury Regulations, and shall be determined in
accordance with ss. 1.704-2(d) of the Treasury Regulations.
"Depreciation" means, with respect to any fiscal year, an amount
equal to the depreciation, amortization or other cost recovery deduction
allowable with respect to an asset for Federal income tax purposes, except that
if the Gross Asset Value of the asset differs from its adjusted tax basis,
Depreciation shall be determined in accordance with the methods used for Federal
income tax purposes and shall equal the amount that bears the same ratio to the
Gross Asset Value of such asset as the depreciation, amortization or other cost
recovery deduction computed for Federal income tax purposes with respect to such
asset bears to the adjusted Federal income tax basis of such asset; provided,
however, that if any such asset that is depreciable or amortizable has an
adjusted federal income tax basis of zero, the rate of Depreciation shall be as
determined by the Tax Matters Partner.
"Effective Tax Rate" shall mean, for any year, the percentage
determined by the Tax Matters Partner, subject to the approval of IX Holding,
which
<PAGE>
3
approval shall not be unreasonably withheld, to be a reasonable estimate of the
highest marginal combined Federal, state and local income tax rate (giving
effect to the deduction of state and local income taxes, as applicable, for
Federal and state income tax purposes), applicable to individuals residing in
New York City, with respect to the taxable income allocated to the Members by
IX, L.L.C. for Federal income tax purposes.
"Excess Capital Account" of a Member shall mean the excess, if any,
of (x) the balance of the Capital Account of such member over (y) the initial
capital contribution of such Member plus, in the case of IX Holding, any portion
of the 6% simple interest on its Capital Contributions reflected in its Capital
Account as a result of the adjustments pursuant to Section 3.3(b)(i).
"Fair Market Value" means, with respect to any asset, the cash
purchase price which a willing buyer, under no compulsion to buy, would pay for
such asset to a willing seller, under no compulsion to sell. Such cash purchase
price shall be determined in good faith by the Tax Matters Partner; provided,
however, that if any Member objects to such determination, the matter shall be
submitted to an independent appraiser or valuation consultant, selected by IX,
Inc., subject to the approval of IX Holding, which approval shall not be
unreasonably withheld. The fees and costs of such appraiser or consultant shall
be paid by the objecting Member, unless the price as determined by such third
party varies by more than 5% from the price determined by the Tax Matters
Partner, in which event the Tax Matters Partner shall pay such fees and costs.
"Final Determination" means (i) a decision, judgment, decree or
other order by a court of original jurisdiction which has become final (i.e.,
the time for filing an appeal shall have expired), (ii) a closing agreement made
under Section 7121 of the Code or any other settlement agreement entered into in
connection with an administrative or judicial proceeding, (iii) the expiration
of the time for instituting a claim for refund, or if a claim was filed, the
expiration of the time for instituting suit with respect thereto, or (iv) in any
case where judicial review shall be unavailable, a decision, judgment, decree or
other order of an administrative official or agency which has become final.
"GAAP" means generally accepted accounting principles as in effect
in the United States from time to time.
"Governmental Agency" means the government of any nation, state,
city, locality or other political subdivision thereof, any entity exercising
executive, legislative, judicial, regulatory or administrative function of or
pertaining to government, and any Person owned or controlled, through stock or
capital ownership or otherwise, by any of the foregoing.
<PAGE>
4
"Gross Asset Value" means, with respect to any asset, such asset's
adjusted basis for Federal income tax purposes, except that (a) the initial
Gross Asset Value of any asset contributed to IX, L.L.C. shall be its gross fair
market value (as reasonably determined by the Tax Matters Partner) at the time
such asset is contributed or deemed contributed for purposes of computing
Capital Accounts, (b) upon a change in the Members' Percentage Interests, if the
Tax Matters Partner determines that such adjustment should be made, the Gross
Asset Value of all of the assets of IX, L.L.C. shall be adjusted to equal their
respective gross fair market values (as reasonably determined by the Tax Matters
Partner), (c) the Gross Asset Value of any asset distributed in kind to any
Member shall be the gross fair market value of such asset (as reasonably
determined by the Tax Matters Partner) on the date of such distribution, (d) the
Gross Asset Value of any asset determined pursuant to clause (a) or (b) above
shall thereafter be adjusted from time to time by the Depreciation taken into
account with respect to such asset for purposes of determining Net Income or Net
Loss, and (e) the Gross Asset Value of any IX, L.L.C. assets shall be increased
or decreased to the extent required by ss. 1.704-1(b)(2)(iv)(m) in the event
that the adjusted tax basis of such assets are adjusted pursuant to ss. 732, 734
or 743 of the Code.
"Interest" means the entire ownership interest of a Member in IX,
L.L.C. at any time, including such Member's share of Net Income and Net Loss,
such Member's rights to receive distributions and other benefits to which such
Member may be entitled hereunder and under the Act, and the obligations of such
Member to comply with the applicable terms and provisions of this Agreement.
"Member Minimum Gain" means "partner nonrecourse debt minimum gain,"
as defined in ss. 1.704-2(i)(2) of the Treasury Regulations, and shall be
determined in accordance with ss. 1.704-2(i)(3) of the Treasury Regulations.
"Member Nonrecourse Debt" means "partner nonrecourse debt," as
defined in ss. 1.704-2(b)(4) of the Treasury Regulations.
"Member Nonrecourse Deductions" means "partner nonrecourse
deductions," as defined in ss. 1.704-2(i)(1) of the Treasury Regulations, and
shall be determined in accordance with ss. 1.704-2(i)(2) of the Treasury
Regulations.
"Net Income" or "Net Loss" means, with respect to any fiscal year,
an amount equal to the taxable income or loss of IX, L.L.C. as determined for
federal income tax purposes in accordance with ss. 703(a) of the Code (for this
purpose, all items of income, gain, loss or deduction required to be separately
stated under ss. 703(a)(1) shall be included in taxable income or loss), with
the following adjustments:
(a) Such taxable income or loss shall be increased by the
amount, if any, of tax-exempt income received or accrued by IX, L.L.C.;
<PAGE>
5
(b) Such taxable income or loss shall be reduced by the
amount, if any, of all expenditures of IX, L.L.C. described in Section
705(a)(2)(B) of the Code, including expenditures treated as described therein
under ss. 1.704(b)(2)(iv)(i) of the Treasury Regulations;
(c) If the Gross Asset Value of any asset is adjusted
pursuant to clause (b) or (c) of the definition of Gross Asset Value, the amount
of such adjust ment shall be taken into account, immediately prior to the event
giving rise to such adjustment, as gain or loss from the disposition of such
asset for purposes of computing Net Income or Net Loss;
(d) Gain or loss resulting from any disposition of any asset
with respect to which gain or loss is recognized for Federal income tax purposes
shall be computed by reference to the Gross Asset Value of the asset disposed
of, notwithstanding that such Gross Asset Value differs from the adjusted tax
basis of such asset;
(e) In lieu of the depreciation, amortization, or other cost
recovery deductions taken into account in computing such taxable income or loss,
there shall be taken into account Depreciation for such fiscal year; and
(f) Notwithstanding any other provision of this definition,
any items that are specially allocated pursuant to Section 4.4(a) hereof shall
not be taken into account in computing Net Income and Net Loss.
"Nonrecourse Deductions" shall have the meaning set forth in ss.
1.704-2(b)(1) of the Treasury Regulations. The amount of Nonrecourse Deductions
for any year equals the excess, if any, of the net increase in the amount of
Company Minimum Gain during such year over the aggregate amount of any
distributions during such year of proceeds of a Nonrecourse Liability that are
allocable to an increase in Company Minimum Gain, determined in accordance with
ss. 1.704-2(c) of the Treasury Regulations.
"Nonrecourse Liability" shall have the meaning set forth in
ss. 1.704-2(b)(3) of the Treasury Regulations.
"Percentage Interest" means, with respect to each Member, the
percentage set forth opposite such Member's name under the heading "Percentage
Interest" on Schedule IA, as it may be from time to time amended.
"Person" means any individual, corporation, company, voluntary
association, partnership, joint venture, limited liability company, trust,
estate, unincorporated organization, Governmental Agency or other entity.
<PAGE>
6
"Securities Act" means the U.S. Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.
"Tax Matters Partner" means IX, Inc. or any successor Tax Matters
Partner elected in accordance with Section 8.5.
"Transfer" means, as a verb, to directly or indirectly, sell,
convey, exchange, pledge, lease, hypothecate, mortgage, create a security
interest in or other lien, gift, encumber, transfer, assign or otherwise dispose
of, and, as a noun, has a meaning correlative to the foregoing. "Transferor" and
"Transferee" have correlative meanings.
"Treasury Regulations" means the income tax regulations, including
temporary regulations, promulgated under the Code, as such regulations may be
amended from time to time.
Section 1.2 Glossary. The following capitalized terms are defined in
the following Sections of the Agreement:
Term Section
---- -------
Act introductory statement
Adjusted Capital Account Deficit 1.1
Affiliate(s) 1.1
Affiliate Transaction 5.5(b)
Agreement introductory statement
Asserted Liability 9.6(a)
Board 5.1
Business introductory statement
Business Day 1.1
Capital Account 4.1(a)
Capital Contribution 3.2
Certificate 1.1
Claims Notice 9.6(a)
Class A Interest 1.1
Class B Interest 1.1
Code 1.1
Company Minimum Gain 1.1
Covered Person 9.2(a)
Depreciation 1.1
Dissolution Event 13.2
Effective Date 2.3
Effective Tax Rate 1.1
Excess Capital Account 1.1
Executive Office 6.1
<PAGE>
7
Term Section
---- -------
Executive Officers 6.1
Fair Market Value 1.1
Final Determination 1.1
GAAP 1.1
Governmental Agency 1.1
Greenhill introductory statement
Gross Asset Value 1.1
Indemnifying Party 9.6(a)
Interest 1.1
IX Holding introductory statement
IX, Inc. introductory statement
IX, L.L.C. introductory statement
License Agreement 14.13(b)
Losses 9.2(b)
Master Investors Rights Agreement 2.9(b)
Member Minimum Gain 1.1
Member Nonrecourse Debt 1.1
Member Nonrecourse Deductions 1.1
Members introductory statement
Modification of an Affiliate Transaction 5.5(b)
Net Income 1.1
Net Loss 1.1
Nonrecourse Deductions 1.1
Nonrecourse Liability 1.1
Operating Agreement introductory statement
Other Office 6.2
Other Officers 6.2
Percentage Interest 1.1
Person 1.1
Post-Amendment Period 4.2
Regulatory Allocations 4.4(a)(viii)
Representative 5.2(a)(ii)
Securities Act 1.1
Tax Matters Partner 1.1
Term 13.1
Transfer 1.1
Transferee 1.1
Transferor 1.1
Treasury Regulations 1.1
<PAGE>
8
Article 2
Continuation of Company
Section 2.1 Continuation. IX, Inc. formed IX, L.L.C. as a limited
liability company under and pursuant to the provisions of the Act by filing a
Certificate of Formation with the Office of the Secretary of State of the State
of Delaware on August 12, 1999 and, along with IX Holding, hereby agrees to
continue IX, L.L.C. as a limited liability company under and pursuant to the
provisions of the Act. The Members hereby agree that IX, L.L.C. shall be
governed by, and the rights, duties and liabilities of the Members shall be as
provided in, the Act and this Agreement.
Section 2.2 Name. The name of IX, L.L.C. shall be "InsightExpress,
L.L.C."
Section 2.3 Effective Date; Term. This Agreement shall become
effective upon the execution of this Agreement by IX, Inc., IX Holding and
Greenhill (the "Effective Date"), and shall only be deemed to be in full force
and effect from and after such date. IX, L.L.C. shall continue in existence
until it is dissolved and its affairs wound up in accordance with the Act and
this Agreement or until it is terminated as provided in the Act or this
Agreement.
Section 2.4 Principal Place of Business. The principal place of
business of IX, L.L.C. shall be at 2 Pickwick Plaza, Suite 400, Greenwich, CT
06830-5530 or at such other place as the Board shall determine from time to
time. IX, L.L.C. may have other offices, either within or outside of the State
of Delaware, at such place or places as the Board may from time to time
designate or the business of IX, L.L.C. may require.
Section 2.5 Registered Office and Rent. The address of IX, L.L.C.'s
registered office in Delaware shall be c/o The Corporation Trust Company, 1209
Orange Street, Wilmington, DE 19801. The name and address of the registered
agent of IX, L.L.C. for service of process on IX, L.L.C. in the State of
Delaware initially is The Corporation Trust Company, 1209 Orange Street,
Wilmington, DE 19801. Such registered office and agent may be changed from time
to time by the Chief Executive Officer.
Section 2.6 Filings. The Board promptly shall cause the execution
and delivery of such documents and performance of such acts consistent with the
terms of this Agreement as may be necessary to comply with the requirements of
law for the formation, qualification and operation of a limited liability
company under the laws of each jurisdiction in which IX, L.L.C. shall conduct
business. All expenses of such filings shall be borne by IX, L.L.C.
<PAGE>
9
Section 2.7 Purpose. IX, L.L.C. is formed for the purpose of
engaging in (i) the Business, (ii) any and all activities and transactions which
are related thereto or necessary, convenient, desirable or incidental to the
foregoing as the Board may determine from time to time and (iii) any and all
activities and transactions for which a limited liability company may be
organized under the Act.
Section 2.8 Powers. Subject to Article 5 and except as otherwise
limited in this Agreement,
(a) IX, L.L.C. shall have the power and authority to do any
and all acts necessary, appropriate, proper, advisable, convenient or incidental
to or for the furtherance of the purpose set forth in Section 2.8, including:
(i) to conduct its business, carry on its operations and
have and exercise the powers granted to a limited liability company by the
Act in any state, territory, district or possession of the United States,
or in any foreign country that may be necessary, appropriate, proper,
advisable, convenient or incidental to or for the furtherance of the
purpose of IX, L.L.C.;
(ii) to acquire by purchase, contribution of property or
otherwise own, hold, operate, maintain, finance, improve, demolish or
Transfer any real or personal property that may be necessary, appropriate,
proper, advisable, convenient or incidental to or for the furtherance of
the purpose of IX, L.L.C.;
(iii) to enter into, perform and carry out contracts of
any kind, including contracts with any Member or any Affiliate thereof, or
any agent of IX, L.L.C. necessary to, in connection with, convenient to,
or incidental to or for the furtherance of the purpose of IX, L.L.C.;
(iv) to purchase, take, receive, subscribe for or
otherwise acquire, own, hold, vote, use, employ, sell, mortgage, lend,
pledge, or otherwise dispose of, and otherwise use and deal in and with,
shares or other interests in or obligations of domestic or foreign
corporations, associations, general or limited partnerships (including the
power to be admitted as a partner thereof and to exercise the rights and
perform the duties created thereby), trusts, limited liability companies
(including the power to be admitted as a member or appointed as a manager
thereof and to exercise the rights and perform the duties created
thereby), or individuals or direct or indirect obligations of the United
States or of any other Governmental Agency;
(v) to lend money for any proper purpose, to invest and
reinvest funds and to take and hold real and personal property for the
payment of funds so loaned or invested;
<PAGE>
10
(vi) to sue and be sued, complain and defend and
participate in administrative or other proceedings, in its name;
(vii) to appoint employees and agents of IX, L.L.C.,
define their duties and fix their compensation;
(viii) to indemnify any Person in accordance with the Act
and to obtain any and all types of insurance;
(ix) to cease its activities and cancel its Certificate;
(x) to negotiate, enter into, renegotiate, extend, renew,
terminate, modify, amend, waive, execute, acknowledge or take any other
action with respect to any lease, contract or security agreement in
respect of any assets of IX, L.L.C.;
(xi) to borrow money and issue evidences of indebtedness,
and to secure the same by a mortgage, pledge or other lien on the assets
of IX, L.L.C.;
(xii) to pay, collect, compromise, litigate, arbitrate or
otherwise adjust or settle any and all other claims or demands of or
against IX, L.L.C. or to hold such proceeds against the payment of
contingent liabilities; and
(xiii) to make, execute, acknowledge and file any and all
documents or instruments necessary, convenient or incidental to or for the
furtherance of the purpose of IX, L.L.C.
(b) Subject to the terms of the Master Investors Rights
Agreement, dated as of October 18, 1999 (the "Master Investors Rights
Agreement"), by and among IX, L.L.C., IX, Inc., IX Holding and the other persons
named therein, IX, L.L.C. may merge with, or consolidate into, another Delaware
limited liability company or "other business entity" (as defined in Section
18-209(a) of the Act) upon the approval of the Board.
Article 3
Interests; Commitments; Closing; Contributions
Section 3.1 Interests.
(a) Each Member's Interest shall entitle such Member to an
interest in the income, losses and distributions of IX, L.L.C. in accordance
with Article 4.
<PAGE>
11
(b) A Member's Interest shall for all purposes be personal
property. A Member has no interest in specific property of IX, L.L.C.
Section 3.2 Capital Contributions. Each of the Members has
contributed to IX, L.L.C. in exchange for a Class A Interest or Class B
Interest, as set forth on Schedule IA hereto, the amount set forth opposite such
Member's name under the heading "Capital Contribution" on Schedule IA hereto (in
each case, such Member's "Capital Contribution").
Section 3.3 Additional Mandatory Capital Contributions. (a) No
Member shall have any obligation to make any additional contributions to the
capital of IX, L.L.C.
(b) Notwithstanding any other provision in this Section 3.3,
as provided in Section 8.5 of the Master Investors Rights Agreement, upon the
exercise of any management option in IX Holding, IX Holding shall be obligated
to contribute the amount of the exercise price of such option to IX, L.L.C. At
the time of any such contribution, (x) the adjustment to the Members' Capital
Accounts pursuant to clause (c) of the definition of Net Income shall be made in
such a way as to cause IX Holding's and Greenhill's respective Capital Account
balances to be consistent with the principles set forth in Exhibit A to the
License Agreement, and (y) the Members' respective Percentage Interests shall be
adjusted such that (i) the Percentage Interest of IX Holding shall be equal to a
fraction, the numerator of which is equal to the aggregate capital contribution
of IX Holding and the denominator of which is equal to the aggregate capital
contributions of all of the Members and (ii) the aggregate Percentage Interests
of IX, Inc. and Greenhill are equal to a fraction, the numerator of which is
equal to the aggregate capital contributions of IX, Inc. and Greenhill and the
denominator of which is equal to the aggregate capital contributions of all of
the Members, and reduction in their aggregate Percentage Interests to be
allocated between them in proportion to their respective Percentage Interests
immediately prior to adjustment. .
Article 4
Capital Accounts; Allocations; Distributions
Section 4.1 Capital Accounts.
(a) There shall be established for each Member on the books of
IX, L.L.C. a capital account (the "Capital Account") reflecting the excess
(deficit) of (a) the sum of (i) such Member's aggregate capital contributions,
(ii) such Member's share of Net Income and any items in the nature of income or
gain that are specifically allocated to such Member and (iii) the amount of any
IX, L.L.C. liabilities assumed by such Member or which are secured by any
property distributed
<PAGE>
12
to such Member over (b) the sum of (i) such Member's share of Net Losses and any
items in the nature of losses or expenses that are specifically allocated to
such Member, (ii) any distributions to such Member and (iii) liabilities of such
Member assumed by IX, L.L.C. or which are secured by any property contributed by
such Member to IX, L.L.C. In determining the amount of any liability for
purposes of this Section 4.1, there shall be taken into account ss. 752(c) of
the Code and any other applicable provisions of the Code and Treasury
Regulations.
(b) Notwithstanding any other provision in this Section 4.1 or
elsewhere in this Agreement, each Member's Capital Account shall be maintained
and adjusted in accordance with the Code and the Treasury Regulations
thereunder, including ss.ss. 1.704-1(b)(2)(iv) and 1.704-2 of the Treasury
Regulations. It is intended that appropriate adjustments shall thereby be made
to Capital Accounts to give effect to any income, gain, loss or deduction (or
items thereof) that is allocated pursuant to this Agreement.
Section 4.2 Allocation of Net Income. Except as otherwise provided
in this Article 4, Net Income of IX, L.L.C. for any period beginning as of the
effectiveness of this Agreement (a "Post-Amendment Period") shall be allocated
as follows and in the following order of priority:
(a) First, to the Class A Interest holder, to reverse prior
allocations of Net Loss pursuant to Section 4.3(a), until such Class A Interest
holder has received aggregate allocations of Net Income pursuant to this Section
4.2(a) for the current and all prior periods sufficient to offset any Net Loss
allocated to such Member pursuant to Section 4.3(a) for all prior periods; and
(b) Thereafter, to the Members, in accordance with their
respective Percentage Interests.
(c) Notwithstanding the foregoing, if immediately following
any Capital Contribution and adjustments described in Section 3.3(b) the
Percentage Interest of IX Holding is greater than the percentage determined by
dividing the Excess Capital Account of IX Holding by the aggregate Excess
Capital Accounts of all Members (determined in each case after taking into
account the adjustment referred to in clause (c) of the definition of Net
Income), then all Net Income of IX, L.L.C. shall be allocated to IX Holding
until such percentage is equal to the Percentage Interest of IX Holding.
Section 4.3 Allocation of Net Loss. Except as otherwise provided in
this Article 4, Net Loss of IX, L.L.C. for any fiscal period shall be allocated
as follows and in the following order of priority:
(a) First, to the Class A Interest holder until such Class A
Interest holder has received aggregate allocations of Net Loss pursuant to this
Section
<PAGE>
13
4.3(a) in excess of such Class A Interest holder's aggregate allocations of Net
Income pursuant to Section 4.2(a) for the current and all prior periods in an
amount equal to $25 million; and
(b) Thereafter, to the Members in accordance with their
respective Percentage Interests.
Section 4.4 Additional Allocation Provisions.
(a) Regulatory Allocations. Notwithstanding the foregoing
provisions of this Article 4, the following special allocations shall be made in
the following order of priority:
(i) If there is a net decrease in Company Minimum Gain
during a IX, L.L.C. taxable year, then each Member shall be allocated
items of IX, L.L.C. income and gain for such taxable year (and, if
necessary, for subsequent years) in an amount equal to such Member's share
of the net decrease in Company Minimum Gain, determined in accordance with
ss. 1.704- 2(g)(2) of the Treasury Regulations. This Section 4.4(a)(i) is
intended to comply with the minimum gain chargeback requirements of ss.
1.704-2(f) of the Treasury Regulations and shall be interpreted
consistently therewith.
(ii) If there is a net decrease in Member Minimum Gain
attributable to a Member Nonrecourse Debt during any IX, L.L.C. taxable
year, each Member who has a share of the Member Minimum Gain attributable
to such Member Nonrecourse Debt, determined in accordance with ss.
1.704-2(i)(5) of the Treasury Regulations, shall be specially allocated
items of IX, L.L.C. income and gain for such taxable year (and, if
necessary, for subsequent years) in an amount equal to such Member's share
of the net decrease in Member Minimum Gain attributable to such Member
Nonrecourse Debt, determined in a manner consistent with the provisions of
ss. 1.704-2(g)(2) of the Treasury Regulations. This Section 4.4(a)(ii) is
intended to comply with the partner nonrecourse debt minimum gain
chargeback requirement of ss. 1.704-2(i)(4) of the Treasury Regulations
and shall be interpreted consistently therewith.
(iii) If any Member unexpectedly receives an adjustment,
allocation or distribution of the type contemplated by ss. 1.704-
1(b)(2)(ii)(d)(4), (5), or (6) of the Treasury Regulations, items of
income and gain shall be allocated to all such Members (in proportion to
the amounts of their respective Adjusted Capital Account Deficits) in an
amount and manner sufficient to eliminate the Adjusted Capital Account
Deficit of such Member as quickly as possible. It is intended that this
Section 4.4(a)(iii) qualify and be construed as a "qualified income
offset" within the meaning of ss. 1.704-
<PAGE>
14
1(b)(2)(ii)(d) of the Treasury Regulations and shall be interpreted
consistently therewith.
(iv) If the allocation of Net Loss to a Member as
provided in Section 4.3 hereof would create or increase an Adjusted
Capital Account Deficit, there shall be allocated to such Member only that
amount of Net Loss as will not create or increase an Adjusted Capital
Account Deficit. The Net Loss that would, absent the application of the
preceding sentence, otherwise be allocated to such Member shall be
allocated to the other Members in accordance with their relative
Percentage Interests, subject to the limitations of this Section
4.4(a)(iv).
(v) To the extent that an adjustment to the adjusted tax
basis of any IX, L.L.C. assets pursuant to ss. 734(b) of the Code, or ss.
743(b) of the Code is required, pursuant to ss. 1.704-1(b)(2)(iv)(m)(2) of
the Treasury Regulations or ss. 1.704-1(b)(2)(iv)(m)(4) of the Treasury
Regulations, to be taken into account in determining Capital Accounts as
the result of a distribution to a Member in complete liquidation of its
Interest in IX, L.L.C., the amount of such adjustment to the Capital
Accounts shall be treated as an item of gain (if the adjustment increases
the basis of the asset) or loss (if the adjustment decreases such basis),
and such gain or loss shall be specially allocated to the Members in
accordance with their Percentage Interests in IX, L.L.C. in the event that
ss. 1.704-1(b)(2)(iv)(m)(2) of the Treasury Regulations applies, or to the
Members to whom such distribution was made in the event that ss.
1.704-1(b)(2)(iv)(m)(4) of the Treasury Regulations applies.
(vi) The Nonrecourse Deductions for each taxable year of
IX, L.L.C. shall be allocated to the Members in proportion to their
Percentage Interests.
(vii) The Member Nonrecourse Deductions shall be
allocated each year to the Member that bears the economic risk of loss
(within the meaning of ss. 1.752-2 of the Treasury Regulations) for the
Member Nonrecourse Debt to which such Member Nonrecourse Deductions are
attributable.
(viii) The allocations set forth in Section 4.4(a)(i)
through (vii) hereof (the "Regulatory Allocations") are intended to comply
with certain requirements of ss.ss. 1.704-1(b) and 1.704-2(i) of the
Treasury Regulations. Notwithstanding the provisions of Sections 4.2 and
4.3, the Regulatory Allocations shall be taken into account in allocating
other items of income, gain, loss and deduction among the Members so that,
to the extent possible, the net amount of such allocations of other items
and the Regulatory Allocations to each Member shall be equal to the net
amount that would have
<PAGE>
15
been allocated to each such Member if the Regulatory Allocations had not
occurred.
(b) Tax Allocations.
(i) Except as provided in Section 4.4(b)(ii) hereof, for
income tax purposes under the Code and the Treasury Regulations each IX,
L.L.C. item of income, gain, loss and deduction shall be allocated between
the Members as its correlative item of "book" income, gain, loss or
deduction is allocated pursuant to this Article 4.
(ii) Tax items with respect to IX, L.L.C. assets that
are contributed to IX, L.L.C. with a Gross Asset Value that varies from
its basis in the hands of the contributing Member immediately preceding
the date of contribution shall be allocated between the Members for income
tax purposes pursuant to Treasury Regulations promulgated under ss. 704(c)
of the Code, so as to take into account such variation. IX, L.L.C. shall
account for such variation under any method approved under ss. 704(c) of
the Code and the applicable Treasury Regulations as chosen by the Tax
Matters Partner. If the Gross Asset Value of any IX, L.L.C. asset is
adjusted pursuant to subparagraph (b), or subparagraph (c), of the
definition of Gross Asset Value, subsequent allocations of income, gain,
loss and deduction with respect to such IX, L.L.C. asset shall take
account of any variation between the adjusted basis of such IX, L.L.C.
asset for Federal income tax purposes and its Gross Asset Value in the
same manner as under ss. 704(c) of the Code and the Treasury Regulations
promulgated thereunder under any method approved under ss. 704(c) of the
Code and the applicable Treasury Regulations as chosen by the Tax Matters
Partner. Allocations pursuant to this Section 4.4(b)(ii) are solely for
purposes of federal, state and local taxes and shall not affect, or in any
way be taken into account in computing, any Member's Capital Account or
share of Net Income, Net Losses and any other items or distributions
pursuant to any provision of this Agreement.
(c) Other Provisions.
(i) For any fiscal year of IX, L.L.C. during which any
part of an Interest is Transferred between the Members or to another
Person, the portion of the Net Income, Net Losses and other items of
income, gain, loss, deduction and credit that are allocable with respect
to such part of an Interest shall be apportioned between the Transferor
and the Transferee under any method allowed pursuant to ss. 706 of the
Code and the applicable Treasury Regulations as agreed to by the
Transferor and Transferee.
(ii) For purposes of determining a Member's proportional
share of the "excess nonrecourse liabilities" of IX, L.L.C. within
<PAGE>
16
the meaning of ss. 1.752-3(a)(3) of the Treasury Regulations, each
Member's interest in Net Income shall be such Member's Percentage
Interest.
Section 4.5 Distributions. Except as set forth in Section 13.3(d),
distributions shall be made to the Members at the times and in the
aggregate amounts determined by the Board. Such distributions shall be
allocated to the Members in accordance with their respective Percentage
Interests.
Section 4.6 Tax Distributions.
(a) Notwithstanding the provisions of Section 4.5, if it is
anticipated that the allocations of Net Income for any year pursuant to Section
4.2(b) will result in the Members recognizing income with respect to IX, L.L.C.
for such year, the Board shall make a good faith estimate of the amount of such
taxable income to be recognized by each of the Members, and distributions of
cash shall be made to each of the Members in an amount equal to the Effective
Tax Rate multiplied by such Member's allocations of Net Income for such year
pursuant to Section 4.2(b). Distributions required to be made pursuant to this
Section 4.6(a) shall be made in quarterly installments at such times as shall
enable the Members to make quarterly estimated tax payments.
(b) The computation of the amounts required to be distributed
pursuant to Section 4.6(a) for any year shall be adjusted (i) prior to each
distribution for such year, (ii) upon the filing of IX, L.L.C.'s Federal income
tax return for such year, (iii) upon any Final Determination of IX, L.L.C.'s
taxable income for such year and (iv) at any other time when in the good faith
determination of the Tax Matters Partner (subject to the approval of IX Holding,
which approval shall not be unreasonably withheld) it appears that a prior
estimate has been incorrect, in each case so as to take into account actual
determinations and/or revised estimates of the Members' shares of taxable income
for such year for Federal income tax purposes. Following any such adjustment,
the amounts to be distributed pursuant to Section 4.6(a) shall be adjusted
appropriately, or additional distributions shall be made, so as to give effect
to such actual determinations and/or revised estimates.
Section 4.7 Distributions in Cash. Except as otherwise provided
herein, distributions made pursuant to this Agreement may be made only in cash.
Section 4.8 Restrictions on Distributions. Notwithstanding any
provision to the contrary contained in this Agreement, IX, L.L.C. shall not make
a distribution to any Member with respect to such Member's Interest if such
distribution would violate Section 18-607 of the Act or other applicable law.
<PAGE>
17
Article 5
Board of Representatives
Section 5.1 General. The Board of Representatives of IX, L.L.C. (the
"Board") shall have authority over the affairs and property of IX, L.L.C. in
accordance with the purposes and limitations set forth in this Agreement. The
Board may exercise all powers and perform all acts not required to be exercised
or performed by the Members under this Agreement or the Act. Subject to the
authority of the Board, the day-to-day management of IX, L.L.C. shall be
conducted by the officers of IX, L.L.C.
Section 5.2 The Board.
(a) The Board shall consist of five representatives designated
as follows:
(i) three representatives shall be designated by IX,
Inc.; and
(ii) two representatives shall be designated by IX
Holding (each, a "Representative" and, all together, the
"Representatives").
IX, Inc. hereby designates Walter A. Forbes, John Sculley and William E. Lipner
as its initial Representatives; IX Holding hereby designates David C. Hodgson as
one of its initial Representatives.
(b) In the event of a "Put Default" (as defined in the Master
Investors Rights Agreement), the number of Representatives on the Board shall
automatically be increased from five to seven, of which four Representatives
shall be designated by IX Holding and three representatives shall be designated
by IX, Inc. Upon cure by IX, L.L.C. of any Put Default or repayment of the
Company Notes (as defined in the Master Investors Rights Agreement) following a
Put Default, then, notwithstanding anything to the contrary contained herein,
the Board shall consist solely of three Representatives, all of whom shall be
designated by IX, Inc.
(c) A Member may change any of its Representatives at any time
by notice to the other Members, such change to be effective two Business Days
following such notice or such other date as provided in such notice or agreed by
the Members but in no event in any manner as would nullify any action
theretofore taken by the Board prior to the giving of such notice. A Member
shall fill any vacancy resulting from the removal, death or resignation of any
of its Representatives as promptly as possible.
<PAGE>
18
(d) No Representative in his or her capacity as a
Representative (or Chairman) shall have the legal authority individually to bind
IX, L.L.C.
(e) Each Representative shall serve without compensation
(other than receipt of reimbursement of reasonable expenses in connection with
such Representative's service as a Representative) from IX, L.L.C.
Section 5.3 Meetings. The Board shall meet quarterly or upon the
call of any three Representatives or the Chairman, either in person or by means
of telephone or other communications facility that permits all persons
participating in the meeting to hear each other, or by video conference, at the
IX, L.L.C. offices or such other place as may be agreed from time to time by the
Board (unless such meeting shall be waived by a writing signed by all the
Representatives). Written notice of all meetings of the Board shall be given, in
compliance with the procedures set forth in Section 14.4, to all Representatives
not less than five days before the time of the meeting (which notice may be
waived by any Representative in writing or by participating in such meeting
except for the purpose of objecting to the transaction of any business on the
grounds that the meeting is not lawfully called); provided, however, that notice
of special meetings to discuss matters requiring prompt attention may be given
to all Representatives, facsimile, email or telephone not less than 24 hours
before the time of the meeting. If the Secretary of IX, L.L.C. is not present at
a meeting of the Board, then the Board shall designate an employee or advisor of
IX, L.L.C. or a Representative to serve as the secretary of the Board and such
person shall record and promptly distribute to each Representative the minutes
of any such meeting.
Section 5.4 Quorum. No action may be taken at a meeting of the Board
unless a simple majority (i.e., more than 50%) of the Representatives is present
(in person or by proxy) at such meeting.
Section 5.5 Voting; Proxies.
(a) Except as set forth in Section 5.5(b), the Board shall act
by a vote of a simple majority (i.e., more than 50%) of the entire Board at a
meeting or by written consent as provided in Section 5.5(b). Each Representative
shall have one vote, which may be exercised in person or by proxy. Each proxy
shall be revocable at the pleasure of the Representative executing it, provided
that unless a proxy by its terms expressly provides for a specific revocation
date, revocation of such proxy shall not be effective unless and until such
revocation is executed in writing by the Representative who executed such proxy
and such revocation is filed with the Secretary of the Board prior to the voting
of such proxy.
<PAGE>
19
(b) The following actions shall require the affirmative vote
of a majority of the Representatives, including at least one Representative
designated by IX Holding:
(i) Any material change in the Business of IX, L.L.C.;
(ii) Permitting IX, L.L.C. to, directly or indirectly,
enter into or suffer to exist any transaction or series of related transactions
(including the sale, purchase, exchange or lease of assets, properties or
services) with any Member or any Affiliate of a Member (each an "Affiliate
Transaction"), or extend, renew, waive or otherwise modify the terms of any
Affiliate Transaction (each a "Modification of an Affiliated Transaction");
provided, however, that the affirmative vote of at least one Representative
designated by IX Holding is not required for any Affiliate Transaction or
Modification of an Affiliated Transaction if such transaction is on terms no
less favorable than those IX, L.L.C. would obtain in a comparable arm's length
transaction and such transaction is valued at less than $100,000 per annum; and
(iii) any amendment or other modification of this
Agreement other than those set forth in Section 14.13(a)(i)-(vi).
(c) Any action required or permitted to be taken at any
meeting of the Board may be taken without a meeting, without prior notice and
without a vote if a consent in writing, setting forth the action so taken, shall
be signed by all of the Representatives and such consent is filed with the
minutes of the proceedings of the Board.
Section 5.6 Fiduciary Duties. Subject to the provisions of the
Master Investors Rights Agreement, each Representative shall have the same
fiduciary duties as a member of the board of directors of a Delaware corporation
(assuming such corporation had in its certificate of incorporation a provision
eliminating certain liabilities of directors as provided in Section 102(b)(7) of
the General Corporation Law of the State of Delaware).
Section 5.7 Committees of the Board. The Board may, by resolution
passed by a vote of the entire Board, designate one or more committees, each
committee to consist of two or more Representatives of IX, L.L.C. and each to
consist of a majority of Representatives designated by IX, Inc.; provided,
however, that any such committee must consist of at least one Representative
designated by IX Holding. The Board may designate one or more Representatives as
alternate members of any committee, who may replace any absent or disqualified
member at any meeting of such committee. If a member of a committee shall be
absent from any meeting, or disqualified from voting thereat, the remaining
member or members present and not disqualified from voting, whether or not such
member or members
<PAGE>
20
constitute a quorum, may, by a unanimous vote, appoint another member of the
Board to act at the meeting in the place of any such absent or disqualified
member. Any such committee, to the extent provided in the resolution of the
Board passed as aforesaid, shall have and may exercise all the powers and
authority of the Board in the management of the business and affairs of IX,
L.L.C., and may authorize the seal of IX, L.L.C. to be impressed on all papers
that may require it, to the extent permitted by the Act, the Certificate and
this Agreement; provided, however, that the authority and power relating to the
actions set forth in Section 5.5(b) shall remain exclusively with the Board, and
shall not be delegated to any committee thereof. At all meetings of any such
committee, a majority of the total number of members of the committee shall
constitute a quorum for the transaction of business, and the vote of a majority
of the members of the committee at which there is a quorum shall be the act of
the committee. Each committee shall keep regular minutes of its meetings. Unless
the Board otherwise provides, each committee designated by the Board may make,
alter and repeal rules for the conduct of its business, other than on rules set
forth in this Section 5.7. In the absence of such rules each committee shall
conduct its business in the same manner as the Board conducts its business
pursuant to Article 5 of this Agreement.
Article 6
Officers
Section 6.1 Executive Officers. The Board shall elect as executive
officers of IX, L.L.C. a Chairman and Chief Executive Officer, a President, a
Chief Operating Officer, a Secretary and a Treasurer, and may elect as executive
officers of IX, L.L.C. one or more Chairmen Emeritus, Vice Chairmen, Executive
Vice Presidents and Senior Vice Presidents. All such executive officers elected
by the Board are referred to in this Agreement as "Executive Officers"and any
such position filled by an Executive Officer is referred to as an "Executive
Office". The Board may from time to time appoint such other officers and agents
of IX, L.L.C. as the interests of IX, L.L.C. may require and may fix their
duties and terms of office. To the extent permitted by law, any number of
offices may be held by the same person.
Section 6.2 Other Officers. In addition to the Executive Officers
elected by the Board pursuant to Section 6.1, the Chairman and Chief Executive
Officer, the President and the Chief Operating Officer may from time to time
appoint such other officers of IX, L.L.C., including Vice Presidents, Assistant
Vice Presidents, Staff Vice Presidents, Assistant Secretaries, Assistant
Treasurers and Controllers, as the interests of IX, L.L.C. may require (the
"Other Officers"); provided, however, that no Other Officer may be appointed to
the office of Chairman Emeritus, Vice Chairman, President, Chief Operating
Officer, Executive Vice President, Senior Vice President, Secretary or
Treasurer. Each appointment of an Other Officer shall be in writing and shall
set forth the duties of the Other Officer
<PAGE>
21
being appointed and, subject to Section 6.3, such officer's term of office. Any
such position filled by an Other Officer is referred to in this Agreement as an
"Other Office".
Section 6.3 Term of Office. Each Executive Officer shall hold office
until such officer's successor is elected and qualified by the Board, or until
such officer's earlier death, resignation, retirement or removal. Each Other
Officer shall hold office for a term to be decided by the appointing Chairman
and Chief Executive Officer, President or Chief Operating Officer; provided,
however, that no such term shall be for a period longer than the term of office
of the appointing Chairman and Chief Executive Officer, President or Chief
Operating Officer.
Section 6.4 Removal of Officers. Any Executive Officer or Other
Officer may be removed from office with or without cause at any time by the
Board. Any Other Officer may also be removed from office at any time with or
without cause by the Chairman and Chief Executive Officer, the President or the
Chief Operating Officer.
Section 6.5 Vacancies. A vacancy in any Executive Office or Other
Office arising from any cause may be filled for the unexpired portion of the
term by the Board. A vacancy in any Other Office arising from any cause may also
be filled for the unexpired portion of the term by the Chairman and Chief
Executive Officer, the President or the Chief Operating Officer.
Section 6.6 Compensation of Officers. The salaries or compensation,
if any, of all Executive Officers shall be fixed by the Board. The salaries or
compensation of the Other Officers and division officers, if there be any, may
be fixed from time to time by the Board, the Chairman and Chief Executive
Officer, the President or the Chief Operating Officer.
Section 6.7 Chairman and Chief Executive Officer. The Chairman and
Chief Executive Officer shall be Chairman of the Board and of the Executive
Committee, if any, shall be the chief executive officer of IX, L.L.C. and,
subject to the control of the Board, shall have general charge and control of
the business and affairs of IX, L.L.C. with power and authority, when acting in
the ordinary course of business of IX, L.L.C., in the name and on behalf of IX,
L.L.C. and under its seal attested by the Secretary or an Assistant Secretary of
IX, L.L.C. or otherwise, to (i) execute and deliver agreements, contracts,
certificates and other instruments, (ii) purchase and accept delivery of stocks,
bonds, evidences of interest and indebtedness, rights and options to acquire the
same, and all other securities, whether negotiable or non-negotiable, (iii)
sell, assign, transfer and deliver all stocks, bonds, evidence of interest and
indebtedness, rights and options to acquire the same, and all other securities,
corporate or otherwise, now or hereafter standing in the name of or owned
beneficially by IX, L.L.C., (iv) open and maintain accounts with banking
institutions, including investment banks and brokerage firms, and (v) borrow
from
<PAGE>
22
banks and other financial institutions, including investment banks and brokerage
firms, such sums of money for such periods of time and upon such terms as such
officer shall deem necessary or appropriate, and execute and deliver notes,
other evidences of indebtedness and agreements for the repayment of any sums so
borrowed in the name and on behalf of IX, L.L.C. Such officer shall preside at
all meetings of Members of IX, L.L.C. and the Board at which such officer is
present. Such officer shall perform all other duties and enjoy all other powers
which are commonly incident to the office of Chairman and Chief Executive
Officer, or are delegated to such officer from time to time by the Board or are
or may at any time be authorized or required by law.
Section 6.8 Chairman Emeritus and Vice Chairmen of the Board. The
Chairman Emeritus and Vice Chairmen of the Board, if there by any, shall be
members of the Board and shall have such powers and perform such duties as may
from time to time be assigned to them by the Board, the Chairman and Chief
Executive Officer, the President or the Chief Operating Officer.
Section 6.9 President. The President shall be responsible for
directing, administering and coordinating the business operations of IX, L.L.C.
in accordance with policies, goals and objectives established by the Board and
the Chairman and Chief Executive Officer with power and authority, when acting
in the ordinary course of business of IX, L.L.C., in the name and on behalf of
IX, L.L.C. and under its seal attested by the Secretary or an Assistant
Secretary of IX, L.L.C., or otherwise, to (i) execute and deliver agreements,
contracts, certificates and other instruments, (ii) purchase and accept delivery
of stocks, bonds, evidences of interest and indebtedness, rights and options to
acquire the same, and all other securities, whether negotiable or
non-negotiable, (iii) sell, assign, transfer and deliver all stocks, bonds,
evidences of interest and indebtedness, rights and options to acquire the same,
and all other securities, corporate or otherwise, now or hereafter standing in
the name of or owned beneficially by IX, L.L.C., (iv) open and maintain accounts
with banking institutions, including investment banks and brokerage firms, and
(v) borrow from banks and other financial institutions, including investment
banks and brokerage firms, such sums of money for such periods of time and upon
such terms as such officer shall deem necessary or appropriate, and execute and
delivery notes, other evidences of indebtedness and agreements for the repayment
of any sums so borrowed in the name and on behalf of IX, L.L.C. Such officer
shall perform all other duties and enjoy all other powers which are commonly
incident to the office of President or which are delegated to such officer by
the Chairman and Chief Executive Officer. In the absence of the Chairman and
Chief Executive Officer, the President shall perform all duties and may exercise
all powers of the Chairman and Chief Executive Officer and shall preside at
meetings of Members of IX, L.L.C. and the Board.
Section 6.10 Chief Operating Officer. The Chief Operating Officer
shall be the chief operating officer of IX, L.L.C. responsible for directing,
administering and coordinating the business operations of IX, L.L.C. in
accordance
<PAGE>
23
with policies, goals and objectives established by the Board and the Chairman
and Chief Executive Officer with power and authority, when acting in the
ordinary course of business of IX, L.L.C., in the name and on behalf of IX,
L.L.C. and under its seal attested by the Secretary or an Assistant Secretary of
IX, L.L.C., or otherwise, to (i) execute and deliver agreements, contracts,
certificates and other instruments, (ii) purchase and accept delivery of stocks,
bonds, evidences of interest and indebtedness, rights and options to acquire the
same, and all other securities, whether negotiable or non-negotiable, (iii)
sell, assign, transfer and deliver all stocks, bonds, evidences of interest and
indebtedness, rights and options to acquire the same, and all other securities,
corporate or otherwise, now or hereafter standing in the name of or owned
beneficially by IX, L.L.C., (iv) open and maintain accounts with banking
institutions, including investment banks and brokerage firms, and (v) borrow
from banks and other financial institutions, including investment banks and
brokerage firms, such sums of money for such periods of time and upon such terms
as such officer shall deem necessary or appropriate, and execute and delivery
notes, other evidences of indebtedness and agreements for the repayment of any
sums so borrowed in the name and on behalf of IX, L.L.C. Such officer shall
perform all other duties and enjoy all other powers which are commonly incident
to the office of Chief Operating Officer, or which are delegated to such officer
by the Chairman and Chief Executive Officer. In the absence of the Chairman and
Chief Executive Officer and the President, the Chief Operating Officer shall
perform all duties and may exercise all powers of the Chairman and Chief
Executive Officer and the President and shall preside at meetings of Members of
IX, L.L.C. and the Board.
Section 6.11 Executive Vice Presidents, Senior Vice Presidents and
Vice Presidents Elected by the Board. The Executive Vice Presidents, the Senior
Vice Presidents and the Vice Presidents elected by the Board pursuant to Section
6.1, if there be any, shall have such powers and perform such duties as may from
time to time be assigned to them by the Board, the Chairman and Chief Executive
Officer, the President or the Chief Operating Officer.
Section 6.12 Secretary. The Secretary shall record the proceedings
of all meetings of Members of IX, L.L.C. and of the Board which such officer
attends in books to be kept for that purpose. Such officer shall attend to the
giving and serving of all notices on behalf of IX, L.L.C., shall have custody of
the records and the seal of IX, L.L.C. and shall affix the seal to any
instrument which requires the seal of IX, L.L.C. Such officer shall, in general,
perform all the duties and functions incident to the office of Secretary and
shall also perform such other duties as may from time to time be assigned to
such officer by the Board, the Chairman and Chief Executive Officer, the
President or the Chief Operating Officer.
Section 6.13 Treasurer. The Treasurer shall have custody and control
of all funds and securities of IX, L.L.C., except as otherwise provided by the
Board. Such officer shall keep full and accurate accounts of all receipts and
disbursements of IX, L.L.C. in books to be kept for that purpose, shall deposit
all money and other
<PAGE>
24
valuable effects in the name and to the credit of IX, L.L.C. in such
depositories as may be designated by the Board, and shall render to the Chairman
and Chief Executive Officer, the President, the Chief Operating Officer or the
Board, whenever any of them may require it, an account of all such officer's
transactions as Treasurer and an account of the financial condition of IX,
L.L.C. Such officer shall also perform such other duties as may from time to
time be assigned to such officer by the Board, the Chairman and Chief Executive
Officer, the President or the Chief Operating Officer.
Section 6.14 Powers and Duties of Other Officers. The Other Officers
shall have such powers and perform such duties as may from time to time be
assigned to them by the Board, the Chairman and Chief Executive Officer, the
President or the Chief Operating Officer.
Article 7
Members
Section 7.1 Members. The name and the business, residence or mailing
address of each of the Members are set forth on Schedule IA.
Section 7.2 Admission of New Members. No new Members shall be
admitted except in accordance with Article 11. The Members also covenant and
agree that if new Interests are issued following compliance with Sections 2, 3
or 4 of the Master Investors Rights Agreement, they shall in good faith and as
expeditiously as possible admit any third party that purchases such Interests as
a Member and take all necessary action to amend this Agreement to admit such
third party and to make whatever equitable adjustments to the parties' Interests
as are necessary.
Section 7.3 Power of Members. The Members shall have the power to
exercise any and all rights or powers granted to Members pursuant to the express
terms of this Agreement and the Act. Except as otherwise specifically provided
by this Agreement or required by the Act, no Member shall have the power to act
for or on behalf of, or to bind, IX, L.L.C.
Section 7.4 Meetings.
(a) Meetings of the Members shall be held at such times as the
Board shall from time to time determine or at the request of a Member.
(b) Written notice shall be given to each Member of each
meeting of the Members, which notice shall state the place, date, time and
purpose of such meeting. Notice of each such meeting shall be given to each
Member, if by mail, not more than 30 days and not less than 15 days (or if by
telecopy, telegraph, cable, or other form of recorded communication, or
delivered personally or by
<PAGE>
25
telephone, not less than ten days before the day on which such meeting is to be
held. A written waiver of notice, signed by the Member entitled to notice,
whether before or after the time of the meeting referred to in such waiver,
shall be deemed equivalent to notice. Neither the business to be transacted at,
nor the purpose of any meeting of the Members need be specified in any written
waiver of notice thereof. Attendance of a Member at a meeting of the Members
shall constitute a waiver of notice of such meeting, except as provided by law.
(c) The Members may hold meetings at IX, L.L.C.'s principal
place of business or such other place as IX, Inc. and IX Holding may mutually
consent.
(d) Any Member may participate in a meeting of the Members by
means of conference telephone or similar communications equipment by means of
which all persons participating in the meeting can hear each other, and
participation in a meeting by such means shall constitute presence in person at
such meeting.
(e) At each meeting of the Members, the Chairman shall act as
chairman of the meeting and preside. If the Secretary of IX, L.L.C. is not
present at a meeting of the Members then the Chairman shall appoint someone at
the meeting to act as secretary and to keep the minutes of such meeting.
Section 7.5 Quorum and Voting. A quorum of any meeting of the
Members shall require the presence of IX, Inc. and IX Holding. No action at any
meeting may be taken by the Members unless a quorum is present. Each Member
shall be entitled to such voting rights that are proportioned to his, her or its
Percentage Interest. Unless otherwise required by law, the Members shall act by
a vote of a simple majority in interest (i.e, more than 50%) of all the Members;
provided that, such majority includes IX, Inc.
Section 7.6 Actions Without a Meeting. Any action required or
permitted to be taken at any meeting of the Members may be taken without a
meeting, without prior notice and without a vote, if a consent in writing,
setting forth the action so taken, shall be signed by IX, Inc. and IX Holding
and such consent is filed with the minutes of the proceedings of the Members.
Section 7.7 Authorized Representatives. Any Member that is not an
individual may participate in any meeting of the Members by authorizing one or
more representatives of such Member to attend in person or participate by means
of conference telephone or similar communications equipment, and participation
in a meeting by such a duly authorized representative of such Member shall
constitute presence in person at such meeting by such Member; provided that,
only one such representative of a Member may be authorized to vote on any matter
on which such Member is entitled to vote.
<PAGE>
26
Section 7.8 Resignation. A Member may not resign from IX, L.L.C.
prior to a Dissolution Event. A resigning Member shall not be entitled to
receive any distribution and shall not be entitled to receive the Fair Market
Value of its Interest except as expressly provided in this Agreement.
Article 8
Accounting; Financial and Tax Matters
Section 8.1 Accounting Method. IX, L.L.C. shall keep its
accounting records and shall report its profits or losses on the accrual method
of accounting in accordance with GAAP.
Section 8.2 Accounting Records. IX, L.L.C. shall keep complete and
accurate business and accounting records reflecting all transactions of IX,
L.L.C. Such accounting records shall be kept in accordance with GAAP
consistently applied and, to the extent inconsistent therewith, in accordance
with this Agreement. IX, L.L.C. shall also keep all records required to be kept
pursuant to the Act. IX, L.L.C.'s records, together with a copy of this
Agreement and of the Certificate, shall be maintained at the principal place of
business of IX, L.L.C. and shall be subject to inspection or examination by each
Member and its duly authorized representatives at all reasonable times for any
purpose reasonably related to such Member's interest as a member of IX, L.L.C.
Section 8.3 Financial Statements.
(a) As soon as practicable but in any event within 45 days
after the end of the first fiscal period and each of the first three quarters of
each fiscal year of IX, L.L.C., the financial officers of IX, L.L.C. shall
prepare and distribute to each Member financial statements of IX, L.L.C. (which
need not be examined or reported on by an independent certified public
accountant), which shall include a balance sheet of IX, L.L.C. as of the end of
the first fiscal period or such fiscal quarter, as the case may be, a statement
of Net Income and Net Loss for the first fiscal period or such fiscal quarter,
as the case may be, and a statement of cash flows of IX, L.L.C. for the first
fiscal period or such fiscal quarter, as the case may be, all in reasonable
detail, setting forth in each case in comparative form the information for the
corresponding period (or periods) of the previous fiscal year, if any.
(b) As soon as practicable but in any event within 120 days
after the close of each fiscal year of IX, L.L.C., IX, L.L.C. shall cause to be
prepared and delivered to each Member the following financial statements,
accompanied by the audited report thereon of the independent accountants for IX,
L.L.C.: (i) a balance sheet of IX, L.L.C. as at the end of such fiscal year;
(ii) a statement of Net Income and Net Loss for such fiscal year; (iii) a
statement of cash flows of IX, L.L.C. for such fiscal year; and (iv) a statement
of the Members'
<PAGE>
27
Capital Accounts and changes therein for such fiscal year, all in reasonable
detail, setting forth in each case in comparative form all the information for
the corresponding period (or periods) of the previous fiscal year, if any.
(c) IX, L.L.C. shall provide to the Members any other
information about IX, L.L.C.'s financial position and affairs as may be
reasonably requested from time to time by a Member.
Section 8.4 Bank and Investment Accounts. All funds of IX, L.L.C.
shall be deposited in its name, or in such name as may be designated by the
Board, in such checking, savings or other accounts, or held in its name in the
form of such other investments as shall be designated by the Board. The funds of
IX, L.L.C. shall not be commingled with the funds of any Person. All withdrawals
of such deposits or liquidations of such investments by IX, L.L.C. shall be made
exclusively upon the signature or signatures of an officer or officers of IX,
L.L.C. as the Chairman and Chief Executive Officer may designate.
Section 8.5 Tax Matters Partner.
(a) The Tax Matters Partner (as such term is defined in
Section 6231(a)(7) of the Code) of IX, L.L.C. shall be the Person so defined in
Section 1.1 or any successor Tax Matters Partner designated by the Members in
accordance with this Agreement. Each Member, by its execution of this Agreement,
consents to such designation of the Tax Matters Partner, and agrees to execute,
certify, acknowledge, deliver, swear to, file and record at the appropriate
public offices such documents as may be necessary or appropriate to evidence
such consent.
(b) Prompt notice shall be given to the Board and the Members
upon receipt of advice that the Internal Revenue Service or another taxing
authority intends to examine any income tax returns or record or books of IX,
L.L.C. and of any notice from the Internal Revenue Service in any administrative
proceeding at any IX, L.L.C. level relating to the determination of any item of
income, gain, loss, deduction or credit of IX, L.L.C., in each case together
with a copy of such Internal Revenue Service notice (or other taxing authority).
Notwithstanding anything to the contrary herein, the Tax Matters Partner shall
not take any action without the prior approval (not to be unreasonably withheld)
of IX Holding.
Section 8.6 Taxes.
(a) IX, L.L.C. shall prepare, or cause to be prepared, and
shall file all tax returns, be they information returns or otherwise, which are
required to be filed with the Internal Revenue Service, state and local tax
authorities and foreign tax jurisdictions, if any.
<PAGE>
28
(b) IX, L.L.C. shall furnish the Members with all information
relating to IX, L.L.C. required to be reported in the tax returns of the Members
for tax jurisdictions in which IX, L.L.C. is considered to be doing business,
including a report indicating each Member's share for income tax purposes of IX,
L.L.C.'s income, gain, credits, losses and deductions within 75 days after the
end of IX, L.L.C.'s fiscal year.
(c) Except as otherwise provided in this Agreement, including
this Section 8.6(c), all determinations as to tax elections shall be made by the
Tax Matters Partner. The Tax Matters Partner shall cause IX, L.L.C. to make a
Section 754 election upon request of any Member.
(d) IX, L.L.C. shall be treated as a partnership for U.S.
Federal income tax purposes.
Section 8.7 Accounting Decisions. All determinations as to
accounting principles shall be made by the Board in accordance with this
Agreement. IX, L.L.C.'s independent accountants shall be Arthur Andersen LLP or,
any successor accountants designated by the Board.
Article 9
Liability; Exculpation; Indemnification
Section 9.1 Liability of Members; Limitation of Liability.
(a) Except as otherwise required by any non-waivable provision
of the Act (or other applicable law) or as otherwise expressly provided for
herein: (i) no Member shall be personally liable in any manner whatsoever for
any debt, liability or other obligation of IX, L.L.C., whether such debt,
liability or other obligation arises in contract, tort, or otherwise; and (ii)
no Member shall in any event have any liability whatsoever in excess of (A) the
amount of its Capital Contributions, (B) its share of any assets and
undistributed profits of IX, L.L.C. and (C) the amount of any wrongful
distribution to such Member, if, and only to the extent, such Member has actual
knowledge (at the time of the distribution) that such distribution is made in
violation of Section 18-607 of the Act.
(b) Notwithstanding anything to the contrary contained in this
Agreement, in no event shall IX, L.L.C. or any Member be liable for any
consequential or punitive damages, whether foreseeable or not, occasioned by any
failure of a party to perform or the breach of any obligation of a party under
this Agreement or for any cause whatsoever whether or not caused by the
negligence of a party. In no event shall any projections or forecasts by any
Person, unless expressly set forth in this Agreement, be binding as commitments
or, in any way, promises by such Person.
<PAGE>
29
Section 9.2 Exculpation.
(a) For purposes of this Agreement, "Covered Person" shall
mean any Representative, any Member, any Affiliate of a Member, and any officer,
director, shareholder, partner, member, employee or agent of a Member or any
Affiliate thereof, and any officer, employee or authorized agent of IX, L.L.C.
(b) No Covered Person shall be liable to IX, L.L.C. or any
other Covered Person for any claims, losses, liabilities, damages, deficiencies,
judgments, assessments, fines, settlement costs and expenses (including,
interest, penalties, fees and reasonable expenses and disbursements of
attorneys, experts, personnel and consultants incurred by the indemnified party
in any action or proceeding between the indemnifying party and the indemnified
party or between the indemnified party and any third party, or otherwise)
("Losses") incurred by reason of any act or omission performed or omitted by
such Covered Person in good faith on behalf of IX, L.L.C. and in a manner
reasonably believed to be within the scope of authority conferred on such
Covered Person by this Agreement, except that a Covered Person shall be liable
for any such Losses incurred by reason of such Covered Person's gross negligence
or willful misconduct.
(c) A Covered Person shall be fully protected in relying in
good faith upon the records of IX, L.L.C. and upon such information, opinions,
reports or statements presented to IX, L.L.C. by any Person as to matters the
Covered Person reasonably believes are within such other Person's professional
or expert competence and who has been selected with reasonable care by or on
behalf of IX, L.L.C., including information, opinions, reports or statements as
to the value and amount of the assets, liabilities, profits, losses, or any
other facts pertinent to the existence and amount of assets from which
distributions to Members might properly be paid.
Section 9.3 Duties and Liabilities of Covered Persons.
(a) To the extent that, at law or in equity, any Covered
Person has duties (including fiduciary duties) and liabilities related thereto
to IX, L.L.C. or to any other Covered Person, a Covered Person acting under this
Agreement shall not be liable to IX, L.L.C. or to any other Covered Person for
its good faith reliance on the provisions of this Agreement. The provisions of
this Agreement, to the extent that they restrict the duties and liabilities of a
Covered Person otherwise existing at law or in equity, are agreed by the Members
to replace such other duties and liabilities of such Covered Person.
(b) Subject to the provisions of Section 5.6 of this
Agreement, unless otherwise expressly provided herein, (i) whenever a conflict
of interest exists or arises between Covered Persons, or (ii) whenever this
Agreement or
<PAGE>
30
any other agreement contemplated herein provides that a Covered Person shall act
in a manner that is, or provides terms that are, fair and reasonable to IX,
L.L.C. or any Member, the Covered Person shall resolve such conflict of
interest, taking such action or providing such terms, considering in each case
the relative interest of each party (including its own interest) to such
conflict, agreement, transaction or situation and the benefits and burdens
relating to such interests, any customary or accepted industry practices, and
any applicable generally accepted accounting practices or principles. In the
absence of bad faith by the Covered Person, the resolution, action or term so
made, taken or provided by the Covered Person shall not constitute a breach of
this Agreement or any other agreement contemplated herein or of any duty or
obligation of the Covered Person at law or in equity or otherwise.
(c) Subject to the provisions of Section 5.6 of this
Agreement, whenever in this Agreement a Covered Person is permitted or required
to make a decision (i) in its "discretion" or under a grant of similar authority
or latitude, the Covered Person shall be entitled to consider only such
interests and factors as it desires, including its own interests, and shall have
no duty or obligation to give any consideration to any interest of or factors
affecting IX, L.L.C. or any other Person, or (ii) in its "good faith" or under
another express standard, the Covered Person shall act under such express
standard and shall not be subject to any other or different standard imposed by
this Agreement or other applicable law.
Section 9.4 Indemnification by IX, L.L.C.
(a) To the fullest extent permitted by applicable law, IX,
L.L.C. shall indemnify, defend and hold harmless any Covered 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 brought against such Covered Person (in
connection with the business of IX, L.L.C.) or otherwise, whether civil,
criminal, administrative or investigative, including an action by or in the
right of IX, L.L.C. to procure a judgment in its favor, by reason of the fact
that such Covered Person is or was a Representative, Member, officer, employee
or agent of IX, L.L.C., or that such Covered Person is or was serving at the
request of IX, L.L.C. as a partner, member, manager, director, officer, trustee,
employee or agent of another Person, against all Losses. Notwithstanding the
foregoing, no indemnification shall be provided to or on behalf of any Covered
Person if a judgment or other final adjudication adverse to such Covered Person
establishes that his or her acts were committed in bad faith or constituted
intentional misconduct or gross negligence.
(b) Any indemnification under Section 9.4(a) (unless ordered
by a court) shall be made by IX, L.L.C. only as authorized in the specific case
upon a determination that the indemnification of the Covered Person is proper
under the circumstances because he or she has met the applicable standard of
conduct set forth in Section 9.4(a). Such determination shall be made by the
Board or, if the Board so directs, by independent legal counsel in a written
opinion; provided, however, that if
<PAGE>
31
the person seeking indemnification under this section is a Representative, then
such Representative shall not participate in such determination by the Board.
Any indemnification payment shall be payable only out of and to the extent of
IX, L.L.C.'s assets, and no Covered Person shall have any liability therefor.
(c) IX, L.L.C. shall, in the discretion of the Board, pay
expenses incurred in defending any action, suit or proceeding described in
Section 9.4(a) (including reasonable legal fees and expenses of counsel and
other experts) in advance of the final disposition of such action, suit or
proceeding upon receipt by IX, L.L.C. of an undertaking, in form satisfactory to
the Board or IX, L.L.C.'s legal counsel, to repay such amount if it shall be
determined that the Covered Person is not entitled to be indemnified as
authorized by Section 9.4(a).
(d) The indemnification provided by this Section 9.4 shall not
be deemed exclusive of any other rights to indemnification to which those
seeking indemnification may be entitled under any agreement, determination of
the Board or otherwise. The rights to indemnification and reimbursement or
advancement of expenses provided by, or granted pursuant to, this Section 9.4
shall continue as to a Covered Person who has ceased to be a Representative,
Member, officer, employee or agent (or other Person indemnified hereunder) and
shall inure to the benefit of the executors, administrators, legatees and
distributees of such Person.
(e) The provisions of this Section 9.4 shall be a contract
between IX, L.L.C., on the one hand, and each Covered Person who served in such
capacity at any time while this Section 9.4 is in effect, on the other hand,
pursuant to which IX, L.L.C. and each such Covered Person intend to be legally
bound. No repeal or modification of this Section 9.4 shall affect any rights or
obligations with respect to any state of facts then or theretofore existing or
thereafter arising or any proceeding theretofore or thereafter brought or
threatened based in whole or in part upon such state of facts.
Section 9.5 Insurance. IX, L.L.C. may purchase and maintain
insurance, to the extent and in such amounts as the Board shall, in its sole
discretion, deem reasonable, on behalf of Covered Persons and such other Persons
as the Board shall determine, against any liability that may be asserted against
or expenses that may be incurred by any such Person in connection with the
activities of IX, L.L.C. or such indemnities, regardless of whether IX, L.L.C.
would have the power to indemnify such Person against such liability under the
provisions of this Agreement. To the extent consistent with the provisions of
Section 9.4, IX, L.L.C. may enter into indemnity contracts with Covered Person
and adopt written procedures pursuant to which arrangements are made for the
advancement of expenses and the funding of obligations under Section 9.4 hereof
and containing such other procedures regarding indemnification as are
appropriate.
<PAGE>
32
Section 9.6 Notice and Opportunity to Defend.
(a) All claims by a Covered Person shall be asserted and
resolved as follows: promptly after receipt by the Covered Person of notice of
any claim or circumstances which, with the lapse of time, would or might give
rise to a claim or the commencement (or threatened commencement) of a claim
including any action, proceeding or investigation (an "Asserted Liability") that
may result in a Loss, the Covered Person shall give notice thereof (the "Claims
Notice") to the party against whom such claims are asserted under this Article 9
(the "Indemnifying Party"). The Claims Notice shall describe the Asserted
Liability in reasonable detail, and shall indicate the amount (estimated, if
necessary and to the extent feasible) of the Loss that has been or may be
suffered by the Covered Person.
(b) The Indemnifying Party may elect to compromise or defend,
at its own expense and by its own counsel any Asserted Liability. If the
Indemnifying Party elects to compromise or defend such Asserted Liability, it
shall within 30 days (or sooner, if the nature of the Asserted Liability so
requires) notify the Covered Person of its intent to do so, and the Covered
Person shall cooperate, at the expense of the Indemnifying Party, in the
compromise of, or defense against, such Asserted Liability. If the Indemnifying
Party elects not to compromise or defend the Asserted Liability, fails to notify
the Covered Person of its election as herein provided or contests its obligation
to indemnify under this Agreement, the Covered Person may pay, compromise or
defend such Asserted Liability. Notwithstanding the foregoing, neither the
Indemnifying Party nor the Covered Person may settle or compromise any Asserted
Liability over the objection of the other; provided, however, consent to
settlement or compromise shall not be unreasonably withheld or delayed. In any
event, the Covered Person and the Indemnifying Party may participate, at their
own expense, in the defense of such Asserted Liability. If the Indemnifying
Party chooses to defend any Asserted Liability, the Covered Person shall make
available to the Indemnifying Party any books, records or other documents within
its control that are necessary or appropriate for such defense.
Article 10
Certain Covenants
Section 10.1 Other Businesses of the Members. Except as otherwise
provided by written agreement entered into with IX, L.L.C., a Member and any
Affiliate thereof may engage in or possess an interest in other business
ventures of any nature or description, independently or with others, similar or
dissimilar to the Business of IX, L.L.C., and IX, L.L.C. and the other Members
shall have no rights by virtue of this Agreement in and to such independent
ventures or the income or profits derived therefrom, and the pursuit of any such
venture, even if competitive with the Business of IX, L.L.C., shall not be
deemed wrongful or improper.
<PAGE>
33
Article 11
Transfers
Section 11.1 General Restrictions. Members shall not, directly or
indirectly, Transfer all or any fraction of their Interests except in accordance
with the Master Investors Rights Agreement.
Section 11.2 Additional Conditions to Transfers. In addition to all
other terms and conditions contained in this Agreement, no Transfers to which
the provisions of Section 11.1 would apply shall be completed or effective for
any purpose unless prior thereto the Transferee shall have executed and
delivered to IX, L.L.C. an agreement by which it shall become a party to and be
bound by the applicable terms and provisions of this Agreement.
Section 11.3 Effect of Transfer. Upon consummation of any Transfer
of an Interest in accordance with the provisions of this Agreement, (a) the
Transferee shall be admitted as a Member (if not already a Member) and for
purposes of this Agreement such Transferee shall be deemed a Member, (b) the
transferred Interest shall continue to be subject to all the provisions of this
Agreement and (c) the Capital Account (or applicable portion thereof in the case
of a Transfer of less than all of the Interest of the Transferor) of the
Transferor shall be transferred to the name of such Transferee at the close of
business on the effective date of such Transfer. No Transfer shall relieve the
Transferor (or any of its Affiliates) of any of their obligations or liabilities
under this Agreement arising prior to the closing of the consummation of such
Transfer.
Section 11.4 Endorsement of Certificates.
(a) Upon the execution of this Agreement, in addition to any
other legend which IX, L.L.C. may deem advisable under the Securities Act and
certain state securities laws, all certificates representing issued and
outstanding Interests shall be endorsed at all times unless the legend has been
removed pursuant to Section 11.4(d) as follows:
THIS CERTIFICATE IS SUBJECT TO, AND IS TRANSFERABLE ONLY UPON COMPLIANCE
WITH, THE PROVISIONS OF THE AMENDED AND RESTATED LIMITED LIABILITY COMPANY
OPERATING AGREEMENT, DATED AS OF OCTOBER 18, 1999, BETWEEN THE MEMBERS OF
IX, L.L.C. AND THE MASTER INVESTORS RIGHTS AGREEMENT, DATED OCTOBER 18,
1999, BETWEEN IX, INC., IX HOLDING CO., INC., INSIGHTEXPRESS, L.L.C. AND
THE OTHER PARTIES THERETO. COPIES OF THE ABOVE-REFERENCED AGREEMENTS ARE
ON FILE AT THE PRINCIPAL OFFICE OF IX, L.L.C.
<PAGE>
34
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT, OR AN EXEMPTION FROM
REGISTRATION, UNDER SAID ACT.
(b) Except as otherwise expressly provided in this Agreement,
all certificates or other instruments representing Interests hereafter issued to
or acquired by any of the Members or their successors, assigns or Transferees
shall bear the legends set forth above, and the Interests represented by such
certificates or instruments shall be subject to the applicable provisions of
this Agreement. The obligations of each party hereto shall be binding upon each
Transferee to whom Interests are Transferred by any party hereto, whether or not
such Transfer is permitted under the terms of this Agreement. Prompt notice
shall be given to IX, L.L.C. and each Member by the Transferor of any Transfer
of any Interest.
(c) The second paragraph of the legend set forth in Section
11.4(a) shall be removed from a particular certificate representing Interests,
at the written request of a Member, when an opinion of counsel has been
delivered to IX, L.L.C. to the effect that any such security may be freely sold
to the public without compliance with the registration provisions of the
Securities Act. Such counsel may include an attorney who is an employee of a
Member and such opinion shall be subject to the reasonable approval of the
Board.
(d) Whenever the restrictions imposed by this Agreement shall
terminate as to any particular Interests, the holder thereof shall be entitled
to receive from IX, L.L.C., without expense, upon delivery to IX, L.L.C. of the
existing certificate representing Interests, a new certificate not bearing the
respective legends otherwise required pursuant to this Section 11.4.
Section 11.5 Improper Transfer. Any attempt to Transfer any
Interests other than in accordance with the terms of this Agreement shall be
null and void and neither IX, L.L.C. nor any transfer agent of such securities
shall give any effect to such attempted Transfer or encumbrance in its records
of Interests.
Article 12
Representations and Warranties
Each Member, severally and not jointly with the other Members,
represents and warrants that:
Section 12.1 Due Organization and Authority. It is an entity duly
organized, validly existing and in good standing under the laws of the state or
other
<PAGE>
35
governmental entity in which it was incorporated or formed and has all requisite
corporate or company power and authority to own, lease and operate its
properties and to carry on its business as now being and as heretofore
conducted.
Section 12.2 Authority to Execute and Perform Agreement. It has the
full legal right and power and all authority and approvals required to enter
into, execute and deliver this Agreement and each and every agreement and
instrument contemplated hereby to which it is or will be a party and to perform
fully its obligations hereunder and thereunder. This Agreement and each and
every agreement and instrument contemplated hereby to which it is or will be a
party has been or will be duly executed and delivered by it, and (assuming due
execution and delivery hereof and thereof by the other parties hereto and
thereto) this Agreement and each such other agreement and instrument will be
valid and binding obligations of it enforceable against it in accordance with
their respective terms. The execution and delivery by it of this Agreement and
each and every other agreement and instrument contemplated hereby to which it is
or will be a party, the consummation of the transactions contemplated hereby and
thereby and the performance by it of this Agreement and each such other
agreement and instrument in accordance with their respective terms and
conditions will not (a) violate any provision of the articles of incorporation,
by-laws, certificate of formation or operating agreement (or comparable
instruments) of it; (b) require it to obtain any consent, approval,
authorization or action of, or make any filing with or give any notice to, any
Governmental Agency or any other Person; (c) violate, conflict with or result in
the breach of any of the terms and conditions of, result in a material
modification of the effect of, otherwise cause the termination of or give any
other contracting party the right to terminate, or constitute (or with notice or
lapse of time or both constitute) a default under, any contract to which it is a
party or by or to which it or any of its properties is or may be bound or
subject; or (d) violate any law or order of any Governmental Agency applicable
to it.
Article 13
Termination; Dissolution; Liquidation and Winding-Up
Section 13.1 Termination of IX, L.L.C. The term of the Agreement
(the "Term") shall commence on the Effective Date and, in the event of the
occurrence of a Dissolution Event, this Agreement and IX, L.L.C. shall be
terminated on the 90th day after the occurrence of such event.
Section 13.2 Events of Dissolution. IX, L.L.C. shall be dissolved
upon any of the following (each a "Dissolution Event"):
(a) at the option of the Board, following the expiration of 60
days after the Transfer of all or substantially all of the assets, properties
and business of IX, L.L.C.;
<PAGE>
36
(b) the affirmative agreement of IX, Inc. and IX Holding for a
dissolution of IX, L.L.C.; and
(c) upon the entry of a decree of judicial dissolution under
Section 18-802 of the Act.
Section 13.3 Liquidation and Winding-Up. If IX, L.L.C. is dissolved,
IX, L.L.C. shall be liquidated and wound up in accordance with the Act and the
following provisions:
(a) The financial officers of IX, L.L.C. shall be directed to
prepare a balance sheet, income statement and statement of cash flows of IX,
L.L.C. in accordance with GAAP as of the date of dissolution and for the period
ended on such date, which balance sheet shall be reported upon by IX, L.L.C.'s
independent public accountants.
(b) The assets, properties and business of IX, L.L.C. shall be
liquidated by the Board as promptly as possible, but in an orderly and
businesslike manner so as not to involve undue sacrifice. Notwithstanding the
foregoing, if it is determined by the Board not to sell all or any portion of
the properties and assets of IX, L.L.C. such properties and assets shall be
distributed in kind in the order of priority set forth in subparagraph (d);
provided, however, that the Fair Market Value of such properties and assets
shall be used in determining the extent and amount of a distribution in kind of
such properties and assets in lieu of actual cash proceeds of any sale or other
disposition thereof.
(c) Net Income or Net Loss of IX, L.L.C. for the year of
liquidation shall be credited or charged to the Capital Accounts of the Members
in accordance with the allocation provisions set forth in Article 4.
(d) The proceeds of sale of all or substantially all of the
properties and assets of IX, L.L.C. and all other properties and assets of IX,
L.L.C. not sold, as provided in subparagraph (b) above, and valued at the Fair
Market Value thereof as provided in such subparagraph (b), shall be applied and
distributed as follows, and in the following order of priority:
(i) First, to the payment of all debts and liabilities
of IX, L.L.C. and the expenses of liquidation not otherwise adequately
provided for;
(ii) Second, to the setting up of any reserves that are
reasonably necessary for any contingent unforeseen liabilities or
obligations of IX, L.L.C. or of the Members arising out of, or in
connection with, IX, L.L.C.; and
<PAGE>
37
(iii) Third, to the Members in proportion to the
positive balances of their respective Capital Accounts until the remaining
balances of all such accounts are zero.
(e) A Certificate of Cancellation shall be filed with the
Secretary of State of the State of Delaware by the Members.
Section 13.4 Survival After Termination. Upon termination of this
Agreement, this Agreement shall become null and void and have no further force
or effect, except that any such termination shall be without prejudice to the
rights of any party on account of the breach or violation of the
representations, warranties, covenants, acknowledgments or agreements of another
party under this Agreement. Notwithstanding anything in this Agreement to the
contrary, the provisions of Sections 1.1, 13.3, 13.4 and 13.5 and Articles 8, 9
and 14 shall survive any termination of this Agreement.
Section 13.5 Claims of the Members. Unless otherwise provided
herein, Members and former Members shall look solely to IX, L.L.C.'s assets for
the return of their contributions to IX, L.L.C., and if the assets of IX, L.L.C.
remaining after payment of or due provision for all debts, liabilities and
obligations of IX, L.L.C. are insufficient to return such contributions, the
Members and former Members shall have no recourse against IX, L.L.C. or any
other Member.
Article 14
Miscellaneous
Section 14.1 Governing Law. This Agreement is governed by and is to
be construed in accordance with the laws of the State of Delaware.
Section 14.2 Consent to Jurisdiction and Service of Process. Any
claim arising out of or relating to this Agreement may be instituted in any
Federal court of the Southern District of New York or any state court located in
New York County, State of New York, and each Member agrees not to assert, by way
of motion, as a defense or otherwise, in any such claim, that (i) any claim that
it is not subject personally to the jurisdiction of such court, (ii) the claim
is brought in an inconvenient forum, (iii) the venue of the claim is improper or
(iv) this Agreement, or the subject matter hereof may not be enforced in or by
such court. Each Member further irrevocably submits to the jurisdiction of such
court in any such claim. Nothing herein contained shall be deemed to affect the
right of any Member to serve process in any manner permitted by law or to
commence legal proceedings or otherwise proceed against any other party in any
other jurisdiction.
Section 14.3 Cooperation. Each Member will provide the information,
cooperation and assistance which the Board reasonably requires to
<PAGE>
38
comply with any terms of this Agreement, obtain any consents, approvals or
permits required by or as a result of this Agreement.
Section 14.4 Notice. All notices and other communications hereunder
shall be in writing and shall be deemed effective or given upon (a)
transmitter's confirmation of receipt when sent by facsimile transmission, (b)
confirmed delivery by a recognized courier service or an affidavit of the
messenger when delivered by hand or (c) the expiration of seven calendar days
after the day when mailed by certified or registered mail, postage prepaid,
addressed to the addresses set forth in Section 2.4 in the case of IX, L.L.C. or
set forth on Schedule IA for all Members until such time as IX, L.L.C. or a
Member designates a different or additional address or addresses.
Section 14.5 Assignment. A party may not assign its rights or
obligations under this Agreement, in whole or in part, without the prior written
consent of the Members, which consent may be granted or withheld in the Members'
sole discretion, except to a Transferee pursuant to the terms of Article 11.
Section 14.6 No Agency. None of the Members shall be or hold itself
out as agent of any other Member under this Agreement.
Section 14.7 Entire Agreement; No Waiver. This Agreement and the
Master Investors Rights Agreement contain the full understanding of the parties
with respect to the subject matter covered herein and therein and supersede any
previous agreements between the parties regarding such subject matter. This
Agreement cannot be changed or terminated orally. No provision of this Agreement
may be waived unless such waiver is in writing and signed by the Members against
whom the waiver is to be effective. No delay on the part of any party in
exercising any right hereunder shall operate as a waiver thereof and no waiver
of any breach of any provision hereof shall be or be deemed to be a waiver of
any preceding or subsequent breach of the same or any other provision of this
Agreement.
Section 14.8 Preservation of Remedies. The rights and remedies
provided herein are cumulative and are not exclusive of any other rights or
remedies contained herein or that any party may otherwise have at law or in
equity. The rights and remedies of any party based upon, arising out of or
otherwise in respect of any inaccuracy in or breach of any representation,
warranty, covenant, acknowledgment or agreement contained in this Agreement or
any document delivered pursuant to this Agreement shall in no way be limited by
the fact that the act, omission, occurrence or other state of facts upon which
any claim of any such inaccuracy or breach is based may also be the subject
matter of any other representation, warranty, covenant, acknowledgment or
agreement contained in this Agreement or any document delivered pursuant to this
Agreement (or in any other agreement between the parties) as to which there is
no inaccuracy or breach.
<PAGE>
39
Section 14.9 No Right to Partition. The Members, on behalf of
themselves and their shareholders, partners, members, successors and assigns, if
any, hereby specifically renounce, waive and forfeit all rights, whether arising
under contract or statute or by operation of law, except as otherwise expressly
provided in this Agreement, to seek, bring or maintain any action in any court
of law or equity for partition of IX, L.L.C. or any asset of IX, L.L.C., or any
interest which is considered to be property of IX, L.L.C., regardless of the
manner in which title to such property may be held.
Section 14.10 Severability. Any provision of this Agreement which is
illegal, void or unenforceable by or contrary to law will be ineffective to the
extent only of that illegality, voidness or unenforceability by or contrariness
to law, without invalidating the remaining provisions of this Agreement. In such
event, the parties shall negotiate in good faith a new provision which is not
illegal, void or unenforceable by or contrary to law and which provides, or
would provide the parties, with the same or equivalent benefits and
participation as are provided by the provision which is illegal, void or
unenforceable by or contrary to law.
Section 14.11 Counterparts. This Agreement may be executed in a
number of counterparts, each of which shall be taken together, when duly
executed by all named parties to the Agreement, to constitute a single
Agreement.
Section 14.12 Fees and Expenses. IX, L.L.C. shall pay all (up to
$100,000 in the aggregate) fees and expenses incurred by IX Holding and General
Atlantic Service Corporation, a Delaware corporation, in connection with IX
Holding's capital investments in IX, L.L.C. IX, L.L.C. shall also reimburse NFO
(a) for all of NFO's legal expenses owing to Paul, Weiss, Rifkind, Wharton &
Garrison in connection with this Agreement and the transactions contemplated
hereby and (b) in amount equal to $2,109,000 all of (x) NFO's expenses in
connection with its investment in IX, L.L.C., and (y) NFO's expenses incurred on
behalf of IX, L.L.C. to the date of this Agreement.
Section 14.13 Amendments. (a)Any amendment to this Agreement must:
(1) be approved by the Board in accordance with Section 5.5(b), (2) be consented
to in writing by Members holding more than 50% of the Percentage Interests of
IX, L.L.C. and by IX, Inc. and (3) if any Member would be adversely affected by
any such amendment in any material respect, be consented to in writing, by such
Member. Notwithstanding the foregoing, the Board, without the consent of any
Member, may amend any provision of this Agreement (unless such amendment would
have a material adverse effect on any Member) to reflect:
(i) a change in the name of IX, L.L.C. or the location of the
principal place of business or the registered office and registered agent
of IX, L.L.C.;
<PAGE>
40
(ii) subject to Section 7.2, the admission of Members or a
change in the Interest of any Member in accordance with this Agreement
(including amending Schedule IA to reflect such admission or change, as
required);
(iii) a change that is necessary to qualify IX, L.L.C. as a
limited liability company in which the Members have limited liability
under the laws of any jurisdiction or that is necessary or advisable in
the opinion of the Board to ensure that IX, L.L.C. will not be taxable
other than as a partnership under the Code and Treasury Regulations;
(iv) a change that is (A) of an inconsequential nature or (B)
necessary or desirable to satisfy any requirements, conditions or
guidelines contained in any opinion, directive, order, ruling or
regulation of any Governmental Agency or contained in any federal or state
statute;
(v) a change clarifying any ambiguity, defect or inconsistency
in this Agreement; or
(vi) any other amendments similar to the foregoing;
provided, however, that (A) no such amendment shall increase the amount of
any Member's Capital Contribution without such Member's consent and (B)
any amendment that (1) alters the allocations to, or distributions from,
Capital Accounts, (2) alters the rights of the Member upon liquidation of
IX, L.L.C. or (3) alters the provisions of this Section 14.13, shall
require the written consent of the Members adversely affected by such
amendment or, if such amendment adversely affects only the rights of
holders of a particular class or series of Interests, then such amendment
shall require the consent of the Members holding such class or series.
Within a reasonable period after any change or amendment in accordance
with the preceding sentence, the Chairman and Chief Executive Officer or
his or her designee shall send a written notice to the Members describing
such change or amendment in reasonable detail.
(b) Notwithstanding anything to the contrary herein, (i) if
the Put Rights (as defined in Section 9 of the License Agreement, dated as of
even date herewith (the "License Agreement"), between IX, Inc. and IX, L.L.C.)
are exercised, the Members agree to amend this Agreement in accordance with
Exhibit A of the License Agreement and (ii) the Members agree to amend this
Agreement, as necessary, in accordance with Section 7.2.
Section 14.14 Interpretation. In this Agreement, unless the context
otherwise requires:
<PAGE>
41
(a) headings and underlinings are for convenience only and do
not affect the interpretation of this Agreement;
(b) words importing the singular include the plural and vice
versa;
(c) words importing a gender include any gender;
(d) other parts of speech and grammatical forms of a word or
phrase defined in this Agreement have a corresponding meaning;
(e) a reference to a part, Article, Section, party, annex,
Exhibit or Schedule is a reference to a part, Article and Section of, and a
party, annex, Exhibit and Schedule to, this Agreement and a reference to this
Agreement includes any annex, Exhibit and Schedule;
(f) a reference to any statute, regulation, proclamation,
ordinance or by-law includes all statutes, regulations, proclamations,
ordinances or by-laws amending, consolidating or replacing them, and a reference
to a statute includes all regulations, proclamations, ordinances and by-laws
issued under that statute;
(g) a reference to a document includes an amendment or
supplement to, or replacement or novation of, that document;
(h) a reference to a party to a document includes that party's
successors and permitted assigns;
(i) where the day on or by which anything is to be done is not
a Business Day, that thing must be done on or by the preceding Business Day;
(j) no rule of construction applies to the disadvantage of a
party because that party was responsible for the preparation of this Agreement
or any part of it;
(k) a covenant or agreement on the part of two or more Persons
binds them severally and not jointly;
(l) a reference to an agreement other than this Agreement
includes an undertaking, agreement or legally enforceable arrangement or
understanding whether or not in writing;
(m) a reference to an asset includes all property of any
nature, including a business, and all rights, revenues and benefits;
<PAGE>
42
(n) a reference to a document includes any agreement in
writing, or any certificate, notice, instrument or other document of any kind;
and
(o) whenever the word "includes" or " including" is used in
this Agreement, it shall be deemed to be followed by the words "without
limitation" unless clearly understood otherwise.
<PAGE>
43
IN WITNESS WHEREOF, the parties have executed this Agreement by
their duly authorized representatives effective as of the day and year first
written above.
IX, INC.
By: /s/ Patrick G. Healy
------------------------
Name: Patrick G. Healy
Title: Chief Financial Officer
IX HOLDING CO., INC.
By: /s/ David Hodgson
---------------------
Name: David Hodgson
Title: President and Secretary
GREENHILL & CO., LLC
By: /s/ Scott L. Bok
--------------------
Name: Scott L. Bok
Title: Managing Director
<PAGE>
Schedule IA
Percentage Interests, Capital Contributions and Class of Membership Interest
Percentage Capital Class of
Member Interest Contribution Membership Interest
- ------ -------- ------------ -------------------
IX, Inc. 1% $1,000 Class B
2 Pickwick Plaza
Suite 400
Greenwich, CT 06830-5530
Fax: 203-629-8885
IX Holding Co., Inc. 92.82% $25,000,000 Class A
c/o General Atlantic Service
Corporation
3 Pickwick Plaza
Greenwich, CT 06830
Fax: 203-622-4098
Greenhill & Co., LLC 6.18% $1,250,000 1/ Class B
31 West 52nd St., 16th Floor
New York, NY 10019
Fax: 212-408-0684
- --------
1/ Services rendered to IX, L.L.C. valued at $1,250,000.
EXHIBIT 10.3
================================================================================
MASTER INVESTORS RIGHTS AGREEMENT
by and among
IX, INC.,
IX HOLDING CO., INC.,
INSIGHTEXPRESS, L.L.C.
and
THE OTHER PERSONS NAMED HEREIN
------------------------------
Dated: October 18, 1999
------------------------------
================================================================================
<PAGE>
TABLE OF CONTENTS
Page #
------
1. Definitions......................................................2
2. Restrictions on Transfer of Equity Interests....................11
2.1 Limitation on Transfer................................11
2.2 Permitted Transfers...................................12
2.3 Permitted Transfer Procedures.........................12
2.4 Transfers in Compliance with Law; Substitution of
Transferee............................................12
3. Right of First Offer and Tag-Along Rights; Drag-Along Rights....13
3.1 Proposed Voluntary Transfers..........................13
3.2 Drag-Along Rights.....................................17
4. Preemptive Rights...............................................19
4.1 Offering Notice.......................................19
4.2 Preemptive Rights; Exercise...........................19
4.3 Closing...............................................20
4.4 Sale to Subject Purchaser.............................20
4.5 Preemptive Rights with respect to Holdco Securities...20
5. After-Acquired Securities; Agreement to be Bound................21
5.1 After-Acquired Securities.............................21
5.2 Agreement to be Bound.................................21
6. Holdco Put......................................................21
6.1 Exercise..............................................21
6.2 Purchase Price........................................22
6.3 Closing...............................................23
6.4 Put Default...........................................24
6.5 NFO Right of First Refusal............................24
7. IX Call.........................................................25
7.1 Exercise..............................................25
7.2 Purchase Price........................................26
7.3 Closing...............................................26
7A. Governance Following Mergers....................................27
7A.1 General...............................................27
7A.2 Election of Directors.................................27
i
<PAGE>
7A.3 Removal and Replacement...............................27
7A.4 Termination of Sections 7A.2 and 7A.3.................28
8. Covenants.......................................................28
8.1 Merger of IX and Holdco...............................28
8.2 Merger of IX and Greenhill............................29
8.3 Grant of Registration Rights..........................30
8.4 Put of Intellectual Property..........................30
8.5 Option Plan...........................................30
8.6 General Atlantic Right to Purchase....................30
8.7 Restrictions of IX Business...........................31
8.8 Restrictions on Holdco Business.......................31
8.9 Restrictions on Greenhill Business....................31
8.10 Preemptive Rights Adjustments.........................31
8.11 Holdco Charter and Bylaws.............................31
9. Stock Certificate Legend........................................31
10. Miscellaneous...................................................32
10.1 Notices...............................................32
10.2 Successors and Assigns................................35
10.3 Amendment and Waiver..................................35
10.4 Counterparts..........................................35
10.5 Specific Performance..................................35
10.6 Headings..............................................36
10.7 GOVERNING LAW.........................................36
10.8 Severability..........................................36
10.9 Entire Agreement......................................36
10.10 Term of Agreement.....................................36
10.11 Further Assurances....................................36
EXHIBITS
A-1 Form of Transfer Agreement (previously issued shares)
A-2 Form of Transfer Agreement (newly issued shares)
B Form of IX/Holdco Merger Agreement
C Form of IX/Greenhill Merger Agreement
D Form of Registration Rights Agreement
ii
<PAGE>
MASTER INVESTORS RIGHTS AGREEMENT
MASTER INVESTORS RIGHTS AGREEMENT, dated October 18, 1999 (this
"Agreement"), by and among InsightExpress, L.L.C., a Delaware limited liability
company (the "Company"), IX, Inc., a Delaware corporation ("IX"), IX Holding
Co., Inc., a Delaware corporation ("Holdco"), NFO Worldwide, Inc., a Delaware
corporation ("NFO"), General Atlantic Partners 57, L.P., a Delaware limited
partnership ("GAP LP"), GAP Coinvestment Partners II, L.P., a Delaware limited
partnership ("GAP Coinvestment" and, together with GAP LP, "General Atlantic"),
Engage Technologies, Inc., a Delaware corporation ("Engage"), and Greenhill &
Co., LLC, a New York limited liability company ("Greenhill LLC").
WHEREAS, NFO has organized IX as a wholly-owned subsidiary of NFO,
and IX has organized the Company as a wholly-owned subsidiary of IX; and
WHEREAS, NFO has transferred the Intellectual Property (as
hereinafter defined) to IX, and has caused IX to license the right to use the
Intellectual Property to the Company so that the Company can commence operations
as an internet based market research business; and
WHEREAS, General Atlantic and Engage have agreed with NFO to make an
equity investment in the Company; and
WHEREAS, General Atlantic and Engage have organized Holdco to hold
their equity interest in the Company; and
WHEREAS, Greenhill LLC has agreed to accept an equity interest in
the Company in lieu of a cash payment for its advisory fee; and
WHEREAS, Greenhill LLC intends to transfer its Company Interests,
immediately after the closing of the transactions contemplated by the Securities
Purchase Agreement, to Greenhill 1999 Equity Holdings Corporation ("Greenhill");
and
WHEREAS, pursuant to the Securities Purchase Agreement dated October
18, 1999 (the "Securities Purchase Agreement") by and between the Company and
Holdco, the Company has agreed to issue and sell to Holdco, a limited liability
company interest in the Company, representing a 92.82% membership interest in
the Company; and
WHEREAS, the parties hereto wish to restrict the transfer of the
Company Owned Interests (as hereinafter defined) and provide for, among other
things, preemptive and certain other rights and obligations under certain
conditions; and
<PAGE>
2
WHEREAS, in order to induce General Atlantic and Engage to cause
Holdco to enter into, and consummate the transactions contemplated by, the
Securities Purchase Agreement, IX and NFO have agreed to restrict the transfer
of the IX Shares (as hereinafter defined) and Greenhill has agreed to restrict
the transfer of the Greenhill Shares (as hereinafter defined) and to provide
for, among other things, first offer rights and certain other rights and
obligations under certain conditions; and
WHEREAS, in order to further induce General Atlantic and Engage to
cause Holdco to enter into, and consummate the transactions contemplated by, the
Securities Purchase Agreement, the parties hereto have agreed to give General
Atlantic the right to put the Holdco Stockholders' (as hereinafter defined)
Holdco Shares (as hereinafter defined) to the Company on the terms specified
herein; and
WHEREAS, in order to induce NFO to cause IX to cause the Company to
enter into, and consummate the transactions contemplated by, the Securities
Purchase Agreement, Holdco, General Atlantic and Engage have agreed to restrict
the transfer of the Holdco Shares (as hereinafter defined) and to provide for,
among other things, call, first offer rights, and certain other rights under
certain conditions; and
WHEREAS, in order to further induce NFO to cause IX to cause the
Company to enter into, and consummate the transactions contemplated by, the
Securities Purchase Agreement, the parties hereto have agreed to give IX the
right to call the Holdco Shares and the Greenhill Shares owned by the Holdco
Stockholders and the Greenhill Stockholders (as hereinafter defined); and
WHEREAS, the parties hereto wish to provide for (a) the merger of IX
and Holdco, (b) the merger of the surviving corporation of such merger and
Greenhill and (c) the grant of registration rights, each upon the occurrence of
certain events.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein and for good and valuable consideration, the receipt
and adequacy of which are hereby acknowledged, the parties hereto agree as
follows:
1. Definitions. As used in this Agreement, the following terms shall
have the meanings set forth below:
"Acquiror" has the meaning set forth in Section 3.2(a) hereof.
"Affiliates" means any Person who is an "affiliate" as defined in
Rule 12b-2 of the General Rules and Regulations under the Exchange Act. In
addition, the following shall be deemed to be Affiliates of GAP LP: (a) GAP LLC,
the members of GAP LLC, the limited partners of GAP Coinvestment and the limited
partners of GAP LP; (b) any Affiliate of GAP LLC, the members of GAP LLC, the
limited partners of GAP Coinvestment and the limited partners of GAP LP; and (c)
any limited liability company or partnership a majority of whose members or
partners, as the case may be, are members, or members, consultants or key
employees of GAP
<PAGE>
3
LLC. In addition, GAP LP and GAP Coinvestment shall be deemed to be Affiliates
of one another.
"Agreement" means this Agreement as the same may be amended,
supplemented or modified in accordance with the terms hereof.
"Alternate Investment Amount" means the product of (a) the
consideration paid by Holdco for the Company Owned Interests purchased by Holdco
pursuant to the Securities Purchase Agreement and (b) the Appreciation.
"Appreciation" means (a) the average closing price of NFO common
stock on the New York Stock Exchange for the thirty (30) trading days prior to
the closing of the transaction that caused the Change of Control of NFO divided
by (b) the Base Price.
"Base Price" means the product of (a) the average closing price of
NFO common stock on the New York Stock Exchange for the fifteen (15) trading
days prior to (and including the day of) the public announcement of the closing
of the transactions contemplated by the Securities Purchase Agreement and the
fifteen (15) days following such public announcement and (b) 1.25.
"Business Day" means any day other than a Saturday, Sunday or other
day on which commercial banks in the State of New York are authorized or
required by law or executive order to close.
"Call" has the meaning set forth in Section 7.1 hereof.
"Call Exercise Date" has the meaning set forth in Section 7.1
hereof.
"Call Notice" has the meaning set forth in Section 7.1 hereof.
"Call Securities" has the meaning set forth in Section 7.1 hereof.
"Change of Control of NFO" means:
(i) the sale, lease, conveyance or other disposition of all or
substantially all of the assets of NFO to any "person" or "group" (as such terms
are used in Section 13(d) and 14(d) of the Exchange Act), in one or a series of
transactions, other than any such sale or other disposition to, or to any such
group that is controlled by NFO; or
(ii) any transaction or series of transactions (as a result of
a tender offer, exchange offer, merger, consolidation or otherwise) that results
in, or that is in connection with, any "person" or "group" acquiring "beneficial
ownership" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except
that a Person shall be deemed to have beneficial ownership of all shares that
such Person has the right to acquire, whether such right is exercisable
immediately or only after the
<PAGE>
4
passage of time) directly or indirectly, of fifty percent (50%) or more of the
aggregate voting power of all classes of NFO's common equity other than any
acquisition by, or by any such group that is controlled by, NFO.
"Change of Control Shortfall" has the meaning set forth in Section
3.2(d)(iii) hereof.
"Code" means the Internal Revenue Code of 1986, as amended, or any
successor statute.
"Commission" means the Securities and Exchange Commission or any
similar agency then having jurisdiction to enforce the Securities Act.
"Company" has the meaning set forth in the recitals hereto.
"Company Interests" means limited liability company interests of the
Company.
"Company Note" has the meaning set forth in Section 6.3(b)(ii)
hereof.
"Company Interests Equivalents" means any security or obligation
which is by its terms convertible into Company Interests, and any option,
warrant or other subscription or purchase right with respect to Company
Interests.
"Company Sale" has the meaning set forth in Section 3.2(a) hereof.
"Company Transferee" has the meaning set forth in Section 6.1
hereof.
"Company Owned Interests" means, with respect to each
Interestholder, all Company Interests whether now owned or hereafter acquired,
owned thereby; provided, however, for the purposes of any computation of the
number of Company Owned Interests pursuant to Sections 2, 3, 4 and 10.3(b), all
outstanding Company Interest Equivalents shall be deemed converted, exercised or
exchanged as applicable and the Company Interests issuable upon conversion,
exercise or exchange shall be deemed outstanding, whether or not such
conversion, exercise or exchange has actually been effected.
"Contract Date" has the meaning set forth in Section 3.1(d) hereof.
"Drag-Along Notice" has the meaning set forth in Section 3.2(b)
hereof.
"Drag-Along Right" has the meaning set forth in Section 3.2(a)
hereof.
"Drag-Along Shortfall" has the meaning set forth in Section
3.2(d)(i) hereof.
<PAGE>
5
"Engage" has the meaning set forth in the recitals hereto.
"Engage Stockholders" means Engage and any Permitted Transferee
thereof to whom Holdco Shares are transferred in accordance with Section 2.2 of
this Agreement, and the term "Engage Stockholder" shall mean any such Person.
"Equity Holder" means (a) the Major Stockholders, (b) any transferee
of a Major Stockholder who has agreed to be bound by the terms and conditions of
this Agreement in accordance with Section 2.4, (c) any Person who has agreed to
be bound by the terms and conditions of this Agreement in accordance with
Section 5.2(a) and (d) the Interestholders, and the term "Equity Holder" shall
mean any such Person.
"Equity Interest Equivalents" means, as the case may be, IX Common
Stock Equivalents, Holdco Common Stock Equivalents, Greenhill Common Stock
Equivalents or Company Interest Equivalents.
"Equity Interests" means, as the case may be, IX Shares, Holdco
Shares, Greenhill Shares or Company Owned Interests.
"Equity Securities" means, as the case may be, IX Common Stock,
Holdco Common Stock, Greenhill Common Stock or Company Interests.
"Excess New Securities" has the meaning set forth in Section 4.2(a)
hereof.
"Excess Offered Securities" has the meaning set forth in Section
3.1(b)(i) hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission thereunder.
"Exempt Issuances" has the meaning set forth in Section 4.1 hereof.
"Fair Value" has the meaning set forth in Sections 3.2(d)(ii) and
6.2(b) hereof.
"First Refusal Contract Date" has the meaning set forth in Section
6.5(d) hereof.
"First Refusal Offer" has the meaning set forth in Section 6.5(a)
hereof.
"First Refusal Offer Price" has the meaning set forth in Section
6.5(a) hereof.
<PAGE>
6
"First Refusal Offering Notice" has the meaning set forth in Section
6.5(a) hereof.
"First Refusal Offeror" has the meaning set forth in Section 6.5(a)
hereof.
"First Refusal Option Period" has the meaning set forth in Section
6.5(b) hereof.
"GAP Coinvestment" has the meaning set forth in the recitals hereto.
"GAP Directors" has the meaning set forth in Section 7A.2 hereof.
"GAP LLC" means General Atlantic Partners, LLC, a Delaware limited
liability company and the general partner of GAP LP, and any successor to such
entity.
"GAP LP" has the meaning set forth in the recitals hereto.
"General Atlantic" has the meaning set forth in the recitals hereto.
"General Atlantic Stockholders" means GAP LP, GAP Coinvestment and
any Permitted Transferee thereof to whom Holdco Shares are transferred in
accordance with Section 2.2 hereof, and the term "General Atlantic Stockholder"
shall mean any such Person.
"Greenhill" has the meaning set forth in the recitals hereto.
"Greenhill Common Stock" means the Common Stock of Greenhill or any
other capital stock of Greenhill into which such stock is reclassified or
reconstituted and any other common stock of Greenhill.
"Greenhill Common Stock Equivalents" means any security or
obligation which is by its terms convertible into shares of Greenhill Common
Stock, and any option, warrant or other subscription or purchase rights with
respect to Greenhill Common Stock.
"Greenhill Interestholders" means Greenhill and any Permitted
Transferee thereof to whom Company Owned Interests are transferred in accordance
with Section 2.2 hereof, and the term "Greenhill Interestholder" shall mean any
such Person.
"Greenhill LLC" has the meaning set forth in the recitals hereto.
"Greenhill Put" has the meaning set forth in Section 6.1(b) hereof.
<PAGE>
7
"Greenhill Put Purchase Price" has the meaning set forth in Section
6.2(a) hereof.
"Greenhill Put Securities" has the meaning set forth in Section
6.1(b) hereof.
"Greenhill Shares" means, with respect to each Greenhill
Stockholder, all shares, whether now owned or hereafter acquired, of Greenhill
Common Stock, owned thereby; provided, however, for the purposes of any
computation of the number of Greenhill Shares pursuant to Sections 2, 3, 4 and
10.3(b), all outstanding Greenhill Common Stock Equivalents shall be deemed
converted, exercised or exchanged as applicable and the shares of Greenhill
Common Stock issuable upon such conversion, exercise or exchange shall be deemed
outstanding, whether or not such conversion, exercise, or exchange has actually
been affected.
"Greenhill Stockholders" means Greenhill LLC and any Permitted
Transferee thereof to whom Greenhill Shares are transferred in accordance with
Section 2.2 of this Agreement, and the term "Greenhill Stockholder" shall mean
any such Person.
"Holdco" has the meaning set forth in the recitals hereto.
"Holdco Common Stock" means the classes of Common Stock, par value
$.01 per share, of Holdco or any other capital stock of Holdco into which such
stock is reclassified or reconstituted and any other common stock of Holdco.
"Holdco Common Stock Equivalents" mean any security or obligation
which is by its terms convertible into shares of Holdco Common Stock, and any
option, warrant or other subscription or purchase rights with respect to Holdco
Common Stock.
"Holdco Interestholders" means Holdco and any Permitted Transferee
thereof to whom Company Owned Interests are transferred in accordance with
Section 2.2 of this Agreement, and the term "Holdco Interestholder" shall mean
any such Person.
"Holdco Put Purchase Price" has the meaning set forth in Section
6.2(a) hereof.
"Holdco Put Securities" has the meaning set forth in Section 6.1(a)
hereof.
"Holdco Shares" means, with respect to each Holdco Stockholder, all
shares, whether now owned or hereafter acquired, of Holdco Common Stock, owned
thereby; provided, however, for the purposes of any computation of the number of
Holdco Shares pursuant to Sections 2, 3, 4 and 10.3(b), all outstanding Holdco
Common Stock Equivalents shall be deemed converted, exercised or exchanged as
applicable and the shares of Holdco Common Stock issuable upon such conversion,
<PAGE>
8
exercise or exchange shall be deemed outstanding, whether or not such
conversion, exercise or exchange has actually been affected.
"Holdco Stockholders" means the General Atlantic Stockholders and
the Engage Stockholders and (a) any transferee thereof who has agreed to be
bound by the terms and conditions of this Agreement in accordance with Section
2.4 and (b) any Person who has acquired Holdco Shares and has agreed to be bound
by the terms and conditions of this Agreement in accordance with Section 5.2(a).
"Intellectual Property" means all of the intellectual property
transferred pursuant to the Instrument of Transfer dated October 18, 1999 from
NFO to IX.
"Interestholder" means the IX Interestholders, the Holdco
Interestholders, the Greenhill Interestholders and (a) any transferee thereof
who has agreed to be bound by the terms and conditions of this Agreement in
accordance with Section 2.4 and (b) any Person who has acquired Company
Interests and has agreed to be bound by the terms and conditions of this
Agreement in accordance with Section 5.2(a), and the term "Interestholder" shall
mean any such Person.
"Initial Public Offering" means the initial public offering of the
shares of Common Stock of the successor corporation to the Company pursuant to
an effective registration statement filed under the Securities Act.
"IPO Effectiveness Date" means the date upon which the successor
corporation to the Company closes the Initial Public Offering.
"Issuer" has the meaning set forth in Section 2.3 hereof.
"IX" has the meaning set forth in the recitals hereto.
"IX Common Stock" means the classes of Common Stock, par value $.01
per share, of IX or any other capital stock of IX into which such stock is
reclassified or reconstituted and any other common stock of IX.
"IX Common Stock Equivalents" means any security or obligation which
is by its terms convertible into shares of IX Common Stock, and any option,
warrant or other subscription or purchase right with respect to IX Common Stock.
"IX Interestholders" means IX and any Permitted Transferee thereof
to whom Company Owned Interests are transferred in accordance with Section 2.2
of this Agreement, and the term "IX Interestholder" shall mean any such Person.
"IX Shares" means, with respect to each IX Stockholder, all shares,
whether now owned or hereafter acquired, of IX Common Stock, owned thereby;
provided, however, for the purposes of any computation of the number of IX
Shares pursuant to Sections 2, 3, 4 and 10.3(b), all outstanding IX Common Stock
Equivalents shall be deemed converted, exercised or exchanged as applicable and
the
<PAGE>
9
shares of IX Common Stock issuable upon such conversion, exercise or exchange
shall be deemed outstanding, whether or not such conversion, exercise or
exchange has actually been effected.
"IX Stockholder" means the NFO Stockholders and (a) any transferee
thereof who has agreed to be bound by the terms and conditions of this Agreement
in accordance with Section 2.4 and (b) any Person who has acquired IX Shares and
has agreed to be bound by the terms and conditions of this Agreement in
accordance with Section 5.2(a).
"Liens" means any mortgage, deed of trust, pledge, hypothecation,
assignment, encumbrance, lien (statutory or other) or preference, priority,
right or other security interest or preferential arrangement of any kind or
nature whatsoever (excluding preferred stock and equity related preferences),
including, without limitation, those created by, arriving under or evidenced by
any conditional sale or other title retention agreement, the interest of a
lessor under a capital lease obligation, or any financing lease having
substantially the same economic effect in any of the foregoing.
"Major Stockholders" means the General Atlantic Stockholders, the
NFO Stockholders, the Engage Stockholders and the Greenhill Stockholders, and
the term "Major Stockholder" shall mean any such Person.
"Mergers" means the mergers referred to in Section 8.1 and 8.2.
"New Issuance Notice" has the meaning set forth in Section 4.1
hereof.
"New Securities" has the meaning set forth in Section 4.1 hereof.
"NFO" has the meaning set forth in the recitals hereto.
"NFO Directors" has the meaning set forth in Section 7A.2 hereof.
"NFO Stockholders" means NFO and any Permitted Transferee thereof to
whom IX Shares are transferred in accordance with Section 2.2 of this Agreement,
and the term "NFO Stockholder" shall mean any such Person.
"Offer Price" has the meaning set forth in Section 3.1(a) hereof.
"Offered Securities" has the meaning set forth in Section 3.1(a)
hereof.
"Offering Notice" has the meaning set forth in Section 3.1(a)
hereof.
"Other Stockholder" means (a) any transferee of a Major Stockholder
(other than a Permitted Transferee thereof), who has agreed to be bound by the
terms and conditions of this Agreement in accordance with Section 2.4 or to whom
Equity Interests have been transferred in accordance with Section 3.1(d) and (b)
any Person
<PAGE>
10
other than a Major Stockholder who has agreed to be bound by the terms and
conditions of this Agreement in accordance with Section 5.2(a).
"Operating Agreement" means the Amended and Restated Limited
Liability Company Operating Agreement of the Company dated as of the date
hereof, as the same may be amended or modified from time to time in accordance
with its terms.
"Option Plan" means the stock option plan of Holdco pursuant to
which options to purchase an aggregate of 7,500,000 shares of Holdco's Class B
Common Stock, par value $0.01 per share, are reserved and available for grant to
Representatives, officers, employees and consultants of the Company.
"Permitted Transferee" has the meaning set forth in Section 2.2
hereof.
"Person" means any individual, firm, corporation, partnership,
limited liability company, trust, incorporated or unincorporated association,
joint venture, joint stock company, government (or an agency or political
subdivision thereof) or any entity of any kind, and shall include any successor
(by merger or otherwise) of such entity.
"Preemptive Rightholders" has the meaning set forth in Section 4.1
hereof.
"Proportionate Percentage" has the meaning set forth in Section
4.2(a) hereof.
"Proposed Price" has the meaning set forth in Section 4.1 hereof.
"Put" has the meaning set forth in Section 6.1 hereof.
"Put Default" has the meaning set forth in Section 6.4 hereof.
"Put Exercise Date" has the meaning set forth in Section 6.1(a)
hereof.
"Put Notice" has the meaning set forth in Section 6.1(a) hereof.
"Put Purchase Price" has the meaning set forth in Section 6.2(a)
hereof.
"Put Securities" has the meaning set forth in Section 6.1(b) hereof.
"Put Trigger Event" has the meaning set forth in Section 6.1(a)
hereof.
"Right of First Refusal" has the meaning set forth in Section 6.5(a)
hereof.
<PAGE>
11
"Rightholder" has the meaning set forth in Section 3.1(a) hereof.
"Rightholder Option Period" has the meaning set forth in Section
3.1(b)(i) hereof.
"Securities Act" means, the Securities Act of 1933, as amended, and
the rules and regulations of the Commission thereunder.
"Securities Purchase Agreement" has the meaning set forth in the
recitals hereto.
"Selling Stockholder" has the meaning set forth in Section 3.1(a)
hereof.
"Stockholders' Meeting" has the meaning set forth in Section 7A.1
hereof.
"Subject Purchaser' has the meaning set forth in Section 4.1 hereof.
"Surviving Corporation" means the ultimate surviving corporation of
the Mergers.
"Surviving Corporation Stock" has the meaning set forth in
Section 3.2(a).
"Tag-Along Rightholder" has the meaning set forth in Section 3.1(e)
hereof.
"Tag-Along Shortfall" has the meaning set forth in Section
3.1(e)(iii) hereof.
"Third Party Purchaser" has the meaning set forth in Section 3.1(a)
hereof.
"Transfer" has the meaning set forth in Section 2.1 hereof.
"Written Consent" has the meaning set forth in Section 7A.1 hereof.
2. Restrictions on Transfer of Equity Interests.
2.1 Limitation on Transfer. No Equity Holder shall sell, give,
assign, hypothecate, pledge, encumber, grant a security interest in or otherwise
dispose of (whether by operation of law or otherwise) (each a "transfer") any
Equity Interest or any right, title or interest therein or thereto, except in
accordance with the provisions of this Agreement, including, without limitation,
Sections 2.2 and 2.4. Any attempt to transfer any Equity Interest or any rights
thereunder in violation of the preceding sentence shall be null and void ab
initio. Notwithstanding the two
<PAGE>
12
preceding sentences, immediately after the closing of the transactions
contemplated by the Securities Purchase Agreement, Greenhill LLC may transfer
all, but not less than all, of its Company Owned Interests to Greenhill.
2.2 Permitted Transfers. Notwithstanding anything to the
contrary contained in this Agreement, but subject to Sections 2.1, 2.3 and 2.4,
at any time, each of the Major Stockholders may transfer all or a portion of its
Equity Interests to any of its Affiliates (each a "Permitted Transferee"). A
Permitted Transferee of Equity Interests pursuant to this Section 2.2 may
transfer its Equity Interests pursuant to this Section 2.2 only to the Major
Stockholder that transferred such Equity Interest to such Permitted Transferee
or to a Person that is a Permitted Transferee of such transferor Major
Stockholder.
2.3 Permitted Transfer Procedures. If any Major Stockholder
wishes to transfer Equity Interests to a Permitted Transferee under Section 2.2,
such Major Stockholder shall give notice to (a) the issuer (the "Issuer") of
such Equity Interest and (b) each of the Equity Holders of its intention to make
any transfer permitted under Section 2.2 not less than ten (10) days prior to
effecting such transfer, which notice shall state the name and address of each
Permitted Transferee to whom such transfer is proposed, the relationship of such
Permitted Transferee to such Major Stockholder and the number of Equity
Interests proposed to be transferred to such Permitted Transferee.
2.4 Transfers in Compliance with Law; Substitution of
Transferee. Notwithstanding any other provision of this Agreement, no transfer
may be made pursuant to this Section 2 or Section 3.1 unless (a) the transferee
has agreed in writing to be bound by the terms and conditions of this Agreement
pursuant to an instrument substantially in the form attached hereto as Exhibit
A-1, (b) the transfer complies in all respects with the applicable provisions of
this Agreement and (c) the transfer complies in all respects with applicable
federal and state securities laws, including, without limitation, the Securities
Act. If requested by the Issuer, an opinion of counsel of such transferring
Major Stockholder shall be supplied to the Issuer at such transferring Major
Stockholder's expense, to the effect that such transfer complies with applicable
federal and state securities laws. Upon becoming a party to this Agreement, (i)
the Permitted Transferee of a Major Stockholder shall be substituted for, and
shall enjoy the same rights and be subject to the same obligations as, the
transferring Major Stockholder hereunder with respect to the Equity Interest
transferred to such Permitted Transferee, (ii) an Other Stockholder shall be
subject to the same obligations as, but none of the rights of, the transferring
Major Stockholder and (iii) the transferee of an Other Stockholder shall be
substituted for, and shall be subject to the same obligations as, the
transferring Other Stockholder hereunder with respect to the Equity Interest
transferred to such transferee.
<PAGE>
13
3. Right of First Offer and Tag-Along Rights; Drag-Along Rights.
3.1 Proposed Voluntary Transfers.
(a) Offering Notice. Subject to Section 2, if any Major
Stockholder, (a "Selling Stockholder") wishes to transfer all or any portion of
its Equity Interests to any Person (other than to a Permitted Transferee) (a
"Third Party Purchaser"), such Selling Stockholder shall offer such Equity
Interests first to the Major Stockholders (who, in each case, is not a Selling
Stockholder) (for the purpose of Section 3.1, each a "Rightholder" and
collectively, the "Rightholders") by sending written notice (an "Offering
Notice") to each Major Stockholder, which shall state (a) the number of Equity
Interests, proposed to be transferred (the "Offered Securities"); (b) the
proposed purchase price per Equity Interest, for the Offered Securities (the
"Offer Price"); and (c) the terms and conditions of such sale. Upon delivery of
the Offering Notice, such offer shall be irrevocable unless and until the rights
of first offer provided for herein shall have been waived or shall have expired.
The Selling Stockholder shall also promptly deliver a copy of the Offering
Notice to IX, Holdco, Greenhill and the Company.
(b) Rightholder Option; Exercise.
(i) For a period of fifteen (15) days after the
giving of the Offering Notice pursuant to Section 3.1(a) (the "Rightholder
Option Period), the Rightholders shall have the right to purchase all, but
not less than all, of the Offered Securities at a purchase price equal to
the Offer Price and upon the terms and conditions set forth in the
Offering Notice. Each such Rightholder (except for the Greenhill
Stockholders) shall have the right to purchase that percentage of the
Offered Securities determined by dividing (i) the portion of the Surviving
Corporation that would be owned by such Rightholder if the Mergers
occurred during the Rightholder Option Period by (ii) the portion of the
Surviving Corporation that would be owned by all such Rightholders
(excluding the Greenhill Stockholders) if the Mergers occurred during the
Rightholder Option Period. If any such Rightholder does not fully
subscribe for the number or amount of Offered Securities it is entitled to
purchase, then each other Rightholder, including the Greenhill
Stockholders (except any Rightholder who had the right to purchase
pursuant to the previous sentence but did not purchase), shall have the
right to purchase that percentage of the Offered Securities not so
subscribed for (for the purposes of this Section 3.1(b), the "Excess
Offered Securities") determined by dividing (x) the portion of the
Surviving Corporation that would be owned by such participating
Rightholder if the Mergers occurred during the Rightholder Option Period
by (y) the portion of the Surviving Corporation that would be owned by all
participating Rightholders who elected to purchase Excess Offered
Securities if the Mergers occurred during the Rightholder Option Period.
The procedure described in the preceding sentence shall be repeated until
there are no remaining Excess Offered Securities. If the Rightholders do
not purchase all of the Offered Securities pursuant to this Section
3.1(b), then
<PAGE>
14
the Selling Stockholder may, subject to Section 3.1(e), sell the Offered
Securities to a Third Party Purchaser in accordance with Section 3.1(d).
(ii) The right of each Rightholder to purchase
the Offered Securities under subsection (i) above shall be exercisable by
delivering written notice of the exercise thereof, prior to the expiration
of the Rightholder Option Period, to the Selling Stockholder with a copy
to IX, Holdco, Greenhill and the Company. Each such notice shall state the
number of Offered Securities that such Rightholder is willing to purchase
pursuant to this Section 3.1(b). The failure of a Rightholder to respond
within the Rightholder Option Period to the Selling Stockholder shall be
deemed to be a waiver of such Rightholder's rights under subsection (i)
above, provided that each Rightholder may waive its rights under
subsection (i) above prior to the expiration of the Rightholder Option
Period by giving written notice to the Selling Stockholder, with a copy to
IX, Holdco, Greenhill and the Company.
(c) Closing. The closing of the purchases of Offered
Securities subscribed for by the Rightholders under Section 3.1(b) shall be held
at the offices of Paul, Weiss, Rifkind, Wharton & Garrison in New York, New
York, at 11:00 a.m., local time, on the 30th day after the giving of the
Offering Notice pursuant to Section 3.1(a) or at such other time and place as
the parties to the transaction may agree. At such closing, the Selling
Stockholder shall deliver certificates representing the Offered Securities, duly
endorsed for transfer and accompanied by all requisite transfer taxes, if any,
and such Offered Securities shall be free and clear of all Liens (other than
those arising hereunder and those attributable to actions by the purchaser
thereof) and the Selling Stockholder shall so represent and warrant, and shall
further represent and warrant that it is the sole beneficial and record owner of
such Offered Securities. The Rightholder purchasing Offered Securities shall
deliver at the closing payment in full in immediately available funds for the
Offered Securities purchased by it. At such closing, all of the parties to the
transaction shall execute such additional documents as are otherwise necessary
or appropriate.
(d) Sale to a Third Party Purchaser. Unless the
Rightholders elect to purchase all, but not less than all, of the Offered
Securities under Section 3.1(b), the Selling Stockholder may, subject to Section
3.1(e), sell all, but not less than all, the Offered Securities to a Third Party
Purchaser on the terms and conditions set forth in the Offering Notice;
provided, however, that (i) such sale is bona fide and made pursuant to a
contract entered into within thirty (30) days after the expiration of the
Rightholder Option Period (the "Contract Date"); (ii) such sale shall not be
consummated unless and until (x) such Third Party Purchaser shall represent in
writing to IX, Holdco, Greenhill, the Company and each Rightholder that it is
aware of the rights of the Major Stockholders contained in this Agreement and
(y) prior to the purchase by such Third Party Purchaser of any of such Offered
Securities, such Third Party Purchaser shall become a party to this Agreement
and shall agree to be bound by the terms and conditions hereof in accordance
with Section 2.4 hereof and (iii) if such Third Party Purchaser is acquiring 50%
or more
<PAGE>
15
of the issued and outstanding IX Common Stock within four (4) years of the date
hereof, then IX shall have transferred all right, title and interest in the
Intellectual Property to the Company. If such sale is not consummated within
sixty (60) days after the Contract Date for any reason, then the restrictions
provided for herein shall again become effective, and no transfer of such
Offered Securities may be made thereafter by the Selling Stockholder without
again offering the same to the Rightholders in accordance with this Section 3.1.
(e) Tag-Along Rights.
(i) If a Major Stockholder is the Selling
Stockholder transferring Offered Securities to a Third Party Purchaser
pursuant to Section 3.1(d), then each of the Major Stockholders (other
than the Selling Stockholder) (each, a "Tag-Along Rightholder") shall have
the right to sell to such Third Party Purchaser a number of Equity
Interests held by such Tag- Along Rightholder equal to the quotient of (i)
the portion of the Surviving Corporation that would be owned by such
Tag-Along Rightholder if the Mergers occurred during the Rightholder
Option Period and (ii) the total portion of the Surviving Corporation that
would be owned by all such Tag- Along Rightholders exercising their rights
pursuant to this Section 3.1(e) if the Mergers occurred during the
Rightholder Option Period plus the portion of the Surviving Corporation
that would be owned by the Selling Stockholder if the Mergers occurred
during the Rightholder Option Period. Subject to subsection (ii) below,
the Selling Stockholder and the Tag-Along Rightholder(s), together, shall
effect the sale of the Offered Securities as follows: such Tag-Along
Rightholder(s) shall sell up to the number permitted to be sold pursuant
to this Section 3.1(e)(i), and the number of Offered Securities to be sold
to such Third Party Purchaser by the Selling Stockholder shall be reduced
accordingly. The sale price of the Equity Interests sold pursuant to this
Section 3.1(e)(i) and the Offered Securities shall be calculated so that
Equity Interests that are equivalent to the same amount of Surviving
Corporation Stock assuming the Mergers occurred during the Rightholder
Option Period are sold for the same amount of consideration.
(ii) Each Selling Stockholder shall give notice
to each Tag-Along Rightholder of each proposed sale by it of Offered
Securities which gives rise to the rights of the Tag-Along Rightholders
set forth in this Section 3.1(e), at least fifteen (15) days prior to the
proposed consummation of such sale, setting forth the name of such Selling
Stockholder, the number of Offered Securities, the name and address of the
proposed Third Party Purchaser, the proposed amount and form of
consideration and terms and conditions of payment offered by such Third
Party Purchaser, the number of Equity Interests that such Tag-Along
Rightholder may sell to such Third Party Purchaser (determined in
accordance with Section 3.1(e)(i)), and a representation that such Third
Party Purchaser has been informed of the "tag- along" rights provided for
in this Section 3.1(e) and has agreed to purchase Equity Interests in
accordance with the terms hereof. The tag-along rights
<PAGE>
16
provided by this Section 3.1(e) must be exercised by any Tag-Along
Rightholder wishing to sell its shares within ten (10) days following
receipt of the notice required by the preceding sentence, by delivery of a
written notice to the Selling Stockholder indicating such Tag-Along
Rightholder's wish to exercise its rights and specifying the number of
Equity Interests (up to the maximum number of Equity Interests owned by
such Tag-Along Rightholder required to be purchased by such Third Party
Purchaser), it wishes to sell, provided that any Tag-Along Rightholder may
waive its rights under this Section 3.1(e) prior to the expiration of such
10-day period by giving written notice to the Selling Stockholder, with a
copy to IX, Holdco, Greenhill and the Company. The failure of a Tag-Along
Rightholder to respond within such 10- day period shall be deemed to be a
waiver of such Tag-Along Rightholder's rights under this Section 3.1(e).
If a Third Party Purchaser fails to purchase Equity Interests, from any
Tag-Along Rightholder that has properly exercised its tag-along rights
pursuant to this Section 3.1(e)(ii), then the relevant Selling Stockholder
shall not be permitted to consummate the proposed sale of the Offered
Securities, and any such attempted sale shall be null and void ab initio.
(iii) In connection with any exercise of "tag-
along" rights by the General Atlantic Stockholders and the Engage
Stockholders pursuant to this Section 3.1(e) in the event of a Company
Sale, if the General Atlantic Stockholders and Engage Stockholders in the
aggregate will not receive consideration in the Company Sale at least
equal to the consideration paid by Holdco for the Company Owned Interests
it purchased pursuant to the Securities Purchase Agreement plus six
percent (6%) simple interest per annum on such amount, calculated from the
date hereof through the closing date of the Company Sale (such shortfall,
the "Tag-Along Shortfall"), then at the closing of the Company Sale, and
as a condition to the closing of the Company Sale, (A) the Surviving
Corporation shall deliver to GAP LLC, on behalf of the General Atlantic
Stockholders, and to Engage, on behalf of the Engage Stockholders, a
certificate certified by its chief financial officer, stating whether or
not there will be a Tag-Along Shortfall and, if so, the amount of the
Tag-Along Shortfall and (B) if there is a Tag-Along Shortfall, NFO shall
pay the amount of such Tag-Along Shortfall by wire transfer of immediately
available funds to GAP LLC, on behalf of the General Atlantic
Stockholders, and to Engage, on behalf of the Engage Stockholders. In the
event that the consideration paid in the Company Sale is not cash or a
publicly-traded security, then the value of such consideration shall be
agreed upon by GAP LLC and NFO; provided, however, that if such parties
fail to agree as to such value it shall be the Fair Value thereof
determined in accordance with Section 3.2(d)(ii).
<PAGE>
17
3.2 Drag-Along Rights.
(a) Triggering Event. Notwithstanding any
restrictions on the transfer of Equity Interests in this Agreement, if IX
approves a sale of the Company to a third party (the "Acquiror"), whether by
sale of Company Interests, merger, sale of all or substantially all of the
assets of the Company or otherwise (a "Company Sale"), thereby triggering the
Mergers, then the Surviving Corporation shall have the right, subject to the
provisions of this Section 3.2 (the "Drag-Along Right"), to require each of the
holders of capital stock of the Surviving Corporation (the "Surviving
Corporation Stock") to (i) if such Company Sale is structured as a sale of
Surviving Corporation Stock, sell, transfer and deliver to the Acquiror all
Surviving Corporation Stock owned by them or (ii) if such Company Sale is
structured as a merger, consolidation, asset sale or other transaction requiring
the consent or approval of some or all of the holders of Surviving Corporation
Stock, vote such holder's Surviving Corporation Stock in favor thereof, and
otherwise consent to and raise no objection to such transaction, and waive any
dissenters' rights, appraisal rights or similar rights which such holder may
have in connection therewith; and, in any such event, subject to the provisions
of subsection (c) below, each such holder shall agree to and shall be bound by
the terms, provisions and conditions of the Company Sale.
(b) Drag-Along Notice. If IX and/or the Surviving
Corporation desires to exercise its Drag-Along Right, it shall give written
notice to the holders of Equity Interests and/or Surviving Corporation Stock
(the "Drag-Along Notice") of the Company Sale, setting forth the name and
address of the Acquiror, the date on which such transaction is proposed to be
consummated (which shall not be less than thirty (30) days after the date such
Drag-Along Notice is given) and the proposed amount and form of consideration
and any other material terms and conditions, including without limitation, the
material terms of any debt or equity proposed to be included in such
transaction.
(c) Condition to Company Sale. The obligations of
the holders of Surviving Corporation Stock in respect of a Company Sale are
subject to the satisfaction of the following conditions: (i) upon the
consummation of the Company Sale, the same form of consideration and the same
portion of the aggregate consideration realized upon such Company Sale shall be
paid or distributed in respect of each share of Surviving Corporation Stock then
issued and outstanding and (ii) if any holder of Surviving Corporation Stock is
given an option as to the form and amount of consideration to be received, each
other such holder shall be given the same option.
(d) Minimum Price.
(i) In connection with any Company Sale
referred to in subsection (a), if the General Atlantic Stockholders and
Engage Stockholders in the aggregate will not receive consideration in the
Company Sale at least equal to the consideration paid by Holdco for the
Company
<PAGE>
18
Owned Interests it purchased pursuant to the Securities Purchase Agreement
plus six percent (6%) simple interest per annum on such amount, calculated
from the date hereof through the closing date of the Company Sale (such
shortfall, the "Drag-Along Shortfall"), then at the closing of the Company
Sale, and as a condition to the closing of the Company Sale, (A) the
Surviving Corporation shall deliver to GAP LLC, on behalf of the General
Atlantic Stockholders, and to Engage, on behalf of the Engage
Stockholders, a certificate certified by its chief financial officer,
stating whether or not there will be a Drag-Along Shortfall and, if so,
the amount of the Drag-Along Shortfall and (B) if there is a Drag-Along
Shortfall, NFO shall pay the amount of such Drag-Along Shortfall by wire
transfer of immediately available funds to GAP LLC, on behalf of the
General Atlantic Stockholders, and to Engage, on behalf of the Engage
Stockholders. In the event that the consideration paid in the Company Sale
is not cash or a publicly-traded security, then the value of such
consideration shall be agreed upon by GAP LLC and NFO; provided, however,
that if such parties fail to agree as to such value it shall be the Fair
Value thereof determined in accordance with subsection (ii) below.
(ii) The Fair Value of the consideration paid in
the Company Sale shall be determined by a nationally recognized investment
bank selected by NFO and consented to by GAP LLC (which consent will not
be unreasonably withheld). Such investment bank shall conduct its
determination as promptly as practicable. Such determination shall be
final and binding. NFO, on the one hand, and the Holdco Stockholders (in
proportion to their ownership of Holdco Shares), on the other hand, shall
each be responsible for fifty percent (50%) of the fees and expenses of
such investment bank.
(iii) If (x) there is a Change of Control of NFO
within 180 days of the closing of the Company Sale and (y) the acquiror of
NFO is the Acquiror, then within five (5) days of such Change of Control
of NFO, NFO (or the surviving Person if NFO has been merged with another
Person) shall send a notice to GAP LLC, on behalf of the General Atlantic
Stockholders, and to Engage, on behalf of the Engage Stockholders,
informing them that the Acquiror has acquired NFO and stating the
Alternate Investment Amount. If the Alternate Investment Amount is greater
than the amount the General Atlantic Stockholders and Engage Stockholders
in the aggregate received in the Company Sale (plus, if applicable, the
Drag-Along Shortfall paid pursuant to subsection (i) above) (such amount,
the "Change of Control Shortfall"), then within five (5) Business Days of
notice by GAP LLC, on behalf of the General Atlantic Stockholders, and to
Engage, on behalf of the Engage Stockholders, to NFO (or the surviving
Person if NFO has been merged with another Person), that such Change of
Control Shortfall exists, NFO or the Acquiror shall pay the amount of such
Change of Control Shortfall by wire transfer of immediately available
funds to GAP LLC, on behalf of the General Atlantic Stockholder, and to
Engage, on behalf of the Engage Stockholders.
<PAGE>
19
4. Preemptive Rights.
4.1 Offering Notice. Except for (a) interests in the Company
issued upon exercise, conversion or exchange of any Company Interest Equivalent
and (b) Company Interests issued in consideration of an acquisition by the
Company of another Person, approved by the Board of Representatives ((a) and (b)
being referred to together as "Exempt Issuances"), if the Company wishes to
issue any Company Interest or Company Interest Equivalent (collectively, "New
Securities") to any Person (the "Subject Purchaser"), then the Company shall
offer such New Securities first to each of the Major Stockholders (each, a
"Preemptive Rightholder" and collectively, the "Preemptive Rightholders") by
sending written notice (the "New Issuance Notice") to the Preemptive
Rightholders, which New Issuance Notice shall state (i) the number of New
Securities proposed to be issued and (ii) the proposed purchase price per
security of the New Securities (the "Proposed Price"). Upon delivery of the New
Issuance Notice, such offer shall be irrevocable unless and until the rights
provided for in Section 4.2 shall have been waived or shall have expired.
4.2 Preemptive Rights; Exercise.
(a) For a period of fifteen (15) days after the giving
of the New Issuance Notice pursuant to Section 4.1, each of the Preemptive
Rightholders shall have the right to purchase its Proportionate Percentage (as
hereinafter defined) of the New Securities at a purchase price equal to the
Proposed Price and upon the terms and conditions set forth in the New Issuance
Notice. Each such Preemptive Rightholder shall have the right to purchase that
percentage of the New Securities equal to portion of the Surviving Corporation
that would be owned by such Preemptive Rightholder exercising its rights under
this Section 4.2 if the Mergers occurred on the date of the New Issuance Notice
(the "Proportionate Percentage"). If any Preemptive Rightholder does not fully
subscribe for the number or amount of New Securities that it is entitled to
purchase pursuant to the preceding sentence, then each Preemptive Rightholder
which elected to purchase New Securities shall have the right to purchase that
percentage of the remaining New Securities not so subscribed for (the "Excess
New Securities") determined by dividing (x) the portion of the Surviving
Corporation that would be owned by such fully participating Preemptive
Rightholder if the Mergers occurred on the date of the New Issuance Notices by
(y) the total portion of the Surviving Corporation that would be owned by all
fully participating Preemptive Rightholders who elected to purchase Excess New
Securities if the Mergers occurred on the date of the New Issuance Notice.
(b) The right of each Preemptive Rightholder to
purchase the New Securities under subsection (a) above shall be exercisable by
delivering written notice of the exercise thereof, prior to the expiration of
the 15-day period referred to in subsection (a) above, to the Company, which
notice shall state the amount of New Securities that such Preemptive Rightholder
elects to purchase pursuant to Section 4.2(a). The failure of a Preemptive
Rightholder to respond within such 15-day period shall be deemed to be a waiver
of such Preemptive Rightholder's rights under Section 4.2(a), provided that each
Preemptive Rightholder may waive its
<PAGE>
20
rights under Section 4.2(a) prior to the expiration of such 15-day period by
giving written notice to the Company.
4.3 Closing. The closing of the purchase of New Securities
subscribed for by the Preemptive Rightholders under Section 4.2 shall be held at
the offices of Paul, Weiss, Rifkind, Wharton & Garrison in New York, New York at
11:00 a.m., local time, on (a) the fortieth (40th) day after the giving of the
New Issuance Notice pursuant to Section 4.1, if the Preemptive Rightholders
elect to purchase all of the New Securities under Section 4.2, (b) the date of
the closing of the sale to the Subject Purchaser made pursuant to Section 4.4 if
the Preemptive Rightholders elect to purchase some, but not all, of the New
Securities under Section 4.2 or (c) at such other time and place as the parties
to the transaction may agree. At such closing, the Company shall deliver
certificates, if the are to be certificated, representing the New Securities,
and such New Securities shall be issued free and clear of all Liens and the
Company shall so represent and warrant, and further represent and warrant that
such New Securities shall be, upon issuance thereof to the Preemptive
Rightholders and after payment therefor, duly authorized, validly issued, fully
paid and non-assessable. Each Preemptive Rightholder purchasing the New
Securities shall deliver at the closing payment in full in immediately available
funds for the New Securities purchased by it. At such closing, all of the
parties to the transaction shall execute such additional documents as are
otherwise necessary or appropriate.
4.4 Sale to Subject Purchaser. The Company may sell to the
Subject Purchaser all of the New Securities not purchased by the Preemptive
Rightholders pursuant to Section 4.2 on terms and conditions that are no more
favorable to the Subject Purchaser than those set forth in the New Issuance
Notice; provided, however, that such sale is bona fide and made pursuant to a
contract entered into within ninety (90) days following the earlier to occur of
(i) the waiver by the Preemptive Rightholders of their option to purchase New
Securities pursuant to Section 4.2 and (ii) the expiration of the 15-day period
referred to in Section 4.2. If such sale is not consummated within such ninety
(90) day period for any reason, then the restrictions provided for herein shall
again become effective, and no issuance and sale of New Securities may be made
thereafter by the Company without again offering the same in accordance with
this Section 4. The closing of any issuance and purchase pursuant to this
Section 4.4 shall be held at a time and place as the parties to the transaction
may agree.
4.5 Preemptive Rights with respect to Holdco Securities.
Except for the issuance of Holdco Shares pursuant to the exercise of options
under the Option Plan, if Holdco wishes to issue any securities to any Person,
then each Holdco Stockholder shall have the right to purchase its pro-rata
portion of such proposed issuance so that such Holdco Stockholder can maintain
its percentage ownership interest in Holdco.
<PAGE>
21
5. After-Acquired Securities; Agreement to be Bound.
5.1 After-Acquired Securities. All of the provisions of this
Agreement shall apply to all of the Equity Interests and Equity Interest
Equivalents now owned or which may be issued or transferred hereafter to an
Equity Holder in consequence of any additional issuance, purchase, exchange or
reclassification of any of such Equity Interests or Equity Interest Equivalents,
company reorganization, or any other form of recapitalization, consolidation,
merger, unit split or distribution, or which are acquired by an Equity Holder in
any other manner.
5.2 Agreement to be Bound. None of IX, Holdco, Greenhill or
the Company, as the case may be, shall issue any Equity Interests or any Equity
Interest Equivalents to any Person not a party to this Agreement, other than to
Representatives, officers, employees or consultants of the Company pursuant to
the Option Plan, unless either (a) such Person has agreed in writing to be bound
by the terms and conditions of this Agreement pursuant to an instrument
substantially in the form attached hereto as Exhibit A-2 or (b) such Person has
entered into an agreement with IX, Holdco, Greenhill or the Company, as the case
may be, restricting the transfer of its Equity Interests in form and substance
reasonably satisfactory to NFO and General Atlantic. Upon becoming a party to
this Agreement, such Person shall be deemed to be, and shall be subject to the
same obligations as, an Other Stockholder hereunder. Any issuance of Equity
Interests or any Equity Interest Equivalents by IX, Holdco, Greenhill or the
Company, as the case may be, in violation of this Section 5.2 shall be null and
void ab initio.
6. Holdco Put.
6.1 Exercise.
(a) By Holdco Stockholders. Notwithstanding
anything to the contrary contained in this Agreement if, on or before the fourth
anniversary of the Closing Date, the Company (or its successor in interest)
shall not have consummated an Initial Public Offering or closed a Company Sale
(the "Put Trigger Event"), then following the fourth anniversary of the Closing
Date, a majority in interest of the Holdco Stockholders shall have the right and
option (the "Put") to require the Company to purchase all, but not less than
all, of the Holdco Shares held by all of the Holdco Stockholders (the " Holdco
Put Securities"). If the Put right is exercised, Holdco, on behalf of the Holdco
Stockholders, shall deliver promptly to the Company, with a copy to the other
Equity Holders, notice (the "Put Notice") of (a) the exercise by Holdco of the
Put and (b) the number of Holdco Put Securities held by the Holdco Stockholders
(the date on which Holdco gives the Put Notice being hereinafter referred to as
the "Put Exercise Date"). Notwithstanding the foregoing, upon the consent of
Holdco, in its sole discretion, the Company may assign to another Person (the
"Company Transferee") the Company's obligation to purchase the Holdco Put
Securities pursuant to this Section 6, but the Company shall not be relieved of
its obligations hereunder.
<PAGE>
22
(b) Greenhill Tag-Along. If the Put is exercised, a
majority in interest of the Greenhill Stockholders shall have the right and
option (the "Greenhill Put") to require the Company to purchase all, but not
less than all, of the Greenhill Shares held by all of the Greenhill Stockholders
(the "Greenhill Put Securities" and, together with the Holdco Put Securities,
the "Put Securities") on the same terms and conditions (but not necessarily the
same price (see 6.2 below)) as the Holdco Put Securities. If the Greenhill Put
is exercised, Greenhill, on behalf of the Greenhill Stockholders, shall deliver
to the Company, with a copy to the other Equity Holders within seven (7) days of
the Put Exercise Date, notice of the exercise by Greenhill of the Greenhill Put
and the number of Greenhill Put Securities held by the Greenhill Stockholders.
6.2 Purchase Price.
(a) If Holdco exercises the Put, the Company or the
Company Transferee, as the case may be, shall purchase, and the Holdco
Stockholders shall sell, all of the Holdco Put Securities held by the Holdco
Stockholders at a purchase price equal to the greater of (i) the consideration
paid by Holdco for the Company Owned Interests it purchased pursuant to the
Securities Purchase Agreement plus six percent (6%) simple interest per annum on
such amount, calculated from the date hereof through the date preceding the
closing date referred to below and (ii) the Fair Value of the Holdco Put
Securities (assuming the consummation of the Mergers and the existence of only
one class of Surviving Corporation Stock) as determined in accordance with the
procedures set forth in Section 6.2(b) (the "Holdco Put Purchase Price"). If
Greenhill exercises the Greenhill Put, the Company or the Company Transferee, as
the case may be, shall purchase, and the Greenhill Stockholders shall sell, all
of the Greenhill Put Securities held by the Greenhill Stockholders at a purchase
price equal to the Fair Value of the Greenhill Put Securities (assuming the
consummation of the Mergers and the existence of only one class of Surviving
Corporation Stock) as determined in accordance with the procedures set forth in
Section 6.2(b) (the "Greenhill Put Purchase Price" and, together with the
"Holdco Put Purchase Price, the "Put Purchase Price").
(b) The Fair Value shall be agreed upon by the
Company and Holdco (and by Greenhill, whose agreement shall not be unreasonably
withheld, if the Company and Holdco agree that Fair Value is less than the
amount set forth in Section 6.2(a)(i)); provided, however, that if such parties
fail to agree, the Fair Value shall be determined by a panel of three
independent appraisers, which shall be nationally recognized investment banking
firms or nationally recognized experts experienced in the valuation of entities
engaged in the business conducted by the Company. Within five (5) days after the
date the applicable parties determine that they cannot agree as to the purchase
price, the Company and Holdco shall each designate one such appraiser that is
willing and able to conduct such determination. If either fails to make such
designation within such period, then the other party that has made the
designation shall have the right to make the designation on its behalf. The two
appraisers designated shall, within a period of five (5) days after the
designation of the second appraiser, designate a mutually acceptable third
appraiser.
<PAGE>
23
The three appraisers shall conduct their determination as promptly as
practicable, and the Fair Value shall be the average of the determination of the
two appraisers that are closer to each other than to the determination of the
third appraiser, which third determination shall be discarded; provided,
however, that if the determination of two appraisers are equally close to the
determination of the third appraiser, then the Fair Value shall be the average
of the determination of all three appraisers. Such determination shall be final
and binding. The Company and Holdco shall each be responsible for fifty percent
(50%) of the fees and expenses of the appraisers, unless Greenhill's
disagreement requires the use of appraisers to determine fair value, in which
case Greenhill shall pay Holdco's share of the fees and expenses.
6.3 Closing.
(a) Delivery of Put Securities. The closing of the Put
exercised by the Holdco Stockholders and the Greenhill Put exercised by the
Greenhill Stockholders pursuant to this Section 6 shall be held at the offices
of Paul, Weiss, Rifkind, Wharton & Garrison in New York, New York at 11:00 a.m.,
local time, on the date mutually agreed upon by the Company or the Company
Transferee, as the case may be, and Holdco, provided that in no event shall such
closing occur more than forty-five (45) days after the Put Exercise Date. At
such closing the Holdco Stockholders and the Greenhill Stockholders shall
deliver certificates representing the Put Securities, duly endorsed for transfer
and accompanied by all requisite transfer taxes, if any, and such Put Securities
shall be free and clear of all Liens and each of the Holdco Stockholders and the
Greenhill Stockholders shall so represent and warrant as to itself, and shall
further represent and warrant that (i) the Company Owned Interests held by such
Holdco Interestholder or such Greenhill Interestholder are free and clear of all
Liens, (ii) each of Holdco and Greenhill, respectively, has no debts or
liabilities, except for liabilities Holdco may have pursuant to the Option Plan
and (iii) such Holdco Stockholder or Greenhill Stockholder is the sole
beneficial and record owner of the Put Securities owned by it. At such closing,
all of the parties to the transaction shall execute such additional documents as
are otherwise necessary or appropriate.
(b) Payment of Put Purchase Price. If the Company
assigns its obligations under this Section 6 to the Company Transferee, then the
Company Transferee shall deliver to the Holdco Stockholders and the Greenhill
Stockholders at the closing payment in full in immediately available funds for
all of the Put Securities or shall make other arrangements for payment
satisfactory to Holdco, which arrangements shall be guaranteed by the Company.
If the Company does not assign its obligations under this Section 6 to the
Company Transferee, then the Put Purchase Price for the Put Securities being
purchased shall be paid in full by the Company at the closing as follows:
(i) the Company shall pay twenty-five percent
(25%) of the Put Purchase Price at the closing by wire transfer of
immediately available funds to an account or accounts specified in writing
by the Holdco Stockholders and the Greenhill Stockholders; and
<PAGE>
24
(ii) the Company shall make and issue to the
Holdco Stockholders and the Greenhill Stockholders, at the closing, one or
more promissory notes, which shall contain reasonable terms and covenants
(the "Company Notes") in favor of such Stockholder in the aggregate
principal amount of seventy-five percent (75%) of the respective Put
Purchase Prices, bearing interest from and after the Put Exercise Date at
the rate of six percent (6%) simple interest per annum. Principal shall be
repaid on the Company Note in equal installments of twenty-five percent
(25%) of the Put Purchase Price on each of the first, second and third
anniversaries of the Put Exercise Date. Interest on the Company Note shall
be due and payable on the principal repayment dates.
(c) Subordination. In no event shall any payment on
a Company Note issued in favor of any Greenhill Stockholder be made unless all
amounts due under Company Notes issued in favor of all of the Holdco
Stockholders up to including such day of payment have been paid in full.
6.4 Put Default. If (a) the Company or the Company Transferee,
as the case may be, fails to consummate the closing of the Put within the time
periods set forth in Section 6.3 or (b) the Company fails to cure any failure to
make payments due under the Company Notes within five (5) Business Days of
notice from a Holdco Stockholder of such failure (a "Put Default") General
Atlantic shall have the right (pursuant to an irrevocable proxy which IX, on
behalf of itself and the other IX Interestholders, hereby grants to General
Atlantic in the event of a Put Default and until such Put Default is cured
(provided that if subsequent Put Defaults occur this irrevocable proxy shall
again take effect)) to vote the Company Interests held by the IX Interestholders
in favor of expanding the Board of Representatives of the Company from five (5)
members to seven (7) members and designating four (4) of such members pursuant
to Section 5.2(b) of the Operating Agreement.
6.5 NFO Right of First Refusal.
(a) Offering Notice. Any time after a Put Default,
notwithstanding any other provision of this Agreement to the contrary, if
General Atlantic receives a bona fide offer from a third party (other than a
Permitted Transferee) (the "First Refusal Offeror") to acquire control of the
Company through a Company Sale (a "First Refusal Offer") and General Atlantic
desires to accept the Third Party Offer, then General Atlantic shall make an
offer to NFO to permit NFO to acquire the Company on the same terms and
conditions as the Third Party Offeror (the "Right of First Refusal"), by sending
written notice (a "First Refusal Offering Notice") to NFO, which shall state (i)
the proposed sale price (the "First Refusal Offer Price") and (ii) the terms and
conditions of such sale. Upon delivery of the First Refusal Offering Notice,
such offer shall be irrevocable unless and until the Right of First Refusal
provided for herein shall have been waived or shall have expired. General
Atlantic shall promptly deliver a copy of the First Refusal Offering Notice to
each of the other Equity Holders.
<PAGE>
25
(b) First Refusal Exercise. For a period of forty-five
(45) days after the giving of the First Refusal Offering Notice pursuant to
Section 6.5(a) (the "First Refusal Option Period"), NFO shall have the right but
not the obligation to acquire the Company at a purchase price equal to the First
Refusal Offer Price and upon the terms and conditions set forth in the First
Refusal Offering Notice. The Right of First Refusal shall be exercisable by
delivering written notice of the exercise thereof, prior to the expiration of
the 45-day period referred to above, to General Atlantic and the Company, with a
copy to each of the other Equity Holders. The failure of NFO to respond within
such 45-day period shall be deemed to be a waiver of its Right of First Refusal,
provided that NFO may waive its rights under this Section 6.5(b) prior to the
expiration of such 45-day period by giving written notice to General Atlantic or
the Company, with a copy to each of the other Equity Holders.
(c) Closing. The closing of the Company Sale pursuant to
the Right of First Refusal shall be held at the offices of Paul, Weiss, Rifkind,
Wharton & Garrison in New York, New York at 11:00 a.m., local time, on the
thirtieth (30th) day after the expiration of the First Refusal Option Period or
at such other time and place as the parties to the transaction may agree. NFO
shall deliver at the closing payment in full in immediately available funds for
the Company Sale. At such closing, all of the parties to the transaction shall
execute such additional documents as are otherwise necessary or appropriate.
(d) Sale to a First Refusal Offeror. Unless NFO
exercises its Right of First Refusal, General Atlantic, on behalf of the
Company, if applicable, may enter into a definitive agreement with the First
Refusal Offeror to consummate the Company Sale on the terms and conditions set
forth in the First Refusal Offering Notice, which shall be binding on all of the
Equity Holders; provided, however, that such sale is bona fide and made pursuant
to a contract entered into within sixty (60) days after the earlier to occur of
(i) the waiver by NFO and (ii) the expiration of the First Refusal Option Period
(the "First Refusal Contract Date"). Such sale may take the form that General
Atlantic believes most effective under the circumstances, and IX and the Company
agree to cooperate with General Atlantic to effectuate such sale, including
making information available, making presentations and executing such documents
as may be necessary to effectuate such sale transaction. If such sale is not
consummated within seventy-five (75) days after the First Refusal Contract Date
for any reason, then the restrictions provided for herein shall again become
effective, and no Company Sale may be made thereafter without again offering the
same to NFO in accordance with this Section 6.5.
7. IX Call.
7.1 Exercise. Notwithstanding anything to the contrary
contained in this Agreement, at any time following the third (3rd) anniversary
of the Closing Date, IX shall have the right and option (the "Call") to require
all of the Holdco Stockholders and the Greenhill Stockholders to sell all, but
not less than all, of the Equity Interests (other than Company Interests) held
by the Holdco
<PAGE>
26
Stockholders and the Greenhill Stockholders (the "Call Securities"). If the Call
right is exercised, IX shall deliver promptly to the Company, the Holdco
Stockholders and the Greenhill Stockholders, with a copy to the other Equity
Holders, notice (the "Call Notice") of the exercise by the IX Interestholders of
the Call (the date on which IX gives the Call Notice being hereinafter referred
to as the "Call Exercise Date").
7.2 Purchase Price. If IX exercises the Call, IX shall
purchase, and the Holdco Stockholders and the Greenhill Stockholders shall sell,
all of the Call Securities at a purchase price equal to the greater of (a) the
amount set forth in Section 6.2(a), (b) the Fair Value of the Call Securities
(assuming the consummation of the Mergers and the existence of only one class of
Surviving Corporation Stock) as determined in accordance with the procedures set
forth in Section 6.2(b) and (c) the Alternate Investment Amount, except that in
determining such Alternate Investment Amount the clause "the closing of the
transaction that caused the Change of Control of NFO" in the definition of
"Appreciation" shall be replaced by the clause "the Call Exercise Date;"
provided, however that the purchase price paid to the Greenhill Stockholders
shall be the amount set forth in clause (b) above.
7.3 Closing.
(a) Delivery of Call Securities. The closing of the Call
exercised by IX shall be held at the offices of Paul, Weiss, Rifkind, Wharton &
Garrison in New York, New York at 11:00 a.m., local time, on the date mutually
agreed upon by IX and Holdco, provided that in no event shall such closing occur
more than forty-five (45) days after the Call Exercise Date. At such closing the
Holdco Stockholders and Greenhill Stockholders shall deliver to IX certificates
representing the Call Securities, duly endorsed for transfer and accompanied by
all requisite transfer taxes, if any, and such Call Securities shall be free and
clear of all Liens and each of the Holdco Stockholders and the Greenhill
Stockholders shall so represent and warrant as to itself, and shall further
represent and warrant that (i) the Call Securities held by such Holdco
Stockholder or such Greenhill Stockholder are free and clear of all Liens, (ii)
each of Holdco and Greenhill, respectively, has no debts or liabilities, except
for liabilities Holdco may have pursuant to the Option Plan and (iii) such
Holdco Stockholder or such Greenhill Stockholders is the sole beneficial and
record owner of the Call Securities owned by it. At such closing, all of the
parties to the transaction shall execute such additional documents as are
otherwise necessary or appropriate.
(b) Payment of Call Purchase Price. IX shall deliver to
the Holdco Stockholders and the Greenhill Stockholders, at the closing payment
in full in immediately available funds for all of the Call Securities or shall
make other arrangements for payment satisfactory to Holdco; provided, however,
that in the event the consideration to be paid to the Holdco Stockholders has
been determined pursuant to clause (c) of Section 7.2, IX shall be entitled, in
its sole discretion, to pay the portion of such consideration equal to the
difference between (x) the amount determined pursuant to clause (c) of such
Section 7.2 and (y) an amount equal to the
<PAGE>
27
greater of the amounts determined pursuant to clauses (a) and (b) of Section
7.2, in newly issued shares of NFO Common Stock.
Section 7A. Governance Following Mergers.
7A.1 General. From and after the occurrence of the Mergers,
each Stockholder of the Surviving Corporation that is a party hereto shall vote
its shares of Surviving Corporation Stock, at any regular or special meeting of
stockholders of the Surviving Corporation (each a "Stockholders' Meeting"), or
in any written consent executed in lieu of such a meeting of stockholders (a
"Written Consent"), and shall take all other actions necessary to give effect to
the agreements contained in this Section 7A and to ensure that the certificate
of incorporation and by-laws of the Surviving Corporation do not at any time
conflict in any respect with the provisions of this Section 7A. In addition,
each such Stockholder shall vote its shares of Surviving Corporation Stock at
any Stockholders' Meeting, or act by Written Consent with respect to such
shares, upon any matter submitted for action by the Surviving Corporation's
stockholders, or with respect to which such Stockholder may vote or act by
Written Consent, in conformity with the specific terms and provisions of this
Agreement and the certificate of incorporation and by-laws.
7A.2 Election of Directors. Each Stockholder shall vote its
shares of Surviving Corporation Stock at any Stockholders' Meeting, or act by
Written Consent with respect to such shares, and take all other actions
necessary to ensure that the number of directors constituting the entire Board
of Directors of the Surviving Corporation shall initially be five (5). Each
Stockholder shall vote its shares of Surviving Corporation Stock at any
Stockholders' Meeting called for the purpose of filling the positions on the
Board of Directors, or in any Written Consent executed for such purpose, and
take all other actions necessary to ensure the election to the Board of
Directors of three individuals, who shall be designated by NFO (the "NFO
Directors") and two individuals, who shall be designated by General Atlantic
(the "GAP Directors").
7A.3 Removal and Replacement.
(i) NFO shall be entitled at any time and for any reason
(or for no reason) to designate any or all of the NFO Directors for
removal. If, at any time, a vacancy is created on the Board of Directors
by reason of the death, removal or resignation of any NFO Director, NFO
shall, as soon as practicable after the date such vacancy first occurs and
in any event prior to the transaction of any other business by the
stockholders or the Board of Directors, designate a nominee to be elected
to fill such vacancy until the next annual meeting of stockholders of the
company.
(b) General Atlantic shall be entitled at any time and
for any reason (or for no reason) to designate either or both of the GAP
Directors for removal. If, at any time, a vacancy is created on the Board
of Directors by reason of the death, removal or resignation of either GAP
<PAGE>
28
Director, General Atlantic shall, as soon as practicable after the date
such vacancy first occurs and in any event prior to the transaction of any
other business by the stockholders or the Board of Directors, designate a
nominee to be elected to fill such vacancy until the next annual meeting
of stockholders of the Company.
7A.4 Termination of Sections 7A.2 and 7A.3.
(a) Notwithstanding anything herein to the contrary,
from and after the date that NFO beneficially owns an aggregate number of
shares of Surviving Corporation Stock that, constitute less than ten
percent (10%) of the total outstanding capital stock, NFO shall be
entitled to designate two directors for election or removal pursuant to
Section 7A.2 or 7A.3, respectively; from and after the date that such
beneficial ownership of NFO shall collectively constitute less than seven
percent (7%) of the total outstanding shares of Surviving Corporation
Stock, NFO shall be entitled to designate one director for election or
removal pursuant to Section 7A.2 or 7A.3, respectively; and from and after
the date such beneficial ownership of NFO shall constitute less than three
percent (3%) of the total outstanding shares of Surviving Corporation
Stock, NFO shall no longer be entitled to designate any directors for
election or removal pursuant to Section 7A.2 or 7A.3, respectively.
(b) Notwithstanding anything herein to the contrary,
from and after the date that General Atlantic shall beneficially own an
aggregate number of Shares of Surviving Corporation Stock that, in the
aggregate, constitute less than seven percent (7%) of the total
outstanding capital stock, General Atlantic shall be entitled to designate
one director for election or removal pursuant to Section 7A.2 or 7A.3,
respectively; and from and after the date that such collective beneficial
ownership of General Atlantic shall constitute less than three percent
(3%) of the total outstanding shares of Surviving Corporation Stock,
General Atlantic shall no longer be entitled to designate any directors
for election or removal pursuant to Section 7A.2 or 7A.3, respectively.
8. Covenants of the Parties.
8.1 Merger of IX and Holdco. Each of IX and Holdco hereby
covenant and agree to, and each of the Major Stockholders (except the Greenhill
Stockholders) hereby covenant and agree to cause IX and Holdco to, enter into a
Merger Agreement, substantially in the form of Exhibit B attached hereto, with
such changes thereto as IX and Holdco may mutually agree upon, and to consummate
a merger in which Holdco shall merge with and into IX with IX as the surviving
corporation, (a) immediately prior to the closing of a Company Sale, (b)
immediately prior to the closing of an Initial Public Offering and (c)
immediately after (i) the Company admits in writing its inability to pay its
debts generally, (ii) the Company makes a general assignment for the benefit of
creditors, (iii) any proceeding is
<PAGE>
29
instituted by or against and (provided that if such proceeding is involuntary,
that it continues undismissed for 60 days, or an order or decree approving or
ordering any such involuntary proceeding is entered) the Company seeking to
adjudicate it as bankrupt or insolvent, or seeking dissolution, liquidation,
winding up, reorganization, arrangement, adjustment, protection, relief or
composition of it or its debts under any law relating to bankruptcy, insolvency
or reorganization or relief of debtors, or seeking the entry of an order for
relief or the appointment of a receiver, trustee, custodian or other similar
relief for either of them or for any substantial part of either of their
property or (iv) the Company takes any action preliminary to or to authorize or
effect any of the actions set forth above in subsections (i) and (ii) of this
clause (c). The parties hereto hereby covenant and agree to take any necessary
action so that the equity ownership of the surviving corporation of the merger
pursuant to this Section 8.1 is as follows (assuming such merger occurred on the
date hereof): (w) NFO Stockholders shall own 50.79% of the fully-diluted equity,
(x) General Atlantic Stockholders shall own 21.90% of the fully-diluted equity,
(y) Engage Stockholders shall own 1.91% of the fully-diluted equity and (z)
shares reserved for issuance, exercisable or exercised pursuant to the Option
Plan (as it may have been converted or reconstituted in such merger) shall in
the aggregate equal 25.4% of the fully-diluted equity, and to make any
adjustment, as may be necessary to reflect changes in the capitalization and
equity ownership of the constituent corporations after the date hereof and prior
to the consummation of such merger. The parties hereto hereby covenant and agree
to use best efforts to cause the merger pursuant to this Section 8.1 to be
treated as a tax-free reorganization. By way of example, based on the
capitalization of IX (15,000,000 shares of Class A Common Stock issued to NFO
and outstanding) and Holdco (7,032,000 shares of Class A Common Stock issued to
the Holdco Stockholders and outstanding and 7,500,000 shares of Class B Common
Stock reserved for issuance upon exercise of stock options) on the date hereof,
the foregoing merger would result in the following capitalization of the
surviving corporation of the merger: (A) 15,000,000 shares of Class A Common
Stock held by NFO; (B) 7,032,000 shares of Class B Common Stock held by the
Holdco Stockholders; and (C) 7,500,000 shares of Class E Common Stock reserved
for issuance upon exercise of stock options.
8.2 Merger of IX and Greenhill. Each of IX and Greenhill
hereby covenant and agree to, and each of the Major Stockholders hereby covenant
and agree to cause the surviving corporation of the merger contemplated in
Section 8.1 and the Company to, enter into a Merger Agreement, substantially in
the form of Exhibit C attached hereto, with such changes thereto as IX and
Greenhill may mutually agree upon, and to consummate a merger in which Greenhill
shall merge with and into IX with IX as the surviving corporation, immediately
after the consummation of the merger referred to in Section 8.1, if the merger
referred to in Section 8.1 occurs pursuant to Section 8.1(a) or (b). The parties
hereto hereby covenant and agree to take any necessary action so that the equity
ownership of the Surviving Corporation is as follows (assuming such merger
occurred on the date hereof): (v) NFO Stockholders shall own 50.00% of the
fully-diluted equity, (w)
<PAGE>
30
General Atlantic Stockholders shall own 21.56% of the fully-diluted equity, (x)
Engage Stockholders shall own 1.88% of the fully-diluted equity, (y) Greenhill
Interestholders shall own 1.56% of the fully-diluted equity and (z) shares
reserved for issuance, exercisable or exercised pursuant to the Option Plan (as
it may have been converted or reconstituted in such merger) shall in the
aggregate equal 25.00% of the fully-diluted equity, and to make any adjustment
as may be necessary to reflect changes in the capitalization and equity
ownership of the constituent entities after the date hereof and prior to the
consummation of such merger. The parties hereto hereby covenant and agree to use
best efforts to cause the merger pursuant to this Section 8.2 to be treated as a
tax-free reorganization. By way of example, assuming the capitalization of the
surviving corporation of the merger described in Section 8.1 is as described in
the last sentence of Section 8.1, the merger described in this Section 8.2 would
result in the following capitalization of the surviving corporation of the
merger: (A) 15,000,000 shares of Class A Common Stock held by NFO; (B) 468,000
shares of Class A Common Stock held by Greenhill; (C) 7,032,000 shares of Class
B Common Stock held by the Holdco Stockholders; and (D) 7,500,000 shares of
Class E Common Stock reserved for issuance upon exercise of stock options.
8.3 Grant of Registration Rights. Immediately after the
closing of the merger referred to in Section 8.2, each of IX and the Major
Stockholders shall enter into a Registration Rights Agreement, substantially in
the form of Exhibit D attached hereto, with such changes thereto as IX and each
of the Major Stockholders may all agree upon.
8.4 Put of Intellectual Property. The parties hereto hereby
acknowledge IX's right to put the Intellectual Property to the Company pursuant
to Section 9 of the License Agreement dated the date hereof between IX and the
Company. The parties hereto hereby covenant and agree to take any necessary
action to amend the Operating Agreement to reflect any changes in the parties'
Company Owned Interests as a result of the put of the Intellectual Property.
8.5 Option Plan. Holdco hereby covenants and agrees to grant
options under the Option Plan to the Persons and in the amounts recommended by
the Board of Representatives of the Company and shall not otherwise grant
options under the Option Plan. Holdco hereby further covenants and agrees that
if any option under the Option Plan is exercised it will promptly contribute any
amount paid by the optionholder to Holdco to exercise the option to the Company.
8.6 General Atlantic Right to Purchase. IX, Holdco and the
Company hereby covenant and agree that GAP LLC, or its designee, shall have the
right to purchase the number of shares of Surviving Corporation Stock from the
underwriters in the Surviving Corporation's Initial Public Offering equal to the
number of shares of common stock of the Surviving Corporation that a holder of a
two percent (2%) Company Interest on the date hereof would hold following the
<PAGE>
31
Mergers. Such number will be subject to dilution proportionally if any
additional Company Interests are issued after the date hereof.
8.7 Restrictions of IX Business. Until such time as the
Mergers are consummated, IX hereby covenants and agrees not to, and each IX
Stockholder hereby covenants and agrees to cause IX not to, (a) conduct any
business other than owning and licensing the Intellectual Property and holding
an equity interest in the Company and (b) incur any debts or other liabilities.
8.8 Restrictions on Holdco Business. Holdco hereby covenants
and agrees not to, and each Holdco Stockholder hereby covenants and agrees to
cause Holdco not to, (a) conduct any business other than activities relating to
the Option Plan and holding an equity interest in the Company and (b) except as
may arise as a result of the Option Plan, incur any debts or other liabilities.
8.9 Restrictions on Greenhill Business. Greenhill hereby
covenants and agrees not to, and each Greenhill Stockholder hereby covenants and
agrees to cause Greenhill not to, (a) conduct any business other than holding an
equity interest in the Company and (b) incur any debts or other liabilities.
8.10 Preemptive Rights Adjustments. The parties hereto hereby
covenant and agree to adjust in an equitable manner the merger conversion ratios
of the Mergers to reflect the issuance of any additional Company Interests (and
the exercise of any preemptive rights with respect thereto pursuant to Section
4, if any).
8.11 Holdco Charter and Bylaws. The General Atlantic
Stockholders hereby covenant and agree not to amend or supplement the
certificate of incorporation or bylaws of Holdco in a manner inconsistent with
the terms of this Agreement.
9. Stock Certificate Legend. A copy of this Agreement shall be filed
with the Secretary of each of IX, Holdco and the Company and kept with the
records of each of IX, Holdco and the Company. Each certificate representing
Equity Interests now held or hereafter acquired by any Equity Holder shall, for
as long as this Agreement is effective, bear legends substantially in the
following forms:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR THE
SECURITIES LAWS OF ANY STATE. THE SECURITIES MAY NOT BE TRANS FERRED
EXCEPT PURSUANT TO AN EFFECTIVE REGIS TRATION STATEMENT UNDER SUCH ACT AND
APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN APPLICABLE
<PAGE>
32
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH LAWS.
THE SALE, ASSIGNMENT, HYPOTHECATION, PLEDGE, ENCUMBRANCE OR OTHER
DISPOSITION (EACH A "TRANSFER") AND VOTING OF ANY OF THE SECURITIES
REPRESENTED BY THIS CERTIFICATE ARE RESTRICTED BY THE TERMS OF THE MASTER
INVESTORS RIGHTS AGREEMENT, DATED OCTOBER 18, 1999, AMONG THE COMPANY AND
THE OTHER PARTIES NAMED THEREIN, A COPY OF WHICH MAY BE INSPECTED AT THE
COMPANY'S PRINCIPAL OFFICE. THE COMPANY WILL NOT REGISTER THE TRANSFER OF
SUCH SECURITIES ON THE BOOKS OF THE COMPANY UNLESS AND UNTIL THE TRANSFER
HAS BEEN MADE IN COMPLIANCE WITH THE TERMS OF THE MASTER INVESTORS RIGHTS
AGREEMENT. THE COMPANY WILL MAIL A COPY OF SUCH AGREEMENT TO THE RECORD
HOLDER OF THIS CERTIFICATE, WITHOUT CHARGE, WITHIN FIVE DAYS AFTER RECEIPT
OF A WRITTEN REQUEST THEREFOR.
10. Miscellaneous.
10.1 Notices. All notices, demands or other communications
provided for or permitted hereunder shall be made in writing and shall be by
registered or certified first class mail, return receipt requested, telecopier,
courier service, overnight mail or personal delivery:
(i) if to IX:
c/o NFO Worldwide, Inc.
2 Pickwick Plaza
Greenwich, CT 06830
Telecopy: (203) 629-8885
Attention: President
with a copy to:
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, NY 10019-6064
Telecopy: (212) 757-3990
Attention: James M. Dubin, Esq.
(ii) If to Holdco:
<PAGE>
33
c/o General Atlantic Services Corporation
3 Pickwick Plaza
Greenwich, CT 06830
Telecopy: (203) 622-8818
Attention: Mr. David C. Hodgson
with a copy to:
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, NY 10019-6064
Telecopy: (212) 757-3990
Attention: James M. Dubin, Esq.
(iii) if to the Company:
2 Pickwick Plaza
Greenwich, CT 06830
Telecopy: (203) 629-8885
Attention: President
with a copy to:
NFO Worldwide, Inc.
2 Pickwick Plaza
Greenwich, CT 06830
Telecopy: (203) 629-8885
Attention: President
and a copy to:
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, NY 10019-6064
Telecopy: (212) 757-3990
Attention: James M. Dubin, Esq.
(iv) if to General Atlantic:
c/o General Atlantic Service Corporation
3 Pickwick Plaza
Greenwich, CT 06830
Telecopy: (203) 622-8818
Attention: Mr. David C. Hodgson
<PAGE>
34
with a copy to:
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, NY 10019-6064
Telecopy: (212) 757-3990
Attention: Matthew Nimetz, Esq.
(v) if to NFO
2 Pickwick Plaza
Greenwich, CT 06830
Telecopy: (203) 629-8885
Attention: Chief Financial Officer
with a copy to:
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, NY 10019-6064
Telecopy: (212) 757-3990
Attention: James M. Dubin, Esq.
(vi) if to Engage
100 Brickstone Square
Andover, MA 01810
Telecopy: (978) 684-3977
Attention: General Counsel
(vii) if to Greenhill
c/o Greenhill & Co., LLC
31 West 52nd Street
New York, NY 10019
Telecopy: (212) 408-0685
Attention: Scott L. Bok
(viii)if to any other Equity Holder, at its address as it
appears on the record books of IX, Holdco or the
Company.
Any party may by notice given in accordance with this Section 10 designate
another address or Person for receipt of notices hereunder. All such notices,
demands and other communications shall be deemed to have been duly given when
delivered by hand, if personally delivered; when delivered by courier or
overnight mail, if
<PAGE>
35
delivered by commercial courier service or overnight mail; five (5) Business
Days after being deposited in the mail, postage prepaid, if mailed; and when
receipt is mechanically acknowledged, if telecopied.
10.2 Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties and their respective successors and
assigns. This Agreement is not assignable except in connection with a transfer
of Equity Interests in accordance with this Agreement.
10.3 Amendment and Waiver.
(a) Except as specifically set forth in this Agreement,
no failure or delay on the part of any party hereto in exercising any right,
power or remedy hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right, power or remedy preclude any other
or further exercise thereof or the exercise of any other right, power or remedy.
The remedies provided for herein are cumulative and are not exclusive of any
remedies that may be available to the parties hereto at law, in equity or
otherwise.
(b) Any amendment, supplement or modification of or to
any provision of this Agreement or the Exhibits attached hereto, any waiver of
any provision of this Agreement, and any consent to any departure by any party
from the terms of any provision of this Agreement or the Exhibits attached
hereto, shall be effective only if it is made or given in writing and signed by
(i) IX, (ii) Holdco, (iii) the Company, (iv) General Atlantic Stockholders
holding a majority of the beneficial ownership interest in the Company held by
General Atlantic Stockholders (v) NFO Stockholders holding a majority of the
beneficial ownership interest in the Company held by NFO Stockholders and (vi)
if the proposed amendment, supplement, modification or waiver would materially
adversely effect the other Equity Holders, such other Equity Holders. Any such
amendment, supplement, modification, waiver or consent shall be binding upon the
IX, Holdco, the Company and all of the Equity Interests.
10.4 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, and all of which
taken together shall constitute one and the same instrument.
10.5 Specific Performance. The parties hereto intend that each
of the parties have the right to seek damages or specific performance in the
event that any other party hereto fails to perform such party's obligations
hereunder. Therefore, if any party shall institute any action or proceeding to
enforce the provisions hereof, any party against whom such action or proceeding
is brought hereby waives any claim or defense therein that the plaintiff party
has an adequate remedy at law.
<PAGE>
36
10.6 Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
10.7 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD
TO THE PRINCIPLES OF CONFLICTS OF LAW OF ANY JURISDICTION.
10.8 Severability. If any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and of
the remaining provisions hereof shall not be in any way impaired, unless the
provisions held invalid, illegal or unenforceable shall substantially impair the
benefits of the remaining provisions hereof.
10.9 Entire Agreement. This Agreement, together with the
exhibits hereto, is intended by the parties as a final expression of their
agreement and intended to be a complete and exclusive statement of the agreement
and understanding of the parties hereto in respect of the subject matter
contained herein and therein. There are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein or therein. This
Agreement, together with the exhibits hereto, supersede all prior agreements and
understandings among the parties with respect to such subject matter.
10.10 Term of Agreement. This Agreement shall become effective
upon the execution hereof and shall terminate upon the earlier of (a) the IPO
Effectiveness Date or (b) the twentieth anniversary of the date hereof.
10.11 Further Assurances. Each of the parties shall, and shall
cause their respective Affiliates to, execute such instruments and take such
action as may be reasonably required or desirable to carry out the provisions
hereof and the transactions contemplated hereby.
[Remainder of Page Intentionally Left Blank]
<PAGE>
37
IN WITNESS WHEREOF, the undersigned have executed, or have caused to
be executed, this Master Investors Rights Agreement on the date first written
above.
IX, INC.
By: /s/ Patrick G. Healy
------------------------
Name: Patrick G. Healy
Title: Chief Financial Officer
IX HOLDING CO., INC.
By: /s/ David Hodgson
---------------------
Name: David Hodgson
Title: President and Secretary
INSIGHTEXPRESS, L.L.C.
By: /s/ Patrick G. Healy
------------------------
Name: Patrick G. Healy
Title: Vice President
GENERAL ATLANTIC PARTNERS 57, L.P.
By: GENERAL ATLANTIC PARTNERS, LLC,
its General Partner
By: /s/ David Hodgson
---------------------
Name: David Hodgson
Title: A Managing Member
<PAGE>
38
GAP COINVESTMENT PARTNERS II, L.P.
By: /s/ David Hodgson
---------------------
Name: David Hodgson
Title: A General Partner
NFO WORLDWIDE, INC.
By: /s/ Patrick G. Healy
------------------------
Name: Patrick G. Healy
Title: President, Australasia & Middle East & CFO
ENGAGE TECHNOLOGIES, INC.
By: /s/ Michael Baker
---------------------
Name: Michael Baker
Title: VP & General Counsel
GREENHILL & CO., LLC
By: /s/ Scott L. Bok
--------------------
Name: Scott L. Bok
Title: Managing Director
<PAGE>
39
Exhibit A-1 1/
ACKNOWLEDGMENT AND AGREEMENT
The undersigned wishes to receive from __________ ("Transferor")
certain shares or certain options, warrants or other rights to purchase _____
[shares, par value $[ __] per share, of Common Stock (the "Shares")] [Owned
Interests (the Owned Interests")] of a [ ], a [ ] ("Company");
The [Shares] [Owned Interests] are subject to the Master Investors
Rights Agreement, dated October __, 1999 (the "Agreement"), among the Company
and the other parties listed on the signature pages thereto;
The undersigned has been given a copy of the Agreement and afforded
ample opportunity to read, and to have counsel review, it, and the undersigned
is thoroughly familiar with its terms;
Pursuant to terms of the Agreement, the Transferor is prohibited
from transferring such [Shares] [Owned Interests] and the Company is prohibited
from registering the transfer of the [Shares] [Owned Interests] unless and until
a transfer is made in accordance with the terms and conditions of the Agreement
and the recipient of such [Shares] [Owned Interests] acknowledges the terms and
conditions of the Agreement and agrees to be bound thereby; and
The undersigned wishes to receive such [Shares] [Owned Interests]
and have the Company register the transfer of such [Shares] [Owned Interests].
In consideration of the mutual promises contained herein and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and to induce the Transferor to transfer such [Shares]
[Owned Interests] to the undersigned and the Company to register such transfer,
the undersigned does hereby acknowledge and agree that (i) it has been given a
copy of the Agreement and afforded ample opportunity to read, and to have
counsel review, it, and the undersigned is thoroughly familiar with its terms,
(ii) the [Shares] [Owned Interests] are subject to the terms and conditions set
forth in the Agreement, and (iii) the undersigned does hereby agree fully to be
bound thereby as [a "Major Stockholder"] [an "IX Interestholder] [a "Holdco
Interestholder] [a "Greenhill Interestholder"] [an "Other Equity Holder"] (as
therein defined).
This ________ day of ________, [19__] [20__].
------------------------------------
- -------------------------
1/ For transfers of previously issued stock.
<PAGE>
40
Exhibit A-2 1/
ACKNOWLEDGMENT AND AGREEMENT
The undersigned wishes to receive from IX, LLC, a Delaware limited
liability company (the "Company"), _______ [Owned Interests] or certain newly
issued options, warrants or other rights to purchase _______ [Owned Interests]
(the "Owned Interests") of the Company;
The Owned Interests are subject to the Master Investors Rights
Agreement, dated October __, 1999 (the "Agreement"), among the Company and the
other parties listed on the signature pages thereto;
The undersigned has been given a copy of the Agreement and afforded
ample opportunity to read, and to have counsel review, it, and the undersigned
is thoroughly familiar with its terms;
Pursuant to terms of the Agreement, the Company is prohibited from
issuing the Owned Interests unless and until a transfer is made in accordance
with the terms and conditions of the Agreement and the recipient of such Owned
Interests acknowledges the terms and conditions of the Agreement and agrees to
be bound thereby; and
The undersigned wishes to receive such Owned Interests.
In consideration of the mutual promises contained herein and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and to induce the Company to issue such Owned Interests,
the undersigned does hereby acknowledge and agree that (i) he[/she] has been
given a copy of the Agreement and afforded ample opportunity to read, and to
have counsel review, it, and the undersigned is thoroughly familiar with its
terms, (ii) the Owned Interests are subject to terms and conditions set forth in
the Agreement, and (iii) the undersigned does hereby agree fully to be bound
thereby as an "Other Equity Holder" (as therein defined).
This ________ day of ________, [19__] [20__].
------------------------------------
- -------------------------
1/ For newly issued stock.
EXHIBIT 99
NFO WORLDWIDE, INC
BW: Business Wire
October 19, 1999 Tuesday
NFO Worldwide Announces Launch of InsightExpress
Creating Next Generation of Market Research
GREENWICH, Conn.--(BUSINESS WIRE)--Oct. 19, 1999--
New Internet Company to Provide Decision Makers Worldwide with Fully
Automated, Fast and Affordable Consumer Insight
NFO Worldwide (NYSE: NFO) announced today the launch of InsightExpress
(www.insightexpress.com and www.insightexpress.net), a new Internet company
formed to provide real-time consumer input to the desktops of decision-makers in
companies of all sizes worldwide. The new company will leverage the worldwide
client experience and panel expertise of NFO Worldwide, North America's largest
and the world's third largest custom market research company.
Supported by the unique visitor profile driven targeting services of Engage
Technologies, Inc., (NASDAQ: ENGA) and funded by NFO, General Atlantic Partners
and Engage, InsightExpress will provide marketing, sales, customer service,
advertising, and planning professionals with real-time access to targeted
consumer audiences and to existing customers via their own lists. InsightExpress
will enable decision-makers worldwide to test new ideas, screen new concepts,
gauge customer satisfaction, survey employees, test advertising and gather
insight into the needs, attitudes and behaviors of consumers. InsightExpress
will provide these capabilities in a fraction of the time and the cost of
existing market research methods.
"NFO has long embraced the Internet and has led the industry in its
creative application to online market research. InsightExpress launches us into
a new frontier of market intelligence, allowing us to provide powerful tools
that will enable companies to increase their speed to market and their
competitive edge," said William E. Lipner, Chairman and CEO of NFO Worldwide.
"We see InsightExpress' fully automated services as a breakthrough innovation
that will greatly expand the market research business. By providing automated
professional research to the vast number of decision-makers who do not have the
budget or resources to undertake full scale market research, we are creating a
whole new industry to complement our traditional business."
"Our vision for InsightExpress is to provide every decision-maker, every
day with access to the consumer feedback they need to make better decisions,"
said Charles B. Hamlin, President of InsightExpress. "Our intuitive website and
patent-pending process will enable managers to create professional quality
surveys and select respondents from a rich and growing list of targeted
demographic groups. Within hours, managers can have the market insights they
need to make key business decisions -- all at an affordable price they can
charge on a credit card. We know of no other service that can match these
benefits."
InsightExpress provides a fully-automated, web-based, market research and
data delivery system that enables clients to:
1) Easily create professional quality surveys in minutes using templates
developed from more than 50 years of market research experience
2) Select desired respondents from a large and increasing number of demographic
groups defined by gender, age, major metropolitan area, and numerous other
special interest areas, or use their own email lists or web sites
3) Choose the number of desired responses
<PAGE>
4) Receive real-time, tabulated and graphically displayed results via the Web or
downloaded to their desktops
5) View complete survey results within 12 to 72 hours, depending upon the
selected target audience
6) Pay an affordable average price of $1,000 per survey.
Engage will serve as InsightExpress' strategic partner by providing access
to more than 35 million anonymous consumer profiles found within the Engage
Knowledge database. Using Engage's profile database and unmatched ad serving
capability, InsightExpress will be able to recruit online survey respondents
through highly targeted online advertisements. "Through Engage, InsightExpress
will be able to target millions of consumers based on over 800 different
behavioral and demographic categories," said Paul Schaut, President and CEO,
Engage. "Our targeting capabilities will provide InsightExpress users the
ability to survey hard-to-reach consumers around the world. We are pleased to be
a strategic partner and an investor in this breakthrough product."
To fund the development and growth of InsightExpress, NFO has raised a
total of $25 Million in new venture capital from General Atlantic Partners and
Engage. Assuming certain put/call rights are exercised, NFO Worldwide will
maintain a 50% equity interest in the consolidated venture.
"We are delighted to have this opportunity to partner with NFO as they
leverage their established research expertise into a new Internet business. And
we are especially pleased to have Engage as technology contributors and
investment partners," said Dave Hodgson of General Atlantic Partners, the lead
investor funding InsightExpress. Hodgson continued, "We have followed NFO's
growth and development as a public company over the past six years, and have
always been impressed with its performance and the caliber of its people. We see
unlimited potential for InsightExpress."
InsightExpress is currently headquartered in Greenwich, CT with operations
in Cupertino, CA. The Company's service is expected to be fully operational and
available to the public in late November at www.insightexpress.com or
www.insightexpress.net. Advance users can visit the site for more information
and register for more news as it develops.
About InsightExpress:
InsightExpress is affiliated with NFO Worldwide and is the nation's
pioneering provider of fully automated market research. Through its application
of Internet-based technologies, market research acumen, and respondent
management expertise, InsightExpress provides clients fast, affordable, and
reliable insights into the needs, behaviors and attitudes of their targeted
consumers, customers and employees. Through its end-to-end, patent-pending
process, InsightExpress enables users to access the consumer input they need to
make better decisions. Visit InsightExpress on the Web at www.insightexpress.com
or www.insightexpress.net.
About NFO Worldwide:
NFO Worldwide, Inc., together with its subsidiary and affiliated companies,
is the world's largest provider of Internet-based custom marketing research, and
a leading provider of research-based marketing information and counsel to the
worldwide business community. With almost 13,000 full and part-time employees
operating in 32 countries; in-depth expertise in all research methodologies; and
in-field marketing experience across multiple market sectors, NFO provides
clients with trusted insight into the behaviors, attitudes and opinions of
customers around the globe. Key services include comprehensive counsel on market
evaluation, product development, brand management, customer satisfaction,
pricing, distribution, and advertising effectiveness. The Company delivers
custom and syndicated marketing information and counsel to over 3,000 clients in
key market sectors such as packaged goods and foods, healthcare, financial
services, high tech/telecommunications, automotive, travel & leisure and
business to business. NFO is the largest custom marketing research firm in North
America, and is among the top three in the world. Visit NFO Worldwide on the Web
http://www.nfow.com.
About General Atlantic Partners:
<PAGE>
General Atlantic Partners, LLC, is the largest private equity firm focused
exclusively on information technology-related businesses worldwide. Among the
companies in which GA Partners has invested are E*Trade (NASDAQ: EGRP),
Priceline.com (NASDAQ: PCLN), Proxicom (NASDAQ: PXCM), Tickets.com and
HealthVision. GA Partners currently has $5 billion under management and has
invested in excess of $1 billion in more than 70 companies since 1980. A global
firm headquartered in Greenwich, Conn., GA Partners' current portfolio consists
of about 40 companies, one third of them outside the U.S. GA Partners takes a
long-term approach to its investments, providing sustained assistance and
optimizing opportunities to create maximum value. To learn more about General
Atlantic Partners, visit www.gapartners.com on the Internet.
About Engage Technologies:
Engage Technologies, Inc., (Nasdaq: ENGA) a majority-owned operating
company of CMGI, Inc., (Nasdaq: CMGI), is a leading provider of profile driven
Internet marketing solutions. Engage offers a range of software products, data,
and services that enable Web publishers, advertisers and merchants to target and
deliver advertisements, commerce and e-commerce offerings to their audiences and
to measure their effectiveness. On September 23, 1999, Engage entered into a
definitive agreement to acquire AdKnowledge Inc., a leading provider of complete
Web marketing management services focused entirely on the needs of online
marketers and agencies. Upon completion of the deal, AdKnowledge will operate as
a wholly-owned subsidiary of Engage. Engage's core product and services include;
Engage AudienceNet, the first Web-wide profile driven advertising and marketing
network, Engage Knowledge, a global database that currently contains more than
35 million anonymous consumer profiles, and Accipiter AdManager, an online
advertising management system that automates the scheduling, targeting and
delivery of ads on Web sites and the reporting of campaign results. Engage
offers Web traffic verification, measurement and analysis, and research through
its wholly-owned subsidiary, I/PRO. Additionally, Engage is partnering with
various resellers and system integrators who will integrate Engage's local
profile software, ProfileServer and DecisionSupportServer, to E-Commerce
merchants across the U.S. For more information about Engage, please visit
www.engage.com.
Statements in this press release relating to matters that are not
historical facts are forward- looking statements. Such forward-looking
statements are based on the Company's current forecasts and actual results may
differ materially. To understand the risks that may affect the Company's future
performance, please refer to Part 1 of NFO's 1998 Annual Report on Form 10- K
filed on March 31, 1999.
NOTE TO EDITORS: In the company name noted in this news release, there is
an "asterisk" symbol between E and Trade. This symbol may not appear properly in
some systems.
--30--ym/cgo*
CONTACT: NFO Worldwide, Inc.
William E. Lipner, 203/618-8500
[email protected]
or
InsightExpress, L.L.C.
Charles B. Hamlin, 203/618-8510
[email protected]
or
Winston Partners, Inc.
James W. DeYoung, 312/855-0439
[email protected]
or
Niehaus Ryan Wong, Inc.
Alissa Neil, 212/308-2572
[email protected]
KEYWORD: CONNECTICUT CALIFORNIA
INDUSTRY KEYWORD: COMPUTERS/ELECTRONICS E-COMMERCE INTERNET
TELECOMMUNICATIONS
Today's News On The Net - Business Wire's full file on the Internet
<PAGE>
with Hyperlinks to your home page.
URL: http://www.businesswire.com
BWviaNewsEDGE
Copyright (c) 1999 Business Wire
Received via NewsEDGE from NewsEdge Corporation: 10/19/99
06:21:53
Tickers: NFO ENGA EGRP PCLN PXCM CMGI
[GRAPHIC OMITTED]
