-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, EaG0Q8JYTaQjRedwXKHK4h8nRaewl8OtWFHz9yeeghLxd+c9bCujYH1CpBVZKjMC O64olW4agfyOiyCTmRSEUQ== 0000950130-99-002099.txt : 19990413 0000950130-99-002099.hdr.sgml : 19990413 ACCESSION NUMBER: 0000950130-99-002099 CONFORMED SUBMISSION TYPE: S-1/A PUBLIC DOCUMENT COUNT: 13 FILED AS OF DATE: 19990412 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MAPQUEST COM INC CENTRAL INDEX KEY: 0001078284 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROCESSING & DATA PREPARATION [7374] IRS NUMBER: 363949110 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-1/A SEC ACT: SEC FILE NUMBER: 333-72667 FILM NUMBER: 99591318 BUSINESS ADDRESS: STREET 1: 3710 HEMPLAND ROAD CITY: MOUNTVILLE STATE: PA ZIP: 17554 BUSINESS PHONE: 7172858500 MAIL ADDRESS: STREET 1: 3710 HEMPLAND ROAD CITY: MOUNTVILLE STATE: PA ZIP: 17554 S-1/A 1 AMENDMENT NO. 1 TO FORM S-1 THIS PAPER DOCUMENT IS BEING SUBMITTED PURSUANT TO RULE 101(d) OF REGULATION S-T. As filed with the Securities and Exchange Commission on April 12, 1999 Registration Statement No. 333-72667 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ------------------- Amendment No. 1 TO FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ------------------- MapQuest.com, Inc. (Exact name of registrant as specified in its charter) Delaware 7374 363949110 (State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer Identification No.) of incorporation or organization) Classification Code Number)
MapQuest.com, Inc. Michael J. Mulligan, Chief Executive Officer 3710 Hempland Road MapQuest.com, Inc. Mountville, PA 17554 3710 Hempland Road (717) 285-8500 Mountville, PA 17554 (717) 285-8500 (Address, including zip code, and (Name, address, including zip code, telephone number, including area code, and telephone number, including area of registrant's principal executive code, of agent for service) offices) ------------------- Copies to: James B. Carlson, Esq. Alexander D. Lynch, Esq. Mayer, Brown & Platt Alan P. Blaustein, Esq. 1675 Broadway Brobeck, Phleger & Harrison LLP New York, NY 10019 1633 Broadway (212) 506-2500 New York, NY 10019 (212) 581-1600 ------------------- Approximate date of commencement of proposed sale to the public: As soon as practicable after this registration statement becomes effective. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. [_] If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [_] If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [_] If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [_] If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [_] CALCULATION OF REGISTRATION FEE - ------------------------------------------------------------------------------- - -------------------------------------------------------------------------------
Proposed Maximum Title of Each Class of Aggregate Offering Amount of Securities to be Registered Price(1)(2) Registration Fee - ------------------------------------------------------------------------------- Common Stock ($0.001 par value per share)............................. $63,480,000 $17,648(3)
- ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- (1) The Company has granted to the Underwriters a 30-day option to purchase additional shares of Common Stock solely to cover over-allotments, if any. (2) Estimated solely for the purpose of computing the amount of the registration fee pursuant to Rule 457(o) promulgated under the Securities Act of 1933, as amended. (3) $13,900 previously paid. The registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until this registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- ++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ +The information in this prospectus is not complete and may be changed. We may + +not sell these securities until the registration statement filed with the + +Securities and Exchange Commission is effective. This prospectus is not an + +offer to sell securities, and we are not soliciting offers to buy these + +securities, in any state where the offer or sale is not permitted. + ++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ SUBJECT TO COMPLETION, DATED APRIL 12, 1999 [LOGO] MAPQUEST.COM(TM) 4,600,000 Shares Common Stock We are offering 4,600,000 shares of our common stock. This is our initial public offering, and no public market currently exists for our shares. We have applied to have the shares we are offering approved for quotation on the Nasdaq National Market under the symbol "MQST." We anticipate that the initial public offering price will be between $10.00 and $12.00 per share. Shares of common stock may be reserved for sale at the initial public offering price to our employees, directors and other persons with relationships with us. These employees, directors and other persons may purchase, in the aggregate, not more than 10% of the common stock in this offering. See "Underwriting." -------------- Investing in our common stock involves risks. See "Risk Factors" beginning on page 8. --------------
Per Share Total --------- ----- Public Offering Price.......................................... $ $ Underwriting Discounts and Commissions......................... $ $ Proceeds to MapQuest........................................... $ $
The Securities and Exchange Commission and state securities regulators have not approved or disapproved these securities, or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. We have granted the underwriters a 30-day option to purchase up to an additional 690,000 shares of common stock to cover over-allotments. -------------- BancBoston Robertson Stephens Thomas Weisel Partners LLC U.S. Bancorp Piper Jaffray Volpe Brown Whelan & Company The date of this prospectus is , 1999 [Picture of the mapquest.com home page and logos of representative customers] [Sequential pictures illustrating MapQuest's Connect Services and logos of representative customers] [Pictures of MapQuest maps on various web portals and third party websites and logos of representative customers] You should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with information different from that contained in this prospectus. We are offering to sell, and seeking offers to buy, shares of common stock only in jurisdictions where offers and sales are permitted. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of our common stock. Until , 1999, all dealers that buy, sell or trade our common stock, whether or not participating in this offering, may be required to deliver a prospectus. This requirement is in addition to the dealers' obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions. --------------------- TABLE OF CONTENTS
Page ---- Prospectus Summary....................................................... 4 Risk Factors............................................................. 8 Forward-Looking Statements; Market Data.................................. 15 Use of Proceeds.......................................................... 16 Dividend Policy.......................................................... 16 Capitalization........................................................... 17 Dilution................................................................. 18 Selected Financial Data.................................................. 19 Management's Discussion and Analysis of Financial Condition and Results of Operations.......................................................... 20 Business................................................................. 28 Management............................................................... 38 Certain Transactions..................................................... 47 Principal Stockholders................................................... 50 Description of Capital Stock............................................. 52 Shares Eligible for Future Sale.......................................... 54 Underwriting............................................................. 56 Legal Matters............................................................ 58 Experts.................................................................. 58 Where You Can Find More Information...................................... 58 Index to Financial Statements............................................ F-1
--------------------- MapQuest and GeoSystems are registered trademarks and service marks of MapQuest.com. This prospectus contains other trade names, trademarks and service marks of MapQuest.com and of other companies. 3 PROSPECTUS SUMMARY You should read the following summary together with the more detailed information regarding our company, the common stock being sold in this offering and our financial statements and the notes relating to these financial statements appearing elsewhere in this prospectus. MapQuest We are a leading online provider of mapping and destination information. By effectively employing over 30 years of traditional and digital mapping experience together with our proprietary integration and editing of geographic databases, we provide comprehensive online mapping solutions to businesses and customized maps, destination information and driving directions to consumers. During February 1999, we delivered over 76.2 million maps and over 14.2 million driving directions through our website and through third-party websites. According to Media Metrix, Inc., in February 1999 mapquest.com had over 2.7 million unique visitors making it the number five travel/tourism Internet property in terms of audience reach. Our online products and services enable businesses to: . Provide customized maps, destination information and driving directions to potential customers; . Expand the service offerings of their websites to attract and retain users; . Use outside sources to meet their map-generating and destination information needs, thereby avoiding a significant portion of the expenses normally associated with establishing and maintaining a map- generating personnel and technology organization; and . Provide potential customers with information regarding which of a business' multiple locations is closest to the potential customer. Our online products and services enable consumers to: . Receive maps and destination information on a real-time basis based on the specific location provided by the consumer; . Generate detailed door-to-door driving directions at any time; and . Create and retrieve customized maps based on the consumer's preferences. We are also a leading U.S. provider of traditional and digital mapping products and services to the educational, reference, directory, travel and governmental markets. In addition, companies that incorporate call centers, CD- ROMs or driving direction kiosks into their information delivery strategy often require non-Internet customized mapping solutions. We have developed our map- generating software to provide mapping applications in these environments. 4 Strategy Our objective is to be the leading online provider of destination solutions for businesses and consumers. Key elements of our strategy include: . Building brand awareness by engaging in a number of advertising, public relations and other marketing programs designed to promote our global brand and build loyalty among our business and consumer customers; . Expanding and enhancing our service by providing comprehensive, cost- effective, accurate and easily accessible destination information and value-added tools and features; . Growing sales channels aggressively by building our direct field sales force and developing strategic value-added reseller channel relationships to target U.S. and international markets; . Developing additional advertising opportunities by offering new methods of targeted advertising based on a consumer's geographic information; . Effectively employing our integrated geographic data in developing future services and products; and . Pursuing international opportunities to expand our access to additional business customers seeking to improve the service offerings of their websites and consumers seeking online map-related information. The Offering Common stock offered............ 4,600,000 shares Common stock to be outstanding after this offering............ 32,166,699 shares Over-allotment option........... 690,000 shares Use of proceeds................. We intend to use approximately $8.6 million of the net proceeds to redeem all outstanding shares of our series B preferred stock. We intend to use the remaining net proceeds for expansion of sales and marketing capabilities, product development, working capital and other general corporate purposes. Proposed Nasdaq National Market MQST symbol......................... Additional shares may be issued after this offering upon the exercise of options and warrants. You should be aware that we are permitted, and in some cases obligated, to issue shares of common stock in addition to the common stock to be outstanding after this offering. If and when we issue these shares, the percentage of common stock you own may be diluted. The following is a summary of these additional shares of common stock: . 4,739,433 shares of common stock issuable upon exercise of outstanding options, with a weighted average exercise price of $0.26 per share; . 1,168,020 shares of common stock issuable upon exercise of outstanding options, with an exercise price of the per share offering price of this offering; . 2,314,611 shares of common stock issuable upon exercise of outstanding warrants, with a weighted average exercise price of $0.69; 5 . 188,959 shares of common stock reserved for future issuance under MapQuest's 1995 stock option plan; . 3,645,000 shares of common stock that have been reserved for future issuance under MapQuest's 1999 stock plan; and . 1,755,000 shares of common stock that have been reserved for future issuance under MapQuest's employee stock purchase plan. Unless otherwise indicated, all information in this prospectus: . reflects a 2.7-for-1 stock split of our common stock that will be effected prior to the closing of this offering. This stock split of our common stock will not impact the number of shares being offered and will not have any impact on the purchasers of the shares in this offering; . reflects the automatic conversion of all outstanding shares of our series A preferred stock and series C preferred stock into 27,122,455 shares of our common stock at the same time as the closing of this offering; . reflects the redemption of all outstanding shares of our series B preferred stock at the same time as the closing of this offering; and . assumes that the underwriters do not exercise their option to purchase additional shares after the closing of this offering. -------------------- Our headquarters are located at 3710 Hempland Road, Mountville, Pennsylvania 17554. Our telephone number at that location is (717) 285-8500. Our website address is www.mapquest.com. The information contained on our website is not part of this prospectus. 6 Summary Financial Data (in thousands, except per share data) The following table sets forth our summary financial data. You should read this information together with the financial statements and the notes to those statements appearing elsewhere in this prospectus and the information under "Selected Financial Data" and "Management's Discussion and Analysis of Financial Condition and Results of Operations." The pro forma as adjusted data reflect the automatic conversion of all outstanding shares of our series A preferred stock and series C preferred stock into 27,122,455 shares of our common stock upon the closing of this offering. The pro forma as adjusted data also reflect the sale of the common stock offered by this prospectus at an assumed initial public offering price of $11.00 per share after deducting underwriting discounts, estimated offering expenses payable by us, and the redemption of all outstanding shares of our series B preferred stock. See the financial statements and the notes to those statements appearing elsewhere in this prospectus for the determination of shares used in computing basic and diluted loss per share and pro forma basic and diluted loss per share.
Year Ended December 31, -------------------------- 1996 1997 1998 ------- -------- ------- Statement of Operations Data: Revenues Business......................................... $ 7,020 $ 4,763 $ 6,536 Consumer......................................... 140 1,276 1,376 ------- -------- ------- Total business and consumer revenues............ 7,160 6,039 7,912 Digital mapping.................................. 12,417 15,377 16,805 ------- -------- ------- Total revenues................................. 19,577 21,416 24,717 Cost of revenues: Business and consumer............................ 4,325 4,535 4,809 Digital mapping.................................. 7,995 10,767 12,837 ------- -------- ------- Total costs of revenues........................ 12,320 15,302 17,646 ------- -------- ------- Gross profit...................................... 7,257 6,114 7,071 Operating expenses: Sales and marketing.............................. 4,455 7,257 5,243 Product development.............................. 2,619 5,048 2,955 General and administrative....................... 1,902 1,811 2,326 ------- -------- ------- Total operating expenses....................... 8,976 14,116 10,524 ------- -------- ------- Operating loss ................................... (1,719) (8,002) (3,453) Interest income and expense, net.................. 199 136 54 Other income...................................... 244 267 244 ------- -------- ------- Loss before provision for income taxes............ (1,276) (7,599) (3,155) Provision for income taxes........................ -- -- -- ------- -------- ------- Net loss.......................................... (1,276) (7,599) (3,155) Less preferred stock dividends and accretion...... (525) (5,834) (667) ------- -------- ------- Net loss applicable to common stockholders........ $(1,801) $(13,433) $(3,822) ======= ======== ======= Basic and diluted loss per share.................. $ (8.84) $ (64.43) $(12.09) Shares used to compute basic and diluted loss per share........................................... 204 208 316 ======= ======== ======= Pro forma basic and diluted loss per share........ $ (0.13) ======= Shares used to compute pro forma basic and diluted loss per share.................................. 27,439 =======
December 31, 1998 --------------------- Pro Forma Actual As Adjusted -------- ----------- Balance Sheet Data: Cash and cash equivalents............................... $ 564 $37,990 Working capital......................................... 4,301 41,727 Total assets............................................ 11,450 48,876 Cumulative redeemable preferred stock................... 8,332 -- Convertible redeemable preferred stock.................. 17,854 -- Stockholders' equity (deficit).......................... (19,768) 43,844
7 RISK FACTORS You should carefully consider the risks described below before making an investment decision. The risks and uncertainties described below are not the only ones facing our company. If any of the following risks actually occur, our business, financial condition and results of operations would likely suffer. In this case, the market price of our common stock could decline, and you may lose all or part of the money you paid to buy our common stock. We have a limited Internet-related operating history We introduced our first Internet products and services in 1995 and launched our website in February 1996. Accordingly, we have a limited Internet-related operating history from which you can evaluate our business and prospects. As a new entrant to the Internet business, we face risks and uncertainties relating to our ability to successfully implement our business plan. If we are unsuccessful in addressing these risks and uncertainties, our business, results of operations and financial condition will be materially adversely affected. We have a history of losses and we expect to continue to lose money in the foreseeable future We have not generated enough revenues to exceed the substantial amounts we have spent to grow our business. We expect to continue to lose money for the foreseeable future because we plan to continue to incur significant expenses. Moreover, we base current and future expense levels on our operating plans and our estimates of future revenues. If our revenues grow at a slower rate than we anticipate, or if our spending levels exceed our expectations or cannot be adjusted to reflect slower revenue growth, we may not generate sufficient revenues to achieve profitability. If we do achieve profitability, we may be unable to sustain or increase profitability on a quarterly or annual basis in the future. We are dependent on a limited number of third parties for a significant portion of our primary geographic data Our products and services rely on the availability and accuracy of primary geographic data. We have licensed a significant portion of our primary geographic data from a limited number of sources through non-exclusive, short- term contractual arrangements. In particular, we license a substantial portion of our data from Navigation Technologies Corporation ("NavTech") pursuant to a short-term data license. Given the short terms of our primary geographic data licenses, we will have to renegotiate our contracts in the foreseeable future which may result in contractual terms that are not as favorable to us as the existing data licenses. If we cannot maintain these data licenses or any other third-party license arrangement on commercially reasonable terms, the accuracy of our products and services would suffer. As a result, the marketability of our products and services would be reduced. The success of our business depends on the accuracy of our products and services The accuracy of our products and services is substantially dependent on the accuracy of data we license from third parties. We plan to update our geographic databases periodically. However, in view of the complexity of updating several databases, revising software and the need to obtain geocoding for address data from third parties, we may not be able to perform these updates as planned. This would adversely affect the accuracy of our products and services. The development of our brand is essential to our future success Establishing and maintaining our brand identity is critical to our efforts to attract users to our website and to build market acceptance of our mapping and destination information products and services. In order to build our brand awareness, we must succeed in our brand marketing efforts, provide high-quality services and increase user traffic on mapquest.com. These efforts have required, and will continue to require, significant 8 expenses. If we do not generate a corresponding increase in revenue as a result of our branding efforts or otherwise fail to promote our brand successfully, our business, results of operations and financial condition will be adversely affected. Fluctuations in our operating results may negatively impact our stock price Our quarterly operating results may fluctuate significantly in the future due to a variety of factors that could affect our revenues or our expenses in any particular quarter. It is possible that in some future periods our results of operations may be below the expectations of public market analysts and investors. In this event, the price of our common stock is likely to fall. You should not rely on quarter-to-quarter comparisons of our results of operations as an indication of future performance. Factors that may affect our quarterly results include: . demand for our products and services from businesses and consumers; . our relative mix of Internet and traditional and digital mapping businesses; . the timing and amount of license and service payments from our business customers; . traffic levels on mapquest.com; . development of competitive websites and businesses; . the relatively short terms of our advertising agreements; . advertising budget decisions by our clients; and . technical difficulties or system downtime affecting the Internet generally or the operation of our website specifically. Seasonal factors may affect our operating results Seasonality of our traffic on mapquest.com and our advertising revenues may cause our revenues to fluctuate. Traffic levels on websites are typically lower during the summer and year-end vacation and holiday periods. We believe that advertising sales in traditional media, such as television and radio, generally are lower in the first and third calendar quarters of each year. Similar seasonal or other patterns may develop in the Internet industry. Our limited Internet-related operating history and the rapid growth of our Internet products and services makes it difficult to assess the impact of seasonal factors on the Internet and therefore whether our Internet products and services are susceptible to cyclical or seasonal economic fluctuations. We will not be able to execute our business plan if the market for our Internet products and services does not develop To date, sales of our traditional and digital mapping products and services have accounted for a significant portion of our revenues. However, our business plan assumes that our Internet products and services will account for a significant and growing portion of our revenues in the foreseeable future. Given that markets for our Internet products and services have only recently begun to develop, are rapidly evolving and are characterized by a large number of entrants, it is difficult to predict what pricing models, if any, for Internet- related products and service will emerge as the industry standard. The markets for our Internet products and services may not develop and demand for our Internet products and services may not emerge or become economically sustainable or customer turnover rates may be higher than expected. Our Internet business is dependent on a small number of customers In 1998, revenues from a limited number of business customers accounted for a substantial portion of our Internet products and services revenues. The loss, without replacement, of one or more of these customers could have a material adverse effect on our revenues. 9 We will not be able to execute our business plan if we cannot increase our direct and indirect sales channels In order to support our growth, we need to substantially increase our direct and indirect sales channels. Our business would be harmed if we fail to maintain an effective internal sales force. Our ability to increase our internal sales force involves a number of risks, including: . the competition we face in hiring and retaining qualified sales personnel; . the length of time it takes new sales personnel to become productive; and . our ability to integrate and motivate additional sales personnel and sales support personnel. In addition, we are seeking to develop relationships with partners such as value-added resellers in order to leverage their sales organizations to distribute our Internet products and services. Sales through these indirect sales channels accounted for less than 0.4% of our revenues in 1998. We may be unsuccessful in our efforts to develop increased indirect sales in the future. We may be unable to protect our intellectual property rights and we may be liable for infringing the intellectual property rights of others If we fail to adequately protect our proprietary rights, third parties may infringe or misappropriate our ownership of our intellectual property and this could erode our market position and our operating results. Currently we are a defendant in two pending litigations involving allegations of infringements of third-party patents by our technologies. While we intend to defend these actions vigorously, our efforts may not be successful. In addition, in the ordinary course of business we have been, and we expect to continue to be, subject to claims, including claims of alleged infringement of patents, trademarks and other proprietary rights of third parties. We expect that infringement claims in our markets will increase in number as more participants enter the market. These claims and any resultant litigation could subject us to significant liability for damages and could result in the invalidation of our proprietary rights. In addition, even if we prevail, litigation could be time-consuming and expensive to defend, and could result in the diversion of our time and attention. Any claims from third parties may also result in limitation on our ability to use the trademarks and other intellectual property subject to claims unless we enter into agreements with the third parties responsible for claims, which may be unavailable on commercially reasonable terms. Please see "Business--Legal Proceedings." We may not be able to compete successfully Competition could result in reduced margins on our products and services, loss of market share or less user traffic to our website. The markets for MapQuest's products and services are highly competitive. We compete for customers with companies offering online map-enabling technology, publishers and distributors of traditional print media that use or license their content for use on the Internet, commercial publishing companies, corporate materials and information market companies, and governmental authorities. We expect competition to continue to increase because these markets, particularly the markets for Internet-related products and services, pose no substantial barriers to entry. Competition may also increase as a result of industry consolidation. We will only be able to execute our business plan if use of the Internet grows Our business would be adversely affected if Internet usage does not continue to grow. Internet usage may be inhibited for any of the following reasons: . the Internet infrastructure may not be able to support the demands placed on it or its performance and reliability may decline as usage grows; 10 . the ability of websites to provide security and authentication of confidential information contained in transmissions over the Internet; . the quality of Internet products and services may not continue to generate user interest; and . the ability of websites to respond to privacy concerns of potential users, including concerns related to the placement by websites of information on a user's hard drive without the user's knowledge or consent. The performance of mapquest.com is critical to our business and our reputation Any system failure, including network, software or hardware failure, that causes an interruption in the delivery of our products and services or a decrease in responsiveness of our website service could result in reduced revenue, and could impair our reputation and brand. In May 1998, we entered into a one-year Internet hosting agreement with Qwest to maintain all of our production servers at its Denver data center. Qwest does not guarantee that our Internet access will be uninterrupted, error free or secure. Any disruption in the Internet access provided by Qwest could have a material adverse effect on our business, results of operations and financial condition. We have experienced system interruptions in the past and believe that these interruptions will continue to occur from time to time in the future. Our insurance may not adequately compensate us for any losses that may occur due to any failures in our system or interruptions in our service. Our servers and software must be able to accommodate a high volume of traffic and we have in the past and may in the future experience slower response times for a variety of reasons. Any substantial increase in demands on our servers will require us to expand and adapt our network infrastructure. If we were unable to add additional software and hardware to accommodate increased demand, this could cause unanticipated system disruptions and result in slower response times. An increase in the volume of consumers accessing mapquest.com or the websites of our business customers could lead to systems failures or slower response times. Business and consumer customers may become dissatisfied by any system failure that interrupts our ability to provide our products and services to them or results in slower response time. Consumers visiting mapquest.com and other websites depend on Internet service providers, online service providers and other website operators for access to particular websites. Many of these providers have experienced significant outages in the past, and could experience outages, delays and other difficulties due to system failures unrelated to our systems. We may not be able to hire and retain qualified employees Our future success depends on our ability to attract, train, motivate and retain highly skilled employees. Competition for employees in our industries is intense. We may be unable to retain our key employees or attract, assimilate or retain other highly qualified employees in the future. We have from time to time in the past experienced, and we expect to continue to experience in the future, difficulty in hiring and retaining highly skilled employees with appropriate qualifications. We may not be able to successfully manage our expansion In order to execute our business plan, we must grow significantly. As of January 31, 1996, we had a total of 167 employees and, as of January 31, 1999, we had a total of 222 employees. We expect that the number of our employees will continue to increase for the foreseeable future, in particular with respect to our Internet-related business. This growth has placed, and our anticipated future growth combined with the requirements we will face as a public company will continue to place, a significant strain on our management systems and resources. We expect that we will need to continue to improve our financial and managerial controls and reporting systems and procedures. We will also need to continue to expand and maintain close coordination among our technical, accounting, finance and sales and marketing organizations. Our inability to manage growth effectively could have a material adverse effect on our business, financial condition and results of operations. 11 We are dependent on our key management personnel for our future success Our future success depends to a significant extent on the continued service and coordination of our management team, particularly Michael Mulligan, our Chief Executive Officer. The departure of any of our officers or key employees could materially adversely affect our ability to implement our business plan. In addition, certain members of our management team, including our Chief Executive Officer, have joined us within the last year. These individuals have not previously worked together and are becoming integrated into our management team. They may not be able to work together effectively or successfully manage our growth. We do not currently have employment agreements with members of management other than our Chief Executive Officer and William Muenster, our Senior Vice President of Development and Production. We may not be able to execute our business plan if we are not able to expand internationally In order to execute our business plan, we must expand our business internationally. To date, we have limited experience in marketing our products and services internationally, and we cannot predict our success in these international markets. Our plans to expand internationally are subject to inherent risks, including: . the impact of economic fluctuations in economies outside of the United States; . greater difficulty in accounts receivable collection and longer collection periods; . unexpected changes in regulatory requirements, tariffs and other trade barriers; . difficulties and costs of staffing and managing foreign operations; . political instability; . currency exchange fluctuations; . potentially adverse tax consequences; and . reduced protection for intellectual property rights outside the United States. We may not be able to successfully introduce new products and services We expect to introduce new and enhanced products and services, and in particular, Internet products and services in order to generate additional revenues, attract more business customers to our products and services, attract more consumers to our website and respond to competition. Any new product or service we introduce that is not favorably received could damage our reputation and the perception of our brand name. The failure of our new products and services to achieve market acceptance and generate revenue could result in a material adverse effect on our business, financial condition and results of operations. We may not be able to adapt as Internet technologies and customer demands continue to evolve To be successful, we must adapt to our rapidly changing market by continually enhancing the technologies used in our Internet products and services, and introducing new technology to address the changing needs of our business and consumers. If we are unable, for technical, legal, financial or other reasons, to adapt in a timely manner in response to changing market conditions or business and consumer customer requirements, our business, financial condition and results of operations could be materially adversely affected. We are susceptible to breaches of online commerce security Online commerce on our website relies on encryption and authentication technology licensed from third parties to provide the security and authentication necessary to effect secure transmission of credit card numbers and other proprietary information. The misappropriation of credit card numbers or other proprietary personal information or the purchase of products through the fraudulent use of credit cards could expose us to a risk of loss or litigation and possible liability from the vendors of our products or from cardholders themselves. 12 We are susceptible to breaches of database security A party who is able to circumvent our security measures could misappropriate proprietary database information or cause interruptions in our operations. As a result we may be required to expend significant capital and other resources to protect against such security breaches or to alleviate problems caused by such breaches, which could have a material adverse effect on our business, financial condition and results of operations. Regulatory and legal uncertainties could harm our business Any new legislation or regulation, or the application or interpretation of existing laws, may decrease the growth in the use of the Internet, which could in turn decrease the demand for our products and services, increase our cost of doing business or otherwise have a material adverse effect on our business, financial condition and results of operations. There is an increasing number of laws and regulations pertaining to the Internet. In addition, a number of legislative and regulatory proposals are under consideration by federal, state, local and foreign governments and agencies. Laws or regulations may be adopted with respect to the Internet relating to liability for information retrieved from or transmitted over the Internet, domain name registration, online content regulation, user privacy, taxation and quality of products and services. Moreover, the applicability to the Internet of existing laws governing issues including intellectual property ownership and infringement, copyright, patent, trademark, trade secret, obscenity, libel, employment and personal privacy is uncertain and developing. Please see "Business--Government Regulation and Legal Uncertainties." We would lose revenues and incur significant costs if our systems or material third-party systems are not Year 2000 compliant The failure of our internal systems, or any material third-party systems, to be Year 2000 compliant would have a material adverse effect on our business, results of operations and financial condition. Although we believe that each of our material systems is Year 2000 compliant, we do not yet know whether our internal system, as a whole, is Year 2000 compliant. We are also contacting our third-party vendors, licensors and providers of hardware, software and services regarding their Year 2000 readiness. Their failure to be compliant would adversely affect our ability to deliver our service. Please see "Management's Discussion and Analysis of Financial Condition and Results of Operations--Year 2000." We cannot predict our future capital needs and we may not be able to secure additional financing We may need to raise additional funds in the future in order to fund more aggressive marketing programs or to acquire complementary businesses, technologies or services. Any required additional financing may be unavailable on terms favorable to us, or at all. If we raise additional funds by issuing equity securities, you may experience significant dilution of your ownership interest and such securities may have rights senior to those of the holders of our common stock. If additional financing is not available when required or is not available on acceptable terms, we may be unable to fund our expansion, successfully promote our brand name, develop or enhance our products and services, take advantage of business opportunities or respond to competitive pressures, any of which could have a material adverse effect on our products and business, financial condition and results of operations. We currently anticipate that the net proceeds from this offering, together with available funds, will be sufficient to meet our anticipated needs for at least the next 12 months. We may not be able to successfully make acquisitions of or investments in other companies If we make an acquisition, we could have difficulty assimilating the acquired company's operations and personnel. If we make other types of acquisitions, we could have difficulty in assimilating any acquired products, services, and technologies into our operations. These difficulties could disrupt our ongoing business, distract our management and employees, increase our expenses and materially adversely affect our business, financial condition and results of operations due to increased operating expenses and charges, such as amortization of goodwill. We have no present understanding or agreement relating to any acquisition of or investment in another company or its business. 13 Future sales of our common stock may negatively affect our stock price Following the offering, we will have a large number of shares of common stock outstanding and available for resale beginning at various points in time in the future. The market price of our common stock could decline as a result of sales of a large number of shares of our common stock in the market following this offering, or the perception that such sales could occur. These sales also might make it more difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate. Please see "Shares Eligible for Future Sale." Our executive officers, directors and existing stockholders will have the ability to exercise significant control over us Our executive officers and directors and entities affiliated with them will, in the aggregate, beneficially own approximately 82.0% of our common stock following this offering. These stockholders will be able to exercise control over all matters requiring approval by our stockholders, including the election of directors and the approval of significant corporate transactions. This concentration of ownership may also have the effect of delaying or preventing a change in control of our company, which could negatively affect our stock price. Please see "Principal Stockholders." You will suffer immediate and substantial dilution The initial public offering price per share will exceed the net tangible book value per share. Accordingly, investors purchasing shares in this offering will incur immediate and substantial dilution in their investments. To the extent outstanding options or warrants to purchase common stock are exercised, there will be further dilution. Please see "Dilution." Our management will have broad discretion in use of proceeds Our management will have broad discretion with respect to the expenditure of proceeds. Investors will be relying on the judgment of our management regarding the application of the proceeds of this offering. 14 FORWARD-LOOKING STATEMENTS; MARKET DATA Many statements made in this prospectus under the captions "Prospectus Summary," "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Business" and elsewhere are forward- looking statements that are not based on historical facts. Because these forward-looking statements involve risks and uncertainties, there are important factors that could cause actual results to differ materially from those expressed or implied by these forward-looking statements, including those discussed under "Risk Factors." This prospectus contains market data related to MapQuest and the Internet. This market data includes projections that are based on a number of assumptions. The assumptions include that: . no catastrophic failure of the Internet will occur; . currency exchange fluctuations; . the number of people online and the total number of hours spent online will increase significantly over the next five years; . the value of online advertising dollars spent per online user hour will increase; . the download speed of content will increase dramatically; and . Internet security and privacy concerns will be adequately addressed. If any one or more of the foregoing assumptions turns out to be incorrect, actual results may differ from the projections based on these assumptions. The failure of these markets to grow at these projected rates may have a material adverse effect on MapQuest's business, results of operations and financial condition, and the market price of MapQuest's stock. 15 USE OF PROCEEDS The net proceeds to MapQuest from the sale of the shares offered by this prospectus are estimated to be $45.8 million ($52.8 million if the over- allotment option is exercised in full) at an assumed initial public offering price of $11.00 per share and after deducting the underwriting discount and estimated offering expenses payable by MapQuest. The principal purposes of this offering are to obtain additional capital, to create a public market for the common stock and to facilitate future access by MapQuest to public securities markets. MapQuest intends to use approximately $8.6 million of the net proceeds to redeem the 1,398,835 outstanding shares of MapQuest's series B preferred stock. MapQuest intends to use the remaining net proceeds to execute its business plan. As part of this plan, MapQuest expects to increase its sales and marketing efforts by hiring additional internal sales personnel and by increasing its promotional and advertising spending. MapQuest estimates that its capital expenditures will be approximately $4.0 million in 1999, which is expected to be used for technical infrastructure improvements and for the expansion of MapQuest's office space. A portion of the net proceeds also may be used to acquire or invest in complementary businesses, products or services. MapQuest has not yet determined the amount of net proceeds to be used specifically for each of the preceding purposes. Accordingly, management will have significant flexibility in applying the net proceeds of this offering. Pending use of the net proceeds for the above purposes, MapQuest intends to invest such funds in short-term, interest-bearing, investment-grade securities. See "Description of Capital Stock-- Preferred Stock" and Note 5 to the Financial Statements. DIVIDEND POLICY MapQuest has never declared or paid any cash dividends on its common stock. MapQuest intends to retain any future earnings to support operations and to finance the growth and development of MapQuest's business and does not anticipate paying cash dividends for the foreseeable future. 16 CAPITALIZATION The following table sets forth, as of December 31, 1998, the capitalization of MapQuest on an actual basis, and on a pro forma as adjusted basis to reflect the automatic conversion of all outstanding shares of series A preferred stock and series C preferred stock into 27,122,455 shares of common stock upon the closing of this offering, the sale of 4,600,000 shares offered by this prospectus at an assumed initial public offering price of $11.00 per share, after deducting the underwriting discount and the estimated offering expenses payable by MapQuest, and the redemption of the series B preferred stock. This information should be read together with MapQuest's financial statements and the notes relating to those statements appearing elsewhere in this prospectus.
December 31, 1998 ------------------------- Pro Forma Actual As Adjusted -------- ----------- (In thousands) Cumulative Redeemable Preferred Stock Series B Preferred Stock, par value $0.01 per share, nonvoting, $6.15 per share redemption value, aggregate liquidation preference of $8,332,036. 2,000,000 shares authorized; 1,354,802 shares issued and outstanding, actual; no shares issued and outstanding pro forma as adjusted............. $ 8,332 $ -- Convertible Redeemable Preferred Stock Series A Preferred Stock, par value $0.01 per share voting, $1.00 per share redemption value, aggregate liquidation preference of $6,550,000. 6,550,000 shares authorized; 6,550,000 shares issued and outstanding, actual; no shares issued and outstanding pro forma as adjusted............. 6,550 -- Series C Preferred Stock, par value $0.01 per share voting, $3.51 per share redemption value, aggregate liquidation preference of $12,268,292. 3,800,000 shares authorized; 3,495,354 shares issued and outstanding, actual; no shares issued and outstanding pro forma as adjusted............. 11,595 -- Notes receivable for convertible preferred stock..... (291) -- Stockholders' Equity (Deficit) -- Preferred stock, par value $0.01 per share. 2,650,000 shares authorized, no shares issued and outstanding, actual, pro forma as adjusted........ -- -- Common stock, par value $0.001 per share. 20,000,000 shares authorized, 336,028 shares issued and outstanding, actual; 32,058,483 shares issued and outstanding pro forma as adjusted................. -- 32 Notes receivable for common stock................... -- (291) Additional paid-in capital.......................... 140 64,011 Retained deficit.................................... (19,908) (19,908) -------- ------- Total stockholders' equity (deficit)................ (19,768) 43,844 -------- ------- Total capitalization.............................. $ 6,418 $43,844 ======== =======
17 DILUTION The pro forma net tangible book value of MapQuest as of December 31, 1998, after giving effect to the conversion of preferred stock, was $6.2 million, or $0.23 per share of common stock. "Pro forma net tangible book value per share" is determined by dividing the number of outstanding shares of common stock into the net tangible book value of MapQuest. Pro forma net tangible book value is equal to total tangible assets less total liabilities. After giving effect to the application of the estimated net proceeds from the sale of the shares of common stock offered by this prospectus, based upon an assumed initial public offering price of $11.00 per share, after deducting the underwriting discounts, estimated offering expenses payable by MapQuest, and the redemption of the series B preferred stock, the pro forma net tangible book value of MapQuest as of December 31, 1998 would have been $43.7 million, or $1.36 per share. This represents an immediate increase in net tangible book value of $1.13 per share to existing stockholders and an immediate dilution of $9.64 per share to new investors purchasing shares at the initial public offering price. The following table illustrates the per share dilution: Assumed initial public offering price............................ $11.00 Pro forma net tangible book value as of December 31, 1998....... $.23 Pro forma increase in net tangible book value attributable to new investors................................................. 1.13 ---- Pro forma net tangible book value per share after this offering.. 1.36 ------ Pro forma dilution per share to new investors.................... $ 9.64 ======
The following table summarizes on a pro forma basis, the total number of shares of common stock purchased from MapQuest, the total consideration paid to MapQuest and the average price per share paid by existing stockholders and by new investors, based upon the number of shares of common stock outstanding as of December 31, 1998 and assuming conversion of shares of preferred stock.
Shares Purchased Total Consideration Average ------------------ ----------------------Price-Per Number Percent Amount Percent Share ---------- ------- ------------ ------------------ % $ % $ Existing stockholders........ 27,458,483 85.7 16,499,676 24.6 1.60 New Investors................ 4,600,000 14.3 50,600,000 75.4 11.00 ---------- ----- ------------ ------- ----- Total...................... 32,058,483 100.0 67,099,676 100.0 2.09 ========== ===== ============ ======= =====
If the underwriters' over-allotment is exercised in full, the number of shares held by new investors will increase to 5,290,000, or 16.2% of the total shares of common stock to be outstanding after this offering. 18 SELECTED FINANCIAL DATA The following selected financial data set forth below should be read together with the financial statements and the notes relating to those statements and with "Management's Discussion and Analysis of Financial Condition and Results of Operations" appearing elsewhere in this prospectus. The selected financial data set forth below for each of the years ended December 31, 1996, 1997 and 1998 and at December 31, 1997 and 1998 are derived from financial statements of MapQuest, audited by Ernst & Young LLP, independent auditors, which are included elsewhere in this prospectus. The selected financial data for the year ended December 31, 1995 and at December 31, 1994, 1995 and 1996 are derived from financial statements of MapQuest audited by Ernst & Young LLP, which are not included in this prospectus. The selected financial data for the year ended December 31, 1994 are derived from the unaudited financial statements of MapQuest, which are not included in this prospectus. For an explanation of the methods used to determine the number of shares used to compute historical and pro forma basic and diluted loss per share see Note 7 to the Financial Statements. Pro forma as adjusted data give effect to the completion of this offering and the application of the net proceeds from this offering. Basic and diluted earnings (loss) per share amounts are not presented for 1994; MapQuest was not an independent entity until October 31, 1994. In addition, there was no common stock outstanding from October 31, 1994 to December 31, 1994.
Year Ended December 31, --------------------------------------------- 1994 1995 1996 1997 1998 ------- ------- ------- -------- -------- (In thousands, except per share data) Statement of Operations Data: Revenues Business.............. $ 4,226 $ 3,095 $ 7,020 $ 4,763 $ 6,536 Consumer.............. -- -- 140 1,276 1,376 Digital mapping....... 6,243 10,982 12,417 15,377 16,805 ------- ------- ------- -------- -------- Total revenues...... 10,469 14,077 19,577 21,416 24,717 Costs of revenues....... 9,189 8,556 12,320 15,302 17,646 ------- ------- ------- -------- -------- Gross profit............ 1,280 5,521 7,257 6,114 7,071 Operating expenses Sales and marketing... 3,027 2,738 4,455 7,257 5,243 Product development... 642 1,395 2,619 5,048 2,955 General and administrative...... 1,897 1,373 1,902 1,811 2,326 ------- ------- ------- -------- -------- Total operating expenses.......... 5,566 5,506 8,976 14,116 10,524 ------- ------- ------- -------- -------- Operating income (loss)................ (4,286) 15 (1,719) (8,002) (3,453) Interest income and expense, net.......... (72) 271 199 136 54 Other income............ 168 258 244 267 244 ------- ------- ------- -------- -------- Income (loss) before provision for income taxes................. (4,190) 544 (1,276) (7,599) (3,155) Provision for income taxes................. -- 20 -- -- -- ------- ------- ------- -------- -------- Net income (loss)....... (4,190) 524 (1,276) (7,599) (3,155) Less preferred stock dividends and accretion............. (10) (458) (525) (5,834) (667) ------- ------- ------- -------- -------- Net income (loss) applicable to common stockholders.......... $(4,200) $ 66 $(1,801) $(13,433) $ (3,822) ======= ======= ======= ======== ======== Basic earnings (loss) per share............. $ -- $ 0.79 $ (8.84) $ (64.43) $ (12.09) Diluted earnings (loss) per share............. $ -- $ 0.00 $ (8.84) $ (64.43) $ (12.09) Shares used to compute basic earnings (loss) per share............. -- 84 204 208 316 Shares used to compute diluted earnings (loss) per share...... -- 19,313 204 208 316 Pro forma basic and diluted loss per share................. $ (0.13) ======== Shares used to compute pro forma basic and diluted loss per share................. 27,439 ======== December 31, ---------------------------------------------------------- Pro Forma 1994 1995 1996 1997 1998 as adjusted ------- ------- ------- -------- -------- ----------- (In thousands) Balance Sheet Data: Cash and cash equivalents......... $ 4,646 $ 4,619 $ 1,904 $ 2,482 $ 564 $37,990 Working capital....... 5,687 6,066 4,085 7,460 4,301 41,727 Total assets.......... 9,169 9,601 9,526 13,221 11,450 48,876 Long-term obligations, less current portion............. -- -- -- 48 -- -- Redeemable preferred stock............... 6,486 6,877 7,331 25,711 26,186 -- Stockholders' equity (deficit)........... 89 213 (1,553) (16,237) (19,768) 43,844
19 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Overview MapQuest is a leading online provider of mapping and destination information. MapQuest provides comprehensive online mapping solutions to businesses and provides customized maps, destination information and driving directions to consumers. MapQuest has three lines of business: Internet business products and services, Internet consumer products and services and digital mapping products and services. MapQuest was formed in 1967 as a business unit of R.R. Donnelley & Sons Company. In 1994, R.R. Donnelley & Sons Company created a subsidiary into which it transferred the MapQuest business unit. Also in 1994, MapQuest sold shares to third parties. R.R. Donnelley & Sons Company sold all of its shares of MapQuest to third parties in 1998. See "Certain Transactions." Since 1967, MapQuest has provided traditional cartographic products and services. In 1989, MapQuest began offering digital mapping products and services. Beginning in 1991, MapQuest introduced map-generating products and services which evolved into online mapping and routing applications. During the first quarter of 1996, MapQuest launched mapquest.com and initiated sales and marketing efforts to build brand awareness and to generate advertising revenues from its website. In the third quarter of 1996, MapQuest began providing online mapping and destination information products and services from its website to companies with an Internet presence and to high-traffic websites offering users a wide range of information and services on their websites, which are commonly referred to as portal websites. In 1997, MapQuest increased its focus on its Internet business and consumer lines of business by devoting significant resources to mapquest.com and to its other Internet products and services. During the fourth quarter of 1997 and the first quarter of 1998, MapQuest decreased its Internet-related sales and marketing activities as it revised its overall business strategy. During the remainder of 1997, MapQuest continued its product development efforts and increased its sales and marketing efforts across all of its lines of business. During the second quarter of 1998, MapQuest introduced its MapQuest Enterprise Server. MapQuest's Enterprise Server is designed to provide mapping and routing capability to high volume websites. As part of its Internet strategy, MapQuest appointed a new chief executive officer in the second half of 1998. MapQuest derives its revenues from the following three lines of business: Business Products and Services. MapQuest provides Internet products and services to companies with an Internet presence and to portal websites. These companies typically contract for MapQuest's services on an annual basis in consideration for a service fee based on usage and an initial set-up fee. MapQuest recognizes service fees ratably over the period of the service. In addition, MapQuest recognizes revenues from the set-up fee upon completion of the related installation services. Typically, MapQuest completes the installation service in less than a month from the signing of a contract with a customer. As part of MapQuest's Enterprise Server, MapQuest licenses its data and sub-licenses third-party data to its business customers. Revenues for software and data licenses relating to MapQuest Enterprise Server and other licensed products are recognized upon delivery of the product. In addition, MapQuest has entered into revenue sharing arrangements for advertising revenues generated by a MapQuest business customer's website. Any revenues MapQuest receives from these revenue sharing arrangements are recognized by MapQuest upon notification by its business customers of advertising revenues on their websites. However, revenues from these arrangements have not been material to date. Further, under those agreements where MapQuest has a maintenance or upgrade obligation, MapQuest recognizes revenue for these obligations over the period of the obligation. Revenues from systems integration contracts, typically long-term fixed-price contracts, are recognized on the percentage-of- completion method. The percentage-of-completion method measures the number of labor hours incurred to date as a percentage of estimated total labor hours for each contract. MapQuest has also historically provided business products and services for non-Internet applications by licensing software and data and by providing professional services on a time and materials basis or a fixed fee basis. Revenues from non-Internet applications as a percent of business products and services revenues has declined over the last three years and, in 1998, they accounted for less than 20 26.0% of revenues from the business products and services line of business. Revenues from all other services provided are recognized when the services are rendered or delivery of the product is made. Revenues from MapQuest's business products and services line of business accounted for 26.4% of total revenues in 1998. Consumer Products and Services. Through mapquest.com, MapQuest derives revenues primarily from the sale of advertising and sponsorships. Advertising rates vary depending on whether the advertisements are delivered to a general audience or a targeted audience based on specific geographic location. Advertising revenues are typically recognized ratably over the period in which the advertisements are displayed, provided that no significant obligations remain and the collection of the resulting receivable is likely. The average term of MapQuest's advertising contracts is between one to two months. MapQuest may guarantee its advertisers a pre-set level of impressions on mapquest.com. Impression refers to a delivery of an advertisement to a user. If the guaranteed impressions are not met, MapQuest defers recognition of the corresponding revenue until the guaranteed impressions are achieved. Sponsorship contracts may have longer terms and may allow sponsors to be exclusive sponsors of portions of mapquest.com or particular advertising categories. Barter transactions in which MapQuest received advertising or other goods and services in exchange for content or advertising on mapquest.com accounted for no more than 2.0% of total revenue in each of 1996, 1997 and 1998. Revenues from MapQuest's consumer products and services business line accounted for 5.6% of total revenues in 1998. Digital Mapping Products and Services. In its digital mapping business, MapQuest derives substantially all of its revenues from providing digital mapping services to businesses and from the sale of mapping products to distributors, retailers and corporate customers. MapQuest typically receives fees and payments on a time and materials basis or a fixed fee basis. Revenues from these services are recognized when the services are rendered. In addition, revenues from long-term contracts are recognized on the percentage-of- completion method, measured by the number of labor hours incurred to date as a percentage of estimated total labor hours for each contract. MapQuest also licenses software and data for a license fee and/or royalties. License fees are recognized upon delivery of the software and data. Royalty revenue is recognized upon payment received. Revenues from all other services provided are recognized when the services are rendered. With respect to the sale of mapping products, MapQuest is paid negotiated amounts, depending on volume, from retailers and distributors, subject to minimum sales and return arrangements. Revenues from MapQuest's digital mapping line of business accounted for approximately 68.0% of total revenues in 1998. Year ended December 31, 1997 compared to year ended December 31, 1998 Revenues Total revenues increased by $3.3 million from $21.4 million in 1997 to $24.7 million in 1998. Revenue for the top 10 customers of MapQuest as a percent of total revenue decreased from 44.5% in 1997 to 27.2% in 1998. Business Revenues. Business revenues increased by $1.7 million from $4.8 million in 1997 to $6.5 million in 1998. This increase was primarily due to an increase in the number of businesses using MapQuest's products and services and the introduction of additional products and services. In addition, during 1998 MapQuest introduced its Enterprise Server products and services. MapQuest expects its business products and services revenues to become a greater percentage of its total revenue in the future. As a percent of total revenues, business revenues increased from 22.2% in 1997 to 26.4% in 1998. Consumer Revenues. Consumer revenues increased $0.1 million from $1.3 million in 1997 to $1.4 million in 1998. This increase was due to increased advertising sales, including advertisements placed on its website and sponsorship advertisements. During 1998, MapQuest changed its third-party advertising sales representative organization. Consequently, MapQuest did not recognize revenues from third-party advertising sales representative organizations during this transition. MapQuest expects to continue to derive revenue from selling advertisements on mapquest.com and also expects that revenues from its consumer business will increase as a percentage of its total revenue. As a percent of total revenues, consumer revenues decreased from 6.0% in 1997 to 5.6% in 1998. Digital Mapping Revenues. Digital mapping revenues increased by $1.4 million from $15.4 million in 1997 to $16.8 million in 1998. This increase was primarily due to increased sales of printed products, including 21 the National Geographic Road Atlas and the National Geographic American Road Atlas. MapQuest expects digital mapping revenues will decrease as a percentage of total revenue as MapQuest believes the growth in this business line to be slower than that of the Internet consumer and business lines of business. As a percent of total revenues, digital mapping revenues decreased from 71.8% in 1997 to 68.0% in 1998. Cost of Revenues Cost of revenues consists primarily of compensation for operations personnel and related operations costs, including depreciation of operating assets, third-party royalties, print and paper costs for printed products, and subcontractor costs. Cost of revenues increased by $2.3 million from $15.3 million in 1997 to $17.6 million in 1998. This increase was primarily due to the increased cost of printed products for distributors, retailers and corporate customers, including National Geographic, and higher depreciation costs associated with computer hardware purchases. Operating Expenses Sales and Marketing. Sales and marketing expenses consist primarily of salaries, commissions, travel related expenses, sales promotion expenses, public relations expenses and costs of marketing materials. Sales and marketing expenses decreased by $2.1 million from $7.3 million in 1997 to $5.2 million in 1998. This decrease reflects lower promotional costs and personnel expenses as MapQuest implemented expense reduction efforts in early 1998. These expense reductions included a reduction in personnel, decreased travel expenses and lower spending for sales promotions involving trade shows and public relations. These expense reduction efforts were undertaken as MapQuest revised its business strategy. MapQuest expects to incur significant increased sales and marketing expenses on an absolute dollar basis and as a percentage of revenues as it hires additional sales and marketing personnel and as it expands its sales and marketing campaigns. Product Development. Product development expenses are primarily the costs of developing new products and services and modifying existing products and services, including software and data. These expenses consist primarily of salaries for product development personnel and related expenses, contract labor expense, and consulting fees. Product development expenses decreased by $2.0 million from $5.0 million in 1997 to $3.0 million in 1998. The decrease from 1997 to 1998 was primarily due to decreases in personnel and related expenses as MapQuest implemented the expense reduction efforts described in the preceding paragraph in early 1998. MapQuest plans to increase product development expenditures significantly for MapQuest's business and consumer products and services in absolute dollars in future periods. General and Administrative. General and administrative expenses consist primarily of payroll and related expenses for MapQuest's executive, accounting and administrative personnel, professional services and other general corporate expenses. These expenses increased by $0.5 million from $1.8 million in 1997 to $2.3 million in 1998. The increase from 1997 to 1998 was primarily due to costs associated with the hiring of a new Chief Executive Officer and for additional professional services. MapQuest anticipates hiring additional personnel and incurring additional costs related to being a publicly held entity, including directors' and officers' liability insurance, investor relations programs and professional service fees. Interest Income and Expense, Net Interest income was $0.1 million in 1997 and 1998. Other Income Other income decreased $0.1 million from $0.3 million in 1997 to $0.2 million in 1998. This decrease was primarily due to lower equity in the earnings of a joint venture that serves a number of automobile clubs with trip routing services. Income Taxes MapQuest paid no income taxes in 1997 or 1998. MapQuest has incurred a net loss for each period since incorporation, except for 1995. As of December 31, 1998, MapQuest had approximately $11.7 million of net 22 operating loss carryforwards for federal income tax purposes, which expire beginning in 2009. Due to the uncertainty of future profitability, a valuation allowance equal to the deferred tax asset has been recorded. Changes in ownership resulting from transactions among MapQuest's stockholders and sales of common stock may limit the future annual realization of the tax net operating loss carryforwards under Section 382 of the Internal Revenue Code of 1986. Year ended December 31, 1996 compared to year ended December 31, 1997 Revenues Total revenues increased $1.8 million from $19.6 million in 1996 to $21.4 million in 1997. Revenue for the top ten customers of MapQuest as a percent of total revenue declined from 58.3% in 1996 to 44.5% in 1997. Business Revenues. Business revenues decreased $2.2 million from $7.0 million in 1996 to $4.8 million in 1997 as MapQuest transitioned its focus from non-Internet client/server based products and services to Internet products and services. Consumer Revenues. Consumer revenues increased $1.2 million from $0.1 million in 1996 to $1.3 million in 1997. This increase was primarily due to increased advertising sales on mapquest.com. Digital Mapping Revenues. Digital mapping revenues increased $3.0 million from $12.4 million in 1996 to $15.4 million in 1997. The increase reflects increased sales from printed products for retail, wholesale and corporate customers, particularly the introduction of the National Geographic Road Atlas. Cost of Revenues Cost of revenues increased $3.0 million from $12.3 million in 1996 to $15.3 million in 1997. The increase was primarily due to the increased costs of printed products for distributors, retailers and corporate customers and increased costs for operational personnel and related costs. Operating Expenses Sales and Marketing. Sales and marketing expenses increased by $2.8 million from $4.5 million in 1996 to $7.3 million in 1997. This increase was primarily due to increased expenses for the hiring of additional personnel and for increased promotional expenses. Product Development. Product development expenses increased $2.4 million from $2.6 million in 1996 to $5.0 million in 1997. This increase was primarily the result of the development of the National Geographic Road Atlas and the hiring of additional personnel for MapQuest Internet products and services. General and Administrative. General and administrative expenses decreased $0.1 million from $1.9 million in 1996 to $1.8 million in 1997. This decrease was primarily due to lower personnel costs resulting from expense reduction efforts as MapQuest revised its business strategy. Interest Income and Expense, Net Interest income decreased by $0.1 million from $0.2 million in 1996 to $0.1 million in 1997. The decrease from 1996 to 1997 was the result of changes in average cash and cash equivalent balances. Other Income Other income remained relatively constant at $0.2 million in 1996 and in 1997. Income Taxes MapQuest paid no income taxes in 1997. Income taxes paid in 1996 were less than $0.1 million. 23 Selected Unaudited Quarterly Results of Operations The following table sets forth selected unaudited quarterly statement of operations data for the eight quarters ended December 31, 1998. The selected statement of operations data has been prepared substantially on the same basis as the financial statements appearing elsewhere in this prospectus and, in the opinion of management, includes all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the information set forth in the data. The quarterly data should be read together with the financial statements and the notes to those statements appearing elsewhere in this prospectus. The results of operations for any quarter are not necessarily indicative of results to be expected in any future period.
Quarter Ended ----------------------------------------------------------------------------- March 31, June 30, Sept. 30, Dec. 31, March 31, June 30, Sept. 30, Dec. 31, 1997 1997 1997 1997 1998 1998 1998 1998 --------- -------- --------- -------- --------- -------- --------- -------- (Unaudited, in thousands) Revenues Business............... $1,192 $ 1,054 $ 1,251 $ 1,266 $1,720 $1,334 $1,834 $ 1,648 Consumer............... 117 180 465 514 292 259 245 580 Digital mapping........ 4,093 3,593 3,758 3,933 3,538 4,729 3,896 4,642 ------ ------- ------- ------- ------ ------ ------ ------- Total revenues......... 5,402 4,827 5,474 5,713 5,550 6,322 5,975 6,870 Costs of revenues....... 3,479 3,574 3,994 4,255 3,654 4,618 4,283 5,091 ------ ------- ------- ------- ------ ------ ------ ------- Gross profit............ 1,923 1,253 1,480 1,458 1,896 1,704 1,692 1,779 Operating expenses Sales and marketing.... 1,351 1,718 1,990 2,198 1,483 1,067 1,163 1,530 Product development.... 1,143 1,633 1,138 1,134 877 813 728 537 General and administrative....... 422 526 440 423 465 527 529 805 ------ ------- ------- ------- ------ ------ ------ ------- Total operating expenses............. 2,916 3,877 3,568 3,755 2,825 2,407 2,420 2,872 ------ ------- ------- ------- ------ ------ ------ ------- Operating income loss... (993) (2,624) (2,088) (2,297) (929) (703) (728) (1,093) Interest income and expense, net.......... 17 6 61 52 23 14 8 9 Other income............ 49 118 74 26 47 70 117 10 ------ ------- ------- ------- ------ ------ ------ ------- Net loss................ $ (927) $(2,500) $(1,953) $(2,219) $ (859) $ (619) $ (603) $(1,074) ====== ======= ======= ======= ====== ====== ====== =======
MapQuest's total revenues fluctuated on a quarter-to-quarter basis during the periods presented primarily due to changes in the mix of products and services sold. During the quarter ended March 31, 1998, MapQuest recognized business revenues of $0.4 million resulting from the license of its software and data to a third-party. During the quarter ended March 31, 1998, revenues from MapQuest's consumer line of business decreased as a result of difficulties with its then third-party advertising sales organization. During the quarter ended September 30, 1997, MapQuest began recognizing digital mapping revenues attributable to an agreement entered into with National Geographic Holdings, Inc. to develop and publish mapping products for retail distribution with the National Geographic brand name. During the quarter ended June 30, 1998, MapQuest began providing the American Road Atlas to National Geographic for sale to its members. This resulted in increased digital mapping revenues partially offset by increased cost of revenues relating to print and paper costs for printed product. During the quarters ended December 31, 1997 and March 31, 1998, MapQuest temporarily reduced its sales and marketing and product development activities, including reducing its number of employees, as it revised its overall business strategy. As part of its revised Internet strategy, MapQuest reduced its non- Internet product development activities in the quarter ended December 31, 1998. During the same quarter, MapQuest incurred additional general and administrative expenses in connection with hiring its Chief Executive Officer. As a result of MapQuest's relatively recent focus on the Internet and the emerging nature of the Internet markets in which it competes, MapQuest is limited in its ability to accurately forecast its revenue. MapQuest's 24 current and future expense levels are based largely on its estimates of future revenue and are to a large extent fixed. Accordingly, MapQuest may be unable to adjust spending in a timely manner to compensate for any unexpected revenue shortfall, and a shortfall in revenue in relation to MapQuest's expectations could have a material adverse effect on MapQuest's business, financial condition and results of operations. In addition, MapQuest currently intends to significantly increase its operating expenses to develop and enhance its technology, to create, introduce and enhance its products and services offerings, to fund increased sales and marketing expenses and to enter into new strategic agreements. To the extent that these expenses precede or are not subsequently followed by increased revenue, MapQuest's business, financial condition and results of operations could be materially adversely affected. MapQuest's quarterly and annual operating results are likely to fluctuate significantly in the future due to a variety of factors, many of which are outside MapQuest's control. See "Risk Factors--Fluctuations in our operating results may negatively impact our stock price." Liquidity and Capital Resources MapQuest has financed its operations to date primarily through the private placement of equity securities, funds from operations and bank borrowings. As of December 31, 1998, MapQuest had $0.6 million of cash and cash equivalents. Net cash used in operating activities was $9.5 million in 1997 and $0.8 million in 1998. In 1997, cash used by operating activities was primarily a result of a net loss and increased working capital. In 1998, cash used by operating activities was primarily a result of a net loss. Net cash provided by financing activities was $11.4 million in 1997. In 1997, cash provided by financing activities was primarily attributable to net proceeds from the issuance of convertible preferred stock. Net cash used in investing activities was $1.5 million in 1996, $1.3 million in 1997 and $1.1 million in 1998. Cash used in investing activities in each period was primarily related to purchases of property and equipment. In addition, in 1996 MapQuest acquired the assets of a map specialty supplier. MapQuest's material capital commitments consisted of obligations under facilities and operating leases. Management anticipates that it will experience an increase in its capital expenditures and lease commitments consistent with its anticipated growth in operations, infrastructure and personnel and additional resources devoted to building its brand name and building its marketing and sales force. See Note 14 to Financial Statements. MapQuest has a revolving demand credit facility with First Union Bank, N.A. in the amount of $5.0 million which bears interest at First Union Bank's prime rate or fixed rates as offered by First Union Bank or LIBOR plus 1.75%. Borrowings are secured by MapQuest's accounts receivable and are limited to the lesser of $5.0 million or 80% of the net amount of eligible accounts receivable which are within 90 days of invoice. As of December 31, 1998, there were no borrowings under this credit facility. MapQuest believes that the net proceeds of this offering, together with its existing cash and cash equivalents and available borrowings, will be sufficient to meet its anticipated cash needs for working capital and capital expenditures for at least the next twelve months. There can be no assurance that the underlying assumed levels of revenues and expenses will prove to be accurate. MapQuest may seek additional funding through public or private financings or other arrangements prior to such time. Adequate funds may not be available when needed or may not be available on terms favorable to MapQuest. If additional funds are raised by issuing equity securities, dilution to existing stockholders will result. If funding is insufficient at any time in the future, MapQuest may be unable to develop or enhance its products or services, take advantage of business opportunities or respond to competitive pressures, any of which could have a material adverse effect on MapQuest's business, financial condition and results of operations. 25 Year 2000 The Year 2000 issue is the potential for system and processing failures of date-related data as a result of computer-controlled systems using two digits rather than four to define the applicable year. For example, computer programs that have time-sensitive software may recognize a date using "00" as the year 1900 rather than the year 2000. This could result in system failure or miscalculations causing disruptions of operations, including, among other things, an inability to process transactions, send invoices or engage in similar normal business activities. MapQuest may be affected by Year 2000 issues related to non-compliant information technology ("IT") systems or non-IT systems operated by MapQuest or third parties. MapQuest's IT systems consist of software and data developed either in-house or purchased from third parties, and hardware purchased from vendors. State of Readiness. MapQuest has completed a preliminary assessment of its information technology systems, which includes but is not limited to, the hardware and software necessary to provide and deliver mapquest.com. MapQuest is continuing to perform assessments of its non-information technology systems, which include many of the building and office equipment and systems. To date, MapQuest's assessment has consisted of the following steps: . establishing a Year 2000 Committee in the third quarter of 1998 consisting of managers from all relevant functional areas of the company; . identifying and evaluating all software and hardware upon which MapQuest is dependent; . contacting third-party vendors of hardware, software and services, including database providers that MapQuest utilizes; . contacting material non-information technology systems and service providers; . developing and formalizing procedures to implement necessary remedial measures; and . assessing the need for and developing a business contingency plan. As of the end of the first quarter of 1999 MapQuest has performed the following: . the Committee has reviewed all functional areas of MapQuest and has identified various systems and software programs that are not Year 2000 compliant; . MapQuest has performed a Year 2000 simulation on a majority of its proprietary systems, products and services to test system and product readiness; . based on the results of its Year 2000 simulation tests, MapQuest has revised and continues to revise its code as necessary to improve the Year 2000 compliance of its proprietary systems; . MapQuest is continuing to upgrade and test all other hardware and software used in its operations; . MapQuest's hosting service provider, Qwest, has stated that it has established a dedicated Year 2000 Program Office to address the compliance functions of its affected systems and is actively preparing its systems for the Year 2000; . MapQuest has identified all vendors of material hardware and software components of its IT systems, and has contacted its principal vendors of hardware, software, and data providers; . Management is continuing the process of working with its hardware and software providers to assure that MapQuest is prepared for the Year 2000; and . MapQuest is currently assessing its non-IT systems. At this point in its assessment, MapQuest is not currently aware of any Year 2000 problems relating to these systems which would have a material effect on its business, financial condition or results of operations, without taking into account its efforts to avoid such problems. MapQuest plans to complete its Year 2000 assessment during the summer of 1999. 26 Cost. To date, MapQuest has not incurred any material costs in connection with identifying and evaluating Year 2000 compliance issues. Most of its expenses have been related to, and are expected to continue to relate to, the operating costs associated with time spent by employees in the evaluation process and Year 2000 compliance matters generally. At this time, MapQuest does not possess the information necessary to estimate the potential costs of the replacement of third party software, hardware or services that are determined not to be Year 2000 compliant. Although MapQuest does not anticipate those amounts will be material, such expenses, if higher than anticipated, could have a material adverse effect on MapQuest's business, financial condition and operating results. Risks. Although MapQuest's assessment may be finalized without identifying any additional material non-compliant IT or systems operated by MapQuest or by third parties, a systemic failure beyond the control of MapQuest, such as a prolonged telecommunications or electrical failure is possible. This type of failure could prevent MapQuest from operating its business, prevent users from accessing its website, or change the behavior of advertising customers or persons accessing its website. MapQuest believes that the primary business risks, in the event of such systemic failure, would include but not be limited to, lost advertising revenues, lost business revenues, increased operating costs, loss of customers or persons accessing its website and servers, or other business interruptions of a material nature, as well as claims of mismanagement, misrepresentation, or breach of contract. Contingency Plan. As discussed above, MapQuest is engaged in an ongoing Year 2000 assessment. The results of MapQuest's further testing and the responses received from third-party vendors, service providers and customers will be taken into account in determining the nature and extent of any contingency plans. 27 BUSINESS Overview MapQuest is a leading online provider of mapping and destination information. By effectively employing its over 30 years of traditional and digital mapping experience together with its proprietary integration and editing of geographic databases, MapQuest provides comprehensive online mapping solutions to businesses and provides customized maps, destination information and driving directions to consumers. During February 1999, MapQuest delivered over 76.2 million maps and over 14.2 million driving directions through its own website and through third-party websites. According to Media Metrix, Inc., in February 1999 mapquest.com had over 2.7 million unique visitors, making it the number five travel/tourism Internet property in terms of audience reach. Industry Background Growth of the Internet The Internet is an increasingly significant global medium for distributing and collecting information, conducting commerce and communicating. International Data Corporation estimates that the number of Internet users worldwide exceeded 69.0 million in 1997 and will grow to over 320.0 million by 2002, representing a compounded annual growth rate of over 35%. According to Forrester Research, Inc., by 2002 approximately 50% of U.S. businesses will have an online presence. The growth of the Internet is being driven by a number of factors, including: . increased use of personal computers and modems; . improvements in network systems and infrastructure; . more readily available and lower cost access to the Internet; . increased awareness of the Internet among businesses and consumers; . increased volume of information and services offered on the Internet; . more compelling interactive content available on the Internet; and . increased acceptance of conducting transactions online. Convergence of the Traditional and Digital Mapping Industries and the Internet Geographically-relevant information has traditionally been provided through a variety of reference materials, including road maps, atlases, travel guides, telephone directories and textbooks. According to a 1998 International Map Trade Associations' United States consumer survey, the annual market for published map, atlas and travel guide products in the United States is estimated to be in excess of $1.6 billion. The development of technology has allowed companies to effectively employ their databases of information across a greater number of platforms such as CD-ROMs, client/server systems and the Internet. Further, with the development of the Internet, users are able to easily and cost-effectively access information on a 24-hour basis. MapQuest believes that the Internet presents a significant opportunity to provide users with comprehensive and reliable geographically relevant information through the delivery of highly customized maps, destination information and driving directions on a real-time basis. Online Destination Information for Businesses Businesses must be able to cost-effectively communicate their existence and physical locations to potential customers. This information has historically been provided through traditional print media, such as newspapers and the yellow pages, which generally target only narrow geographic audiences and have a limited ability to provide updated destination information that is tailored to the specific routing needs of a potential customer. MapQuest believes that the Internet presents a significant opportunity for businesses to provide potential customers with real-time physical location information and customized driving directions to such locations. 28 In addition, highly trafficked websites such as portals, which provide users with a wide range of information and services at a single site, need to continually enhance and expand their service offerings to promote and extend usage among existing and new users. Many of these sites have expanded their websites through the addition of a variety of features such as stock quotes, news, yellow pages, and mapping and destination information. However, many of these websites do not have the personnel or technical infrastructure necessary to provide these expanded service offerings on a cost-effective basis. MapQuest believes that businesses will increasingly seek to outsource products and services to expand the service offerings of their websites. Online Destination Information for Consumers Consumers and travelers have traditionally located businesses and other points of interest by using maps, telephone and general information inquiries. As the availability of travel-related information on the Internet becomes more available, consumers and travelers are increasingly obtaining location information online. MapQuest believes there is a significant opportunity to provide consumers and travelers with easily accessible, reliable and comprehensive door-to-door driving directions available 24 hours a day. Geographically Targeted Online Advertising Forrester Research, Inc. estimates that online advertising revenues will grow from approximately $1.0 billion in 1998 to approximately $8.1 billion in 2002. Advertisers on the Internet desire cost-effective means of targeting their advertising and direct marketing efforts. MapQuest believes that specific location information provided by a consumer on a real-time basis would improve these efforts. MapQuest believes there is a significant opportunity to provide accurate and reliable products and services designed to meet the mapping and destination information needs of businesses and consumers on the Internet. Businesses must be able to accurately direct a potential customer to their physical location(s). Further, to successfully attract and retain users, highly trafficked websites need to continually and cost-effectively expand the service offerings of their websites. In addition, consumers using the Internet need a reliable source of real-time customized destination information available 24 hours a day. The MapQuest.com Solution MapQuest is a leading online provider of mapping and destination information for businesses and consumers. MapQuest's online products and services enable businesses to: . Provide customized maps, destination information and driving directions to potential customers; . Expand the service offerings of their websites to attract and retain users; . Use outside sources to meet their map-generating and destination information needs, thereby avoiding a significant portion of the expenses normally associated with establishing and maintaining a map- generating personnel and technology organization; and . Provide potential customers with information regarding which of a business' multiple locations is closest to the potential customer. MapQuest's online products and services enable consumers to: . Receive maps and destination information on a real-time basis based on specific location parameters provided by the customer; . Generate detailed door-to-door driving directions at anytime; and . Create and retrieve customized maps based on the consumer's preferences. 29 MapQuest is also a leading U.S. provider of traditional and digital mapping products and services to the educational, reference, directory, travel and governmental markets. In addition, companies that incorporate call centers, CD- ROMs or driving direction kiosks into their information delivery strategy require non-Internet customized mapping solutions. MapQuest has developed its map-generating software to promote the rapid development of mapping applications in these environments. Strategy MapQuest's objective is to be the leading online provider of destination solutions for businesses and consumers. Key elements of MapQuest's strategy include: Build Brand Awareness. MapQuest intends to further its position as an industry leader for online destination information for businesses and consumers by enhancing its brand name recognition. In addition to branding on its website, MapQuest currently co-brands its products and services on each of its business customer's websites. MapQuest intends to expand its use of advertising, public relations and other marketing programs designed to promote its global brand and build loyalty among its business and consumer customers. In the future, MapQuest intends to expand both its online and offline marketing programs. Expand and Enhance the MapQuest Service. MapQuest intends to continue to broaden and deepen its services by providing comprehensive, cost-effective, accurate and easily accessible information and value-added tools and features. MapQuest is developing product and service enhancements aimed at its business customers, including enhancing their opportunity to offer geographically targeted advertising programs on their websites. MapQuest's planned enhancements to its consumer service include introducing greater personalization features to mapquest.com. Grow Sales Channels Aggressively. MapQuest intends to build its sales capabilities in order to broaden penetration of its products and services and generate increased revenues. MapQuest intends to build its direct field sales force to target U.S. and international markets. MapQuest also seeks to develop strategic relationships in the value-added-reseller ("VAR") channels. MapQuest also intends to build its own advertising sales force in order to augment the current third-party representative sales force it engages to sell advertisements on mapquest.com. Develop Additional Advertising Opportunities. MapQuest intends to increase and expand its advertising revenue opportunities by offering new methods of targeted advertising based on a consumer's geographic information. MapQuest will use consumer-provided information to provide advertisers with the ability to base their advertising and promotions on a consumer's geographic information. Use Existing Integrated Geographic Data as a Platform. MapQuest intends to develop new products and services by effectively employing the comprehensive integrated geographic databases it has been developing since 1967. MapQuest has utilized proprietary editing software tools to create its geographic data from multiple providers in a variety of data formats. Pursue International Opportunities. MapQuest believes that significant opportunities exist to expand MapQuest's products and services internationally. As of December 1998, approximately 10.8% of the maps that MapQuest generates from its own website represent international locations. MapQuest intends to expand its international marketing efforts to gain access to additional business customers seeking to improve the service offerings of their websites and consumers seeking online map-related information. 30 MapQuest Products and Services Internet Business
Application Name of and Product/Service Data Host Description --------------------- ----------------- ------------------------------------- MapQuest Connect MapQuest . Enables businesses to display user- requested maps based on any combination of city, state, street address and ZIP code in the United States. MapQuest InterConnect MapQuest . Enhances MapQuest Connect. . Enables consumers who visit a business' website to find the closest location to a user's point of origin. MapQuest Locator MapQuest . Enhances MapQuest InterConnect. . Enables more advanced location searching by integrating MapQuest with specific geographic search parameters contained in its business customer's database, such as "find closest gas station with a car wash." MapQuest TripConnect MapQuest . Enables businesses to provide consumers with door-to-door driving instructions, including a route- highlighted map, trip mileage and estimated driving time. MapQuest Enterprise MapQuest . Provides mapping and routing Service capability designed primarily for high volume websites. . Enables business customers to integrate generated map pages into their websites. MapQuest Enterprise Business Customer . Provides mapping and routing Server capability designed primarily for high volume websites. . Enables business customers to integrate generated map pages into websites. MapQuest Server for Business Customer . Provides mapping and routing Windows NT capability designed primarily for low volume websites. . Enables business customers to customize their own mapping solutions.
Internet Consumer The mapquest.com website offers several menu options for consumers: . Maps--enables map generation either based on detailed supplied information or a more general location request; . Driving Directions--provides the most direct route from a point of origin to a destination using a variety of options and formats, including door-to-door, city-to-city, overview map with text, text only or turn-by-turn; . Travel Guide--provides access to lodging, dining, city and weather information for most consumer-requested destinations, all of which can be tailored by the consumer to fit his or her particular information needs; . Buy A Map--provides access to the MapStore to buy U.S. and international maps, road atlases, travel guides and other map and travel-related products; and . Membership--by becoming a member, the consumer is able to save generated maps, place his or her personalized icons on generated maps that can be stored for future use, receive advance notice of new MapQuest features and enhancements and become eligible for promotional offers. 31 Traditional and Digital Mapping Products and Services MapQuest publishes or provides the relevant geographic data for printed road maps, atlases, travel guides, hotel and telephone directories, maps used in textbooks and reference books, and CD-ROMs. In addition, MapQuest's products and services include software applications incorporating customized mapping solutions for publishers and producers of CD-ROMs. MapQuest also provides extensive cartography, geographic database development, comprehensive map data maintenance, advanced mapping technology and consultation services to a wide variety of customers on a fee for service basis. MapQuest's traditional and digital mapping customers include National Geographic, Galileo International, Ryder, Exxon, Best Western and the Alamo and National car rental units of Republic Industries. MapQuest's product development strategy is to enhance the technology and features of its Internet, client/server network applications and traditional and digital mapping applications and to further expand its core geographical database assets. MapQuest has numerous development projects in process. MapQuest expects to continue to devote substantial resources to its product development activities. Sales and Marketing MapQuest sells its Internet business products and services in the United States through a sales organization of 17 employees as of January 31, 1999. This sales organization consists of 12 direct field salespeople based throughout the United States and five telemarketers located at MapQuest's Denver office. In addition, MapQuest sells its Internet products and services through indirect sales channels, including value-added resellers such as Moore Data, SABRE BTS and Three-X Communications. Sales of advertisements on mapquest.com have been generated by third-party advertising sales representatives and to a lesser extent by MapQuest's internal advertising sales force, which consisted of two persons as of January 31, 1999. MapQuest sells its traditional and digital mapping products through a direct sales force consisting of 11 field salespersons and telemarketers. MapQuest markets its products and services online by placing advertisements on third-party websites. In addition, MapQuest advertises through traditional offline media and utilizes public relations campaigns, trade shows and ongoing customer communications programs. 32 Customers As of January 31, 1999, MapQuest had licensed its products and services to over 380 business customers. No one customer accounts for over 10% of MapQuest's overall revenues. The following is a representative list of customers as of December 31, 1998: Telecommunications/Directories Content Providers Ameritech Excite APIL Partnership (Don Tech) Infoseek GTE Lycos Pacific Bell Ticketmaster-Citysearch Southwestern Bell Yahoo! US West Travel/Entertainment Retail/Services American Automobile Association Blockbuster American Express Border's Group Avis Cybermeals Bass Hotel and Resorts Home Depot Best Western Kinko's Budget Rent-A-Car Sears Galileo International Hertz Publishers/Advertising Agencies Republic Industries Ryder Transportation Services Classical Atlas Sabre Group (Travelocity) DDB Needham Sierra On-Line Harte Hanks McGraw-Hill Media Modem Media . Poppe Tyson R.R. Donnelley Denver Post Los Angeles Times Real Estate National Geographic Cendant Other Moore Data Citgo Petroleum Exxon Technology and Infrastructure Geographic Data MapQuest has licensed a significant portion of its primary geographic data from a limited number of sources through non-exclusive, short-term contractual arrangements. MapQuest currently relies on United States street level data drawn from the U.S. government and through agreements with NavTech and Geographical Data Technologies ("GDT"). Data covering Canada is supplied by Desktop Mapping Technology, Inc. MapQuest obtains Western European street and major road data from TeleAtlas, NavTech and AND Mapping NV. Major road data for the rest of the world is obtained from AND Mapping NV. If MapQuest lost access to these sources of third-party data or should the terms of these contractual arrangements materially change, MapQuest would need to substitute alternative sources of data or attempt to develop substitute sources of data internally, and MapQuest's business, financial condition and results of operations could be materially and adversely affected. MapQuest's own proprietary data assets also support its online and traditional and digital mapping products and services. MapQuest has spent approximately six years developing a United States major road database. MapQuest also maintains a graphical image database that contains over 190,000 archived files to serve as an internal reference library. In addition, MapQuest has developed a suite of international city map data that includes over 300 metropolitan maps and over 500 downtown maps of most major international tourist and business destinations. 33 Software and Editing Tools MapQuest's proprietary software development toolkit, GeoLocate, employs scalable object-oriented technology and comprises the core tools used to perform high-speed mapping while maintaining high-quality cartographic display. Designed with an open architecture, GeoLocate offers platform flexibility in converting a variety of data formats. GeoLocate has been used in the development of MapQuest's Internet technology, resulting in the creation of a scalable platform that is designed to serve millions of maps and driving directions on a daily basis. An easy-to-use consumer interface overlays MapQuest's variety of integrated data formats and personalization tools, enabling consumers to save and display customized maps and driving directions. MapQuest has also developed numerous software tools and has customized existing commercial applications to create and maintain its digital map databases. System Architecture Maps and driving directions delivered by MapQuest are generated utilizing a UNIX operating system, Apache web server software and MapQuest's proprietary mapping applications. User activity is distributed and load-balanced across multiple servers via our proprietary software and third-party equipment, which maintain replicated, local storage of underlying software and data, resulting in minimal interdependencies among servers. Each server has its own local storage, and all data and software are replicated across all servers. The system's flexible architecture is designed to be scalable to meet anticipated future demand. In addition to built-in redundancies, MapQuest operates automated internal monitoring tools seven days a week/24 hours a day and independent third parties continuously monitor MapQuest's website from at least 10 different cities on at least eight different national Internet backbone providers. MapQuest's network, hosting facilities, internal architecture and monitoring are deployed to provide high availability, efficiency and redundancy. MapQuest's Internet map and driving direction applications are located in Denver, Colorado in a Qwest Communications Cyber Center hosting facility tied to Qwest's nationwide, dedicated high speed OC-48 IP network. mapquest.com is connected to Qwest's backbone via Cisco routers and multiplexers. Qwest does not guarantee that our Internet access will be uninterrupted, secure, or error free and MapQuest's operations are dependent on Qwest's ability to protect its and MapQuest's systems against damage from fire, power loss, water damage, telecommunications failure, vandalism, and other malicious acts. Any disruption in the Internet access provided by Qwest could have a material adverse effect on MapQuest's business, financial condition and results of operations. Competition The markets for MapQuest's products and services are highly competitive. MapQuest competes for customers with companies offering online map-enabling technology and publishers and distributors of traditional print media that use or license their content for use on the Internet, commercial publishing companies, corporate materials and information market companies, and governmental authorities. MapQuest expects competition to continue to increase because these markets, particularly the markets for Internet-related products and services, pose no substantial barriers to entry. Competition may also increase as a result of industry consolidation. In addition, MapQuest's licensees may develop products and services that are equal or superior to MapQuest's or that achieve greater market acceptance than those of MapQuest. Similarly there can be no assurance that MapQuest's data suppliers will not develop products and services competitive with those of MapQuest or will continue licensing data to MapQuest. Increased competition could result in reduced markets, loss of market share or less traffic to MapQuest's website, any of which could have a material adverse effect on MapQuest's business, financial condition and results of operations. MapQuest believes that its ability to compete depends upon many factors, many of which are beyond its control. These factors include MapQuest's ability to provide depth and accuracy of destination information, to 34 increase its sales force and to implement its sales and marketing initiatives, the introduction and acceptance of new and enhanced products and services developed either by MapQuest or its competitors and the ease of use of products and services developed either by MapQuest or its competitors. Government Regulation There is an increasing number of laws and regulations pertaining to the Internet including laws or regulations relating to user privacy, liability for information retrieved from or transmitted over the Internet, online content regulation, user privacy, taxation and domain name registration. Moreover, the applicability to the Internet of existing laws governing issues such as intellectual property ownership and infringement, copyright, patent, trademark, trade secret, obscenity, libel, employment and personal privacy is uncertain and developing. Privacy Concerns. Government agencies are considering adopting regulations regarding the collection and use of personal identifying information obtained from individuals when accessing websites. While MapQuest has implemented and intends to implement additional programs, designed to enhance the protection of the privacy of its users, these programs may not conform with any regulations adopted by these agencies. In addition, these regulatory and enforcement efforts may adversely affect the ability to collect demographic and personal information from users, which could have an adverse effect on MapQuest's ability to provide advertisers with geocentric information. The European Union (the "EU") has adopted a directive that imposes restrictions on the collection and use of personal data. The directive could impose restrictions that are more stringent than current Internet privacy standards in the United States. The directive may adversely affect the activities of entities such as MapQuest that plan to engage in data collection from users in EU member countries. Internet Taxation. A number of legislative proposals would impose additional taxes on the sale of goods and services over the Internet which may substantially impair the growth of commerce on the Internet and, as a result, adversely affect MapQuest's opportunity to derive financial benefit from these activities. Domain Names. Domain names are the user's Internet "addresses." The current system for registering, allocating and managing domain names has been the subject of litigation and of proposed regulatory reform. Although MapQuest has applied to register "mapquest.com" as a trademark, third parties may bring claims for infringement against MapQuest for the use of this trademark. There can be no assurance that MapQuest's domain name will not lose its value, or that MapQuest will not have to obtain entirely new domain names in addition to or in lieu of its current domain names if reform efforts result in a restructuring in the current system. Jurisdictions. Due to the global nature of the Internet, it is possible that, although transmissions by MapQuest over the Internet originate primarily in Denver, the governments of other states and foreign countries might attempt to regulate MapQuest's business activities. In addition, as MapQuest's service is available over the Internet in multiple states and foreign countries, these jurisdictions may require MapQuest to qualify to do business as a foreign corporation in each of these states or foreign countries, which could subject MapQuest to taxes and other regulations. Liability for Information Retrieved from mapquest.com and from the Internet Content may be accessed on mapquest.com or on the websites of MapQuest's business customers, and this content may be downloaded by users and subsequently transmitted to others over the Internet which could result in claims against MapQuest based on a variety of theories, including negligence, copyright, patent or trademark infringement. It is also possible that if any destination information provided on or through mapquest.com contains errors, third parties could make claims against MapQuest for losses incurred in reliance on such information. Any imposition of liability that is not covered by insurance or is in excess of insurance coverage could have a material adverse effect on MapQuest's business, financial condition and results of operations. 35 Intellectual Property We rely upon a combination of patent, trademark, copyright law, trade secret protection and contractual restrictions with employees, customers, partners and others to protect our proprietary rights. We do not currently hold any patents, but we have filed one patent application with the United States Patent and Trademark Office, and intend to file a second patent application in the near future. There can be no assurance that our patent applications will be approved and, if approved, that they will not be successfully challenged by others or invalidated through administrative process or litigation. Patent, trademark, copyright and trade secret protection may not be available in every country in which our products and services are distributed or made available. If we fail to adequately protect our proprietary rights, our business, financial condition and results of operations could be materially and adversely affected. Legal standards relating to the validity, enforceability and scope of protection of certain proprietary rights in Internet-related industries are uncertain and still evolving, and no assurance can be given as to the future viability or value of any of our proprietary rights or those of other companies within the industry. Despite our efforts to protect our proprietary rights, third parties may infringe or misappropriate these rights, which could result in a material adverse effect on our business, financial condition and results of operation. Currently we are a defendant in two pending litigations involving allegations of infringements of third-party patents by our technologies. Both litigations are in the early stages. While we intend to defend these actions vigorously, our efforts may not be successful. In addition, in the ordinary course of business we have been, and we expect to continue to be, subject to claims, including claims of alleged infringement of the patents, trademarks and other proprietary rights of third parties. We expect that infringement claims in our markets will increase in number as more participants enter the market. These claims and any resultant litigation could subject us to significant liability for damages and could result in the invalidation of our proprietary rights. In addition, even if we prevail, such litigation could be time- consuming and expensive to defend, and could result in the diversion of our time and attention, any of which could materially adversely affect our business, financial condition and results of operations. Any claims from third parties may also result in limitation on our ability to use the trademarks, patents, copyrights and other intellectual property subject to such claims unless we enter into agreements with the third parties responsible for such claims, which may be unavailable on commercially reasonable terms. Employees As of January 31, 1999, MapQuest employed 222 persons, including 63 cartographers, 16 GIS/database analysts, 59 software/systems/Internet engineers, 46 persons in sales, marketing and customer-support, and 38 persons in general and administrative areas. None of MapQuest's employees is represented by a labor union and MapQuest believes it has good employee relations. MapQuest believes that its future success will depend in part on its continued ability to attract, integrate, retain and motivate highly qualified sales, technical, and managerial personnel, and upon the continued service of MapQuest's senior management and key sales and technical personnel. MapQuest may not successfully attract, integrate, retain and motivate a sufficient number of qualified personnel to conduct its business in the future. Please see "Risk Factors--We may not be able to successfully manage our expansion." Facilities MapQuest's headquarters are located in Mountville, Pennsylvania, where MapQuest currently leases approximately 62,000 square feet under a ten-year lease expiring in March 2007. MapQuest also leases approximately 7,200 square feet in Columbia, Maryland under a two-year lease expiring in June 2000, approximately 11,000 square feet in Denver, Colorado under a three-year lease expiring in October 1999, approximately 11,600 square feet in Mount Joy, Pennsylvania under a three-year lease expiring December 2000, and approximately 4,200 square feet in New York, New York under a seven-year lease expiring January 2006. MapQuest intends to expand its sales and marketing staff and therefore may require additional facilities in the foreseeable future. 36 Legal Proceedings On December 14, 1998, Mark Tornetta filed a lawsuit against Moore U.S.A., Inc. in the United States District Court for the Eastern District of Pennsylvania. MapQuest is defending this matter pursuant to an indemnity provision in its contract with Moore U.S.A., Inc. Mr. Tornetta's patent describes a specific method for searching real estate properties, which Mr. Tornetta alleges is infringed by Moore U.S.A., Inc.'s online real estate service. MapQuest believes that the claims of the patent are not infringed by MapQuest, and/or the patent is invalid. While the litigation is in the early stage, and its outcome cannot be predicted, MapQuest believes that this litigation is without merit, and intends to defend this action vigorously. On January 26, 1999, Civix-DDI, LLC filed a lawsuit in the United States District Court for the District of Colorado against twenty different defendants, including MapQuest. Seven of these defendants are licensees of MapQuest technology and may have rights to indemnification under their respective agreements or at law. The complaint alleges infringement by MapQuest of two patents, by manufacture, use, sale, and offers to sell MapQuest electronic yellow page services, systems and products. MapQuest believes that the claims of the patents are not infringed by MapQuest, and/or the patents are invalid. While the litigation is in the early stage, and its outcome cannot be predicted, MapQuest believes that this litigation is without merit, and intends to defend this action vigorously. MapQuest is not party to any other material legal proceedings. 37 MANAGEMENT Executive Officers and Directors and Key Employees The following table sets forth certain information with respect to the executive officers, key employees and directors of MapQuest as of the date of this prospectus.
Name Age Position(s) ---- --- ----------- *Michael Mulligan................ 48 Chief Executive Officer and Chairman *James Thomas.................... 48 Chief Operating Officer, Chief Financial Officer and Treasurer *William Muenster................ 46 Senior Vice President of Development and Production James Hilliard................... 47 Vice President of Digital Mapping Services James Killick.................... 36 Vice President of Product Management Michael Nappi.................... 44 Vice President of Business Solutions David Ingerman................... 36 Vice President of Marketing Michael Crosson.................. 46 Vice President of Advertising Sales Robert Binford................... 44 Corporate Controller, Assistant Treasurer Robert McCormack (1)............. 59 Director John Moragne (2)................. 42 Director Daniel Nova (2).................. 37 Director Carlo von Schroeter (1).......... 35 Director C. Richard Allen................. 44 Director
- -------- * Denotes executive officer. (1) Member of Audit Committee. (2) Member of Compensation Committee. Michael Mulligan has served as Chief Executive Officer and Chairman of MapQuest since August 1998. From May 1995 to June 1998, Mr. Mulligan was Senior Vice President and General Manager of Corporate Services Interactive at American Express Travel Related Services, where he was responsible for developing and implementing American Express' interactive travel strategy. Mr. Mulligan was an independent consultant to various companies from October 1994 to April 1995. From September 1993 to October 1994, Mr. Mulligan served as Chief Operating Officer of Official Airline Guide, an airline information publishing company. Mr. Mulligan holds a B.A. from Wheeling College and an M.B.A. from Harvard Business School. James Thomas has served as Chief Financial Officer of MapQuest since July 1995 and as Chief Operating Officer of MapQuest since June 1997. From September 1994 to June 1995, Mr. Thomas was an independent consultant. From July 1993 to August 1994, Mr. Thomas was President of the publishing division of Sierra On- Line, Inc., a multimedia entertainment publisher and developer. Mr. Thomas holds a B.S. from the Florida Institute of Technology and an M.B.A. from the University of Virginia. William Muenster has served as Senior Vice President of Development and Production of MapQuest since September 1997. From February 1995 to August 1997, Mr. Muenster served as Unit President of MapQuest's Mapping Products and Services Group. From November 1993 to February 1995, Mr. Muenster served as MapQuest's Vice President of Operations. Mr. Muenster holds a B.A. from the University of Virginia and an M.I.M. from the American Graduate School. James Hilliard has served as Vice President of Digital Mapping Services of MapQuest since October 1998. From June 1996 to October 1998, Mr. Hilliard served as MapQuest's Vice President of Sales and Marketing for Mapping Products and Services. From July 1993 to June 1996, Mr. Hilliard served as MapQuest's Director of Publisher Services. Mr. Hilliard holds a B.B.A. and an M.S. from the University of Wisconsin. 38 James Killick has served as Vice President of Product Management of MapQuest since January 1998. From January 1997 to January 1998, Mr. Killick was MapQuest's Director of Product Management. From January 1996 to January 1997, Mr. Killick served as MapQuest's Director of Data Products. From January 1995 to January 1996, Mr. Killick was Director of Product Marketing at Etak, Inc., a mapping database company. From January 1994 to January 1995, Mr. Killick served as Director of Map Data Products at Etak, Inc. Mr. Killick holds a B.Sc. from the University of York, England. Michael Nappi has served as Vice President of Business Solutions of MapQuest since October 1997. From September 1995 to October 1997, Mr. Nappi served as MapQuest's Director of Business Development. Mr. Nappi held various sales positions with MapQuest from May 1992 to September 1995. Mr. Nappi holds a B.A. and a B.S. from Kent State University. David Ingerman has served as Vice President of Marketing of MapQuest since January 1999. From June 1998 to December 1998, Mr. Ingerman was President of Internet Marketing Associates Consulting, a consulting firm focusing on applying direct marketing disciplines to the Internet. From August 1984 to May 1998, Mr. Ingerman held various marketing positions at American Express. Mr. Ingerman holds a B.A. from the University of Pennsylvania and an M.B.A. from Columbia Business School. Michael Crosson has served as Vice President of Advertising Sales of MapQuest since January 1999. From March 1998 to January 1999, Mr. Crosson served as the Managing Director of Eastern Sales for NetRatings, a web audience measurement company. From January 1993 to March 1998, Mr. Crosson operated his own consulting business, developing strategic advertising and partnerships for websites. From April 1992 to August 1996, Mr. Crosson served as Director of Online Publishing at Scholastic, Inc., a publishing company. Mr. Crosson holds a B.A. from the University of Arizona. Robert Binford has served as Corporate Controller of MapQuest since January 1995. From February 1991 to January 1995, Mr. Binford served as a Financial Manager of MapQuest. Mr. Binford holds a B.S. from the University of Kentucky. Robert McCormack has served as a director of MapQuest since May 1998 and previously served as a director of MapQuest from November 1994 to July 1997. Since 1993, Mr. McCormack has been a managing director of Trident Capital, Inc., the general partner of Trident Capital, L.P., a private equity investment firm. Mr. McCormack serves on the boards of directors of Illinois Tool Works, Inc. and DeVry, Inc. Mr. McCormack holds a B.A. from the University of North Carolina and an M.B.A. from the University of Chicago. Mr. McCormack was elected to the board of directors pursuant to a voting agreement between MapQuest and some of MapQuest's stockholders which will be terminated upon the closing of this offering. John Moragne has served as a director of MapQuest since November 1994 and was Chairman of the board of directors of MapQuest from November 1994 until July 1997. Since 1993, Mr. Moragne has been a managing director of Trident Capital, Inc., the general partner of Trident Capital, L.P., a private equity investment firm. Mr. Moragne serves on the boards of directors of Daou Systems, Inc. Mr. Moragne holds a B.A. from Dartmouth College, an M.S. from Stanford University and an M.B.A. from Stanford Business School. Mr. Moragne was elected to the board of directors pursuant to a voting agreement between MapQuest and some of MapQuest's stockholders which will be terminated upon the closing of this offering. Daniel Nova has served as a director of MapQuest since July 1997. Since August 1996, Mr. Nova has served as a general partner of Highland Capital Partners, a venture capital firm. Previously, he was a general partner of CMG@Ventures from January 1995 to August 1996 and a Senior Associate at Summit Partners from June 1991 to January 1995. Mr. Nova is a director of eToys, an online retailer of toys, Lycos, Inc., an online portal and several private companies. Mr. Nova received a Bachelor of Science in Computer Science and Marketing with honors from Boston College and a Masters in Business Administration from Harvard Business School. Mr. Nova was elected to the board of directors pursuant to a voting agreement between MapQuest and some of MapQuest's stockholders which will be terminated upon the closing of this offering. 39 Carlo von Schroeter has served as a director of MapQuest since July 1997. Mr. von Schroeter is a General Partner of Weston Presidio Capital, a private equity partnership with over $900 million under management. Prior to joining Weston Presidio Capital at its inception in September 1992, Mr. von Schroeter was a Vice President with Security Pacific Capital. Mr. von Schroeter serves on the boards of directors of NOVA Pb, U.S. Netting, Star International Holdings, and The Lion Brewery. Mr. von Schroeter holds a B.S. from Queen's University, Canada and an M.B.A. from Harvard Business School. Mr. von Schroeter was elected to the board of directors pursuant to a voting agreement between MapQuest and some of MapQuest's stockholders which will be terminated upon the closing of this offering. C. Richard Allen has served as a director of MapQuest since May 1998. Since December 1997, Mr. Allen has served as the President and Chief Executive Officer of National Geographic Holdings, Inc. Mr. Allen is also the Chief Executive Officer of National Geographic Ventures, a position he has held since October 1997. From December 1995 to October 1997, Mr. Allen was a Senior Vice President of Discovery Communications, Inc., and from February 1993 to December 1995, Mr. Allen was Deputy Assistant to the President of the United States. Mr. Allen serves on the boards of directors of National Geographic Ventures, National Geographic Television, National Geographic Holdings, Inc., National Geographic Channel and Destination Cinema, Inc. Mr. Allen holds a B.A. from Dartmouth College and a J.D. from the University of Chicago. Mr. Allen is the nominee of the National Geographic Society to the board of directors pursuant to an agreement between MapQuest and the National Geographic Society which will be modified upon the closing of this offering so as to terminate the National Geographic Society's right to nominate a director to the board of directors. Please see "Certain Transactions--National Geographic Alliance" for a description of this agreement. Each officer serves at the discretion of MapQuest's board of directors. Within 90 days following this offering, MapQuest expects to nominate and elect an additional independent director. Director Terms and Compensation The members of the board of directors of MapQuest are divided into three classes, each of whose members will serve for a staggered three-year term. Upon the expiration of the term of a class of directors, directors in that class will be elected for three-year terms at the annual meeting of stockholders in the year in which their term expires. Independent, non-institutional investor directors are paid an annual retainer and will be granted stock options exercisable for shares of common stock. Directors who are also employees of MapQuest or who are affiliated with institutional investors do not receive any additional compensation for serving on the board of directors. Compensation Committee Interlocks and Insider Participation Pursuant to a voting agreement which will be terminated upon the closing of this offering, MapQuest's compensation committee is comprised of one director designated by Highland Capital Partners and Weston Presidio Capital, one director designated by Trident Capital Partners Fund - I, L.P. and Trident Capital Partners Fund - I, C.V. and one director designated by all of the directors other than those nominated by members of management. MapQuest's compensation committee currently has two members. In the past, compensation of executive officers of MapQuest has been determined by directors of MapQuest who were not officers of MapQuest. No interlocking relationship exists between MapQuest's board of directors and the board of directors or compensation committee of any other company, nor has any interlocking relationship existed in the past. 40 Limitation of Liability and Indemnification Matters MapQuest's certificate of incorporation limits the liability of directors to the maximum extent permitted by Delaware law. The Delaware General Corporation Law provides that the personal liability of a director for monetary damages for breach of his or her fiduciary duties as a director may be eliminated, except for liability for: . any failure to act in good faith in the best interests of the corporation or its stockholders; . acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law; . unlawful payments of dividends or unlawful stock repurchases or redemptions; or . any transaction from which the director derives an improper personal benefit. MapQuest's bylaws provide that MapQuest will indemnify its directors and officers and may indemnify its employees and agents to the fullest extent permitted by Delaware law. In addition to the indemnification provided for in its certificate of incorporation and bylaws, MapQuest intends to enter into agreements to indemnify its directors and officers. Under these agreements, MapQuest will be obligated to indemnify its directors and officers for expenses, attorneys' fees, judgments, fines and settlement amounts incurred by any director or officer in any action or proceeding arising out of the director's or officer's services as a director or officer of MapQuest, any subsidiary of MapQuest or any other company or enterprise to which the person provides services at the request of MapQuest. MapQuest believes that these provisions and agreements are necessary to attract and retain qualified individuals to serve as directors and officers. 41 Executive Compensation and Employment Agreements The following table sets forth information concerning the compensation received for services rendered to MapQuest by its current Chief Executive Officer and each of the other four most highly-compensated executive officers of MapQuest for the year ended December 31, 1998, whose total compensation in 1998 equaled or exceeded $100,000: SUMMARY COMPENSATION TABLE
Long-Term Annual Compensation Compensation Awards --------------- Securities Salary Bonus Underlying All Other Name and Principal Position ($) ($) Options Compensation --------------------------- ------- ------- ------------ ------------ Michael Mulligan, Chief Executive Officer (1).... 94,769 100,000 1,944,000 -- James Thomas, Chief Operating Officer and Chief Financial Officer........................ 150,000 -- -- -- William Muenster, Senior Vice President of Development and Production..................... 140,004 -- -- -- James Hilliard, Vice President of Digital Mapping Services....... 115,008 28,177(2) 94,500 -- Michael Nappi, Vice President of Business Solutions............. 107,508 69,814(3) 243,000 -- Barry Glick, Former Chief Executive Officer (4).......... 131,256 -- -- 56,041(5)
- -------- (1) Mr. Mulligan was appointed Chief Executive Officer and Chairman of MapQuest on August 10, 1998. He received salary payments for the period August 10, 1998 through December 31, 1998. (2) Consists of a $23,177 bonus accrued in 1997 and paid in 1998 and a $5,000 sales bonus earned and paid in 1998. (3) Reflects sales commissions paid to Mr. Nappi. (4) Mr. Glick served as MapQuest's Chief Executive Officer prior to Mr. Mulligan's appointment and received salary payments for the period January 1, 1998 through September 30, 1998. (5) Represents payments made in connection with Mr. Glick's voluntary termination of employment. See "Certain Transactions--Other Transactions." David Ingerman was hired by MapQuest on January 15, 1999 to serve as Vice President of Marketing. His base salary is $130,008 and he may earn a bonus of up to 50% of his base salary upon the attainment of performance goals set by the board of directors. Mr. Ingerman also received options to purchase 270,000 shares of common stock at an exercise price of the per share price of this offering. These options vest over four years and expire on January 15, 2009. Michael Crosson was hired by MapQuest on January 20, 1999 to serve as Vice President of Advertising. His base salary is $125,004 and he received a bonus of $10,000 upon commencing his employment with MapQuest. Mr. Crosson is also entitled to sales commissions equal to 5% of any recognized personal sales, 1.5% of any sales made for MapQuest through third-party advertising sales representatives and 1.5% of any recognized sales made by Mr. Crosson's sales staff. Mr. Crosson also received options to purchase 135,000 shares of common stock at an exercise price of the per share price of this offering. These options vest over four years and expire on January 20, 2009. 42 OPTION GRANTS IN LAST FISCAL YEAR The following table sets forth information as to options granted to the named executive officers during the year ended December 31, 1998. MapQuest has not granted any stock appreciation rights.
Potential Realizable Value at Assumed Annual Rates of Stock Price Appreciation for Individual Grants Option Term (1) ------------------------------------------- ----------------------- Percent of Total Number of Options Securities Granted to Exercise Underlying Employees Price Options in Fiscal Per Expiration Name Granted Year (2) Share Date 5% 10% ---- ---------- ---------- -------- ---------- --------- ---------- Michael Mulligan (3).... 1,944,000 67.9% $0.37 8/10/08 $452,351 $1,146,347 James Thomas............ -- -- -- -- -- -- William Muenster........ -- -- -- -- -- -- James Hilliard.......... 54,000 1.9 0.37 2/1/08 12,565 31,843 40,500 1.4 11.00(4) 12/30/08 280,173(4) 710,012(4) Michael Nappi........... 81,000 2.8 0.37 2/1/08 18,848 47,764 162,000 5.7 11.00(4) 12/30/08 1,120,690 2,840,049 Barry Glick............. -- -- -- -- -- --
- -------- (1) Potential realizable values are net of exercise price, but before the payment of taxes associated with exercise. Amounts represent hypothetical gains that could be achieved for the respective options if exercised at the end of the option term. The 5% and 10% assumed annual rates of compounded stock price appreciation are mandated by rules of the Securities and Exchange Commission and do not represent MapQuest's estimate or projection of MapQuest's future common stock prices. These amounts represent certain assumed rates of appreciation in the value of the common stock from the fair market value on the date of grant. Actual gains, if any, on stock option exercises are dependent on the future performance of the common stock and overall stock market conditions. The amounts reflected in the table may not necessarily be achieved. (2) Based on options to purchase an aggregate of 2,863,620 shares of common stock granted to MapQuest employees during the year ended December 31, 1998. (3) These options vest over four years as follows: 16.67% on August 10, 1998, 16.67% on the date of this offering, and 16.67% on each of August 10, 1999, August 10, 2000, August 10, 2001 and August 10, 2002. (4) The exercise price of these options will be the initial public offering price in this offering. For purposes of calculating the potential realizable value, the exercise price is assumed to be $11.00 per share. 43 AGGREGATED STOCK OPTION EXERCISES IN FISCAL 1998 AND FISCAL YEAR-END OPTION VALUES The following table sets forth information with respect to unexercised options held by the named executive officers as of December 31, 1998. No options were exercised by the named executive officers during 1998.
Number of Securities Underlying Value of Unexercised Unexercised Options In-the-Money Options at December 31, 1998 at December 31, 1998(1) ------------------------- ------------------------- Name Exercisable Unexercisable Exercisable Unexercisable ---- ----------- ------------- ----------- ------------- Michael Mulligan............ 324,064 1,619,936 $3,444,680 $17,219,311 James Thomas................ 202,769 312,905 2,208,282 3,382,957 William Muenster............ 224,940 287,977 2,451,351 3,109,660 James Hilliard.............. 47,250 155,250 513,050 1,226,950 Michael Nappi............... 16,200 253,800 177,600 979,400 Barry Glick................. 508,914 -- 5,567,382 --
- -------- (1) There was no public trading market for the common stock as of December 31, 1998. Accordingly, these values have been calculated on the basis of the assumed initial public offering price of $11.00 per share, less the applicable exercise price per share, multiplied by the number of shares underlying such options. Employment Agreements William Muenster Employment Agreement. In October 1994, MapQuest entered into an employment agreement with Mr. Muenster providing for (1) an initial annual base salary of $82,500, subject to annual increases at the discretion of MapQuest's board of directors, and (2) incentive compensation of an immediately payable bonus of $10,000 and the right to participate in MapQuest's annual bonus program. Mr. Muenster is entitled to (1) an annual bonus of 15% of his base salary if MapQuest achieves its annual budget and (2) an additional bonus of up to 15% of his base salary for any other target that the board of directors establishes. If MapQuest terminates Mr. Muenster's employment without cause or if he voluntarily terminates his employment, he is entitled to receive severance benefits equal to (1) any salary and bonus earned through the date of his termination, (2) base salary for the six-month period after the date of his termination and (3) health plan benefits for one year following the date of his termination. If Mr. Muenster is terminated by MapQuest for cause, he is entitled to receive (1) his base compensation, (2) all earned and unpaid bonus compensation through the termination date of his employment and (3) health plan benefits for one year following the date of his termination. In addition, Mr. Muenster has agreed to confidentiality, non-competition and non-solicitation provisions. Michael Mulligan Employment Agreement. On August 10, 1998, MapQuest entered into an employment agreement with Mr. Mulligan providing for (1) an initial annual base salary of $240,000, subject to annual increases at the discretion of MapQuest's board of directors, and (2) incentive compensation of up to $145,000 per year, based on objectives and according to a plan to be agreed to by Mr. Mulligan and MapQuest's board of directors. If MapQuest terminates Mr. Mulligan's employment without cause, he is entitled to receive severance benefits equal to (1) any salary and bonus earned through the date of his termination, and (2) health insurance benefits for one year after the date of termination. If Mr. Mulligan is terminated by MapQuest for cause or if he resigns following the first anniversary of his employment, he is entitled to receive (1) his base salary and (2) all earned and unpaid bonus compensation through his termination date. In addition, Mr. Mulligan has agreed to confidentiality, non-competition and non-solicitation provisions. In addition, MapQuest granted Mr. Mulligan options to purchase 1,944,000 shares of common stock at an exercise price of $0.37 per share. The options granted under the employment agreement, subject to certain contingencies, vest over four years as follows: 16.67% on August 10, 1998, 16.67% on the date of this offering, 44 16.67% on each of August 10, 1999, August 10, 2000, August 10, 2001 and August 10, 2002. All of Mr. Mulligan's options will vest immediately in the event of the takeover of MapQuest by another person or corporation. Employee Benefit Plans 1995 Stock Option Plan An aggregate of 6,233,627 shares are reserved for issuance under the 1995 stock option plan. MapQuest may grant stock options under the 1995 stock option plan to its employees and officers and consultants. The board of directors selects the individuals to whom options are granted and specifies the terms of the options. Stock options granted under the 1995 stock option plan may either be incentive stock options within the meaning of Section 422 of the Internal Revenue Code of 1986 or stock options that do not qualify as incentive stock options. As of December 31, 1998, options to purchase an aggregate of 4,847,650 shares of common stock had been granted, at a weighted average exercise price of $0.26 per share and options to purchase an aggregate of 645,570 shares of common stock had been granted, at an exercise price equal to the price per share in this offering. Since December 31, 1998, MapQuest has granted options to purchase an aggregate of 522,450 shares of common stock at an exercise price equal to the price per share of this offering. Options to purchase 1,484,954 shares of common stock will vest and become exercisable on the closing of this offering. Incentive stock options granted under the 1995 stock option plan may not be exercised more than 10 years after the date of grant. If an optionee leaves MapQuest, the optionee generally may exercise only those options vested as of the date of termination of service. Unless otherwise specified in the option agreement, if an optionee desires to exercise an option, the optionee must exercise within 90 days of termination of service for any reason other than death or disability, and within one year after termination due to death or disability. The exercise price of incentive stock options granted under the stock option plan cannot be less than the fair market value of the common stock of MapQuest on the date of grant. The exercise price of nonqualified stock options cannot be less than the lesser of $0.04 per share or the fair market value of the common stock as of the date of the stock option grant. An optionee may pay the exercise price in cash or in shares of MapQuest's common stock having a total fair market value equal to the aggregate exercise price. The 1995 stock option plan provides for adjustments if a recapitalization or other change in the common stock of MapQuest which dilutes the rights of stock option plan participants. If any person, directly or indirectly, acquires securities of MapQuest representing 50% or more of the voting power of MapQuest or other specified events constituting a change of control, each outstanding option automatically vests and becomes fully exercisable. Employee Stock Purchase Plan Concurrently with this offering, MapQuest will establish an employee stock purchase plan under which a total of 1,755,000 shares of common stock will be made available for sale. The purchase plan, which is intended to qualify as an employee stock purchase plan within the meaning of Section 423 of the Internal Revenue Code of 1986 will be administered by the board of directors or by a committee appointed by the Board. All employees of MapQuest or any present or future subsidiary of MapQuest designated by the Board of Directors may participate in the purchase plan. The purchase plan will permit eligible employees to purchase common stock through payroll deductions, which may not exceed 10% of an employee's compensation, subject to certain limitations. The purchase plan will be implemented in a series of consecutive, overlapping offering periods, each approximately six months in duration. The purchase price of each share of common stock under the purchase plan will be equal to the lesser of 85% of the closing price per share of the common stock on the NASDAQ National Market System on the start date of that offering period or on the date of termination of the offering period. Employees may modify or end their participation in the purchase plan at any time prior to the termination date of an offering period. An employee's participation ends on the employee's termination of employment with MapQuest. The purchase plan will terminate in 2009 unless sooner terminated by MapQuest's Board of Directors. 45 1999 Stock Plan At the closing of this offering, the board of directors of MapQuest will adopt a 1999 stock plan. MapQuest has reserved 3,645,000 shares of common stock for the 1999 stock plan. Pursuant to the omnibus stock plan, MapQuest may grant stock options, stock appreciation rights, restricted or unrestricted share awards, phantom stock, performance awards or any combination of the foregoing to employees, officers, directors of MapQuest and its subsidiaries. However, incentive stock options may only be granted to employees of MapQuest. The plan will be administered by a committee appointed by the board of directors. The committee will select the Individuals to whom options are granted and will specify the terms of the options. . Incentive Stock Options. These options may not be exercised more than 10 years after the date of grant. The exercise price must be at least equal to the fair market value of MapQuest's common stock on the date of grant. The purchase price of the shares issued upon exercise of these options may be paid in cash or shares of common stock having a total fair market value equal to the aggregate purchase price. . Non-Qualified Stock Options. These options may not be exercised more than 10 years after the date of grant. The exercise price will be determined by the stock option plan committee. The purchase price of shares issued upon exercise of these options may be paid in cash or shares of common stock having a total fair market value equal to the aggregate purchase price. . Stock Appreciation Rights. These rights may be granted on a free-standing or tandem basis. The term of exercise will be determined by the board of directors, but in no event will be more than 10 years from the date of grant. These rights entitle the holder to receive a payment having an aggregate value equal to the product of the excess of the fair market value over the exercise price per share specified in the grant multiplied by the number of shares specified in the award. Payment by MapQuest of the amount receivable in respect of the stock appreciation right may be paid in any combination of cash and common stock. . Phantom Stock, Restricted Shares and Performance Awards. These grants and awards may be made at the discretion of the committee. The method of payment of the exercise price will be determined by the committee and may include a combination of cash and common stock having a fair market value equal to the aggregate exercise price. The 1999 stock plan will provide for adjustments if a recapitalization or other change in the common stock of MapQuest which dilutes the rights of 1999 stock plan participants. 401(k) Plan MapQuest has a tax-qualified employee savings plan which covers all of MapQuest's full-time employees who are at least 21 years of age and who have been employed with MapQuest for at least one month. Eligible employees may defer up to 15% of their pre-tax earnings, subject to the Internal Revenue Service's annual contribution limit. The MapQuest 401(k) plan permits additional discretionary matching contributions by MapQuest on behalf of all participants in the MapQuest 401(k) plan in an amount determined by MapQuest. The MapQuest 401(k) plan is intended to qualify under Section 401 of the Internal Revenue Code of 1986 so that contributions by employees or by MapQuest to the MapQuest 401(k) plan, and income earned on plan contributions, are not taxable to employees until withdrawn from the plan, and so that contributions by MapQuest, if any, will be deductible by MapQuest when made. 46 CERTAIN TRANSACTIONS Equity Transactions Equity Sale by R.R. Donnelley & Sons Company and 77 Capital Corporation On May 8, 1998, R.R. Donnelley & Sons Company and 77 Capital Corporation sold their respective equity positions in MapQuest to Highland Capital Partners III Limited Partnership, Highland Entrepreneurs' Fund III Limited Partnership, Weston Presidio Capital II, L.P., Trident Capital Partners Fund-I, L.P. and Trident Capital Partners Fund-I, C.V. R.R. Donnelley & Sons Company sold 3,000,000 shares of series A preferred stock and 1,000,000 shares of series B preferred stock. 77 Capital Corporation sold 220,798 shares of series C preferred stock. The aggregate sale price for these transactions was $7 million. Series C Preferred Stock. In July 1997, MapQuest sold an aggregate of 3,431,498 shares of series C preferred stock for an aggregate purchase price of $12,044,558, or $3.51 per share, to various investors, including Highland Capital Partners III Limited Partnership, Highland Entrepreneurs' Fund III Limited Partnership, Weston Presidio Capital II, L.P., Trident Capital Partners Fund-I, L.P., Trident Capital Partners Fund-I, C.V., The Roman Arch Fund, L.P., the Roman Arch Fund II, L.P., and Stet & Query, L.P. Rights Agreement. Series A preferred stock investors and series C preferred stock investors entered into a rights agreement concurrent with the sale of the series C preferred stock. Pursuant to the rights agreement, holders of not less than 35% of either the outstanding series A preferred stock or outstanding series C preferred stock or any common stock issued or issuable upon conversion of series A preferred stock or series C preferred stock may request that MapQuest cause their shares of common stock to be registered under the Securities Act. See "Description of Capital Stock--Registration Rights of Certain Holders." In November 1997, James Thomas, MapQuest's Chief Financial Officer, and William Muenster, its Senior Vice President of Development and Production, each purchased 31,928 shares of series C preferred stock from MapQuest for $112,067.28, or $3.51 per share, paid in each case by delivery to MapQuest of a non-recourse promissory note. Each promissory note bears interest at 7.0% accruing as and from November 1, 1999. Payments under the promissory notes are due beginning November 1, 2000 in an amount that is the lesser of one-fifth of the principal balance together with any accrued interest or 50% of any bonus to which such person is entitled while an employee of MapQuest. Each of these promissory notes is payable in full on November 1, 2004. The promissory notes are secured by the shares purchased, with shares released to the extent each promissory note is paid. At December 31, 1998, $112,067.28 remained outstanding on Mr. Thomas's promissory note and $112,067.28 remained outstanding on Mr. Muenster's promissory note. Each of Mr. Thomas and Mr. Muenster have the right to cause MapQuest to purchase their series C preferred stock at the fair market value upon the earlier of each person's death or disability or November 1, 2007. Other Transactions Related Party Transactions. During 1998, MapQuest paid $16,597 to R.R. Donnelley & Sons Company, a then stockholder. MapQuest recorded sales to R.R. Donnelley & Sons Company of $513,626 during 1998. Also, MapQuest recorded sales to an affiliate, the National Geographic Society, of $2,022,000 during 1998. Evans 1996 Stock Purchase. In March 1996, pursuant to the terms of an employment agreement dated October 31, 1994, MapQuest sold an aggregate of 35,000 shares of series A preferred stock at an aggregate purchase price of $35,000, or $1.00 per share, to Perry Evans, MapQuest's then Vice President of Sales and Marketing. The purchase price was paid as $3,500 in cash and $31,500 as a promissory note due October 31, 2000. The promissory note bears interest at a rate of 7.5% per annum. The promissory note is secured by the shares purchased with shares released to the extent the promissory note is paid. At December 31, 1998, $31,500 in principal amount remained outstanding under this promissory note. 47 Evans Separation Agreement. In September 1997, upon the voluntary termination of Mr. Evans' employment as Vice President of Sales and Marketing, MapQuest agreed to engage Mr. Evans as an independent consultant and paid him a separation fee of approximately $93,656, forgave him $27,000 in respect of unearned bonus payments he had received and agreed to provide him with his then current medical and certain other benefits until November 7, 1997. Glick Separation Agreement. In June 1998, upon the voluntary termination of Mr. Glick's employment as Chief Executive Officer and pursuant to a transition agreement and general release, MapQuest agreed to pay Mr. Glick a total of approximately $43,752, representing separation and salary payments for the period between July 1, 1998 and September 30, 1998, inclusive. National Geographic Alliance MapQuest, the National Geographic Society, and a subsidiary of the National Geographic Society, National Geographic Holdings, Inc. ("National Geographic"), entered into a Cartographic Product Development, Publishing, Marketing and Distribution Agreement in April 1997 (the "National Geographic Agreement") which established a five-year alliance, commencing May 1997, to pursue commercial opportunities involving mapping products and services using trademarks and copyrighted materials of National Geographic. MapQuest is authorized to be the primary, and in limited cases, exclusive, commercial publisher of National Geographic mapping products and services, including products such as maps, globes, road atlases, reference atlases, historical atlases, and map guide products which are distributed other than by National Geographic to its members or in promotion to prospective members. Pursuant to its rights under the National Geographic Agreement, National Geographic has designated C. Richard Allen to serve as its nominee director on MapQuest's Board of Directors. As part of this arrangement, National Geographic Holdings, Inc. received warrants to purchase 954,147 shares of common stock with an exercise price of $1.04 per share. The warrants were valued at $0 on the date of grant using the "Black Scholes" option pricing model. Under the National Geographic Agreement, MapQuest has guaranteed minimum annual royalty payments to National Geographic for each year of the initial five-year term of the agreement. MapQuest must pay additional royalties on the net revenues derived by MapQuest from the sale of National Geographic related products and services. The National Geographic Agreement's initial five-year term automatically extends provided that: .MapQuest has not elected to terminate; .MapQuest has not breached the National Geographic Agreement; . National Geographic has received a minimum aggregate royalty payment of $2.0 million from MapQuest in each of the last three years of the initial term; and .minimum royalties have been negotiated in accordance with the National Geographic Agreement. Warrants As of December 31, 1998, warrants to purchase 2,314,611 shares of common stock were outstanding at a weighted-average exercise price of $0.69 per share. Generally, each warrant contains provisions for the adjustment of the exercise price and the aggregate number of shares issuable upon the exercise of the warrant in the event of stock dividends, stock splits, reorganizations, reclassifications, consolidations and dilutive issuances of securities at prices below the then existing warrant exercise price. Set forth below is a summary of the outstanding warrants. Prudential Warrant. In connection with the sale of the series C preferred stock, MapQuest issued to Prudential Securities Incorporated a warrant for an aggregate purchase price of $1,000 to purchase 406,709 shares of MapQuest's common stock at an exercise price of $1.30 per share. The warrant is exercisable prior to July 2002. National Geographic Warrant. In April 1997, in connection with the National Geographic Agreement, MapQuest issued National Geographic warrants (the "National Geographic Warrants") to purchase 954,147 shares of common stock at an exercise price of $1.04 per share. The warrants were valued at $0 on the date of grant using the "Black Scholes" option pricing model. The National Geographic Warrant expires on April 22, 2002, or earlier in the event of a termination of the National Geographic Agreement without cause by 48 National Geographic or termination by MapQuest for material breach by National Geographic. If National Geographic has exercised the National Geographic Warrant prior to MapQuest terminating the National Geographic Agreement due to a breach of the agreement by National Geographic, MapQuest has the option to purchase the shares of common stock issued upon exercise of the warrant for a period of 60 days after the termination of the National Geographic Agreement at a purchase price equal to the lesser of $1.77 or the then fair market value of such shares. Warrants to Series C Investors. In May 1998, MapQuest and some of the series C preferred stock investors entered into an agreement to preserve these investors' fully diluted ownership percentage in MapQuest as a result of the increase in the number of options to purchase shares of common stock eligible for award under the 1995 stock option plan and the appointment of Mr. Michael Mulligan as Chief Executive Officer of MapQuest. Pursuant to this agreement, the series C preferred stock investors were issued an aggregate of 522,231 warrants to purchase common stock at an exercise price of $0.004 per share. The warrants are exercisable prior to April 30, 2008. Executive Search Firm Warrants. Effective September 22, 1998, MapQuest issued to Ramsey/Beirne Associates a warrant to purchase 41,266 shares of MapQuest common stock in partial consideration for executive search firm services Ramsey/Beirne Associates performed. The warrant is exercisable at any time prior to September 22, 2003 at an exercise price of $1.30 per share. 49 PRINCIPAL STOCKHOLDERS The following table sets forth information with respect to the beneficial ownership of MapQuest's common stock as of December 31, 1998: . each person or entity who is known by MapQuest to beneficially own five percent or more of the outstanding shares of MapQuest's common stock; . each director; . each named executive officer; and . all directors and executive officers of MapQuest as a group. Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission. In computing the number of shares beneficially owned by a person and the percentage ownership of that person, shares of common stock subject to options and warrants held by that person that are currently exercisable or exercisable within 60 days of April 7, 1999, are treated as outstanding. These shares, however, are not treated as outstanding for the purpose of computing the percentage ownership of any other person. Except as indicated in the footnotes to this table the following individuals have sole voting and investment power with respect to the shares they beneficially own.
Beneficially Owned Securities ----------------------------------------------------------------------- Number of Shares Percentage of Shares Beneficially Owned Includes Beneficially Owned Total --------------------------- ------------------------ Number of Shares Securities Securities Beneficially Underlying Underlying Before After Name (1) Owned Warrants Options Offering Offering - -------- ---------------- ------------- ------------- ---------- ---------- Trident Capital Partners Fund - I, L.P.(1)..... 9,684,802 352,755 34.7% 29.8% Trident Capital Partners Fund - I, C.V.(1)..... 1,915,844 69,781 6.9 5.9 Robert McCormack(2)(3)..... 11,600,646 422,536 41.4 35.6 John Moragne(2)(3).... 11,600,646 422,536 41.4 35.6 Rockwell Schnabel(3).. 11,600,646 422,536 41.4 35.6 Stephen Hall(3)....... 11,600,646 422,536 41.4 35.6 Donald Dixon(3)....... 11,600,646 422,536 41.4 35.6 Weston Presidio Capital II, L.P.(4)........... 6,844,480 223,826 24.6 21.1 Carlo von Schroeter(2)(5)..... 6,844,480 223,826 24.6 21.1 Michael Cronin(5)..... 6,844,480 223,826 24.6 21.1 Michael Lazarus(5).... 6,844,480 223,826 24.6 21.1 James McElwee(5)...... 6,844,480 223,826 24.6 21.1 Philip Halperin(5).... 6,844,480 223,826 24.6 21.1 Highland Capital Partners III Limited Partnership(5)........ 6,570,698 214,873 23.7 20.3 Highland Entrepreneurs' Fund III, L.P.(5)..... 273,780 8,953 1.0 0.9 Daniel Nova(2)(7)..... 6,844,478 223,826 24.6 21.1 Robert Higgins(7)..... 6,844,478 223,826 24.6 21.1 Paul Maeder(7)........ 6,844,478 223,826 24.6 21.1 Wycliffe Grousbeck(7)........ 6,844,478 223,826 24.6 21.1 Michael Mulligan ....... 958,608 648,064 3.4 2.9 James Thomas ........... 803,767 4,770 515,675 2.9 2.6 William Muenster ....... 806,393 4,770 512,915 2.9 2.6 James Hilliard ......... 162,000 162,000 0.6 0.5 Michael Nappi .......... 108,000 108,000 0.4 0.3 C. Richard Allen(2)(8).. 954,147 954,147 3.3 2.8 Barry Glick ............ 778,912 508,912 2.8 2.4 Directors & Executive Officers as a group (fifteen persons) .... 30,084,185 1,833,877 2,678,317 94.4 82.0
50 - -------- (1) The address of each of Trident Capital Partners Fund - I, L.P. and Trident Capital Partners Fund - I, C.V. is 2480 Sand Hill Road, Suite 100, Menlo Park, California 94025. (2) Director of MapQuest. (3) Includes 9,684,802 shares held by Trident Capital Partners and 1,915,844 shares held by Trident Capital Partners Fund--I, C. V. Messrs. McCormack, Moragne, Schnabel, Hall and Dixon are officers of Trident Capital, Inc., the general partner of Trident Capital, L.P., which is the general partner of Trident Capital Partners Fund-I, L.P. and the investment general partner of Trident Capital Partners Fund-I, C.V., and therefore may be considered to share beneficial ownership of the shares held by each of Trident Capital Partner Fund-I, L.P. and Trident Capital Partners Fund-I, C.V. Messrs. McCormack, Moragne, Schnabel, Hall and Dixon disclaim beneficial ownership of shares held by Trident Capital, Inc. and its affiliates, except to the extent of their pecuniary interests, if any. (4) The address of Weston Presidio Capital II, L.P. is One Federal Street, 21st Floor, Boston, Massachusetts 02110. (5) Includes 6,844,480 shares held by Weston Presidio Capital II, L.P. Messrs. Cronin, Lazarus, McElwee, von Schroeter and Halperin are the general partners of Weston Presidio Capital Management II, L.P. the general partner of Weston Presidio Capital II, L.P. and therefore may be considered to share the beneficial ownership of the shares held by Weston Presidio Capital II, L.P. Messrs. Cronin, Lazarus, McElwee, von Schroeter and Halperin disclaim beneficial ownership of these shares, except to the extent of their pecuniary interests, if any. (6) The address of each of Highland Capital Partners III, L.P. and Highland Entrepreneurs' Fund III, L.P. is Two International Place, Boston, Massachusetts 02110. (7) Includes 6,570,698 shares held by Highland Capital Partners III Limited Partnership and 273,780 shares held by Highland Entrepreneur's Fund III, L.P. Messrs. Higgins, Maeder, Nova and Grousbeck are the general partners of Highland Management Partners III, L.P., the general partner of Highland Capital Partners III Limited Partnership, and the members of HEF III, L.L.C., the general partner of Highland Entrepreneurs' Fund III, L.P. and therefore may be considered to share the beneficial ownership of the shares held by each of Highland Capital Partners III, Limited Partnership and Highland Entrepreneurs' Fund III, L.P. Messrs. Higgins, Maeder, Nova and Grousbeck disclaim beneficial ownership of these shares, except to the extent of their pecuniary interests if any. (8) Includes 954,147 shares held by National Geographic Holdings, Inc., a wholly-owned indirect subsidiary of National Geographic Society. Mr. Allen disclaims beneficial ownership of these shares, except to the extent of his pecuniary interest, if any. The address of National Geographic Holdings, Inc. is 1145 17th Street, N.W., Washington, DC 20036. 51 DESCRIPTION OF CAPITAL STOCK Following this offering, MapQuest will have the authority to issue an aggregate of 105,000,000 shares of capital stock, consisting of 100,000,000 shares of common stock, par value $0.001 per share, and 5,000,000 shares of preferred stock, par value $0.01 per share. Common Stock Voting Rights. Each outstanding share of common stock is entitled to one vote on all matters submitted to a vote of MapQuest's stockholders, including the election of directors. There is no cumulative voting in the election of directors. Dividends. Holders of common stock are entitled to receive dividends if and when declared by MapQuest's board of directors out of assets legally available for the payment of dividends, subject to the preferential rights of shares of preferred stock, if any. Liquidation. In the event of any dissolution, liquidation, or winding up of the affairs of MapQuest, whether voluntary or involuntary, after payment of the debts and other liabilities of MapQuest and after making provision for the holders of preferred stock, if any, the remaining assets of MapQuest will be distributed ratably among the holders of the common stock. Preferred Stock Following this offering, the board of directors will have the authority, without further action by the stockholders, to issue up to 5,000,000 shares of preferred stock in one or more series and to fix the designations, powers, preferences, privileges, and relative participating, options, or special rights and the qualifications, limitations, or restrictions of the preferred stock, including dividend rights, conversion rights, voting rights, terms of redemption and liquidation preferences, any or all of which may be greater than the rights of the common stock. Preferred stock could thus be issued with terms that may delay or prevent a change in control of MapQuest or make removal of management more difficult. Additionally, the issuance of preferred stock may have the effect of decreasing the market price of the common stock. Upon the completion of this offering, there will be no shares of preferred stock outstanding and MapQuest has no current plans to issue any preferred stock. Registration Rights After this offering, the holders of approximately 27,122,455 shares of common stock and the holders of 954,147 warrants to purchase shares of common stock will be entitled to have their shares registered under the Securities Act of 1933. If MapQuest proposes to register any of its securities under the Securities Act, either for its own account or for the account of other securities holders exercising registration rights, these holders are entitled to notice of the registration and are entitled to include their shares as part of that registration. Holders of registration rights may also require MapQuest to file a registration statement under the Securities Act at MapQuest's expense with respect to their shares of common stock. Further, holders may require MapQuest to file registration statements on Form S-3 at MapQuest's expense when MapQuest is eligible to use the form. All registration rights are subject to conditions and limitations, including the right of the underwriters of an offering to limit the number of shares to be included in the registration. Delaware Anti-Takeover Law and Charter and Bylaw Provisions MapQuest is subject to the provisions of Section 203 of the Delaware General Corporation Law, an anti-takeover law. In general, the statute prohibits a publicly-held Delaware corporation, which MapQuest will be after the offering, from engaging in a business combination with an "interested stockholder" for a period of three years after the date of the transaction in which the person became an interested stockholder, unless the business combination is approved in a prescribed manner. A "business combination" includes a merger, asset 52 sale or other transaction resulting in a financial benefit to the stockholder. For purposes of Section 203, an "interested stockholder" is defined to include any person that is: . the owner of 15% or more of the outstanding voting stock of the corporation; . an affiliate or associate of the corporation and was the owner of 15% or more of the voting stock outstanding of the corporation, at any time within three years immediately prior to the relevant date; and . an affiliate or associate of the persons described in the foregoing bullet points. Stockholders may, by adopting an amendment to the corporation's certificate of incorporation or bylaws, elect for the corporation not to be governed by Section 203, effective 12 months after adoption. Annual meetings of stockholders will be held to elect the board of directors of MapQuest and transact such other business as may be properly brought before the meeting. Special meetings of stockholders may be called by the Chairman or the Chief Executive Officer or by a majority of the board of directors. MapQuest's certificate of incorporation may be amended with the approval of a majority of the board and the holders of a majority of MapQuest's outstanding voting securities. The number of directors is determined by the board of directors. The size of the board of directors is currently six members and is divided into three classes of directors serving staggered three-year terms. The directors will be elected at the annual meeting of the stockholders, except for filling vacancies. Directors may be removed with the approval of the holders of a majority of MapQuest's voting power present and entitled to vote at a meeting of stockholders. Vacancies and newly-created directorships resulting from any increase in the number of directors may be filled by (1) a majority of the directors then in office, (2) a sole remaining director, or (3) the holders of a majority of the voting power present and entitled to vote at a meeting of stockholders. The presence, in person or by proxy, of the holders of a majority of the votes entitled to be cast by the stockholders entitled to vote generally shall constitute a quorum for stockholder action at any meeting. Limitation of Liability and Indemnification Matters MapQuest's certificate of incorporation contains provisions permitted under the Delaware General Corporation Law relating to the liability of directors. These provisions eliminate a director's personal liability for monetary damages resulting from a breach of fiduciary duty, except for liability for: . any failure to act in good faith in the best interests of MapQuest or its stockholders; . acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law; . unlawful payments of dividends or unlawful stock repurchases or redemptions; or . any transaction from which the director derives an improper personal benefit. These provisions do not limit or eliminate the rights of MapQuest or any stockholder to seek non- monetary relief, such as an injunction or rescission, in the event of a breach of a director's fiduciary duty. These provisions will not alter a director's liability under federal securities laws. MapQuest's bylaws also contain provisions indemnifying the directors and officers of MapQuest to the fullest extent permitted by the Delaware General Corporation Law. MapQuest believes that these provisions are necessary to attract and retain qualified individuals to serve as directors and officers. Listing Application has been made to have the common stock approved for quotation on the Nasdaq National Market under the trading symbol "MQST." Transfer Agent and Registrar The transfer agent and registrar for the common stock will be American Stock Transfer & Trust Company, New York, New York. 53 SHARES ELIGIBLE FOR FUTURE SALE Prior to this offering, there has not been any public market for the common stock, and MapQuest cannot predict the effect, if any, that market sales of shares of common stock or the availability of shares of common stock for sale will have on the market price of the common stock prevailing from time to time. Nevertheless, sales of substantial amounts of common stock in the public market, or the perception that such sales could occur, could adversely affect the market price of the common stock and could impair MapQuest's future ability to raise capital through the sale of its equity securities. Upon completion of this offering, MapQuest will have an aggregate of 32,166,699 shares of common stock outstanding, assuming no exercise of the underwriters' over-allotment option and no exercise of outstanding options or warrants. Of the outstanding shares, the 4,600,000 shares sold in this offering will be freely tradeable, except that any shares held by "affiliates" of MapQuest, as that term is defined in Rule 144 promulgated under the Securities Act of 1933, may only be sold in compliance with the limitations described below. The remaining 27,566,699 shares of common stock will be deemed "restricted securities" as defined under Rule 144. Restricted securities may be sold in the public market only if registered or if they qualify for an exemption from registration under Rules 144, 144(k) or 701 promulgated under the Securities Act, which rules are summarized below. Subject to the lock-up agreements described below and the provisions of Rules 144, 144(k) and 701, additional shares will be available for sale in the public market as follows:
Number of Shares Date ---------- ---- 902,097 After the date of this prospectus 129,924 After 90 days from the date of this prospectus 26,534,678 After 180 days from the date of this prospectus (subject, in some cases, to volume limitations)
In general, under Rule 144, as currently in effect, a person, including an affiliate, who has beneficially owned shares for at least one year is entitled to sell, within any three-month period commencing 90 days after the date of this prospectus, a number of shares that does not exceed the greater of (1) 1% of the then outstanding shares of common stock (approximately 321,667 shares immediately after this offering) or (2) the average weekly trading volume in the common stock during the four calendar weeks preceding the date on which notice of such sale is filed, subject to certain restrictions. In addition, a person who is not deemed to have been an affiliate of MapQuest at any time during the 90 days preceding a sale and who has beneficially owned the shares proposed to be sold for at least two years would be entitled to sell such shares under Rule 144(k) without regard to the requirements described above. To the extent that shares were acquired from an affiliate of MapQuest, that person's holding period for the purpose of selling under Rule 144 commences on the date of transfer from the affiliate. Notwithstanding the foregoing, to the extent the shares were acquired through the cashless exercise of a stock option or a warrant, that person's holding period for effecting a sale under Rule 144 commences on the date of the option or warrant grant. In general, under Rule 701 of the Securities Act as currently in effect, any employee, consultant or advisor of MapQuest who purchased shares from MapQuest in connection with a compensatory stock or option plan or other written agreement is eligible to resell such shares after the effective date of this offering in reliance on Rule 144, but without compliance with certain restrictions, including the holding period, contained in Rule 144. As of the date of this prospectus, options to purchase a total of 5,907,453 shares of common stock are outstanding, of which 3,443,438 are currently exercisable (without regard to the 180-day lock up period). Not sooner than 180 days after the closing of this offering, MapQuest intends to file a registration statement to register for resale all shares of common stock issued or issuable under its 1995 stock option plan, the 1999 employee stock purchase plan and not otherwise freely transferable. Accordingly, shares covered by that registration statement will be eligible for sale in the public markets, unless those options are subject to vesting restrictions. Upon the closing of this offering, 2,314,611 shares of common stock will be issuable upon the exercise of outstanding warrants. 54 MapQuest's directors and officers and certain stockholders who hold 31,187,837 shares and options in the aggregate, and the holders of warrants to purchase 2,314,611 shares of common stock, have agreed that they will not sell, directly or indirectly, any shares of common stock (other than shares of common stock purchased as part of the directed share program in connection with this offering) without the prior written consent of BancBoston Robertson Stephens, Inc. for a period of 180 days from the date of this prospectus. See "Underwriting." MapQuest has agreed not to sell or otherwise dispose of any shares of common stock during the 180-day period following the date of the prospectus, except MapQuest may issue, and grant options to purchase, shares of common stock under its stock option plan. Following this offering, under certain circumstances and subject to certain conditions, holders of 27,122,455 shares of MapQuest's outstanding common stock and the holders of 954,147 warrants to purchase shares of common stock will have certain demand registration rights with respect to their shares of common stock (subject, in certain cases, to the 180-day lock-up arrangement described above) to require MapQuest to register their shares of common stock under the Securities Act, and they will have certain rights to participate in any future registration of securities by MapQuest. MapQuest is not required to effect more than an aggregate of four demand registrations on behalf of such holders. See "Description of Capital Stock--Registration Rights." 55 UNDERWRITING The underwriters named below, acting through their representatives, BancBoston Robertson Stephens Inc., Thomas Weisel Partners LLC, U.S. Bancorp Piper Jaffray Inc. and Volpe Brown Whelan & Company, LLC have severally agreed with MapQuest, subject to the terms and conditions of the underwriting agreement, to purchase from MapQuest the number of shares of common stock set forth opposite their names below. The underwriters are committed to purchase and pay for all of the shares if any are purchased.
Number of Underwriter Shares ----------- ----------- BancBoston Robertson Stephens Inc. .............................. Thomas Weisel Partners LLC....................................... U.S. Bancorp Piper Jaffray Inc. ................................. Volpe Brown Whelan & Company, LLC................................ ----------- Total.......................................................... 4,600,000 ===========
The representatives have advised MapQuest that the underwriters propose to offer the shares of common stock to the public at the initial public offering price set forth on the cover page of this prospectus and to dealers at such price less a concession of not in excess of $ per share, of which $ may be reallowed to other dealers. After this offering, the public offering price, concession, and reallowance to dealers may be reduced by the representatives. No reduction shall change the amount of proceeds to be received by MapQuest as set forth on the cover page of this prospectus. The common stock is offered by the underwriters as stated in this prospectus, subject to receipt and acceptance by them and subject to their right to reject any order in whole or in part. The underwriters do not intend to confirm sales to any accounts over which they exercise discretionary authority. Over-allotment Option MapQuest has granted to the underwriters an option, exercisable during the 30-day period after the date of this prospectus, to purchase up to 690,000 additional shares of common stock at the same price per share as MapQuest will receive for the 4,600,000 shares that the underwriters have agreed to purchase. To the extent that the underwriters exercise this option, each of the underwriters will have a firm commitment to purchase approximately the same percentage of the additional shares that the number of shares of common stock to be purchased by it shown in the above table represents as a percentage of the 4,600,000 shares offered in this prospectus. If purchased, these additional shares will be sold by the underwriters on the same terms as those on which the 4,600,000 shares are being sold. MapQuest will be obligated, pursuant to the option, to sell shares to the extent the option is exercised. The underwriters may exercise this option only to cover over-allotments made in connection with the sale of the shares of common stock offered by this prospectus. If the option is exercised in full, the total public offering price, underwriting discounts and commissions and net proceeds to MapQuest will be approximately $ million, $ million and $ million, respectively. Directed Share Program At the request of MapQuest, the underwriters have reserved up to 460,000 shares of common stock to be issued by MapQuest and offered by this prospectus for sale, at the initial public offering price, to directors, officers, employees, business associates and related persons of MapQuest. The number of shares of common stock available for sale to the general public will be reduced to the extent these individuals purchase such reserved shares. Any reserved shares which are not so purchased will be offered by the underwriters to the general public on the same basis as the other shares offered by this prospectus. 56 Thomas Weisel Partners LLC Thomas Weisel Partners LLC, one of the representatives of the underwriters, was organized and registered as a broker-dealer in December 1998. Since December 1998, Thomas Weisel Partners has co-managed six public offerings of equity securities and has acted as an underwriter in an additional seven public offerings of equity securities. Thomas Weisel Partners does not have any material relationship with MapQuest or any of MapQuest's officers, directors or controlling persons, except with respect to its contractual relationship with MapQuest pursuant to the underwriting agreement entered into in connection with this offering. Indemnity The Underwriting Agreement contains covenants of indemnity among the underwriters and MapQuest against civil liabilities, including liabilities under the Securities Act and liabilities arising from breaches of representations and warranties contained in the underwriting agreement. Lock-Up Agreements Each officer and director of MapQuest and substantially all other holders of shares of common stock, including those issuable upon the exercise of outstanding options or warrants, have agreed, during the period ending 180 days after the date of this prospectus ("the lock-up period"), subject to limited exceptions, not to engage in particular activities without the prior written consent of BancBoston Robertson Stephens Inc. Specifically they have agreed not to offer to sell, contract to sell, or otherwise sell, dispose of, loan, pledge or grant any rights with respect to any shares of common stock, any options or warrants to purchase any shares of common stock, or any securities convertible into or exchangeable for shares of common stock owned as of the date of this prospectus or acquired after the date of this prospectus directly by such holders or with respect to which they have the power of disposition. However, BancBoston Robertson Stephens Inc. may, in its sole discretion and at any time without notice, release all or any portion of securities subject to the lock-up agreement. There are no existing agreements between the representatives of the underwriters and any of MapQuest's stockholders providing consent to the sale of shares prior to the expiration of the lock-up period. Future Sales. In addition, MapQuest has agreed that during the lock-up period MapQuest will not, without the prior written consent of BancBoston Robertson Stephens Inc., subject to limited exceptions, (1) consent to the disposition of any shares held by stockholders or option holders subject to lock-up agreements prior to the expiration of the lock-up period, (2) issue, sell, contract to sell, or otherwise dispose of, any shares of common stock, any options to purchase any shares of common stock or any securities convertible into, exercisable for or exchangeable for shares of common stock other than MapQuest's sale of shares in this offering, the issuance of common stock upon the exercise of outstanding options, and the issuance of options under existing stock option and incentive plans provided the options do not vest prior to the expiration of the lock-up period or (3) file a Form S-8 registration statement. See "Shares Eligible for Future Sale." No Prior Public Market. Prior to this offering, there has been no public market for MapQuest's common stock. Consequently, the public offering price for the common stock offered by this prospectus will be determined through negotiations among MapQuest and the representatives of the underwriters. Among the factors to be considered in such negotiations are prevailing market conditions, financial information of MapQuest, market valuations of other companies that MapQuest and the representatives believe to be comparable to MapQuest, estimates of the business potential of MapQuest, the present state of MapQuest's development and other factors deemed relevant. Stabilization. The representatives of the underwriters have advised MapQuest that, pursuant to Regulation M under the Securities Act of 1933, particular persons participating in this offering may engage in transactions, including stabilizing bids, syndicate covering transactions or the imposition of penalty bids, that may have the effect of stabilizing or maintaining the market price of the common stock at a level above that which might otherwise prevail in the open market. A "stabilizing bid" is a bid for or the purchase of common 57 stock on behalf of the underwriters for the purpose of fixing or maintaining the price of the common stock. A "syndicate covering transaction" is the bid for or the purchase of common stock on behalf of the underwriters to reduce a short position incurred by the underwriters in connection with this offering. A "penalty bid" is an arrangement permitting the representatives to reclaim the selling concession otherwise accruing to an underwriter or syndicate member in connection with this offering if the common stock originally sold by such underwriter or syndicate member is purchased by the representatives in a syndicate covering transaction and has not been effectively placed by such underwriter or syndicate member. The representatives have advised MapQuest that these transactions may be effected on the Nasdaq National Market or otherwise and, if commenced, may be discontinued at any time. LEGAL MATTERS The validity of the shares of common stock offered hereby will be passed upon for MapQuest by Mayer, Brown & Platt, New York, New York, and for the underwriters by Brobeck, Phleger & Harrison LLP, New York, New York. Certain other legal matters will be passed up on behalf of the Company by Venable, Baetjer & Howard, LLP. EXPERTS The financial statements of MapQuest.com, Inc. at December 31, 1997 and 1998, and for each of the three years in the period ended December 31, 1998, appearing in this prospectus and Registration Statement of which it forms a part, and the related financial statement schedule included elsewhere in this Registration Statement have been audited by Ernst & Young LLP, independent auditors, as set forth in their reports thereon appearing elsewhere herein, and are included in reliance upon such reports given upon the authority of such firm as experts in accounting and auditing. WHERE YOU CAN FIND MORE INFORMATION MapQuest has filed with the Securities and Exchange Commission a registration statement on Form S-1 under the Securities Act of 1933 with respect to the shares of common stock offered by this prospectus. This prospectus does not contain all of the information set forth in the registration statement and its exhibits and schedules. Particular items are omitted in accordance with the rules and regulations of the Securities and Exchange Commission. For further information with respect to MapQuest and the common stock offered by this prospectus, reference is made to the registration statement and its exhibits and schedules. A copy of the registration statement, and the exhibits and schedules to the registration statement, may be inspected without charge at the public reference facilities maintained by the Securities and Exchange Commission in Room 1024, 450 Fifth Street., N.W., Washington, D.C. 20549, and at the Securities and Exchange Commission's regional offices located at the Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661 and Seven World Trade Center, 13th Floor, New York, New York 10048, and copies of all or any part of the registration statement may be obtained from such offices upon the payment of the fees prescribed by the Securities and Exchange Commission. The Securities and Exchange Commission maintains a website that contains reports, proxy and information statements and other information regarding registrants that file electronically with the Securities and Exchange Commission. The address of the site is http://www.sec.gov. This prospectus includes statistical data regarding Internet usage and the advertising and marketing industry that were obtained from industry publications, including reports generated by Forrester Research Inc., International Data Corporation and Media Metrix, Inc. These industry publications generally indicate that they have obtained information from sources believed to be reliable, but do not guarantee the accuracy and completeness of their information. While MapQuest believes these industry publications to be reliable, MapQuest has not independently verified their data. MapQuest also has not sought the consent of any of these organizations to refer to their reports in this prospectus. 58 INDEX TO FINANCIAL STATEMENTS Report of Independent Auditors............................................. F-2 Balance sheets at December 31, 1997 and 1998............................... F-3 Statements of Operations for the Years ended December 31, 1996, 1997 and 1998..................................................................... F-4 Statements of Changes in Redeemable Preferred Stock, Common Stock, and Other Stockholders' Equity (Deficit) for the Years ended December 31, 1996, 1997 and 1998...................................................... F-5 Statements of Cash Flows for the Years ended December 31, 1996, 1997 and 1998..................................................................... F-6 Notes to Financial Statements.............................................. F-7
F-1 REPORT OF INDEPENDENT AUDITORS Board of Directors MapQuest.com, Inc. We have audited the accompanying balance sheets of MapQuest.com, Inc. (formerly GeoSystems Global Corporation) as of December 31, 1997 and 1998, and the related statements of operations, changes in redeemable preferred stock, common stock, and other stockholders' equity (deficit), and cash flows for each of the three years in the period ended December 31, 1998. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of MapQuest.com, Inc. at December 31, 1997 and 1998, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1998, in conformity with generally accepted accounting principles. Ernst & Young LLP Harrisburg, Pennsylvania February 18, 1999, except for Note 15, as to which the date is April , 1999 --------------------- The foregoing report is in the form that will be signed upon the completion of the restatement of the capital accounts described in Note 15 to the financial statements. Ernst & Young LLP Harrisburg, Pennsylvania April 9, 1999 F-2 MAPQUEST.COM, INC. BALANCE SHEETS
December 31 Pro Forma -------------------------- December 31 1997 1998 1998 ------------ ------------ ------------ (Unaudited) (Note 15) ASSETS Current assets: Cash and cash equivalents.......... $ 2,482,090 $ 564,087 $ 564,087 Accounts receivable, net of allowance for doubtful accounts (1997--$407,136; 1998-- $469,726)........................ 5,468,654 6,646,882 6,646,882 Accounts receivable--affiliates.... 57,500 127,989 127,989 Inventories........................ 1,686,117 1,364,608 1,364,608 Contract work in progress.......... 385,778 147,317 147,317 Prepaid expenses and other current assets........................... 1,079,347 481,921 481,921 ------------ ------------ ------------ Total current assets........... 11,159,486 9,332,804 9,332,804 Property and equipment, net of accumulated depreciation (1997-- $2,420,561; 1998--$3,433,368)...... 1,830,324 1,844,324 1,844,324 Goodwill, net........................ 208,763 178,212 178,212 Other assets......................... 22,650 94,901 94,901 ------------ ------------ ------------ Total assets................... $ 13,221,223 $ 11,450,241 $ 11,450,241 ============ ============ ============ LIABILITIES AND STOCKHOLDERS' DEFICIT Current liabilities: Accounts payable................... $ 1,332,656 $ 1,715,133 $ 1,715,133 Current portion of note payable.... 51,716 48,108 48,108 Accrued personnel costs............ 450,287 561,714 561,714 Advance billings on contracts...... 346,383 498,108 498,108 Deferred revenue................... 505,238 1,207,867 1,207,867 Other accrued liabilities.......... 1,012,809 1,000,940 1,000,940 ------------ ------------ ------------ Total current liabilities...... 3,699,089 5,031,870 5,031,870 ------------ ------------ ------------ Note payable, less current portion... 48,108 -- -- Payment to redeem Preferred Stock-- Series B........................... -- -- 8,332,036 Convertible Redeemable Preferred Stock--Series A, voting, $1.00 per share redemption value, aggregate liquidation preference of $6,550,000: Issued and outstanding shares-- actual, 6,550,000 in 1997 and 1998; pro forma, none............ 6,550,000 6,550,000 -- Cumulative Redeemable Preferred Stock--Series B, nonvoting, $6.15 per share redemption value, aggregate liquidation preference of $7,815,737 in 1997 and $8,332,036 in 1998: Issued and outstanding shares-- actual, 1,270,851 in 1997 and 1,354,802 in 1998; pro forma, none ............................ 7,815,737 8,332,036 -- Convertible Redeemable Preferred Stock--Series C, voting, $3.51 per share redemption value, aggregate liquidation preference of $12,268,292: Issued and outstanding shares-- actual, 3,495,354 in 1997 and 1998; pro forma, none............ 11,636,252 11,595,176 -- Notes receivable arising from issuance of preferred stock........ (290,835) (290,835) -- Stockholders' deficit: Common Stock--$.001 par value: Authorized shares--20,000,000 Issued and outstanding shares-- actual, 216,419 in 1997 and 336,028 in 1998; pro forma, 27,458,483 216 336 27,458 Notes receivable for common stock............................ -- -- (290,835) Additional paid-in capital......... -- 140,170 18,263,267 Retained deficit................... (16,237,344) (19,908,512) (19,913,555) ------------ ------------ ------------ Total stockholders' deficit.... (16,237,128) (19,768,006) (1,913,665) ------------ ------------ ------------ Total liabilities and stockholders' deficit........ $ 13,221,223 $ 11,450,241 $ 11,450,241 ============ ============ ============
See accompanying notes. F-3 MAPQUEST.COM, INC. STATEMENTS OF OPERATIONS
Year ended December 31 -------------------------------------- 1996 1997 1998 ----------- ------------ ----------- Revenues Business............................ $ 7,019,461 $ 4,762,627 $ 6,536,153 Consumer............................ 140,200 1,275,900 1,375,900 ----------- ------------ ----------- Total business and consumer revenues.......................... 7,159,661 6,038,527 7,912,053 Digital mapping..................... 12,417,232 15,377,141 16,805,149 ----------- ------------ ----------- Total revenues................... 19,576,893 21,415,668 24,717,202 Cost of Revenues Business and consumer............... 4,325,166 4,535,153 4,808,764 Digital mapping..................... 7,994,347 10,767,256 12,837,036 ----------- ------------ ----------- Total cost of revenues........... 12,319,513 15,302,409 17,645,800 ----------- ------------ ----------- Gross profit.......................... 7,257,380 6,113,259 7,071,402 Operating expenses Sales and marketing................. 4,454,791 7,256,519 5,243,377 Product development................. 2,619,443 5,047,744 2,954,510 General and administrative.......... 1,901,857 1,811,391 2,326,191 ----------- ------------ ----------- Total operating expenses......... 8,976,091 14,115,654 10,524,078 Operating loss........................ (1,718,711) (8,002,395) (3,452,676) Interest income and expense, net...... 198,632 135,888 53,916 Other income.......................... 243,900 267,384 243,891 ----------- ------------ ----------- Loss before provision for income taxes............................... (1,276,179) (7,599,123) (3,154,869) Provision for income taxes............ -- -- -- ----------- ------------ ----------- Net loss......................... (1,276,179) (7,599,123) (3,154,869) Less preferred stock dividends and accretion........................... (525,320) (5,833,651) (667,223) ----------- ------------ ----------- Net loss applicable to common stockholders........................ $(1,801,499) $(13,432,774) $(3,822,092) =========== ============ =========== Basic and diluted loss per share...... $ (8.84) $ (64.43) $ (12.09) =========== Shares used to compute basic and diluted loss per share.............. 203,779 208,499 316,202 =========== ============ =========== Pro forma basic and diluted loss per share............................... $ (0.13) =========== Shares used to compute pro forma basic and diluted loss per share.......... 27,438,658
See accompanying notes. F-4 MAPQUEST.COM, INC. STATEMENTS OF CHANGES IN REDEEMABLE PREFERRED STOCK, COMMON STOCK, AND OTHER STOCKHOLDERS' EQUITY (DEFICIT)
Notes Convertible Cumulative Convertible Receivable Redeemable Redeemable Redeemable Arising from Convertible Preferred Preferred Preferred Issuance of Preferred Additional Stock-- Stock-- Stock-- Preferred Stock-- Common Paid Retained Series A Series B Series C Stock Series A Stock in Capital Deficit ----------- ----------- ------------ ------------ ----------- ------ ----------- ------------- Balance at December 31, 1995.................. $ -- $ 6,877,136 $ -- $ (87,500) $ 65,150 $ 199 $ 1,238,435 $ (1,003,071) Net loss............... -- -- -- -- -- -- -- (1,276,179) Payment on notes receivable........... -- -- -- 31,168 -- -- -- -- Dividends.............. -- 454,295 -- -- -- -- -- (525,320) Issuance of 35,000 shares convertible preferred stock-- Series A............. -- -- -- (31,500) 350 -- 34,650 -- Exercise of 7,074 options.............. -- -- -- -- -- 7 255 -- ----------- ----------- ------------ ---------- -------- ----- ----------- ------------- Balance at December 31, 1996.................. -- 7,331,431 -- (87,832) 65,500 206 1,273,340 (2,804,570) Net loss............... -- -- -- -- -- -- -- (7,599,123) Payment on notes receivable........... -- -- -- 21,132 -- -- -- -- Dividends.............. -- 484,306 -- -- -- -- -- (560,025) Exercise of 10,314 options.............. -- -- -- -- -- 10 775 -- Addition of redemption feature to Series A preferred stock...... 6,550,000 -- -- -- (65,500) -- (1,274,115) (5,210,383) Issuance of 3,495,354 shares convertible preferred stock-- Series C, net........ -- -- 11,573,009 (224,135) -- -- -- -- Accretion of redeemable preferred stock to redemption value..... -- -- 63,243 -- -- -- -- (63,243) ----------- ----------- ------------ ---------- -------- ----- ----------- ------------- Balance at December 31, 1997.................. $ 6,550,000 $ 7,815,737 $ 11,636,252 $ (290,835) $ -- $ 216 $ -- $ (16,237,344) Net loss............... -- -- -- -- -- -- -- (3,154,869) Dividends.............. -- 516,299 -- -- -- -- -- (516,299) Exercise of 119,610 options.............. -- -- -- -- -- 120 7,444 -- Issuance of 522,234 warrants............. -- -- (192,000) -- -- -- 192,000 -- Issuance of 41,266 warrants for services............. -- -- -- -- -- -- 53,650 -- Accretion of redeemable preferred stock to redemption value..... -- -- 150,924 -- -- -- (150,924) -- Compensation related to stock options........ -- -- -- -- -- -- 38,000 -- ----------- ----------- ------------ ---------- -------- ----- ----------- ------------- Balance at December 31, 1998.................. $ 6,550,000 $ 8,332,036 $ 11,595,176 $ (290,835) $ -- $ 336 $ 140,170 $ (19,908,512) =========== =========== ============ ========== ======== ===== =========== =============
See accompanying notes. F-5 MAPQUEST.COM, INC. STATEMENTS OF CASH FLOWS
Year ended December 31 ------------------------------------- 1996 1997 1998 ----------- ----------- ----------- Operating activities Net loss................................ $(1,276,179) $(7,599,123) $(3,154,869) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation........................... 527,990 816,369 1,074,875 Amortization........................... 30,550 30,550 30,551 Provision for doubtful accounts........ 232,500 262,388 271,598 Issuance of warrants for services...... -- -- 53,650 Compensation expense related to options.............................. -- -- 38,000 Equity in earnings of joint venture.... (282,461) (256,068) (291,558) Dividends received from joint venture.. 285,273 288,556 285,976 Loss (gain) on disposal of property and equipment............................ -- 59,758 (3,089) Changes in operating assets and liabilities, net of effects from acquisition of a business: Accounts receivable................... (1,505,806) (1,115,351) (1,449,823) Accounts receivable--affiliates....... 10,154 72,400 (70,489) Inventories........................... (20,778) (1,182,649) 321,509 Contract work in progress............. (151,563) (60,575) 238,461 Prepaid expenses...................... (231,318) (724,940) 597,426 Other assets.......................... (16,694) 14,659 (94,638) Accounts payable...................... 448,974 448,374 382,447 Advance billings on contracts......... 471,473 (688,387) 151,726 Deferred revenue...................... -- 396,807 702,629 Accrued personnel costs and other liabilities......................... 316,892 (257,500) 99,557 ----------- ----------- ----------- Net cash used in operating activities... (1,160,993) (9,494,732) (816,061) Investing activities Property and equipment purchases........ (1,190,210) (1,354,690) (1,062,126) Proceeds from disposal of property and equipment............................. -- 32,264 4,340 Purchase of Interarts' assets........... (328,600) -- -- ----------- ----------- ----------- Net cash used in investing activities... (1,518,810) (1,322,426) (1,057,786) Financing activities Proceeds from note payable.............. -- 131,468 -- Principal payments on debt.............. -- (32,499) (51,716) Proceeds from issuance of Series A convertible preferred stock........... 3,500 -- -- Net proceeds from issuance of Series C convertible preferred stock........... -- 11,348,874 -- Exercise of common stock options........ 262 785 7,560 Principal payments received on notes receivable arising from issuance of preferred stock....................... 31,168 21,132 -- Cash dividends paid..................... (69,889) (74,506) -- ----------- ----------- ----------- Net cash provided by (used in) financing activities............................ (34,959) 11,395,254 (44,156) ----------- ----------- ----------- Net increase (decrease) in cash and cash equivalents........................... (2,714,762) 578,096 (1,918,003) Cash and cash equivalents at the beginning of the year................. 4,618,756 1,903,994 2,482,090 ----------- ----------- ----------- Cash and cash equivalents at the end of the year.............................. $ 1,903,994 $ 2,482,090 $ 564,087 =========== =========== =========== Supplemental cash flow information Stock dividends paid on Preferred Stock Series B.............................. $ 454,294 $ 484,306 $ 516,299 =========== =========== =========== Dividends accrued on Preferred Stock Series B.............................. $ 18,329 $ 19,540 $ -- =========== =========== =========== Notes receivable received for stock..... $ 31,500 $ 224,135 $ -- =========== =========== ===========
See accompanying notes. F-6 MAPQUEST.COM, INC. NOTES TO FINANCIAL STATEMENTS December 31, 1998 1. Business and Accounting Policies Business In February 1999, GeoSystems Global Corporation changed its name to MapQuest.com, Inc. MapQuest.com, Inc. ("MapQuest" or the "Company") is an online provider of mapping and destination information through its Web site, mapquest.com. MapQuest's proprietary integration and editing of geographic databases enable it to provide comprehensive mapping solutions to businesses and provide customized maps, destination information and driving directions to consumers. Consumers can also purchase maps and cartography information from MapQuest's MapStore located on mapquest.com. MapQuest is also a United States provider of traditional digital mapping products and services to the educational, reference, directory, travel and governmental markets. In addition, companies that incorporate call centers, CD- ROMs or stand-alone driving direction kiosks into their information delivery strategy require non-Internet customized mapping solutions. MapQuest has developed its map-enabling software to promote the rapid development of mapping applications in these environments. Revenue Recognition Contracts with businesses for Internet products and services are generally on an annual basis and consist of a one-time setup fee and annual service or license fee. The one-time setup fee is based on costs incurred to initially integrate the Web site connection and is recognized upon installation of the connection. The remaining service or license fee is recognized ratably over the contract period. Revenues recognized under this method are included in the statements of operations as business revenues. Royalty revenues are recognized when earned based on the revenues generated by the sale of a licensed product or based on the minimum royalty provisions in the related contract. Revenue from the sale of licenses to its customers for the use of MapQuest's geographic systems or products are generally recognized upon delivery of the licensed systems or products if no significant obligations exist. If a maintenance or upgrade obligation exists, revenues are recognized ratably over the obligation period. MapQuest's license agreements have terms generally ranging from one to three years. Substantially all revenues recognized under this method are included in the statements of operations as business revenues. Revenues from long-term fixed price contracts for the development of customized geographic and cartographic data are recognized on the percentage of completion method, measured by the percentage of labor hours incurred to date to estimated total labor hours for each contract. Revenues recognized in excess of amounts billed are classified as contract work in progress. Amounts billed to clients for contracts in excess of revenues recognized to date are classified as advance billings on contracts. Revenues recognized under this method are included in the statements of operations as digital mapping revenues. Advertising revenue is recognized ratably over the period in which the advertisements are displayed, provided that no significant obligations remain and collection of the resulting receivable is probable. The average duration of MapQuest's advertising arrangements is one to two months. MapQuest may guarantee its advertisers a pre-set level of impressions during the contract period. To the extent minimum guaranteed impression levels are not met ratably over the contract period, MapQuest defers recognition of the corresponding pro- rata portion of the revenues relating to such unfulfilled obligations until the guaranteed impression levels are achieved. Revenues recognized under this method are included in the statements of operations as consumer revenues. Barter revenues are recognized in connection with agreements in which MapQuest receives advertising or other goods and services in exchange for content or advertising on mapquest.com. Barter transactions are F-7 MAPQUEST.COM, INC. NOTES TO FINANCIAL STATEMENTS--(Continued) recorded at the lower of estimated fair value of the goods or services received or the estimated fair value of the content or advertisements given. Barter transactions accounted for approximately 0%, 1% and 2% of revenues during 1996, 1997 and 1998, respectively. Revenues recognized under this method are included in the statements of operations as consumer revenues. Revenues from all other services provided and products sold or licensed are recognized when the services are rendered or delivery of the product is made and no significant MapQuest obligations remain outstanding. Revenues recognized under this method are included in the statements of operations as digital mapping and business revenues. Product Development Product development expenses in the accompanying statements of operations include the costs to develop new products and services and to modify existing products and services, including software and data. These costs consist primarily of salaries for product development personnel and related expenses, contract labor expense, and consulting fees. Statement of Financial Accounting Standards ("SFAS") No. 86, "Accounting for the Costs of Computer Software to be Sold, Leased or Otherwise Marketed," requires capitalization of certain software development costs subsequent to the establishment of technological feasibility. Based upon MapQuest's product development process, technological feasibility is established upon completion of a working model. Costs incurred by MapQuest between completion of the working model and the point at which the product is ready for general release have been insignificant. As a result, MapQuest has expensed software development costs. Statements of Cash Flows For purposes of the statements of cash flows, MapQuest considers all cash and highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. Fair Values of Financial Instruments The carrying amounts of cash and cash equivalents, notes receivable and notes payable approximate fair value because of the short-term maturity of these instruments. Inventories Inventories are carried at the lower of cost or market using the first-in, first-out (FIFO) method. Property and Equipment Property and equipment consisting primarily of computer hardware are stated at historical cost. Depreciation is computed principally using the straight- line method over the estimated useful life of assets ranging from 3 to 5 years. Goodwill Goodwill, principally from the acquisition of Maryland Cartographics, Inc. in July 1994, represents the excess of cost over fair value of net assets acquired and is being amortized over 10 years using the straight-line method. As of December 31, 1997 and 1998, accumulated amortization was $96,744 and $127,295, respectively. Accounting for Stock-Based Compensation In October 1995, the FASB issued SFAS No. 123, "Accounting for Stock-Based Compensation". SFAS No. 123 prescribes accounting and reporting standards for all stock-based compensation plans, including F-8 MAPQUEST.COM, INC. NOTES TO FINANCIAL STATEMENTS--(Continued) employee stock options, restricted stock, employee stock purchase plans and stock appreciation rights. SFAS No. 123 requires compensation expense to be recorded (i) using the new fair value method or (ii) using existing accounting rules prescribed by Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees", ("APB 25") and related interpretations with pro forma disclosure of what net income and earnings per share would have been had the Company adopted the fair value method. The Company accounts for its stock- based compensation plans in accordance with the provisions of APB 25. Advertising Costs Advertising costs are expensed as incurred. Advertising costs for 1996, 1997 and 1998 amounted to $332,300, $779,000 and $741,600, respectively, and include barter advertising costs for 1997 and 1998 of $148,000 and $538,000, respectively. Investment in Joint Venture The Company's 50 percent-owned joint venture, Donnelly Spatial Data Partnership, is accounted for by the equity method. The joint venture is engaged in providing, among other things, highway trip routing products and services. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. 2. Inventories Inventories are comprised of the following:
December 31 --------------------- 1997 1998 ---------- ---------- Materials.............................................. $ 240,000 $ 96,006 Work-in-process........................................ 207,838 336,123 Finished goods......................................... 1,238,279 932,479 ---------- ---------- $1,686,117 $1,364,608 ========== ==========
3. Asset Purchase--Interarts Effective April 1, 1996, MapQuest acquired certain assets, primarily inventory, of Interarts, Ltd. (Interarts) for $328,600. Interarts is an upscale niche publisher of reference maps, atlases and products that use map images. This transaction was accounted for in accordance with the purchase method of accounting for business combinations. No goodwill has been recognized by MapQuest in connection with this transaction. The operating results of Interarts are included in MapQuest's results of operations from the effective date of the acquisition. Pro forma information about operating results assuming Interarts was acquired at the beginning of 1996 is not presented because it would not differ materially from reported results. 4. Debt Arrangements MapQuest has a $5,000,000 secured line of credit payable on demand with a financial institution. Borrowings under the line of credit are limited to 80% of MapQuest's qualified accounts receivable that are within 90 days of invoice. Under the agreement, MapQuest may choose an interest rate based on the following options: prime rate, a fixed rate as offered by the Bank from time to time for varying periods up to 180 days or at the LIBOR Rate plus 1.75% for periods of 30, 60, 90 or 180 days. No amount was drawn on the line at December 31, 1997 or 1998. F-9 MAPQUEST.COM, INC. NOTES TO FINANCIAL STATEMENTS--(Continued) MapQuest entered into a promissory note during 1997. Terms of repayment require thirty consecutive monthly payments of principal and interest. Interest on the outstanding principal is fixed at a rate of 9%. 5. Preferred Stock and Stockholders' Equity Restated Certificate of Incorporation On July 17, 1997, MapQuest filed a Restated Certificate of Incorporation with the State of Delaware in conjunction with the purchase and sale of Series C Preferred Stock. The Restated Certificate of Incorporation authorizes MapQuest to issue 35,000,000 shares, of which 20,000,000 shares are designated Common Stock and 15,000,000 shares are designated Preferred Stock. Of the Preferred Stock, 6,550,000 shares are designated Series A Preferred, 2,000,000 shares are designated Series B Preferred, 3,800,000 shares are designated Series C Preferred and 2,650,000 shares are undesignated as to series. Series A Preferred Stock MapQuest is authorized to issue 6,550,000 shares (10,000,000 shares as of December 31, 1996) of noncumulative, convertible, voting Series A Preferred Stock. Effective July 17, 1997, a redemption feature was added and the issued and outstanding shares were reclassified outside of stockholders' equity. At the option of the Holder, each share of Series A Preferred Stock is convertible into Common Stock at a conversion rate of 2.7 shares of Common Stock for each share of Series A Preferred Stock. Each share of Series A Preferred Stock automatically converts into shares of Common Stock, either (i) immediately prior to the closing of MapQuest's initial underwritten public offering pursuant to a Registration Statement filed with and declared effective by the Securities and Exchange Commission under the Securities Act of 1993, as amended, and having an aggregate offering to the public of not less than $15,000,000 or (ii) upon the affirmative vote of the holders of at least two- thirds of the then outstanding shares of Series A Preferred Stock, whichever is earlier. The Series A Preferred Stock ranks senior to the Common Stock as to dividend, liquidation, and redemption rights. The Series A Preferred Stock ranks junior to the Series B Preferred Stock and the Series C Preferred Stock as to dividend, liquidation and redemption rights. Each share of Series A Preferred Stock issued and outstanding has a number of votes equal to the number of shares into which such share of Series A Preferred Stock is then convertible. Subject to the prior and superior rights of the holders of the shares of Series B Preferred Stock and shares of Series C Preferred Stock, upon written notice at least 120 days prior to December 31 of any calendar year from, and including, the year 2002, by the holders of at least two-thirds of the then outstanding shares of Series A Preferred Stock, MapQuest shall be required to redeem all of the issued, outstanding and nonredeemed shares of Series A Preferred Stock held by each holder of Series A Preferred Stock at a redemption price per share of $1.00 plus an amount equal to all declared but unpaid dividends on the Series A Preferred Stock. The redemption would be payable in three annual installments. No dividends may be paid on the Series A Preferred Stock unless MapQuest has fulfilled its dividend obligations on the Series B Preferred Stock and Series C Preferred Stock. The Series A Preferred Stock has an annual cash dividend rate of $.075 per share when and as declared by the Board of Directors. MapQuest has reserved 17,685,000 shares of Common Stock for issuance upon conversion of Series A Preferred Stock. Pursuant to the terms of the stock purchase agreement dated October 31, 1994, MapQuest sold 215,000 shares of its Series A Preferred Stock at a purchase price of $1 per share to MapQuest's then existing management. The aggregate purchase price of $215,000 was paid $127,500 in cash and $87,500 in notes due October 31, 1999. The notes bear interest at a rate of 7.5% compounded annually. Payments are due annually in an amount that is the lesser of one-fifth of the principal balance or 50% of any bonus to which each employee is entitled. The notes are secured by the shares purchased, with shares released to the extent each note is paid. At December 31, 1997 and 1998, outstanding notes receivable in conjunction with this stock purchase was $35,200. F-10 MAPQUEST.COM, INC. NOTES TO FINANCIAL STATEMENTS--(Continued) On March 26, 1996, pursuant to the terms of an Employment Agreement dated October 31, 1994, the Company sold 35,000 shares of its Series A Preferred Stock at a purchase price of $1 per share to a member of MapQuest's then existing management. The aggregate purchase price of $35,000 was paid $3,500 in cash and $31,500 in a note due October 31, 2000. The note bears interest at a rate of 7.5% compounded annually. The repayment terms were modified pursuant to a severance agreement in 1997. The payment of the note, inclusive of interest, is due on the earlier of September 30, 2000 or the date on which the severed employee transfers all shares of the employee's Series A Preferred Stock. The note is secured by the shares purchased with shares released to the extent the note is paid. At December 31, 1997 and 1998, outstanding notes receivable in conjunction with this stock purchase was $31,500. Series B Preferred Stock MapQuest is authorized to issue 2,000,000 shares of cumulative, redeemable, nonvoting Series B Preferred Stock. Holders of shares of Series B Preferred Stock are entitled to a cumulative dividend, payable semiannually, at the annual rate of $.46125 per share with respect to dividends payable on or prior to December 31, 1997 and $.39975 per share with respect to dividends payable after December 31, 1997. The dividend may be paid in cash or a combination of cash and additional shares of Series B Preferred Stock; however, at least 13.33% of the dividend payable in any period on or prior to December 31, 1997 shall be payable in cash. As of December 31, 1997 and 1998, there were no dividends in arrears. Subject to the prior written consent of the holders of a majority of the shares of Series C Preferred Stock then issued and outstanding, the Series B Preferred Stock is redeemable at the option of MapQuest at any time at a price of $6.15 per share, payable in cash or a combination of cash and subordinated convertible debentures. Subject to the prior and superior rights of holders of Series C Preferred Stock, the Series B Preferred Stock is also redeemable at the option of the holders upon written notice at least 120 days prior to December 31 of any calendar year from and including the year 2002, by the holders of at least two-thirds of the then outstanding shares of Series B Preferred Stock, at a price of $6.15 per share payable in cash, plus an amount equal to all dividends accrued and unpaid thereon to the redemption date. The redemption would be payable in three annual installments. The Series B Preferred Stock ranks senior to the Series A Preferred Stock and the common stock as to dividend, liquidation and redemption rights. The Series B Preferred Stock ranks senior to the Series C Preferred Stock as to dividend rights and junior to the Series C Preferred Stock as to liquidation and redemption rights. During 1996, 1997 and 1998 MapQuest paid dividends totaling $524,183, $558,812 and $516,299, respectively, on Series B Preferred Stock. These dividends included cash dividends of $69,889, $74,506 and -0- and stock dividends of $454,295, $484,306 and $516,299, during 1996, 1997 and 1998, respectively. The stock dividends were based on the issuance of additional shares of Series B Preferred Stock of 73,869, 78,749 and 83,951 shares during 1996, 1997 and 1998, respectively, using a value of $6.15 per share. Series C Preferred Stock MapQuest is authorized to issue 3,800,000 shares (0 shares as of December 31, 1996) of noncumulative, redeemable, convertible, voting Series C Preferred Stock. At the option of the holder, each share of Series C Preferred Stock is convertible into Common Stock at a conversion rate of 2.7 shares of Common Stock for each share of Series C Preferred Stock. Each share of Series C Preferred Stock automatically converts into shares of Common Stock, immediately prior to the closing of MapQuest's initial underwritten public offering pursuant to a Registration Statement filed with and declared effective by the Securities and Exchange Commission under the Securities Act of 1993, as amended, in which the aggregate proceeds to MapQuest equal at least $15,000,000 and in which the price per share of Common Stock equals or exceeds $2.60 per share (as adjusted for stock splits, stock dividends, recapitalizations and similar events). Each share of Series C Preferred Stock F-11 MAPQUEST.COM, INC. NOTES TO FINANCIAL STATEMENTS--(Continued) issued and outstanding has a number of votes equal to the number of shares into which such share of Series C Preferred Stock is then convertible. The Series C Preferred Stock ranks senior to the Common Stock, the Series A Preferred Stock and the Series B Preferred Stock as to liquidation and redemption rights and ranks senior to the Common Stock and the Series A Preferred Stock with respect to the payment of dividends. The Series C Preferred Stock ranks junior to the Series B Preferred Stock with respect to the payment of dividends. The Series C Preferred Stock has an annual cash dividend rate of $.26325 per share when and as declared by the Board of Directors. Upon written notice at least 120 days prior to December 31 of any calendar year from, and including, the year 2002, by the holders of at least two-thirds of the then outstanding shares of Series C Preferred Stock, the Company shall be required to redeem all of the issued, outstanding and nonredeemed shares of Series C Preferred Stock held by each holder of Series C Preferred Stock at a redemption price per share of $3.51 plus an amount equal to all declared but unpaid dividends on the Series C Preferred Stock. The redemption would be payable in three annual installments. The Company has reserved 9,437,456 shares of Common Stock for issuance upon conversion of Series C Preferred Stock. Pursuant to the terms of the stock purchase agreement dated July 17, 1997, MapQuest sold 3,431,498 shares of its Series C Preferred Stock at a purchase price of $3.51 per share. The aggregate purchase price of $12,044,558 was paid in cash. The difference between the aggregate purchase price net of the warrants issued during 1998 is being accreted to the redemption value through 2002. Accretion totaled $63,243 and $150,924 during 1997 and 1998, respectively. On November 1, 1997, MapQuest sold 63,856 shares of its Series C Preferred Stock at a purchase price of $3.51 per share to members of the Company's then existing management. The aggregate purchase price of $224,135 was paid by $224,135 in notes due November 1, 2004. The notes bear interest at a rate of 7.0% compounded annually. Payments are due annually, commencing in the year 2000, in an amount that is the lesser of one-fifth of the principal balance or 50% of any bonus to which each employee is entitled. The note is secured by the shares purchased with shares released to the extent the note is paid. At December 31, 1997 and 1998, outstanding notes receivable in connection with this stock purchase were $224,135. Common Stock As of December 31, 1998, MapQuest has a total of 35,778,701 shares of Common Stock reserved for future issuance. 6. Stock Options and Warrants 1995 Stock Option Plan As of December 31, 1998, 6,233,627 shares of MapQuest's Common Stock were reserved for issuance under the GeoSystems Global Corporation 1995 Stock Option Plan (the Plan), under which the Company may grant stock options to key employees and consultants. Each option entitles the holder to purchase from MapQuest one share of Common Stock at an exercise price which shall not be less than the fair market value of one share of stock on the date of grant. These options vest generally over five years and expire ten years from the date of grant. F-12 MAPQUEST.COM, INC. NOTES TO FINANCIAL STATEMENTS--(Continued) Changes during the years ended December 31, 1996, 1997 and 1998 in options outstanding were as follows:
Number of Exercise Price Options Per Option --------- -------------- Balance at January 1, 1996......................... 1,375,515 $ 0.04 Granted during 1996................................ 1,071,179 $ 0.04 Granted during 1996................................ 365,310 $ 0.06 Granted during 1996................................ 429,300 $ 0.37 Exercised.......................................... (7,074) $ 0.04 Forfeited.......................................... (27,216) $ 0.04 --------- ----------- Outstanding at December 31, 1996................... 3,207,014 $ .04-$0.37 Granted during 1997................................ 933,678 $ 0.37 Exercised.......................................... (3,240) $ 0.04 Exercised.......................................... (6,210) $ 0.06 Exercised.......................................... (864) $ 0.37 Forfeited.......................................... (268,855) $ 0.04 Forfeited.......................................... (24,840) $ 0.06 Forfeited.......................................... (80,022) $ 0.37 --------- ----------- Outstanding at December 31, 1997................... 3,756,661 $ .04-$0.37 Granted during 1998................................ 2,218,050 $ 0.37 Exercised.......................................... (78,570) $ 0.04 Exercised.......................................... (33,750) $ 0.06 Exercised.......................................... (7,290) $ 0.37 Forfeited.......................................... (551,855) $ 0.04 Forfeited.......................................... (135,000) $ 0.06 Forfeited.......................................... (320,596) $ 0.37 --------- ----------- Outstanding at December 31, 1998................... 4,847,650 $0.04-$0.37 ========= ===========
During June, 1998 MapQuest accelerated the vesting and extended the exercise period of options in connection with a severance agreement for the former President and recorded compensation expense of $38,000. Pro forma information regarding net loss and net loss per share is required by SFAS 123, and has been determined as if MapQuest had accounted for its employee stock options under the fair value method of that statement. As permitted under the provisions of SFAS No. 123, and based on the historical lack of a public market for MapQuest.com, Inc. options, no factor for volatility has been reflected in the option pricing calculation. The fair value of the options was estimated at date of grant using a Black-Scholes option pricing model with the following weighted average assumptions:
1996 1997 1998 ------- ------- ------- Assumptions Volatility factor of the expected market price of MapQuest's common stock........................... 0% 0% 0% Average risk free interest rate.................... 6.1% 6.1% 5.24% Dividend yield..................................... 0.0% 0.0% 0.0% Average life....................................... 5 years 5 years 5 years
F-13 MAPQUEST.COM, INC. NOTES TO FINANCIAL STATEMENTS--(Continued) The Black-Scholes option valuation model was developed for use in estimating the fair value of traded options which have no vesting restrictions and are fully transferable. In addition, option valuation models require the input of highly subjective assumptions including the expected stock price volatility. Because MapQuest stock options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, in management's opinion, the existing models do not necessarily provide a reliable single measure of the fair value of its stock options. For purposes of pro forma disclosures, the estimated fair value of the options is amortized to expense over the options' vesting period. MapQuest's pro forma information is as follows:
1996 1997 1998 ----------- ------------ ----------- Pro forma net loss applicable to common stockholders.............. $(1,801,499) $(13,432,774) $(3,822,092) Pro forma basic and diluted loss per share........................ $ (8.84) $ (64.43) $ (12.09)
Additional information with respect to outstanding options as of December 31, 1998 is as follows:
Options Options Outstanding Exercisable ----------------------- ----------- Weighted Average Remaining Number of Contractual Number of Exercise Prices Options Life Options --------------- ---------- ----------- ----------- $0.04.................................... 1,509,883 6.7 1,043,163 $0.06.................................... 165,510 7.5 89,640 $0.37.................................... 3,172,257 8.5 669,394 ---------- --------- $0.04 - $0.37............................ 4,847,650 1,802,197 ========== =========
The weighted average fair value of options granted during 1996, 1997 and 1998 was $0 in each year. On December 31, 1998 MapQuest granted 645,570 options for which the exercise price per share will be the initial public offering price determined upon completion of the offering MapQuest intends to make (see Note 15). These options are excluded from the disclosures in this Note 6. Warrants As of December 31, 1998, there were 390,258 warrants outstanding under which each warrant entitles the holder to purchase one share of MapQuest's Common Stock for $.04 per share. The warrants were issued for $.004 per warrant in connection with the original Series A Preferred Stock Purchase Agreement dated October 31, 1994. The warrants expire upon the earlier of October 31, 2004 or the fifth anniversary of an initial public offering. MapQuest has reserved 390,258 shares of common stock for issuance upon exercise of the warrants. As of December 31, 1998, there were 406,709 warrants outstanding under which each warrant entitles the holder to purchase one share of MapQuest's common stock for $1.30. The warrants were issued for $1,000 in connection with the Purchase and Sale of Series C Preferred Stock Agreement. The warrants expire on July 18, 2002. MapQuest has reserved 406,709 shares of common stock for issuance upon exercise of the warrants. F-14 MAPQUEST.COM, INC. NOTES TO FINANCIAL STATEMENTS--(Continued) As of December 31, 1998, there were 954,147 warrants outstanding under which each warrant entitles the holder to purchase one share of MapQuest's common stock for $1.04 per share. The warrants were issued in connection with a distribution agreement MapQuest executed in 1997. These warrants were valued at $0 on the date of grant using the "Black Scholes" option pricing model. The warrants expire on the earlier of April 22, 2002 or upon termination of the agreement. In the event that the holder shall have exercised the warrants prior to the Company terminating the distribution agreement due to a breach of the agreement by the holder, the Company shall have the option to purchase these shares of common stock for a period of 60 days after the termination of the distribution agreement at a purchase price which is the lesser of $1.77 or the then fair market value of such shares. The Company has reserved 954,147 shares of common stock for issuance upon exercise of the warrants. As of December 31, 1998, there were 522,231 warrants outstanding under which each warrant entitles the holder to purchase one share of MapQuest's common stock for $.004 per share. The warrants were issued during May 1998 to certain holders of Series C Preferred Stock in connection with the original issuance of the Series C Preferred Stock. The warrants expire on April 30, 2008. MapQuest has reserved 522,231 shares of common stock for issuance upon exercise of the warrants. As of December 31, 1998, there were 41,266 warrants outstanding under which each warrant entitles the holder to purchase one share of MapQuest's common stock for $1.30. The warrants were issued for services rendered by an outside party. The warrants expire in September 2003. 7. Loss Per Share The following table sets forth the computation of basic and diluted loss per share:
1996 1997 1998 ----------- ------------ ----------- Numerator: Net loss......................... $(1,276,179) $ (7,599,123) $(3,154,869) Preferred stock dividends........ (525,320) (560,023) (516,299) Accretion of redeemable preferred stock........................... -- (63,243) (150,924) Addition of redemption feature to preferred stock................. -- (5,210,383) -- ----------- ------------ ----------- Numerator for loss per share ap- plicable to common stockhold- ers............................. $(1,801,499) $(13,432,772) $(3,822,092) =========== ============ =========== Denominator: Denominator for basic and diluted loss per share--weighted-average shares.......................... 203,779 208,499 316,202 Basic and diluted loss per common share............................. $ (8.84) $ (64.43) $ (12.09) =========== ============ ===========
The following securities and number of shares have been excluded from the diluted per share computation as they are antidilutive:
1996 1997 1998 --------- --------- --------- Convertible redeemable preferred stock Se- ries A..................................... -- 6,550,000 6,550,000 Convertible redeemable preferred stock Se- ries C..................................... 3,495,354 3,495,354 Convertible preferred stock Series A........ 6,550,000 -- -- Stock options............................... 3,207,014 3,756,661 4,847,650 Stock warrants.............................. 390,258 1,751,114 2,314,611
F-15 MAPQUEST.COM, INC. NOTES TO FINANCIAL STATEMENTS--(Continued) The following table sets forth the computation of pro forma basic and diluted loss per share, assuming conversion of the shares of Series A Preferred Stock and Series C Preferred Stock to shares of common stock and the redemption of the shares of Series B Preferred Stock outstanding at December 31, 1998 at the beginning of the year ended December 31, 1998. However, the issuance of common shares for the redemption of the Series B Preferred Stock has not been reflected in the following table since an assumed offering price has not been included on a pro forma basis.
1998 ----------- Numerator: Net loss applicable to common stockholders.................. $(3,822,092) Redeemable preferred stock--Series C accretion.............. 150,924 Preferred stock dividends on cumulative preferred stock--Se- ries B..................................................... -- ----------- Numerator for pro forma basic and diluted loss per share.... $(3,671,168) Denominator: Weighted average number of common shares.................... 316,202 Assumed conversion of preferred shares to common shares..... 27,122,456 Assumed issuance of common shares to redeem Series B Pre- ferred Stock............................................... -- ----------- Denominator for pro forma basic and diluted loss per share.. 27,438,658 Pro forma basic and diluted loss per share.................. $ 0.13
8. Income Taxes No provision for income taxes has been recorded as MapQuest has incurred net operating losses during 1996, 1997 and 1998. The tax effects of temporary differences and net operating loss and credit carryforwards that give rise to MapQuest's deferred tax assets and liabilities are as follows:
December 31 ------------------------ 1997 1998 ----------- ----------- Deferred tax liabilities: Depreciation................................... $ (385,093) $ (347,306) Deferred tax assets: Allowance for doubtful accounts................ 84,040 146,324 Other.......................................... 481,607 496,126 Net operating loss and credit carryforwards.... 3,486,589 4,746,255 ----------- ----------- Total deferred tax assets........................ 4,052,236 5,388,705 ----------- ----------- Net deferred tax assets.......................... 3,667,143 5,041,399 Valuation allowances for deferred tax assets..... (3,667,143) (5,041,399) ----------- ----------- Net deferred taxes............................. $ -- $ -- =========== ===========
Due to the uncertainty of the realization of the assets, a valuation allowance has been provided. The valuation allowance was increased by $1,374,256, $2,618,565 and $1,239,780 for the years ended December 31, 1996, 1997 and 1998, respectively. As of December 31, 1998, MapQuest has net operating loss carryforwards of approximately $11,680,000, which expire between 2009 and 2018, and research and development tax credit carryforwards of approximately $623,000, which expire during 2010 and 2013. The utilization of approximately $10,035,000 of such net operating loss carryforwards and $561,000 of such research and development tax credit carryforwards is subject to an annual limitation of approximately $1,300,000, pursuant to Section 382 of the Internal Revenue Code. F-16 MAPQUEST.COM, INC. NOTES TO FINANCIAL STATEMENTS--(Continued) 9. Segment Information MapQuest has two reportable segments: MapQuest Business/Consumer and Digital Mapping Services. The MapQuest Business/Consumer segment provides products and services to address the web-based destination information needs of both businesses and consumers. Business and Consumer revenues and costs are combined for this segment because a significant portion of the costs, primarily compensation for operations personnel and related operations costs, are common to both Business and Consumer revenues and are not allocated. The Digital Mapping Services segment provides non-internet mapping products and services to the education, reference, directory, travel and governmental markets as well as providing customized mapping solutions to various other customers. Revenues are derived principally from the United States. The accounting policies of the segments are the same as those described in the summary of significant accounting policies. MapQuest evaluates performance based on gross profit and does not allocate assets to the reportable segments since management does not evaluate segment performance based on asset information and common assets are used in the segments. Accordingly, depreciation expense is not included in the information set forth below. MapQuest's reportable segments are strategic business units that offer different products and services. They are managed separately because each business requires different technology and marketing strategies.
Year ended December 31 ------------------------------- 1996 1997 1998 --------- --------- --------- In thousands Business segment revenues: MapQuest consumer/business-trade......... $ 7,159.7 $ 6,038.6 $ 7,912.0 Digital mapping services-trade........... 12,417.2 15,377.1 16,805.1 --------- --------- --------- Total...................................... $19,576.9 $21,415.7 $24,717.1 ========= ========= ========= Business segment profit: MapQuest consumer/business............... 2,834.5 1,503.4 3,103.2 Digital mapping services................. 4,422.9 4,609.9 3,968.1 --------- --------- --------- Total segment profit....................... 7,257.4 6,113.3 7,071.3 Reconciling items: Operating expenses....................... (8,976.1) (14,115.7) (10,524.1) Other and interest income................ 442.5 403.3 297.9 --------- --------- --------- Pre-tax loss............................... $(1,267.2) $(7,599.1) $(3,154.9) ========= ========= =========
10. Leases MapQuest leases certain office and warehouse space from one of its stockholders under operating leases. MapQuest also leases other office space and office equipment from unrelated parties under operating leases. Future lease commitments are as follows: 1999........................................................... $1,039,000 2000........................................................... 848,000 2001........................................................... 754,000 2002........................................................... 758,000 2003........................................................... 762,000 Thereafter..................................................... 2,351,000 ---------- $6,512,000 ==========
F-17 MAPQUEST.COM, INC. NOTES TO FINANCIAL STATEMENTS--(Continued) Rental expense for the years ended December 31, 1996, 1997 and 1998, was $683,000, $1,131,000 and $1,033,000, respectively. 11. Retirement Savings Plan MapQuest sponsors a defined contribution retirement savings plan for substantially all of its employees. Employees may elect to defer up to 15% of their salary. MapQuest has the option to match up to 100% of the employees' contribution up to 2% of their salary. The expense incurred related to this plan was $161,549, $209,235 and $189,512 during the years ended December 31, 1996, 1997 and 1998, respectively. 12. Related Party Transactions MapQuest paid a management fee of $75,000 to a stockholder during 1996 and 1997, respectively. In connection with the Purchase and Sale of Series C Preferred Stock Agreement, the $75,000 annual management fee arrangement was terminated effective July 17, 1997. MapQuest incurred rent expense of $112,000, $35,591 and $16,597 related to leases with one of its stockholders during 1996, 1997 and 1998, respectively. MapQuest recorded sales to its stockholders of $475,000, $432,320 and $513,626 during 1996, 1997 and 1998, respectively. Also, MapQuest recorded sales to other affiliates of $181,000, $1,290,900 and $2,022,000 during 1996, 1997 and 1998, respectively. As of December 31, 1998, MapQuest's accounts receivable - affiliates was $127,989. 13. Concentration of Credit Risk For the years ended December 31, 1996, 1997 and 1998, sales to MapQuest's top four customers represented 38%, 25% and 18% of total sales, respectively. During 1996, one customer represented 16% of total sales. 14. Commitments and Contingencies Minimum Annual Royalties MapQuest has guaranteed payment of the following minimum annual royalties under a distribution agreement for each of the following years:
Minimum Year ended December 31 Annual Royalty ---------------------- -------------- 1997...................................................... $ 166,667 1998...................................................... 345,833 1999...................................................... 462,500 2000...................................................... 500,000 2001...................................................... 500,000 2002...................................................... 125,000 ---------- Total................................................... $2,100,000 ==========
Contingencies On December 14, 1998, Mark Tornetta filed a lawsuit against Moore U.S.A., Inc. in the United States District Court for the Eastern District of Pennsylvania. The Company is defending this matter pursuant to an indemnity provision in its contract with Moore U.S.A., Inc. Mr. Tornetta's patent describes a specific method for searching real estate properties, which Mr. Tornetta alleges is infringed by Moore U.S.A., Inc.'s online real F-18 MAPQUEST.COM, INC. NOTES TO FINANCIAL STATEMENTS--(Continued) estate service. The Company believes that the claims of the patent are not infringed by MapQuest, and/or the patent is invalid. While the litigation is in the early stage, and its outcome cannot be predicted, MapQuest believes that this litigation is without merit, and intends to defend this action vigorously. On January 26, 1999, Civix-DDI, LLC filed a lawsuit in the United States District Court for the District of Colorado against twenty different defendants, including MapQuest. Seven of these defendants are licensees of MapQuest's technology and may have rights to indemnification under their respective agreements or at law. The complaint alleges infringement by MapQuest of two patents, by manufacture, use, sale, and offers to sell MapQuest's electronic yellow page services, systems and products. MapQuest believes that the claims of the patents are not infringed by MapQuest, and/or the patents are invalid. While the litigation is in the early stage, and its outcome cannot be predicted, MapQuest believes that this litigation is without merit, and intends to defend this action vigorously. MapQuest periodically receives notices of claims arising out of the normal course of business. In the opinion of management, these matters will not have a material effect on MapQuest's financial position, results of operations, or liquidity. 15. Subsequent Events and Pro Forma Adjustments During February 1999, the Board of Directors authorized MapQuest to file a registration statement with the Securities and Exchange Commission for an initial public offering of shares of its common stock. Prior to the closing of the offering, MapQuest intends to effect a 2.7 for 1 common stock split. Concurrently with the offering, MapQuest intends to establish an employee stock purchase plan under which a total of 1,755,000 shares of common stock will be made available for sale and intends to adopt the 1999 stock plan for which 3,645,000 shares of common stock will be reserved for future issuances. In connection with the above, MapQuest intends to amend and restate its Certificate of Incorporation such that it will have the authority to issue an aggregate of 105,000,000 shares of capital stock, consisting of 100,000,000 shares of common stock, par value $0.001 per share, and 5,000,000 shares of preferred stock, par value $0.01 per share. All references to common shares, per common share and par value per common share, except for references to authorized common shares, in the financial statements have been restated to give effect to the common stock split and change in par value per common share. MapQuest intends to use a portion of the proceeds of the offering to redeem the outstanding shares of Series B Preferred Stock. Also, upon the completion of an initial public offering in which the gross proceeds paid by the public are at least $15,000,000 and, with respect to the Series C Preferred Stock at a per share price to the public of not less than $2.60, all outstanding redeemable preferred shares of Series A Preferred Stock and Series C Preferred Stock will automatically be converted into shares of common stock in the manner described in Note 5. The pro forma balance sheet at December 31, 1998 gives effect to such conversion as if it occurred on that date. The pro forma loss per share (Note 7) for the year ended December 31, 1998 gives effect to the conversion of such shares as if it occurred at the beginning of 1998. F-19 [Back cover--Picture of various Digital Mapping Services products and logos of representative customers.] [LOGO] MAPQUEST.COM(TM) PART II INFORMATION NOT REQUIRED IN THE PROSPECTUS Item 13. Other Expenses of Issuance and Distribution. Expenses in connection with the issuance and distribution of the securities being registered, other than underwriting discounts and commissions, are estimated as follows: SEC registration fee.......................................... $ 13,900 NASD filing fee............................................... 6,848 Printing and engraving expenses............................... 150,000 Legal fees and expenses....................................... 450,000 Accountants' fees and expenses................................ 550,000 Nasdaq listing fee............................................ 100,000 Transfer Agent's fees and expenses............................ 10,000 Miscellaneous costs........................................... 19,252 ---------- Total....................................................... $1,300,000 ==========
Item 14. Indemnification of Directors and Officers. Section 145 of the Delaware General Corporation Law permits a corporation to include in its charter documents, and in agreements between the corporation and its directors and officers, provisions expanding the scope of indemnification beyond that specifically provided by the current law. The Registrant's Restated Certificate of Incorporation provides for the indemnification of directors to the fullest extent permissible under Delaware law. The Registrant's Restated Bylaws provide for the indemnification of officers, directors and third parties acting on behalf of the Registrant if the person acted in good faith and in a manner reasonably believed to be in and not opposed to the best interest of the Registrant, and, with respect to any criminal action or proceeding, the indemnified party had no reason to believe his conduct was unlawful. The Registrant has entered into indemnification agreements with its directors and executive officers, in addition to indemnification provided for in the Registrant's Restated Bylaws, and intends to enter into indemnification agreements with any new directors and executive officers in the future. Item 15. Recent Sales of Unregistered Securities. Since March 1996, the Registrant has issued and sold the following unregistered securities: (1) In March 1996, the Registrant sold an aggregate of 35,000 shares of Series A Preferred Stock at an aggregate purchase price of $35,000, or $1.00 per share, to Perry Evans, the Registrant's then Vice President of Sales and Marketing. (2) In June 1996, in addition to options issuable under the 1995 stock option plan, the Registrant issued Barbara Petersen an option to purchase 108,000 shares of common stock at an exercise price of $.37 per share. The option is exercisable at any time prior to June 11, 2006. (3) In July 1997, the Registrant sold an aggregate of 3,431,498 shares of Series C Preferred Stock for an aggregate purchase price of $12,044,558, or $3.51 per share, to Highland Capital Partners III Limited Partnership, Highland Entrepreneurs' Fund III Limited Partnership, Weston Presidio Capital II, L.P., Trident Capital Partners Fund-I, L.P., Trident Capital Partners Fund-I, C.V., The Roman Arch Fund, L.P., The Roman Arch Fund II, L.P., Mr. Bart Faber and Stet & Query, L.P. II-1 (4) In November 1997, the Registrant sold 31,928 shares of Series C Preferred Stock at a purchase price of $112,067.28, or $3.51 per share, to James Thomas and sold 31,928 shares of Series C Preferred Stock at a purchase price of $112,067.28, or $3.51 per share, to William Muenster. (5) In April 1997 and in connection with a licensing and distribution agreement, the Registrant issued National Geographic Holdings, Inc. warrants to purchase 954,147 shares of the Registrant's common stock at an exercise price of $1.04 per share. The warrants expire in April 22, 2002. (6) In July 1997, the Registrant issued to Prudential Securities Incorporated a warrant, for an aggregate purchase price of $1,000, to purchase 406,709 shares of the Registrant's common stock at an exercise price of $1.30 per share. The warrant expires in July 2002. (7) In May 1998, the Registrant granted certain Series C Preferred Stock investors warrants to purchase an aggregate of 522,231 shares of common stock at an exercise price of $0.004 per share, without the payment of additional amounts to the Registrant. The warrants expire in April 2008. (8) In September, 1998 the Registrant issued Ramsey/Beirne Associates a warrant to purchase 41,266 shares of the Registrant's common stock at an exercise price of $1.30 per share in partial consideration for services performed on behalf of the Registrant. The warrant expires in September 2003. (9) Since March 1996, the Registrant has issued 137,214 shares of common stock to its employees upon the exercising of options granted under its 1995 stock option plan at an exercise price of $0.04 per share. The sales of the securities described in Item 15(9) were deemed to be exempt from registration under the Securities Act in reliance on Rule 701 promulgated under Section 3(b) of the Securities Act as transactions pursuant to compensatory benefit plans and contracts relating to compensation as provided under such Rule 701. The sale of the securities described in Items 15(1) through 15(8) were deemed to be exempt from registration under the Securities Act in reliance on Section 4(2) of the Securities Act, as transactions by an issuer not involving a public offering, or Rule 506 under Regulation D. Item 16. Exhibits (a)Exhibits A list of exhibits filed herewith is contained on the Exhibit Index immediately preceding such exhibits and is incorporated herein by reference. (b) Financial Statement Schedules. Report of Independent Auditors Schedule II: Valuation and Qualifying Accounts Item 17. Undertakings The Registrant hereby undertakes to provide the Underwriters at the closing specified in the Underwriting Agreement certificates in such denominations and registered in such names as required by the Underwriters to permit prompt delivery to each purchaser. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the provisions described in Item 14 above, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933, and will be governed by the final adjudication of such issue. II-2 The undersigned Registrant undertakes that: (1) for purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus as filed as part of the registration statement in reliance upon Rule 430A and contained in the form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective, and (2) for the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and this offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. II-3 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant has duly caused this amended registration statement on Form S-1 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Mountville, State of Pennsylvania, on April 12, 1999. MAPQUEST.COM, INC. /s/ Michael J. Mulligan By: _________________________________ Michael J. Mulligan Chief Executive Officer Pursuant to the requirements of the Securities Act of 1933, as amended, this amended registration statement has been signed by the following persons in the capacities and on April 12, 1999.
Signatures Title Chief Executive Officer (Principal * Executive Officer) and Chairman - ------------------------------------- Michael J. Mulligan * Chief Financial Officer and Vice - ------------------------------------- President, Finance and James Thomas Administration and Secretary (Principal Financial Officer and Principal Accounting Officer) * Director - ------------------------------------- Robert McCormack * Director - ------------------------------------- John Moragne * Director - ------------------------------------- Daniel Nova * Director - ------------------------------------- Carlo von Schroeter * Director - ------------------------------------- C. Richard Allen /s/ Michael J. Mulligan By: _________________________________ Michael J. Mulligan Attorney-in-Fact
II-4 REPORT OF INDEPENDENT AUDITORS Board of Directors MapQuest.com, Inc. We have audited the financial statements of MapQuest.com, Inc. as of December 31, 1997 and 1998, and for each of the three years in the period ended December 31, 1998, and have issued our report thereon dated February 18, 1999 except for Note 15 as to which the date is April , 1999 (included elsewhere in this Registration Statement). Our audits also included the financial statement schedule listed in Item 16(b) of this Registration Statement. This schedule is the responsibility of the Company's management. Our responsibility is to express an opinion based on our audits. In our opinion, the financial statement schedule referred to above, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein. Ernst & Young LLP Harrisburg, Pennsylvania February 18, 1999 --------------------- The foregoing report is in the form that will be signed upon the completion of the restatement of the capital accounts described in Note 15 to the financial statements. Ernst & Young LLP Harrisburg, Pennsylvania April 9, 1999 II-5 SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS MapQuest.com, Inc.
COL. A COL. B COL. C COL. D COL. E ------ ------------ --------------------------------- ------------ ----------------- Additions --------------------------------- Balance at Charged to Other Beginning of Charged to Costs Accounts-- Deductions-- Balance at End of Description Period and Expenses Describe Describe Period ----------- ------------ ---------------- ---------------- ------------ ----------------- Year Ended December 31, 1998: Reserves and allowances deducted from asset accounts: Allowance for uncollectible accounts......... $407,136 $271,598 $209,008(1) $469,726 Year Ended December 31, 1997: Reserves and allowances deducted from asset accounts: Allowance for uncollectible accounts......... $433,672 $262,388 $288,924(1) $407,136 Year Ended December 31, 1996: Reserves and allowances deducted from asset accounts: Allowance for uncollectible accounts......... $263,171 $232,500 $ 61,999(1) $433,672
- -------- (1) Uncollectible accounts written off, net of recoveries. II-6 EXHIBIT INDEX
Exhibit Number Description Page ------- ----------- ---- 1.1 Form of Underwriting Agreement* 3.1 Restated Certificate of Incorporation, as currently in effect 3.2 Form of Amendment No. 2 to the Amended and Restated Certificate of Incorporation of MapQuest, to be filed prior to consummation of the offering 3.3 Form of Amended and Restated Certificate of Incorporation of MapQuest, to be effective immediately prior to the consummation of the offering 3.4 By-Laws of MapQuest 4.1 Specimen common stock certificate* Form of Opinion of Mayer, Brown & Platt as to legality of the 5.1 securities being issued* 10.1 Cartographic Product Development, Publishing, Marketing and Distribution Agreement, dated as of April 22, 1997, between National Geographic Society, National Geographic Holdings, Inc., and MapQuest.com, Inc.* +10.2 Employment Agreement, dated as of August 10, 1998, between Michael Mulligan and MapQuest.com, Inc. +10.3 Employment Agreement, dated as of October 31, 1994, between William Muenster and MapQuest.com, Inc. +10.4 MapQuest.com, Inc. 1995 Stock Option Plan 10.5 Amendment No. 1 to 1995 Stock Option Plan of MapQuest.com, Inc.* +10.6 Amendment No. 2 to 1995 Stock Option Plan of MapQuest.com, Inc. +10.7 Amendment No. 3 to 1995 Stock Option Plan of MapQuest.com, Inc. 10.8 Amendment No. 4 to 1995 Stock Option Plan of MapQuest.com, Inc. 10.9 MapQuest 1999 Employee Stock Purchase Plan 10.10 MapQuest 1999 Stock Plan 10.11 Form of Recapitalization Agreement among MapQuest and the stockholders named therein 10.12 Agreement between MapQuest and Qwest Communications, dated May 18, 1998 10.13 Lease Agreement, dated December 9, 1996 between Donnerville Associates and MapQuest in respect of the Mountville facility 21.1 Subsidiaries of MapQuest 23.1 Consent of Independent Auditors 23.4 Consent of counsel (included in Exhibits 5.1 and 5.2)* +24.1 Power of Attorney +27.1 Financial Data Schedule
- -------- * To be filed by amendment. + Previously filed. EX-3.1 2 RESTATED CERTIFICATE OF INCORPORATION EXHIBIT 3.1 RESTATED CERTIFICATE OF INCORPORATION OF GEOSYSTEMS GLOBAL CORPORATION It is hereby certified that: 1. The present name of the corporation (hereinafter called the "Corporation") is GEOSYSTEMS GLOBAL CORPORATION, which is the name under which the Corporation was originally incorporated; the date of filing of the original Certificate of Incorporation of the Corporation with the Secretary of State of Delaware is March 28, 1994, and a Restated Certificate of Incorporation was filed with the Secretary of State of Delaware on November 1, 1994. 2. This Restated Certificate of Incorporation restates and amends the Certificate of Incorporation of the Corporation by amending said Certificate of Incorporation of the Corporation in its entirety as set forth in Exhibit A --------- attached hereto and made a part hereof. 3. The Restated Certificate of Incorporation herein certified was duly adopted by the Board of Directors of the Corporation and by the stockholders of the Corporation pursuant to Sections 242 and 245 of the General Corporation Law of the State of Delaware, as amended. 4. IN WITNESS WHEREOF, said GEOSYSTEMS GLOBAL CORPORATION has caused this certificate to be signed by James Thomas, its Executive Vice President and Secretary, this 17/th/ day of July, 1997. GEOSYSTEMS GLOBAL CORPORATION By: /s/ James Thomas ------------------------------------------ Name: James Thomas Title: Executive Vice President and Secretary RESTATED CERTIFICATE OF INCORPORATION OF GEOSYSTEMS GLOBAL CORPORATION A DELAWARE CORPORATION GeoSystems Global Corporation, a corporation organized and existing under the laws of the State of Delaware, does hereby certify: 1. The name of the corporation is GeoSystems Global Corporation (the "Corporation"). The original Certificate of Incorporation of the Corporation was filed with the Secretary of State of the State of Delaware on March 28, 1994, and a Restated Certificate of Incorporation was filed with the Secretary of State of Delaware on November 1, 1994. 2. The restatement herein set forth has been duly approved by the Board of Directors of the Corporation and by the stockholders of the Corporation pursuant to Section 242 of the General Corporation Law of the State of Delaware ("Delaware Law"). 3. The restatement herein set forth has been duly adopted pursuant to Section 245 of the Delaware Law. This Restated Certificate of Incorporation restates and integrates and further amends the provisions of the Corporation's Certificate of Incorporation as heretofore restated and amended. 4. The text of the Certificate of Incorporation is hereby restated and amended to read in its entirety as follows: ARTICLE I The name of the corporation is GeoSystems Global Corporation (the "Corporation"). ARTICLE II The address of the Corporation's registered office in the State of Delaware is Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County of New Castle. The name of its registered agent at such address is The Corporation Trust Company. ARTICLE III The Corporation shall have perpetual existence. The nature of the business or purposes to be conducted or promoted is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware. ARTICLE IV This Corporation is authorized to issue two classes of stock to be designated, respectively, "Common Stock" and "Preferred Stock." The total number of shares which this corporation is authorized to issue is thirty-five million (35,000,000) shares. Twenty million (20,000,000) shares shall be designated Common Stock, par value $0.001 per share. Fifteen million (15,000,000) shares shall be designated Preferred Stock, par value $0.01 per share, of which six million five hundred and fifty thousand (6,550,000) shares shall be designated Series A Preferred Stock (the "Series A Preferred"), two million (2,000,000) shares shall be designated Series B Preferred Stock (the "Series B Preferred") and three million eight hundred thousand (3,800,000) shares shall be designated Series C Preferred Stock (the "Series C Preferred") and two million six hundred and fifty thousand (2,650,000) shares shall be undesignated as to series. Any Preferred Stock not previously designated as to series may be issued from time to time in one or more series pursuant to a resolution or resolutions providing for such issue duly adopted by the Board of Directors (authority to do so being hereby expressly vested in the Board), and such resolution or resolutions shall also set forth the voting powers, full or limited or none, of each such series of Preferred Stock and shall fix the designations, preferences and relative, participating, optional or other special rights and qualifications, limitations or restrictions of each such series of Preferred Stock. The Board of Directors is authorized to alter the designation, rights, preferences, privileges and restrictions granted to or imposed upon any wholly unissued series of Preferred Stock and, within the limits and restrictions stated in any resolution or resolutions of the Board of Directors originally fixing the number of shares constituting any series of Preferred Stock, to increase or decrease (but not below the number of shares of any such series then outstanding) the number of shares of any such series subsequent to the issue of shares of that series. Each share of Preferred Stock issued by the Corporation, if reacquired by the Corporation (whether by redemption, repurchase, conversion to Common Stock or other means), shall upon such reacquisition resume the status of authorized and unissued shares of Preferred Stock, undesignated as to series and available for designation and issuance by the Corporation in accordance with the immediately preceding paragraph. -2- ARTICLE V The preferences and relative, optional and other special rights of the shares of Series A Preferred, and the qualifications, limitations or restrictions thereof, are as follows: 1. DESIGNATION OF SERIES: RANK. The number of shares of Series A --------------------------- Preferred may be increased or decreased, at any time and from time to time, by resolution of the Board of Directors: provided that no decrease shall reduce the number of shares of Series A Preferred to a number less than that of the shares of such series then outstanding. The Series A Preferred shall rank senior to the Common Stock of the Corporation and junior to the Series B Preferred and Series C Preferred with respect to the payment of dividends and as to (i) the distribution of assets upon liquidation, dissolution or winding up, and (ii) the distribution of assets upon the redemption of the Series A Preferred, Series B Preferred and Series C Preferred. Subject to the protective provisions set forth in Section 7(b) hereof, the Board of Directors may by resolution issue and designate additional series or classes of Preferred Stock which may rank senior to, junior to, or on parity with the Series A Preferred with respect to the payment of dividends, the distribution of assets upon liquidation, dissolution or winding up, redemption rights, and the other rights, preferences and privileges of such preferred stock. 2. DIVIDENDS AND DISTRIBUTIONS. --------------------------- (a) Subject to the prior and superior rights of the holders of any shares of Series B Preferred, of shares of Series C Preferred or of shares of any other series of Preferred Stock now existing or hereafter designated ranking senior to the shares of Series A Preferred with respect to dividends, the holders of shares of Series A preferred, in preference to the holders of Common Stock and any series of Preferred Stock now existing or hereafter designated which expressly provides by its terms that it is junior to the Series A Preferred in dividend rights, shall be entitled to receive, when and as declared by the Board of Directors out of funds legally available therefor, an annual cash dividend in the amount of $0.075 per share. Such dividends shall not be cumulative, and no right shall accrue to holders of Series A Preferred by reason of the fact that dividends on such shares are not declared or paid in any year. (b) Notwithstanding Section 2(a) hereof, the Board of Directors of the Corporation may not declare, and the Corporation may not pay, any dividends on the shares of Series A Preferred unless (i) the Corporation has paid in cash all dividends or interest (as the case may be) accrued and payable on the shares of Series B Preferred or Convertible Debt (as defined in Article VI, Section 4(a) hereof) (as the case may be) as of the date of the proposed dividend on the shares of Series A Preferred and (ii) the Corporation has paid in cash a dividend on each share of Series C Preferred as of the date of the proposed dividend on the shares of Series A Preferred in an amount equal to the original purchase price of the Series C Preferred multiplied by a fraction, the numerator of which is the amount of the dividend payable on the Series A Preferred, and the denominator of which is the original purchase price of the Series A Preferred -3- (subject to appropriate adjustment for all stock splits, stock dividends, combinations and recapitalizations of Series A and Series C Preferred). (c) Notwithstanding Section 2(a) hereof, the Corporation may at any time, out of funds legally available therefor, repurchase shares of Common Stock of the corporation (i) issued to or held by employees, directors or consultants of the Corporation or its subsidiaries upon termination of their employment of services, pursuant to an agreement providing for such right of repurchase, or (ii) issued to or held by any person subject to the Corporation's right of first refusal to purchase such shares where the purchase is pursuant to the exercise of such right of first refusal, in either case whether or not dividends on the Series A Preferred shall have been declared and paid or funds set aside therefor. 3. VOTING RIGHTS. Except as otherwise required by law, each share of ------------- Series A Preferred issued and outstanding shall at any time have a number of votes equal to the number of shares of Common Stock into which such share of Series A Preferred is then convertible pursuant to Section 5 hereof. Subject to the foregoing, the holders of Series A Preferred shall be entitled to vote with the holders of Common Stock on all matters submitted to a vote of stockholders (whether at a meeting or by written consent); provided that, subject to Section 1 hereof, the Series A Preferred shall be entitled to vote as a separate series (the affirmative vote or consent of the holders of at least a majority of the outstanding shares of such separate series being required) or as part of a class (together with other series of Preferred Stock) on any matter with respect to which a series vote by the Series A Preferred or a class vote of the Preferred Stock, as the case may be, shall be expressly required by law, and any such class or series vote may be given in person or by proxy, either in writing without a meeting or by vote at any meeting called for the purpose. 4. LIQUIDATION. Subject to the prior and superior rights of the holders ----------- of any shares of Series B Preferred, of shares of Series C Preferred and of shares of any other series of Preferred Stock now existing or hereafter designated ranking senior to the shares of Series A Preferred with respect to liquidation preference, in the event of any voluntary or involuntary dissolution, liquidation or winding up of the Corporation (for the purposes of this Section 4, a "LIQUIDATION"), before any distribution of assets shall be made to the holders of the Common Stock or the holders of any other stock now existing or hereafter designated that by its express terms ranks junior to the Series A Preferred in respect of distributions upon the Liquidation of the Corporation, the holder of each share of Series A Preferred then outstanding shall be entitled to be paid out of the assets of the Corporation available for distribution to its stockholders an amount in cash equal to $1.00 per share plus all dividends declared and unpaid on such share on the date fixed for the distribution of assets of the Corporation in liquidation to the holders of Series A Preferred. If upon any Liquidation the aggregate assets available for distribution to the holders of the Series A Preferred and any other stock of the Corporation now existing or hereafter designated ranking on parity with the Series A Preferred upon Liquidation and which shall then be -4- outstanding (hereinafter in this paragraph called the "TOTAL AMOUNT AVAILABLE") shall be insufficient to pay the holders of all outstanding shares of Series A Preferred and all such other parity stock the full amounts (including all dividends accrued and unpaid) to which they shall be entitled by reason of such Liquidation of the Corporation, then there shall be paid to the holder of each share of Series A Preferred in connection with such Liquidation an amount equal to the product derived by multiplying the Total Amount Available times a fraction, the numerator of which shall be the full amount to which such share of Series A Preferred shall be entitled under the terms of the preceding paragraph by reason of such Liquidation and the denominator of which shall be the total amount which would have been distributed by reason of such Liquidation with respect to all Series A Preferred and other stock ranking on a parity with the Series A Preferred then outstanding upon a Liquidation had the Corporation possessed sufficient assets to pay the maximum amount which the holders of all such stock would be entitled to receive in connection with such Liquidation. The voluntary sale, conveyance, lease, exchange or transfer of all or substantially all the property or assets of the Corporation, or the merger or consolidation of the Corporation into or with any other corporation, or the merger of any other corporation into the Corporation, or any purchase or redemption of some or all of the shares of any class or series of stock of the Corporation, shall not be deemed to be a Liquidation of the Corporation for the purposes of this Section 4. The holder of any shares of Series A Preferred shall not be entitled to receive any payment owed for such shares under this Section 4 until such holder shall cause to be delivered to the Corporation (i) the certificate(s) representing such shares and (ii) transfer instrument(s) satisfactory to the Corporation and sufficient to surrender such shares to the Corporation free of any adverse interest. After payment of the full amount of the liquidating distribution to which any holder of Series A Preferred is entitled, the holder of such share or shares will not be entitled to any further participation in any distribution of assets by the Corporation. 5. CONVERSION RIGHTS. ----------------- (a) Optional Conversion into Common Stock. The holder of any share ------------------------------------- of Series A Preferred shall have the right, at such holder's option, at any time to convert such share into that number of shares of fully paid and nonassessable whole shares of Common obtained by dividing $1.00 by the Series A Conversion Price then in effect. The Series A Conversion Price shall initially be $1.00 per share, and shall be subject to adjustment as set forth below. (b) Automatic Conversion. Each share of Series A Preferred shall -------------------- automatically convert into shares of fully paid and nonassessable Common Stock, without any further action required on the part of the holder thereof, either (i) immediately prior to the closing of the Corporation's initial underwritten public offering pursuant to a Registration Statement filed with -5- and declared effective by the Securities and Exchange Commission under the Securities Act of 1933, as amended, and having an aggregate offering price to the public of not less than $15,000,000 (a "Qualified Public Offering") or (ii) upon the affirmative vote of the holders of at least two-thirds (2/3) of the then outstanding shares of Series A Preferred, whichever is earlier. The number of shares of Common Stock issuable upon such automatic conversion of any such share shall be equal to the number obtained by dividing $1.00 by the Series A Conversion Price then in effect. (c) Procedure for Conversion. To exercise the conversion privilege set ------------------------ forth in Section 5(a) hereof, the holder of shares of Series A Preferred shall surrender the shares to be converted, accompanied by instruments of transfer satisfactory to the Corporation and sufficient to transfer the shares being converted to the Corporation free of any adverse interest, at the principal offices of the Corporation or any of the offices or agencies maintained for such purpose by the Corporation ("Conversion Agent") and shall give written notice (by registered or certified mail, overnight courier or hand delivery) to the Corporation at such Conversion Agent that the holder elects to convert such shares. Such notice shall state whether and to what extent the shares so surrendered for conversion shall be converted into shares of Common Stock, and shall also state the name or names, together with address or addresses, in which the certificate or certificates for Common Stock issuable on such conversion shall be issued. As promptly as practicable after the surrender of such shares of Series A Preferred as aforesaid, the Corporation shall issue and deliver at such Conversion Agent to such holder, or on such holder's written order, a certificate or certificates for the number of full shares of Common Stock issuable upon the conversion of such shares in accordance with the provisions hereof. Certificates will be issued for the balance of the shares of Series A Preferred in any case in which fewer than all of the shares of Series A Preferred are converted. Each conversion pursuant to Section 5(a) hereof shall be deemed to have been effected immediately prior to the close of business on the date on which the shares of Series A Preferred shall have been so surrendered and such notice shall have been received by the Corporation as aforesaid. Each conversion pursuant to Section 5(b) hereof shall be deemed to have been effected, automatically and with no further required action on die part of the holder of the shares as converted, immediately prior to (but contingent upon) the closing of the sale of shares pursuant to the Qualified Public Offering. In each such case, the person or persons in whose name or names any certificate or certificates for shares of Common Stock shall be issuable upon such conversion shall be deemed to have become the holder or holders of record of the Common Stock represented thereby at the effective date of such conversion, unless the stock transfer books of the Corporation shall be closed on such date, in which event such conversion shall be deemed to have been effected immediately prior to the open of business on the next succeeding day on which such stock transfer books are open, and such person or persons shall be deemed to have become such holder or holders of record of the Common Stock at the open of business on such later day. In each such case, the conversion shall be at the Conversion Price in effect on the effective date of the conversion as determined above. No payment or adjustment shall be made on conversion for any dividends payable on the Common Stock delivered on -6- conversion. Effective as of any such conversion, the Corporation shall be excused from paying any dividends on the shares converted, except for any dividends accrued (whether or not earned or declared) and unpaid through the day of conversion. No fractional interest in a share of Common Stock shall be deliverable upon the conversion of any share or shares of Series A Preferred, and the number of shares of Common Stock issuable upon any such conversion shall be rounded down to the nearest whole share. If more than one certificate representing shares of Series A Preferred is to be converted at one time by the same holder into Common Stock, the number of full shares of Common Stock issuable upon conversion thereof shall be computed on the basis of the aggregate number of shares of Series A Preferred represented by such certificates, or the specified portions thereof to be converted. (d) Adjustment of Conversion Price. The Conversion Price shall be ------------------------------ adjusted from time to time in respect of any of the following events occurring on or after the date upon which a share of Series A Preferred is first issued (the "ORIGINAL ISSUE DATE" of the Series A Preferred), as follows: (i) Dividends and Distributions. In case the Corporation shall --------------------------- pay or make a dividend or other distribution upon its Common Stock payable in Common Stock, the Conversion Price in effect at the opening of business on the day following the date fixed for the determination of stockholders entitled to receive such dividend or other distribution shall be reduced by multiplying such Conversion Price by a fraction, of which the numerator shall be the number of shares of Common Stock outstanding at the close of business on the date fixed for such determination and the denominator shall be the sum of such number of shares and the total number of shares constituting such dividend or other distribution, such reduction to become effective immediately after the opening of business on the day following the date fixed for such determination. For the purposes of this paragraph (i), the number of shares of Common Stock at any time outstanding shall not include shares held in the treasury of the Corporation. The Corporation will not pay any dividend or make any distribution on shares of Common Stock held in the treasury of the Corporation. (ii) Subdivisions and Combinations. In case the outstanding ----------------------------- shares of Common Stock shall each be subdivided into a greater number of shares of Common Stock (other than any such subdivision which is effected pursuant to a dividend or distribution for which adjustment to the Conversion Price is made under paragraph (i) above), the Conversion Price in effect at the opening of business on the day following the day upon which such subdivision becomes effective shall be proportionately reduced and, conversely, in case the outstanding shares of Common Stock shall each be combined into a smaller number of shares of Common Stock, the Conversion Price in effect at the opening of business on the day following the day upon which such combination becomes effective shall be proportionately increased, such reduction or increase, as the case may be, to become effective immediately after the opening of business on the day following the day upon which such subdivision or combination becomes effective. -7- (iii) Distributions other than Cash Dividends. In case the --------------------------------------- Corporation shall declare a cash dividend upon its Common Stock payable otherwise than out of retained earnings or shall distribute to holders of its Common Stock shares of its capital stock (other than Common Stock), stock or other securities of other persons, evidences of indebtedness issued by the Corporation or other persons, assets (excluding cash dividends out of retained earnings) or options or rights (excluding options to purchase and rights to subscribe for Common Stock or other securities of the Corporation convertible into or exchangeable for Common Stock), then, in each such case, the holders of shares of Series A Preferred shall, concurrently with the distribution to holders of Common Stock, receive a like distribution based upon the number of shares of Common Stock into which such shares of Series A Preferred shall then be convertible. (iv) Reclassifications. In case of any capital reorganization ----------------- or reclassification of the stock of the Corporation (other than any transaction described in paragraph (i), (ii) or (iii) hereof), of the consolidation or merger of the Corporation with or into another person (other than a consolidation or merger in which the Corporation is the continuing entity and which does not result in any change in the Common Stock), the shares of the Series A Preferred shall, after such reorganization, reclassification, consolidation or merger, be convertible into the kind and number of shares of stock or other securities or property of the Corporation or otherwise to which the holder thereof would have been entitled if immediately prior to such reorganization, reclassification, consolidation, or merger the holder had converted the holder's shares of the Series A Preferred into Common Stock. (v) Tax Adjustments. The Corporation may in its sole --------------- discretion make such reductions in the Conversion Price, in addition to those required by paragraphs (i), (ii), (iii) and (iv) above, as it considers to be advisable in order that any event treated for Federal income tax purposes as a dividend of stock or stock rights shall not be taxable to the recipient. (vi) Reservation of Shares. the Corporation shall at all times --------------------- reserve and keep available, free from preemptive fights, out of its authorized but unissued Common Stock, for the purpose of issuance upon conversion of the Series A Preferred, the maximum number of shares of Common Stock then deliverable upon the conversion of all shares of Series A Preferred then outstanding. All common Stock issued upon conversion of the Series A Preferred shall be newly issued and, when issued, shall be duly authorized, validly issued, fully paid and nonassessable, and free and clear of any liens or encumbrances. 6. NOTICES OF RECORD DATE. In the event of any taking by the Corporation ---------------------- of a record of the holders of any class of securities for the purpose of determining the holders thereof who are entitled to receive any dividend (other than a cash dividend) or other distribution, any right to subscribe for, purchase or otherwise acquire any shares of stock of any class or any other securities or property, or to receive any other right, the Corporation shall mail to each holder of Series A Preferred, at least fifteen (15) days prior to the date specified therein, a notice specifying the date on which any such record is to be taken for the purpose of such dividend, distribution or right, and the amount and character of such dividend, distribution or right. -8- 7. PROTECTIVE PROVISIONS. So long as any shares of Series A Preferred --------------------- are outstanding, this Corporation shall not, without first obtaining the approval (by vote or written consent, as provided by law) of the holders of at least a majority of the then outstanding shares of Series A Preferred voting together as a class: (a) amend or repeal any provision of, or add any provision to, this Corporation's Restated Certificate of Incorporation if such action would adversely alter or change the preferences, rights, privileges or powers of, or the restrictions provided for the benefit of, the Series A Preferred; or (b) authorize or issue shares of any class of stock (other than the Series B Preferred issued as dividends as described in Article VI hereof) having any preference or priority as to dividend, redemption or liquidation preferences which is superior to any such preference or priority of the Series A Preferred. 8. REDEMPTION RIGHTS. ----------------- (a) Holder Redemption. Subject to the prior and superior rights of ----------------- the holders of the shares of Series B Preferred and shares of Series C Preferred, upon written notice at least one hundred twenty (120) days prior to December 31 of any calendar year from, and including, the year 2002, by the holders of at least two-thirds (2/3) of the then outstanding shares of Series A Preferred (a "Holder Election"), the Corporation shall be required to redeem all of the issued, outstanding and nonredeemed shares of Series A Preferred held by each holder of Series A Preferred (a "Holder Redemption"), at a redemption price per share (the "Redemption Price") of $1.00 plus an amount equal to all declared but unpaid dividends on the Series A Preferred. In the event of any such Holder Election, the Corporation shall, out of and only to the extent of funds legally available therefor, redeem (i) on the December 31 following such Holder Election, one-third of the number of shares of Series A Preferred then issued and outstanding; (ii) on the second December 31 following such Holder Election, one-half of the number of shares of Series A Preferred then issued and outstanding; and (iii) on the third December 31 following such Holder Election, all of the shares of Series A Preferred then issues and outstanding. the Redemption Price payable upon any Holder Redemption shall be paid in cash, to the extent of funds legally available therefor. (b) In the event that the Corporation does no have legally available funds sufficient to pay in full the Redemption Price with respect to each share of Series A Preferred being redeemed pursuant to this Section 8 ("REDEEMED SHARES"), the corporation shall redeem the shares of Series A Preferred otherwise scheduled for redemption pro rata among the holders of the Series A Preferred then outstanding, based on the number of shares then held by each holder of Series A Preferred. (c) Payment of Redemption Price. In the case of any Holder --------------------------- Redemption pursuant to Section 4(a), the Corporation shall pay the Redemption Price in cash. -9- (d) Mechanics of Redemption. ----------------------- (i) Notice of any Holder Redemption of the Series A Preferred shall be mailed at least thirty (30), but not more than sixty (60), calendar days prior to each December 31 redemption date (each, a "Holder Redemption Date"), to each holder of Series A Preferred to be redeemed at such holder's address as it appears on the books of the Corporation. To facilitate the redemption of the Series A Preferred, the Board of Directors may fix a record date for the determination of the holders of shares of Series A Preferred to be redeemed on each Holder Redemption Date, which date shall be not more than sixty (60), nor less than ten (10) calendar days prior to the respective Holder Redemption Date. (ii) The holder of any shares of Series A Preferred redeemed pursuant to this Section 8 shall not be entitled to receive payment of the Redemption Price for such shares until such holder shall cause to be delivered to the place specified in the Corporation's notice of redemption (i) the certificates representing the shares of Series A Preferred to be redeemed and (ii) appropriate endorsements and transfer documents sufficient to transfer such shares of Series A Preferred to the Corporation free of any adverse interest. In the event the redemption amount payable on any redeemed share of Series A Preferred is not paid in full within fifteen (15) business days after the Holder Redemption Date as provided herein, then the unpaid portion of the Redemption Price of such share shall bear interest at a rate of 12% per annum, commencing at the close of business on the Holder Redemption Date and continuing until the redemption price on such share is paid in full. Interest shall be computed on the basis of a three hundred sixty-five (365) day year and shall be payable on demand. (iii) In the event of any redemption, then upon the Holder Redemption Date and if all funds necessary for such redemption shall have been paid in cash or set aside by the Corporation separate and apart from its other funds in trust for the pro rata benefit of the holders of the shares called for redemption, so as to be and continue to be available therefor, then the shares so called for redemption shall no longer be deemed outstanding, the rights to receive dividends thereon shall cease to accrue from and after the applicable Holder Redemption Date, and all rights of the holders of the shares of Series A Preferred called for redemption shall cease and terminate, excepting only the right to receive the Redemption Price therefor (including any accrued and unpaid dividends, whether or not earned or declared, to the Holder Redemption Date if such price has not already been paid, without interest except as provided in Section 4(d)(ii) hereof. (e) Conversion Rights. Nothing contained in this Section 8 shall in ----------------- any way restrict or prohibit the holders of the Series A Preferred from exercising their conversion rights pursuant to Section 5 hereof prior to the redemption of any shares hereunder. (f) Priority on Redemption. The redemption rights of the shares of ---------------------- Series A Preferred are subject to the prior and superior rights of the holders of any shares of Series B Preferred and Series C Preferred. Accordingly, if on any applicable Holder Redemption Date, -10- any shares of Series B Preferred or Series C Preferred remain outstanding, the holders of the Series B Preferred and Series C Preferred shall be entitled to have all of their shares redeemed prior to the redemption of any shares of Series A Preferred. Upon its receipt of a Holder Election under this Section 8, the Corporation shall promptly provide a copy of such Holder Election to the holders of the Series B Preferred and Series C Preferred. ARTICLE VI The preferences and relative, optional and other special rights of the shares of Series B Preferred, and the qualifications, limitations or restrictions thereof, are as follows: 1. DESIGNATION OF SERIES: RANK. The number of shares of Series B --------------------------- Preferred may be increased or decreased, at any time and from time to time, by resolution of the Board of Directors; provided that no decrease shall reduce the number of shares of Series B Preferred to a number less than that of the shares of such series then outstanding. The Series B Preferred shall rank senior to the Common Stock and the Series A Preferred with respect to the payment of dividends and as to the distribution of assets upon liquidation, dissolution or winding up. The Series B Preferred shall rank senior to the Series C Preferred as to the payment of dividends and junior to the Series C Preferred as to (i) the distribution of assets upon liquidation, dissolution or winding up, and (ii) the distribution of assets upon the redemption of the Series B Preferred and Series C Preferred. Subject to the protective provisions set forth in Section 7(b) hereof, the Board of Directors may by resolution issue and designate additional series or classes of Preferred Stock which may rank senior to, junior to, or on parity with the Series B Preferred with respect to the payment of dividends, the distribution of assets upon liquidation, dissolution or winding up, redemption rights, and the other rights, preferences and privileges of such preferred stock. 2. DIVIDENDS AND DISTRIBUTIONS. --------------------------- (A) Subject to the prior and superior rights of the holders of any shares of any series of Preferred Stock ranking senior to the shares of Series B Preferred with respect to dividends, the holders of shares of Series B Preferred, in preference to the holders of Common Stock, Series A Preferred, Series C Preferred and any other series of Preferred Stock now existing or hereafter designated which expressly provides by its terms that it is junior to the Series B Preferred in dividend rights, shall be entitled to receive, when and as declared by the Board of Directors out of funds legally available therefor, semiannual dividends payable as hereinafter provided. Dividends shall begin to accrue with respect to any share of Series B Preferred commencing on the date that such share is first issued (the "Original Issue Date") and shall accumulate (whether or not earned or declared) and be payable on September 30 and March 31 of each year, beginning on March 31, 1995, or, if any such day is not a business day of the Corporation, on the next succeeding business day (each such payment date being referred to herein as a "Dividend Payment date"), at an annual rate of $0.46125 per share of Series B Preferred Stock until December 31, 1997 and, thereafter, at an annual rate of $0.39975 per share of Series B preferred Stock, in each case, calculated on the basis of a year of three hundred sixty-five (365) -11- days. The amount of dividends payable per share for each full semi-annual dividend period shall be computed by dividing by two the applicable annual rate of $0.46125 or $0.39975 (rounding the amount payable to any holder of Series B Preferred, after aggregating amounts payable on all shares of Series B Preferred held by such holder, to the nearest cent). If less than six (6) months shall have elapsed from the Original Issue Date of any share or shares of Series B Preferred to the first Dividend Payment Date after such issuance, the dividends payable on such Dividend Payment Date shall be the amount payable on each subsequent Dividend Payment Date multiplied by a fraction, the numerator of which is the number of days from the Original Issue Date of such share or shares of the Series B Preferred Stock to such first Dividend Payment Date and the denominator of which is 182.5. Any dividend (whether or not earned or declared) not paid in full within fifteen (15) days following the relevant Dividend Payment Date shall bear interest at the rate of 7.5% per annum with respect to dividends payable on or prior to December 31, 1997, and 6.5% per annum with respect to dividends payable after December 31, 1997, calculated as provided above, commencing at the close of business on such Dividend Payment Date and continuing until such dividend is paid in full. Any such unpaid interest shall be payable upon payment of the delinquent dividend or thirty (30) days following any written demand from the holder for payment thereof. Dividends paid on shares of Series B Preferred Stock in an amount less than the total amount of such dividends at the time accumulated and payable on the Series B Preferred shall be allocated pro rata on a share-by-share basis among all shares of Series B Preferred at the time outstanding. The Board of Directors may fix a record date for the determination of holders of shares of Series B Preferred entitled to receive payment of a dividend or distribution declared thereon, which record date shall be no more than sixty (60) nor less than ten (10) calendar days prior to the respective Dividend Payment Date. (b) Any dividend on shares of Series B Preferred shall be payable in cash or a combination of cash and shares of Series B Preferred, such form of payment to be determined at the Corporation's election and in its sole discretion, provided that not less than 13.33% of the dividend payable in any period on or prior to December 31, 1997 shall be payable in cash. The number of shares of Series B Preferred so to be issued, if any, shall be computed by dividing the dollar amount of the dividend to be paid in shares of Series B Preferred (as determined above) by the amount of six dollars and fifteen cents ($6.15) per share. Any dividends on the Series B Preferred paid in Series B Preferred shall be paid to any holder only in whole shares of Series B Preferred, and any fraction shall be paid in cash. The respective portions of any dividend payable in each of cash and shares of Series B Preferred shall be distributed pro rata among all holders of Series B Preferred based on each Holder's respective ownership of Series B Preferred. (c) If a dividend (whether or not earned or declared) or any redemption or repurchase payment upon any shares of Series B Preferred (or any interest thereon), or any other outstanding Preferred Stock of the Corporation ranking on a parity with the Series B Preferred as to dividends, is in arrears, then no dividend or other distribution may be declared and no redemption or repurchase payment may be made (and no interest thereon may be paid) on any such shares (other than dividends or payments made in stock of the Corporation ranking junior to the Series B Preferred as to dividends, upon liquidation, dissolution and winding up and -12- redemption ("Junior Stock")) unless amounts are paid or distributed in respect of all such arrearages pro rata, so that (i) the amounts so paid or distributed per share of each such series bear to each other the same ratio that the amounts in arrears per share of each such series (i.e., the Series B Preferred and any other outstanding series of Preferred Stock of the Corporation ranking in parity with the Series B Preferred) bear to each other and (ii) the percentage of each such amount in arrears which is paid in cash per share of Series B Preferred is no lower than the percentage of the amount in arrears which is paid or distributed in cash per share of any such other series. So long as any shares of Series B Preferred remain outstanding, no dividend shall be paid or declared and no distribution made on any stock of the Corporation ranking junior to the Series B Preferred as to dividends or upon liquidation, dissolution or winding up (other than a dividend payable in Junior Stock), and no shares of stock of the Corporation ranking junior to the Series B Preferred as to dividends or upon liquidation, dissolution or winding up or upon redemption or repurchase shall be purchased, redeemed or otherwise acquired for consideration by the Corporation, directly or indirectly (other than as a result of a reclassification of Junior Stock, or the exchange or conversion of one Junior Stock for or into another Junior Stock, or other than through the use of the proceeds of a substantially contemporaneous sale of other Junior Stock), unless in each case (i) all dividends (whether or not earned or declared) on the Series B Preferred then accrued and in arrears for all past dividend periods (and any interest thereon) are first paid in full and the full dividend thereon for the then-current dividend period is paid or declared and set apart for payment and (ii) the Corporation first pays in full all amounts then due and payable in connection with any matured redemption obligation on the Series B Preferred or, with respect to amounts to be paid in cash, sets aside such payable amounts separate and apart from its other funds, in trust for the pro rata benefit of the holders of the shares subject to such redemption so as to continue to be available therefor. Subject to the foregoing, and not otherwise, such dividends (payable in cash, stock or otherwise) as may be determined by the Board of Directors may be declared and paid on any Junior Stock, or shares of Junior Stock may be purchased, redeemed or otherwise acquired for consideration by the Corporation, from time to time out of any funds legally available therefor, and the Series B Preferred shall not be entitled to participate in any such dividend, purchase, redemption or other acquisition, whether payable in cash, stock or otherwise. (d) Notwithstanding Section 2(c) hereof, the Corporation may at any time, out of funds legally available therefor, (x) repurchase shares of Common Stock of the Corporation (i) issued to or held by employees, directors or consultants of the Corporation or its subsidiaries upon termination of their employment of services, pursuant to an agreement providing for such right of repurchase, or (ii) issued to or held by any person subject to the Corporation's right of first refusal to purchase such shares where the purchase is pursuant to the exercise of such right of first refusal, (y) repurchase the Series C Preferred in accordance with Section 3.2(b) of the Series C Convertible Preferred Stock Purchase Agreement dated as of July 17, 1997, and (z) redeem the Series C Preferred in accordance with Section 8 of Article VIII of this Certificate of Incorporation, in any case whether or not dividends on the Series B Preferred shall have been declared and paid or funds set aside therefor. -13- 3. VOTING RIGHTS. The holders of Series B Preferred shall have no right ------------- by virtue of their ownership of such shares to vote in the election of directors of the Corporation and shall have no other voting rights except as expressly required by law. Any vote expressly required by law may be given in person or by proxy, either in writing without a meeting or by vote at any meeting called for the purpose. 4. REDEMPTION RIGHTS. ----------------- (a) Optional Redemption. Subject to the prior written consent of the ------------------- holders of a majority of the shares of Series C Preferred then issued and outstanding, the Corporation may, at its sole option and election, redeem (an "OPTIONAL REDEMPTION") the Series B Preferred, in whole or in part, at any time and from time to time, at a redemption price per share (the "REDEMPTION PRICE") of six dollars and fifteen cents ($6.15) plus an amount equal to all dividends (whether or not earned or declared ) accrued and unpaid thereon to the redemption date. The Redemption Price payable upon any Optional Redemption may be paid in cash, the issue of convertible debentures on the terms provided herein ("Convertible Debt") or any combination of cash and Convertible Debt, at the election of the Corporation in its sole discretion, pursuant to Section 4(e) hereof, provided that any such amounts payable in cash shall be paid only to the extent of funds legally available therefor. (b) Holder Redemption. Subject to the prior and superior rights of ----------------- the holders of the shares of Series C Preferred, upon written notice at least one hundred twenty (120) days prior to December 31 of any calendar year from, and including the year 2002, by the holders of at least two-thirds (2/3) of the then outstanding shares of Series B Preferred (a "Holder Election"), the Corporation shall be required to redeem, to the extent that such shares have not already been redeemed pursuant to paragraph (a) above, all of the issued, outstanding and nonredeemed shares of Series B Preferred held by each holder of Series B Preferred (a "Holder Redemption"), at a price per share equal to the Redemption Price. In the event of any such Holder Election, the Corporation shall, out of and only to the extent of funds legally available therefor, redeem (i) on the December 31 following such Holder Election, one-third of the number of shares of Series B Preferred then issued and outstanding; (ii) on the second December 31 following such Holder Election, one-half of the number of shares of Series B Preferred then issued and outstanding; and (iii) on the third December 31 following such Holder Election, all of the shares of Series B Preferred then issued and outstanding. The Redemption Price payable upon any Holder Redemption shall be paid in cash, to the extent of funds legally available therefor. (c) Redemption to be Effected Pro Rata. If, in the case of an ---------------------------------- Optional Redemption pursuant to Section 4(a) hereof, less than all of the Series B Preferred at the time outstanding is to be redeemed, then the shares so to be redeemed shall be redeemed pro rata among the holders of the Series B Preferred based on the total number of shares of Series B Preferred then held. -14- (d) In the event that the Corporation does not have legally available funds sufficient to pay in full the Redemption Price with respect to each share of Series B Preferred being redeemed pursuant to this Section 4 ("REDEEMED SHARES"), the Corporation shall redeem the shares of Series B Preferred otherwise scheduled for redemption pro rata among the holders of Series B Preferred then outstanding , based on the number of shares then held by each holder of Series B Preferred. (e) Payment of Redemption Price. In the case of any Optional --------------------------- Redemption pursuant to Section 4(a), the Corporation may pay the Redemption Price in cash, Convertible Debt, or any combination thereof, at the election of the Corporation in its sole discretion. In the case of any Holder Redemption pursuant to section 4(b), the Corporation shall pay the Redemption Price in cash. If the Corporation elects to pay any part of the Redemption Price of an Optional Redemption in some combination of cash and Convertible Debt, the respective portions of such Redemption Price payable in each such form of consideration shall be distributed pro ram among all holders of Series B Preferred being redeemed based on each such Holder's respective ownership of the Series B Preferred being redeemed. The aggregate face value of Convertible Debt issuable upon such redemption shall be equal to the aggregate dollar amount of the Redemption Price payable in Convertible Debt. Convertible Debt shall bear interest at a rate of 7.5% per annum until December 31, 1997 and, thereafter, at a rate of 6.5% per annum, shall be subordinate in right of payment to all debt to financial institutions for money borrowed, shall be payable upon demand at any time after September 30, 2002, and shall be evidenced by subordinated debentures in substantially the form attached as Exhibit A to this Restated Certificate of Incorporation (with such changes thereto as may be agreed by the Company and holders of a majority of the shares of Series B Preferred then outstanding). (f) Mechanics of Redemption. ----------------------- (i) Notice of any Optional Redemption of the Series B Preferred shall be mailed at least thirty (30), but not more than sixty (60), calendar days prior to the date fixed for redemption (the "Optional Redemption Date"), to each holder of Series B Preferred to be redeemed at such holder's address as it appears on the books of the Corporation. To facilitate the redemption of the Series B Preferred, the Board of Directors may fix a record date for the determination of holders of shares of Series B Preferred to be redeemed, which date shall not be more than sixty (60) nor less than ten (10) calendar days prior to the Optional Redemption Date. (ii) Notice of any Holder Redemption of the Series B Preferred shall be mailed at least thirty (30), but not more than sixty (60), calendar days prior to each December 31 redemption date (each, a "Holder Redemption Date"), to each holder of Series B Preferred to be redeemed at such holder's address as it appears on the books of the Corporation. To facilitate the redemption of the Series B Preferred, the Board of Directors may fix a record date for the determination of the holders of shares of Series B preferred to be redeemed on each Holder Redemption Date, which date shall be not more than sixty (60), nor less than ten (10) calendar days prior to the respective Holder Redemption Date. -15- (iii) The holder of any shares of Series B Preferred redeemed pursuant to this Section 4 shall not be entitled to receive payment of the Redemption Price for such shares until such holder shall cause to be delivered to the place specified in the Corporation's notice of redemption (i) the certificates representing the shares of Series B Preferred to be redeemed and (ii) appropriate endorsements and transfer documents sufficient to transfer such shares of Series B Preferred to the Corporation free of any adverse interest. In the event the redemption amount payable on any redeemed share of Series B Preferred is not paid in full within fifteen (15) business days after the Optional Redemption Date or Holder Redemption Date (as applicable) as provided herein, then the unpaid portion of the Redemption Price of such share shall bear interest at a rate of 12% per annum, commencing at the close of business on the Optional Redemption Date or Holder Redemption Date (as applicable) and continuing until the redemption price on such share is paid in full. Interest shall be computed on the basis of a three hundred sixty-five (365) day year and shall be payable on demand. (iv) In the event of any redemption, then upon the Optional Redemption Date or Holder Redemption Date and if all funds necessary for such redemption shall have been paid (either in cash, Convertible Debt (as applicable), or some combination thereof (as applicable)) or set aside by the Corporation separate and apart from its other funds in trust for the pro rata benefit of the holders of the shares called for redemption, so as to be and continue to be available therefor, then the shares so called for redemption shall no longer be deemed outstanding, the rights to receive dividends thereon shall cease to accrue from and after the applicable Optional Redemption Date or Holder Redemption Date, and all rights of the holders of the shares of Series B Preferred called for redemption shall cease and terminate, excepting only the right to receive the Redemption Price therefor (including any accrued and unpaid dividends, whether or not earned or declared, to the Optional Redemption Date or Holder Redemption Date (as the case may be)) if such price has not already been paid, without interest except as provided in Section 4(f)(iii) hereof. (g) Priority on Redemption. The redemption rights of the shares of ---------------------- Series B Preferred are subject to the prior and superior rights of the holders of any shares of Series C Preferred. Accordingly, if on any applicable Holder Redemption Date, any shares of Series C Preferred remain outstanding, the holders of the Series C Preferred shall be entitled to have all of their shares redeemed prior to the redemption of any shares of Series B Preferred. Upon its receipt of a Holder Election under this Section 4, the Corporation shall promptly provide a copy of such Holder Election to the holders of the Series C Preferred. 5. LIQUIDATION. Subject to the prior and superior rights of the holders ----------- of any shares of Series C Preferred and of shares of any other series of Preferred Stock now existing or hereafter designated ranking senior to the shares of Series B Preferred with respect to liquidation preference, in the event of any voluntary or involuntary dissolution, liquidation or winding up of the Corporation (for the purposes of this Section 5, a "LIQUIDATION"), before any distribution of assets shall be made to the holders of the Common Stock, Series A Preferred Stock or any other series of Preferred Stock now existing or hereafter designated that by its express terms ranks -16- junior to the Series B Preferred in respect of distributions upon the Liquidation of the Corporation, the holder of each share of Series B Preferred then outstanding shall be entitled to be paid out of the assets of the Corporation available for distribution to its stockholders an amount in cash equal to $6.15 per share plus all dividends (whether or not earned or declared) accrued and unpaid on such share to the date fixed for the distribution of assets of the Corporation in liquidation to the holders of Series B Preferred. If upon any Liquidation the aggregate assets available for distribution to the holders of the Series B Preferred and any other stock of the Corporation now existing or hereafter designated ranking on parity with the Series B Preferred upon Liquidation and which shall then be outstanding (hereinafter in this paragraph called the "TOTAL AMOUNT AVAILABLE") shall be insufficient to pay to the holders of all outstanding shares of Series B Preferred and all such other parity stock the full amounts (including all dividends accrued and unpaid) to which they shall be entitled by reason of such Liquidation of the Corporation, then there shall be paid to the holder of each share of Series B Preferred in connection with such Liquidation an amount equal to the product derived by multiplying the Total Amount Available times a fraction, the numerator of which shall be the full amount to which such share of Series B Preferred shall be entitled under the terms of the preceding paragraph by reason of such Liquidation and the denominator of which shall be the total amount wich would have been distributed by reason of such Liquidation with respect to all Series B Preferred and other stock ranking on a parity with the Series B Preferred then outstanding upon a Liquidation had the Corporation possessed sufficient assets to pay the maximum amount which the holders of all such stock would be entitled to receive in connection with such Liquidation. The voluntary sale, conveyance, lease, exchange or transfer of all or substantially all the property or assets of the Corporation, or the merger or consolidation of the Corporation into or with any other corporation, or the merger of any other corporation into the Corporation (other than any such sale, conveyance, lease, exchange or transfer of all or substantially all the property or assets of the Corporation, merger or consolidation, following which the stockholders of the Corporation prior to the transaction retain a majority of the voting securities of the surviving or successor corporation and the holders of Series B Preferred receive in the transaction a security of the surviving or successor corporation having rights, preferences, and privileges substantially similar to the rights, preferences and privileges of the Series B Preferred), shall, at the option of the holders of a majority of the outstanding shares of Series B Preferred, be deemed to be a Liquidation of the Corporation for the purposes of this Section 5. The holder of any shares of Series B Preferred shall not be entitled to receive any payment owed for such shares under this Section 5 until such holder shall cause to be delivered to the Corporation (i) the certificate(s) representing such shares and (i) transfer instrument(s) satisfactory to the Corporation and sufficient to surrender such shares to the Corporation free of any adverse interest. -17- After payment of the full amount of the liquidating distribution to which any holder of Series B Preferred is entitled, the holder of such share or shares will not be entitled to any further participation in any distribution of assets by the Corporation. 6. CONVERSION RIGHTS. The Series B Preferred shall have no conversion ----------------- rights. 7. PROTECTIVE PROVISIONS. So long as any shares of Series B Preferred --------------------- are outstanding, this Corporation shall not, without first obtaining the approval (by vote or written consent, as provided by law) of the holders of at least a majority of the then outstanding shares of Series B Preferred voting together as a class: (a) amend or repeal any provision of, or add any provision to this Corporation's Restated Certificate of Incorporation if such action would adversely alter or change the preferences, rights, privileges or powers of, or the restrictions provided for the benefit of, the Series B Preferred; (b) authorize or issue shares of any class of stock (other than the Series B Preferred issued as dividends as described in this Article VI) having any preference or priority as to dividend, redemption or liquidation preferences which is superior or equal to any such preferences or priority of shares of Series B Preferred; or (c) repurchase any outstanding shares of Series A Preferred or Common Stock, except pursuant to any repurchase agreements between the Company and any employee, consultant or director which provide for the repurchase by the Company of shares held by such person upon termination of services to the Corporation. 8. NOTICES OF RECORD DATE. In the event of any taking by the Corporation ---------------------- of a record of the holders of any class of securities for the purpose of determining the holders thereof who are entitled to receive any dividend (other that a cash dividend) other distribution, any right to subscribe for, purchase or otherwise acquire any shares of stock of any class or any other securities or property, or to receive any other right, the Corporation shall mail to each holder of Series B Preferred, at least fifteen (15) days prior to the date specified therein, a notice specifying the date on which any such record is to be taken for the purpose of such dividend, distribution or right, and the amount and character of such dividend, distribution or right. ARTICLE VII The preferences and relative, optional and other special rights of the shares of Series C Preferred, and the qualifications, limitations or restrictions thereof, are as follows: 1. DESIGNATION OF SERIES: RANK. The number of shares of Series C --------------------------- Preferred may be increased or decreased, at any time and from time to time, by resolution of the Board of Directors; provided that no decrease shall reduce the number of shares of Series C Preferred to -18- a number less than that of the shares of such series then outstanding. The Series C Preferred shall rank senior to the Common Stock of the Corporation, the Series A Preferred and Series B Preferred as to the distribution of assets upon liquidation, dissolution or winding up and upon redemption and shall rank senior to the Common Stock of the Corporation and the Series A Preferred with respect to the payment of dividends. The Series C Preferred shall rank junior to the Series B Preferred with respect to the payment of dividends. Subject to the protective provisions set forth in Section 7(b) hereof, the Board of Directors may by resolution issue and designate additional series or classes of Preferred Stock which may rank senior to, junior to, or on parity with the Series C Preferred with respect to the payment of dividends, the distribution of assets upon liquidation, dissolution or winding up, redemption rights, and the other rights, preferences and privileges of such preferred stock. 2. DIVIDENDS AND DISTRIBUTIONS. --------------------------- (a) Subject to the prior and superior rights of the holders of Series B Preferred and any shares of any other series of Preferred Stock ranking senior to the shares of Series C Preferred with respect to dividends, the holders of shares of Series C Preferred, in preference to the holders of Common Stock, the Series A Preferred and any series of Preferred Stock now existing or hereafter designated which expressly provides by its terms that it is junior to the Series C Preferred in dividend rights, shall be entitled to receive, when and as declared by the Board of Directors out of funds legally available therefor, an annual cash dividend in the amount of $0.26325 per share. Such dividends shall not be cumulative, and no right shall accrue to holders of Series C Preferred by reason of the fact that dividends on such shares are not declared or paid in any year. (b) If a dividend (whether or not earned or declared) or any redemption or repurchase payment upon any shares of Series C Preferred (or any interest thereon), or any other outstanding Preferred Stock of the Corporation ranking on a parity with the Series C Preferred as to dividends, is in arrears, then no dividend or other distribution may be declared and no redemption or repurchase payment may be made (and no interest thereon may be paid) on any such shares (other than dividends or payments made in stock of the Corporation ranking junior to the Series C Preferred as to dividends, upon liquidation, dissolution and winding up and redemption ("Junior Stock")) unless amounts are paid or distributed in respect of all such arrearages pro rata, so that (i) the amounts so paid or distributed per share of each such series bear to each other the same ratio that the amounts in arrears per share of each such series (i.e., the Series C Preferred and any other outstanding series of Preferred Stock of the Corporation ranking in parity with the Series C Preferred) bear to each other and (ii) the percentage of each such amount in arrears which is paid in cash per share of Series C Preferred is no lower than the percentage of the amount in arrears which is paid or distributed in cash per share of any such other series. So long as any shares of Series C Preferred remain outstanding, no dividend shall be paid or declared and no distribution made on any stock of the Corporation ranking junior to the Series C Preferred as to dividends or upon liquidation, dissolution or winding up (other than a dividend payable in Junior Stock), and no shares of stock of the Corporation ranking junior to -19- the Series C Preferred as to dividends or upon liquidation, dissolution or winding up or upon redemption or repurchase shall be purchased, redeemed or otherwise acquired for consideration by the Corporation, directly or indirectly (other than as a result of a reclassification of Junior Stock, or the exchange or conversion of one Junior Stock for or into another Junior Stock, or other than through the use of the proceeds of a substantially contemporaneous sale of other Junior Stock), unless in each case (i) all dividends on the Series C Preferred then declared and in arrears for all past dividend periods (and any interest thereon) are first paid in full and the full dividend of $0.26325 for the then-current dividend period is paid or declared and set apart for payment and (ii) the Corporation first pays in full all amounts then due and payable in connection with any matured repurchase or redemption obligation on the Series C Preferred or, with respect to amounts to be paid in cash, sets aside such payable amounts separate and apart from its other funds, in trust for the pro rata benefit of the holders of the shares subject to such redemption so as to continue to be available therefor. Subject to the foregoing, and not otherwise, such dividends (payable in cash, stock or otherwise) as may be determined by the Board of Directors may be declared and paid on any Junior Stock, or shares of Junior Stock may be purchased, redeemed or otherwise acquired for consideration by the Corporation, from time to time out of any funds legally available therefor, and the Series C Preferred shall not be entitled to participate in any such dividend, purchase, redemption or other acquisition, whether payable in cash, stock or otherwise. (c) Notwithstanding Section 2(b) hereof, the Corporation may at any time, out of funds legally available therefor, repurchase shares of Common Stock of the Corporation (i) issued to or held by employees, directors or consultants of the Corporation or its subsidiaries upon termination of their employment of services, pursuant to an agreement providing for such right of repurchase, or (ii) issued to or held by any person subject to the Corporation's right of first refusal to purchase such shares where the purchase is pursuant to the exercise of such right of first refusal, in either case whether or not dividends on the Series C Preferred shall have been declared and paid or funds set aside therefor. 3. VOTING RIGHTS. Except as otherwise required by law, each share of ------------- Series C Preferred issued and outstanding shall at any time have a number of votes equal to the number of shares of Common Stock into which such share of Series C Preferred is then convertible pursuant to Section 5 hereof. Subject to the foregoing, the holders of Series C preferred shall be entitled to vote with the holders of Common Stock on all matters submitted to a vote of stockholders (whether at a meeting or by written consent); provided that, subject to section 1 hereof, the Series C Preferred shall be entitled to vote as a separate series (the affirmative vote or consent of the holders of at least a majority of the outstanding shares of such separate series being required) or as part of a class (together with other series of Preferred Stock) on any matter with respect to which a series vote by the Series C Preferred or a class vote of the Preferred Stock, as the case may be, shall be expressly required by law, and any such class or series vote may be given in person or by proxy, either in writing without a meeting or by vote at any meeting called for the purpose. -20- 4. LIQUIDATION. Subject to the prior and superior rights of the holders ----------- of any shares of any series of Preferred Stock ranking senior to the shares of Series C Preferred with respect to liquidation preference, in the event of any voluntary or involuntary dissolution, liquidation or winding up of the Corporation (for the purposes of this Section 4, a "LIQUIDATION"), before any distribution of assets shall be made to the holders of the Common Stock, Series A Preferred, Series B Preferred or the holders of any stock now existing or hereafter designated that by its express terms ranks junior to the Series C Preferred in respect of distributions upon the Liquidation of the Corporation, the holder of each share of Series C Preferred then outstanding shall be entitled to be paid out of the assets of the Corporation available for distribution to its stockholders an amount in cash equal to $3.51 per share plus all dividends declared and unpaid on such share on the date fixed for the distribution of assets of the Corporation in liquidation to the holders of Series C Preferred. If upon any Liquidation the aggregate assets available for distribution to the holders of the Series C Preferred and any other stock of the Corporation now existing or hereafter designated ranking on parity with the Series C Preferred upon Liquidation and which shall then be outstanding (hereinafter in this paragraph called the "TOTAL AMOUNT AVAILABLE") shall be insufficient to pay to the holders of all outstanding shares of Series C Preferred and all such other parity stock the full amounts (including all dividends accrued and unpaid) to which they shall be entitled by reason of such Liquidation of the Corporation, then there shall be paid to the holder of each share of Series C Preferred in connection with such Liquidation an amount equal to the product derived by multiplying the Total Amount Available times a fraction, the numerator of which shall be the full amount to which such share of Series C Preferred shall be entitled under the terms of the preceding paragraph by reason of such Liquidation and the denominator of which shall be the total amount which would have been distributed by reason of such Liquidation with respect to all Series C Preferred and other stock ranking on a parity with the Series C Preferred then outstanding upon a Liquidation had the Corporation possessed sufficient assets to pay the maximum amount which the holders of all such stock would be entitled to receive in connection with such Liquidation. The voluntary sale, conveyance, lease, exchange or transfer of all or substantially all the property or assets of the Corporation, or the merger or consolidation of the Corporation into or with any other corporation, or the merger of any other corporation into the Corporation (other than any such sale, conveyance, lease, exchange or transfer of all or substantially all the property or assets of the Corporation, merger or consolidation, following which the stockholders of the Corporation prior to the transaction retain a majority of the voting securities of the surviving or successor corporation and the holders of Series C Preferred receive in the transaction a security of the surviving or successor corporation having rights, preferences, and privileges substantially similar to the rights, preferences and privileges of the Series C Preferred), or the transfer of the voting control of the Corporation shall, at the option of the holders of a majority of the outstanding shares of Series C Preferred, be deemed to be a Liquidation of the Corporation for the purposes of this Section 4. -21- The holder of any shares of Series C Preferred shall not be entitled to receive any payment owed for such shares under this Section 4 until such holder shall cause to be delivered to the Corporation (i) the certificate(s) representing such shares and (ii) transfer instrument(s) satisfactory to the Corporation and sufficient to surrender such shares to the Corporation free of any adverse interest. After payment of the full amount of the liquidating distribution to which any holder of Series C Preferred is entitled, the holder of such share or shares will not be entitled to any further participation in any distribution of assets by the Corporation. 5. CONVERSION RIGHTS. ----------------- (a) Optional Conversion into Common Stock. The holder of any share of ------------------------------------- Series C Preferred shall have the right, at such holder's option, at any time to convert such share into that number of shares of fully paid and nonassessable whole shares of Common obtained by dividing $3.51 by the Series C Conversion Price then in effect. The Series C Conversion Price shall initially be $3.51 per share, and shall be subject to adjustment as set forth below. (b) Automatic Conversion. Each share of Series C Preferred shall -------------------- automatically convert into shares of fully paid and nonassessable Common Stock, without any further action required on the part of the holder thereof, immediately prior to the closing of the Corporation's initial underwritten public offering pursuant to a Registration Statement filed with and declared effective by the Securities and Exchange Commission under the Securities Act of 1933, as amended, covering the offer and sale of Common Stock for the account of the Corporation in which the aggregate proceeds to the Corporation equal at least $15,000,000 and in which the price per share of Common Stock equals or exceeds $7.02 per share (as adjusted for stock splits, stock dividends, recapitalizations and similar events) (the "Qualified Public Offering"). The number of shares of Common Stock issuable upon such automatic conversion of any such share shall be equal to the number obtained by dividing $3.51 by the Series C Conversion Price then in effect. (c) Procedure for Conversion. To exercise the conversion privilege ------------------------ set forth in Section 5(a) hereof, the holder of shares of Series C Preferred shall surrender the shares to be converted, accompanied by instruments of transfer satisfactory to the Corporation and sufficient to transfer the shares being converted to the Corporation free of any adverse interest, at the principal offices of the Corporation or any of the offices or agencies maintained for such purpose by the Corporation ("Conversion Agent") and shall give written notice (by registered or certified mail, overnight courier or hand delivery) to the Corporation at such Conversion Agent that the holder elects to convert such shares. Such notice shall state whether and to what extent the shares so surrendered for conversion shall be converted into shares of Common Stock, and shall also state the name or names, together with address or addresses, in which the certificate or certificates for Common Stock issuable on such conversion shall be issued. As promptly as practicable after the surrender of such shares of Series C Preferred as aforesaid, the Corporation shall issue and deliver at such Conversion Agent to such holder, or on such holder's written order, a certificate -22- or certificates for the number of full shares of Common Stock issuable upon the conversion of such shares in accordance with the provisions hereof. Certificates will be issued for the balance of the shares of Series C Preferred in any case in which fewer than all of the shares of Series C Preferred are converted. Each conversion pursuant to Section 5(a) hereof shall be deemed to have been effected immediately prior to the close of business on the date on which the shares of Series C Preferred shall have been so surrendered and such notice shall have been received by the Corporation as aforesaid. Each conversion pursuant to Section 5(b) hereof shall be deemed to have been effected, automatically and with no further required action on the part of the holder of the shares as converted, immediately prior to (but contingent upon) the closing of the sale of shares pursuant to the Qualified Public Offering. In each such case, the person or persons in whose name or names any certificate or certificates for shares of Common Stock shall be issuable upon such conversion shall be deemed to have become the holder or holders of record of the Common Stock represented thereby at the effective date of such conversion, unless the stock transfer books of the Corporation shall be closed on such date, in which event such conversion shall be deemed to have been effected immediately prior to the open of business on the next succeeding day on which such stock transfer books are open, and such person or persons shall be deemed to have become such holder or holders of record of the Common Stock at the open of business on such later day. In each such case, the conversion shall be at the Conversion Price in effect on the effective date of the conversion as determined above. No payment or adjustment shall be made on conversion for any dividends payable on the Common Stock delivered on conversion. Effective as of any such conversion, the Corporation shall be excused from paying any dividends on the shares converted, except for any dividends accrued (whether or not earned or declared) and unpaid through the day of conversion. No fractional interest in a share of Common Stock shall be deliverable upon the conversion of any share or shares of Series C Preferred, and the number of shares of Common Stock issuable upon any such conversion shall be rounded down to the nearest whole share. If more than one certificate representing shares of Series C Preferred is to be converted at one time by the same holder into common Stock, the number of full shares of Common Stock issuable upon conversion thereof shall be computed on the basis of the aggregate number of shares of Series C Preferred represented by such certificates, or the specified portions thereof to be converted. (d) Adjustment of Conversion Price. The Conversion Price shall be ------------------------------ adjusted from time to time in respect of any of the following events occurring on or after the date upon which a share of Series C Preferred is first issued (the "ORIGINAL ISSUE DATE" of the Series C Preferred), as follows: (i) Dividends and Distributions. In case the Corporation shall --------------------------- pay or make a dividend or other distribution upon its Common Stock payable in Common Stock, the Conversion Price in effect at the opening of business on the day following the date fixed for the determination of stockholders entitled to receive such dividend or other distribution shall be -23- reduced by multiplying such Conversion Price by a fraction, of which the numerator shall be the number of shares of Common Stock outstanding at the close of business on the date fixed for such determination and the denominator shall be the sum of such number of shares and the total number of shares constituting such dividend or other distribution, such reduction to become effective immediately after the opening of business on the day following the date fixed for such determination. For the purposes of this paragraph (i), the number of shares of Common Stock at any time outstanding shall not include shares held in the treasury of the Corporation. The Corporation will not pay any dividend or make any distribution on shares of Common Stock held in the treasury of the Corporation. (ii) Subdivisions and Combinations. In case the outstanding ----------------------------- shares of Common Stock shall each be subdivided into a greater number of shares of Common Stock (other than any such subdivision which is effected pursuant to a dividend or distribution for which adjustment to the Conversion Price is made under paragraph (i) above), the Conversion Price in effect at the opening of business on the day following the day upon which such subdivision becomes effective shall be proportionately reduced and, conversely, in case the outstanding shares of Common Stock shall each be combined into a smaller number of shares of Common Stock, the Conversion Price in effect at the opening of business on the day following the day upon which such combination becomes effective shall be proportionately increased, such reduction or increase, as the case may be, to become effective immediately after the opening of business on the day following the day upon which such subdivision or combination becomes effective. (iii) Distributions other than Cash Dividends. In case the --------------------------------------- Corporation shall declare a cash dividend upon its Common Stock payable otherwise than out of retained earnings or shall distribute to holders of its Common Stock shares of its capital stock (other than Common Stock), stock or other securities of other persons, evidences of indebtedness issued by the Corporation or other persons, assets (excluding cash dividends out of retained earnings) or options or rights (excluding options to purchase and rights to subscribe for Common Stock or other securities of the Corporation convertible into or exchangeable for Common Stock), then, in each such case, the holders of shares of Series C Preferred shall, concurrently with the distribution to holders of Common Stock, receive a like distribution based upon the number of shares of Common Stock into which such shares of Series C Preferred shall then be convertible. (iv) Reclassifications. In case of any capital reorganization ----------------- or reclassification of the stock of the Corporation (other than any transaction described in paragraph (i), (ii) or (iii) hereof), or the consolidation or merger of the Corporation with or into another person (other than a consolidation or merger in which the Corporation is the continuing entity and which does not result in any change in the Common Stock), the shares of the Series C Preferred shall, after such reorganization, reclassification, consolidation or merger, be convertible into the kind and number of shares of stock or other securities or property of the Corporation or otherwise to which the holder thereof would have been entitled if immediately prior to such reorganization, reclassification, consolidation, or merger the holder had converted the holder's shares of the Series C Preferred in Common Stock. -24- (v) (A) Upon Sale of Common Stock. If the Corporation shall, ------------------------- while there are any shares of Series C Preferred outstanding, issue or sell (or in accordance with Section 5(d)(v)(B) below is deemed to have issued or sold) shares of its Common Stock without consideration or at a price per share less than the Conversion Price in effect immediately prior to such issuance or sale, then in each such case such Conversion Price for the Series C Preferred, upon each such issuance or sale, except as hereinafter provided, shall be lowered so as to be equal to an amount determined by multiplying the Conversion Price by a fraction: (1) the numerator of which shall be (a) the number of shares of Common Stock outstanding immediately prior to the issuance of such additional shares of Common Stock, plus (b) the number of shares of Common Stock which the net aggregate consideration, if any, received by the Corporation for the total number of such additional shares of Common Stock so issued would purchase at the Conversion Price in effect immediately prior to such issuance, and (2) the denominator of which shall be (a) the number of shares of Common Stock outstanding immediately prior to the issuance of such additional shares of Common Stock plus (b) the number of such additional shares of Common Stock so issued; provided that for the purpose of clauses (1) and (2) of this Subsection 5 (d)(v)(A), all shares of Common Stock issuable upon conversion of the outstanding shares of Series A Preferred and Series C Preferred and all shares of Common Stock issuable upon exercise of outstanding options and warrants shall be deemed to be outstanding. (B) Upon Issuance of Warrants, Options and Rights to Common ------------------------------------------------------- Stock. ----- (1) For the purposes of this Section 5(d)(v), the issuance of any warrants, options, subscriptions, or purchase rights with respect to shares of Common Stock and the issuance of any securities convertible into or exchangeable for shares of Common Stock (or the issuance of any warrants, options or any rights with respect to such convertible or exchangeable securities) shall be deemed an issuance of such Common Stock at such time if the Net Consideration Per Share (as hereinafter determined) which may be received by the Corporation for such Common Stock shall be less than the Conversion Price at the time of such issuance. Any obligation, agreement, or undertaking to issue warrants, options, subscriptions, or purchase rights at any time in the future shall be deemed to be an issuance at the time such obligation, agreement or undertaking is made or arises. No adjustment of the Conversion Price shall be made under this Section 5(d)(v) upon the issuance of any shares of Common Stock which are issued pursuant to the exercise of any warrants, options, subscriptions, or purchase rights or pursuant to the exercise of any conversion or exchange rights in any convertible securities if any adjustment shall previously have been made or deemed not required hereunder, upon the issuance of any such warrants, options, or subscription or purchase rights or upon the issuance of any convertible securities (or upon the issuance of any warrants, options or any rights therefor) as above provided. -25- Should the Net Consideration Per Share of any such warrants, options, subscriptions, or purchase rights or convertible securities be decreased from time to time (other than as a result of a stock split, stock dividend or other similar event), then, upon the effectiveness of each such change, the Conversion Price shall be adjusted to such Conversion Price as would have obtained (1) had the adjustments made upon the issuance of such warrants, options, rights, or convertible securities been made upon the basis of the decreased Net Consideration per share of such securities, and (2) had adjustments made to the Conversion Price since the date of issuance of such securities been made to the Conversion Price as adjusted pursuant to (1) above. Any adjustment of the Conversion Price with respect to this Section 5(d)(v)(B) which relates to warrants, options, subscriptions, purchase rights or convertible securities with respect to shares of Common Stock shall be disregarded if, as, when and to the extent such warrants, options, subscriptions, purchase rights or convertible securities expire or are canceled without being exercised or converted, so that the Conversion Price effective immediately upon such cancellation or expiration shall be equal to the Conversion Price in effect at the time of the issuance of the expired or canceled warrants, options, subscriptions, purchase rights, or convertible securities with such additional adjustments as would have been made to that Conversion Price had the expired or canceled warrants, options, subscriptions, purchase rights or convertible securities not been issued. (2) For purposes of this paragraph, the "Net Consideration Per Share" which may be received by the Corporation shall be determined as follows: (a) The "Net Consideration Per Share" shall mean the amount equal to the total amount of consideration, if any, received by the Corporation for the issuance of all such warrants, options, subscriptions, or other purchase rights or convertible or exchangeable securities, plus the minimum amount of consideration, if any, payable to the Corporation upon exercise or conversion thereof, divided by the aggregate number of shares of Common Stock that would be issued if all such warrants, options, subscriptions, or other purchase rights or convertible or exchangeable securities were exercised, exchanged, or converted. (b) The "Net Consideration Per Share" which may be received by the Corporation shall be determined in each instance as of the date of issuance of warrants, options, subscriptions, or other purchase rights or convertible or exchangeable securities without giving effect to any possible future upward price adjustments or rate adjustments which may be applicable with respect to such warrants, options, subscriptions, or other purchase rights or convertible or exchangeable securities. (c) Stock Dividends. In the event the Corporation shall make or --------------- issue a dividend or other distribution payable in Common Stock or securities of the Corporation convertible into or otherwise exchangeable for the Common Stock of the Corporation which -26- is not subject to Section 5(d)(i) above, then such Common Stock or other securities issued in payment of such dividend shall be deemed to have been issued without consideration (except for dividends payable in shares of Common Stock payable pro rata to holders of Series C Preferred Stock and to -------- holders of any other class of stock). (D) Consideration Other than Cash. For purposes of this ----------------------------- Section 5(d), if a part or all of the consideration received by the Corporation in connection with the issuance of shares of the Common Stock or the issuance of any of the securities described in this Section 5(d)(v) consists of property other than cash, such consideration shall be deemed to have a fair market value as is reasonably determined in good faith by the Board of Directors of the Corporation. (E) Exceptions. This Section 5(d)(v) shall not apply under any ---------- of the circumstances which are described in Sections 5(d)(i), (ii) i (iii) or (iv) above. Further, the provisions of this Section 5(d)(v) shall not apply to (i) shares issued upon conversion of the Series A Preferred or Series C Preferred, (ii) options (and the shares issuable upon exercise thereof) to purchase up to an aggregate of 1,841,375 shares of Common Stock granted or to be granted to employees, directors and consultants of the Corporation, (iii) shares issued upon conversion of warrants to purchase an aggregate of 144,540 shares of Common Stock outstanding on the Original Issue Date, (iv) shares issued upon conversion of warrants to purchase an aggregate of 353,388 shares of Common Stock held by NGC, Inc., (v) shares issued upon conversion of warrants to purchase an aggregate of 150,633 shares of Common Stock held by Prudential Securities Incorporated, (vi) capital stock or warrants to purchase capital stock issued in connection with bona fide equipment lease financings or bank credit facilities approved by the Corporation's Board of Directors, (vii) capital stock or warrants to purchase capital stock issued in connection with bona fide acquisition transactions, the terms of which are approved by the Corporation's Board of Directors, or (viii) shares of Common Stock issued pursuant to a transaction described in Section 5(d)(i) or 5(d)(ii) hereof. The number of shares in this Section (E) shall be proportionately adjusted to reflect any stock dividend, stock split or other form of recapitalization occurring after the date hereof. (vi) Tax Adjustments. The Corporation may in its sole --------------- discretion make such reductions in the Conversion Price, in addition to those required by paragraphs (i), (ii), (iii) and (iv) above, as it considers to be advisable in order that any event treated for Federal Income tax purposes as a dividend of stock or stock rights shall not be taxable to the recipient. (vii) Reservation of Shares. The Corporation shall at all times --------------------- reserve and keep available, free from preemptive fights, out of its authorized but unissued Common Stock, for the purpose of issuance upon conversion of the Series C Preferred, the maximum number of shares of Common Stock then deliverable upon the conversion of all shares of Series C Preferred then outstanding. All Common Stock issued upon conversion of the Series C Preferred shall be -27- newly issued and, when issued, shall be duly authorized, validly issued, fully paid and nonassessable, and free and clear of any liens or encumbrances. 6. NOTICES OF RECORD DATE. In the event of any taking by the Corporation ---------------------- of a record of the holders of any class of securities for the purpose of determining the holders thereof who are entitled to receive any dividend (other than a cash dividend) or other distribution, any right to subscribe for, purchase or otherwise acquire any shares of stock of any class or any other securities or property, or to receive any other right, the Corporation shall mail to each holder of Series C Preferred, at least fifteen (15) days prior to the date specified therein, a notice specifying the date on which any such record is to be taken for the purpose of such dividend, distribution or right, and the amount and character of such dividend, distribution or right. 7. PROTECTIVE PROVISIONS. So long as any shares of Series C Preferred are --------------------- outstanding, this Corporation shall not, without first obtaining the approval (by vote or written consent, as provided by law), of the holders of at least a majority of the then outstanding shares of Series C Preferred voting together as a class: (a) amend or repeal any provision of, or add any provision to, this Corporation's Restated Certificate of Incorporation if such action would adversely alter or change the preferences, rights, privileges or powers of, or the restrictions provided for the benefit of, the Series C Preferred; or (b) authorize or issue shares of any class of stock (other than the Series B Preferred issued as dividends as described in Article VI hereof) having any preference or priority as to dividend, redemption or liquidation preferences which is superior to or on parity with any such preference or priority of any series of Series C Preferred. (c) Merge or consolidate with or into another entity or sell, lease or otherwise dispose of a material portion of the assets of the Company or any subsidiary or transfer voting control of the Company if the total consideration to be received by the holders of the Series C Preferred Stock is less than the lesser of (i) $7.02 per share of Series C Preferred (as adjusted for stock splits, stock dividends, recapitalizations and similar events) and (ii) $4.74 per share of Series C Preferred (as adjusted for stock splits, stock dividends, recapitalizations and similar events), with respect to transactions occurring on or prior to the first anniversary of the Original Issue Date of the Series C Preferred and thereafter an amount per share of Series C Preferred which would result in the holder of a share of Series C Preferred realizing an annual cumulative internal rate of return of 35% on the original purchase price paid per share of Series C Preferred, which consent shall not be unreasonably withheld; 8. REDEMPTION RIGHTS. ----------------- (a) Holder Redemption. Upon written notice at least one hundred ----------------- twenty (120) days prior to December 31 of any calendar year from, and including, the year 2002, by the -28- holders of at least two-thirds (2/3) of the then outstanding shares of Series C Preferred (a "Holder Election"), the Corporation shall be required to redeem all of the issued, outstanding and nonredeemed shares of Series C Preferred held by each holder of Series C Preferred (a "Holder Redemption"), at a redemption price per share (the "Redemption Price") of $3.51 plus an amount equal to all declared but unpaid dividends on the Series C Preferred. In the event of any such Holder Election, the Corporation shall, out of and only to the extent of funds legally available therefor, redeem (i) on the December 31 following such Holder Election, one-third of the number of shares of Series C Preferred then issued and outstanding; (ii) on the second December 31 following such Holder Election, one-half of the number of shares of Series C Preferred then issued and outstanding; and (iii) on the third December 31 following such Holder Election, all of the shares of Series C Preferred then issued and outstanding. The Redemption Price Payable upon any Holder Redemption shall be paid in cash, to the extent of funds legally available therefor. (b) In the event that the Corporation does not have legally available funds sufficient to pay in full the Redemption Price with respect to each share of Series C Preferred being redeemed pursuant to this Section 8 ("REDEEMED SHARES"), the Corporation shall redeem the shares of Series C Preferred otherwise scheduled for redemption pro rata among the holders of the Series C Preferred then outstanding, based on the number of shares then held by each holder of Series C Preferred. (c) Payment of Redemption Price. In the case of any Holder Redemption --------------------------- pursuant to Section 4(a), the Corporation shall pay the Redemption Price in cash. (d) Mechanics of Redemption. ----------------------- (i) Notice of any Holder Redemption of the Series C Preferred shall be mailed at least thirty (30), but not more than sixty (60), calendar days prior to each December 31 redemption date (each, a "Holder Redemption Date"), to each holder of Series C Preferred to be redeemed at such holder's address as it appears on the books of the Corporation. To facilitate the redemption of the Series C Preferred, the Board of Directors may fix a record date for the determination of the holders of shares of Series C Preferred to be redeemed on each Holder Redemption Date, which date shall be not more than sixty (60), nor less than ten (10) calendar days prior to the respective Holder Redemption Date. (ii) The holder of any shares of Series C Preferred redeemed pursuant to this Section 8 shall not be entitled to receive payment of the Redemption Price for such shares until such holder shall cause to be delivered to the place specified in the Corporation's notice of redemption (i) the certificates representing the shares of Series C Preferred to be redeemed and (ii) appropriate endorsements and transfer documents sufficient to transfer such shares of Series C Preferred to the Corporation free of any adverse interest. In the event the redemption amount payable on any redeemed share of Series C Preferred is not paid in full within fifteen (15) business days after the Holder Redemption Date as provided herein, then the unpaid portion of the Redemption Price of such share shall bear interest at a rate of 12% per annum, commencing at -29- the close of business on the Holder Redemption Date and continuing until the redemption price on such share is paid in full. Interest shall be computed on the basis of a three hundred sixty-five (365) day year and shall be payable on demand. (iii) In the event of any redemption, then upon the Holder Redemption Date and if all funds necessary for such redemption shall have been paid in cash or set aside by the Corporation separate and apart from its other funds in trust for the pro rata benefit of the holders of the shares called for redemption, so as to be and continue to be available therefor, then the shares so called for redemption shall no longer be deemed outstanding, the rights to receive dividends thereon shall cease to accrue from and after the applicable Holder Redemption Date, and all rights of the holders of the shares of Series C Preferred called for redemption shall cease and terminate, excepting only the right to receive the Redemption Price therefor (including any accrued and unpaid dividends, whether or not earned or declared, to the Holder Redemption Date if such price has not already been paid, without interest except as provided in Section 4(d)(ii) hereof. (e) Conversion Rights. Nothing contained in this Section 8 shall in ----------------- any way restrict or prohibit the holders of the Series C Preferred from exercising their conversion rights pursuant to Section 5 hereof prior to the redemption of any shares hereunder. (f) Priority on Redemption. The redemption rights of the shares of ---------------------- Series C Preferred are senior to the redemption rights of the Series A Preferred and Series B Preferred. Accordingly, the Corporation shall not redeem any shares of Series A Preferred or Series B preferred unless and until the shares of Series C Preferred have been redeemed in full. ARTICLE VIII In furtherance and not in limitation of the powers conferred by statute, the Board of Directors of the Corporation is expressly authorized to make, alter or repeal the by-laws of the Corporation. ARTICLE IX Meetings of stockholders may be held within or without the State of Delaware, as the by-laws of the Corporation may provide. The books of the Corporation may be kept outside the State of Delaware at such place or places as may be designated from time to time by the Board of Directors or in the by-laws of the Corporation. Election of directors need not be by written ballot unless the by-laws of the Corporation so provide. ARTICLE X To the fullest extent permitted by the General Corporation Law of the State of Delaware as the same exists or may hereafter be amended, a director of the Corporation shall not be personally -30- liable to the Corporation or its stockholders for monetary damages for a breach of fiduciary duty as a director. Any repeal or modification of this Article X shall not adversely affect any right or protection of a director of the Corporation existing at the time of such repeal or modification. ARTICLE XI Each person who is or was director or officer of the Corporation, and each person who serves or served at the request of the Corporation as a director or officer of another enterprise, shall be indemnified by the Corporation in accordance with, and to the fullest extent authorized by, the General Corporation Law of the State of Delaware as it may be in effect from time to time. ARTICLE XII The Corporation reserves the right to amend, alter, change or repeal any provision contained in this Restated Certificate in the manner now or hereafter prescribed herein and by the laws of the State of Delaware, and all rights conferred upon stockholders herein are granted subject to this reservation." -31- THE UNDERSIGNED, being the Executive Vice President of this Corporation, does make this certificate, hereby declaring and certifying that this is his act and deed and the facts herein stated are true, and accordingly, has hereunto set his hand this 17th day of July, 1997. GEOSYSTEMS GLOBAL CORPORATION a Delaware corporation By: /s/ James Thomas ------------------------------- Name: James Thomas Title: Executive Vice President Attest: /s/ Robert S. Binford - ------------------------------ Title: Asst. Secretary Robert S. Binford -32- STATE OF DELAWARE SECRETARY OF STATE DIVISION OF CORPORATIONS FILED 09:00 AM 01/27/1999 991033810 - 2389679 CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION OF GEOSYSTEMS GLOBAL CORPORATION GeoSystems Global Corporation, a Delaware corporation (hereinafter called "Corporation"), hereby certifies that: FIRST: The Certificate of Incorporation of the Corporation, as ------ heretofore amended, is further amended by striking out Article FIRST of the Certificate of Incorporation and inserting in lieu thereof the following. "FIRST: The name of the Corporation (hereinafter called the "Corporation") is MapQuest.com, Inc." SECOND: The board of directors of the Corporation, by written consent ------ to such action by all the members thereof and filed with the minutes of proceedings of the board, adopted a resolution in which was set forth the foregoing proposed amendment of the Certificate of Incorporation of the Corporation declaring that the said amendment of the Certificate of Incorporation was advisable and directing that it be submitted for action thereon by the stockholders of the Corporation by written consent of the holders of a majority of the shares of stock of the Corporation entitled to vote thereon. Such amendment of the Certificate of Incorporation has been duly adopted in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware. THIRD: A consent in writing in accordance with Section 228 of the ----- General Corporation Law of the State of Delaware, setting forth approval of the amendment of the Certificate of Incorporation of the Corporation hereinabove set forth, was signed by the holders of majority of the shares of stock of the Corporation entitled to vote thereon, and such consent is filed with the records of the Corporation. FOURTH: The amendment of the Certificate of Incorporation of the ------ Corporation as hereinabove set forth has been duly advised by the Board of Directors and approved by the stockholders of the Corporation in the manner and by the vote required by law. IN WITNESS WHEREOF, the Corporation has caused this Certificate of Amendment to be signed in its name and on its behalf by James Thomas, COO/CFO of the Corporation, on the 16/th/ day of January, 1999. GEOSYSTEMS GLOBAL CORPORATION By /s/ James Thomas ------------------------- James Thomas, COO/CFO EX-3.2 3 FORM OF AMD. 2 TO AMENDED & RESTATED CERT. OF INCORP. EXHIBIT 3.2 AMENDMENT NO. 2 TO THE AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF MAPQUEST.COM, INC. I, THE UNDERSIGNED, James Thomas, being the Secretary of MapQuest.com, Inc. (the "Corporation"), hereby certify: ----------- 1. The Amended and Restated Certificate of Incorporation of the Corporation is amended so that the second and third sentences of Article FOURTH are deleted and replaced with the following: "The total number of shares which this Corporation is authorized to issue is one hundred five million (105,000,000) shares. One hundred million (100,000,000) shares shall be designated Common Stock, par value per share equal to $0.001 upon the effectiveness of the two and seven- tenths-for-one stock split (the "Stock Split") to be effected by the Corporation upon the effectiveness of the Registration Statement on Form S- 1 filed with the Securities and Exchange Commission relating to the initial public offering of the Common Stock." 2. This amendment was authorized and duly adopted by the unanimous written consent of the Board of Directors and by the stockholders of the Corporation in accordance with Sections 242 and 245 of the General Corporation Law of the State of Delaware, as amended. IN WITNESS WHEREOF, the undersigned has executed this certificate as of the ____ day of April, 1999, and hereby affirms under penalty of perjury that this certificate is the act and deed of the Corporation and that the facts contained herein are true. By:______________________________ Name: James Thomas Title: Secretary EX-3.3 4 FORM OF AMENDED & RESTATED CERT. OF INCORP. EXHIBIT 3.3 AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF MAPQUEST.COM, INC. a Delaware corporation MapQuest.com, Inc., a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware (the "Corporation") does hereby certify as follows: WHEREAS: The original Certificate of Incorporation of the Corporation was filed under the name of "Geosystems Global Corporation" with the Secretary of State of the State of Delaware on March 28, 1994. WHEREAS: This Amended and Restated Certificate of Incorporation has been duly adopted in accordance with the provisions of Sections 242 and 245 of the General Corporation Law of the State of Delaware by the Board of Directors of the Corporation. WHEREAS: This Amended and Restated Certificate of Incorporation was approved by written consent of the stockholders pursuant to Section 228 of the General Corporation Law of the State of Delaware ("Delaware Law"). WHEREAS: Written notice of this Amended and Restated Certificate of Incorporation was duly given to stockholders of this Corporation who did not consent in writing to the foregoing resolutions. THEREFORE BE IT RESOLVED: The Certificate of Incorporation of this Corporation is amended and restated in its entirety to read as follows: "FIRST: The name of this corporation is MapQuest.com, Inc. SECOND: The address of the Corporation's registered office in the State of Delaware is 1209 Orange Street, Wilmington, New Castle County, Delaware 19801. The name of its registered agent at such address is The Corporation Trust Company. THIRD: The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware. FOURTH: The Corporation is authorized to issue two classes of stock to be designated, respectively, "common stock" and "preferred stock." The total number of shares which this Corporation is authorized to issue is one hundred and five million (105,000,000) shares. One hundred million (100,000,000) shares shall be designated common stock (the "Common Stock"), and five million (5,000,000) shares shall be undesignated preferred stock (the "Preferred Stock"). Each share of Preferred Stock shall have a par value of $0.01, and each share of Common Stock shall have a par value of $0.001. Any Preferred Stock not previously designated as to series may be issued from time to time in one or more series pursuant to a resolution or resolutions providing for such issue duly adopted by the Board of Directors (authority to do so being hereby expressly vested in the Board), and such resolution or resolutions shall also set forth the voting powers, full or limited or none, of each such series of Preferred Stock and shall fix the designations, preferences and relative, participating, optional or other special rights and qualifications, limitations or restrictions of each such series of Preferred Stock. The Board of Directors is authorized to alter the designation, rights, preferences, privileges and restrictions granted to or imposed upon any wholly unissued series of Preferred Stock and, within the limits and restrictions stated in any resolution or resolutions of the Board of Directors originally fixing the number of shares constituting any series of Preferred Stock, to increase or decrease (but not below the number of shares of any such series then outstanding) the number of shares of any such series subsequent to the issue of shares of that series. Each share of Preferred Stock issued by the Corporation, if reacquired by the Corporation (whether by redemption, repurchase, conversion to Common Stock or other means), shall upon such reacquisition resume the status of authorized and unissued shares of Preferred Stock, undesignated as to series and available for designation and issuance by the Corporation in accordance with the immediately preceding paragraph. FIFTH: 1. Dividends. The holders of Common Stock shall be entitled to receive, on --------- a share-for-share basis, such dividends if and when declared from time to time by the Board of Directors of the Corporation. 2. Voting. Except as otherwise required by law, each holder of Common Stock ------ shall be entitled to one (1) vote for each share of Common Stock held by such holder. SIXTH: Any action required or permitted to be taken at any annual or special meeting of stockholders may be taken only upon the vote of stockholders at an annual or special meeting duly noticed and called in accordance with Delaware Law and may not be taken by written consent of stockholders without a meeting. SEVENTH: The management of the business and the conduct of the affairs of the Corporation shall be vested in its Board of Directors. The number of directors which shall constitute the whole Board of Directors shall be fixed exclusively by one or more resolutions adopted from time to time by the Board of Directors. EIGHTH: - ------ A. CLASSIFIED DIRECTORS The directors (subject to the last paragraph of this Article Eighth) shall be divided into three classes, designated Class I, Class II and Class III. Each class shall consist, as nearly as may be possible, of one-third of the total number of directors constituting the entire Board of Directors. Each director shall serve for a term ending on the date of the third annual meeting of stockholders next following the annual meeting at which such director was elected, provided that directors initially designated as Class I directors shall -------- serve for a term ending on the date of the 2002 annual meeting, directors initially designated as Class II directors shall serve for a term ending on the 2001 annual meeting, and directors initially designated as Class III directors shall serve for a term ending on the date of the 2000 annual meeting. Notwithstanding the foregoing, each director shall hold office until such director's successor shall have been duly elected and qualified or until such director's earlier death resignation or removal. In the event of any change in the number of directors, the Board of Directors shall apportion any newly created directorships among, or reduce the number of directorships in, such class or classes as shall equalize, as nearly as possible, the number of directors in each class. In no event will a decrease in the number of directors shorten the term of any incumbent director. The names and mailing addresses of the persons who are to serve initially as directors of each Class are: Class I Michael Mulligan Rick Allen Class II Robert McCormack Daniel Nova Class III Carlo von Schroeter John Moragne B. DIRECTORS 3. No Written Ballot. Election of directors need not be by written ballot ----------------- unless the bylaws of the Corporation so provide. 4. Vacancies. Vacancies on the Board of Directors resulting from death, --------- resignation, removal or otherwise and newly created directorships resulting from any increase in the number of directors may be filled solely by a majority of the directors then in office (although less than a quorum) or by the sole remaining director, and each director so elected shall hold office for a term that shall coincide with the term of the class to which such director shall have been elected. 5. Removal. No director may be removed from office by the stockholders ------- except for cause with the affirmative vote of the holders of not less than a majority of the outstanding shares of stock generally entitled to vote. 6. Preferred Stock Directors. Notwithstanding the foregoing, whenever the ------------------------- holders of one or more classes or series of Preferred Stock shall have the right, voting separately as a class or series, to elect directors, the election, term of office, filing of vacancies, removal and other features of such directorships shall be governed by the terms of the resolution or resolutions adopted by the Board of Directors pursuant to ARTICLE FOURTH applicable thereto, and each director so elected shall not be subject to the provisions of this ARTICLE SIXTH unless otherwise provided therein. NINTH: Subject to Article Thirteenth, The Board of Directors shall have the ----- power to adopt, amend or repeal the By-laws of the Corporation. TENTH: Any action required or permitted to be taken at any annual or ----- special meeting of stockholders may be taken only upon the vote of stockholders at an annual or special meeting duly noticed and called in accordance with the Delaware Law, as amended from time to time, and may not be taken by written consent of stockholders without a meeting, except with regard to election, removed and filling of vacancies of directors by holders of Preferred Stock, voting separately, as and if so provided by the terms of the resolution or resolutions adopted by the Board of Directors pursuant to Article Fourth applicable thereto. At all meetings of stockholders, each stockholder shall be entitled to vote, in person or by proxy, the shares owned by such stockholders of record on the record date for the meeting. When a quorum is present or represented at any meeting, the vote of the holders of a majority of those of the outstanding shares of stock generally entitled to vote and represented, in person or proxy, at the meeting on any matter, question, or proposal properly brought before such meeting shall decide such question, unless the question is one upon which, by express provision of law, this Amended and Restated Certificate of Incorporation or the By-Laws, a different vote is required, in which case such express provision shall govern and control the decision of such question. NINTH: Meetings of the stockholders shall only be called by the Secretary ----- of the Corporation upon written request signed by either (a) stockholders holding at least 20% of those of the outstanding shares of stock generally entitled to vote or (b) by a majority of the Board of Directors, or (c) the Chairman of the Board of Directors, or (d) the President of the Corporation, and may not be called by any other person. Notwithstanding the foregoing, whenever holders of one or more classes or series of Preferred Stock shall have the right, voting separately as a class or series, to elect directors, such holders may call, pursuant to the terms of the resolution or resolutions adopted by the Board of Directors pursuant to ARTICLE FOURTH hereto, special meetings of the holders of such Preferred Stock. Any call for a special meetings of holders of such Preferred Stock. Any call for a special meeting of the stockholders must specify the matters to be acted upon at such meeting; only those matters set forth in such notice may be considered or acted upon at the meeting, unless otherwise provided by law. NINTH: In furtherance and not in limitation of the powers conferred by statute, the Board of Directors is expressly authorized to make, alter, amend or repeal the Bylaws of the Corporation. TENTH: The directors of the Corporation need not be elected by written ballot unless a stockholder or stockholders holding a majority of the voting power of the outstanding capital stock entitled to vote demands election by written ballot at the meeting and before voting. ELEVENTH: Advance notice of stockholder nomination for the election of directors and of business to be brought by stockholders before any meeting of the stockholders of the Corporation shall be given in the manner provided in the Bylaws of the Corporation. TWELFTH: Special meetings of the stockholders of the Corporation may be called, for any purpose or purposes, by (i) the Chairman of the Board of Directors, (ii) the Chief Executive Officer or (iii) the Board of Directors. THIRTEENTH: 1. To the fullest extent permitted by the Delaware Law as the same exists or as may hereafter be amended, a director of the Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages for a breach of fiduciary duty as a director. 2. The Corporation may indemnify to the fullest extent permitted by law any person made or threatened to be made a party to an action or proceeding, whether criminal, civil, administrative or investigative, by reason of the fact that he, his testator or intestate is or was a director, officer or employee of the Corporation or any predecessor of the Corporation or serves or served at any other enterprise as a director, officer or employee at the request of the Corporation or any predecessor to the Corporation. The Board of Directors of the Corporation may, in its discretion, extend such indemnification to former, current or future directors, employees and other agents of the Corporation or any predecessor to the Corporation. 3. Neither any amendment nor repeal of this Article THIRTEENTH, nor the adoption of any provision of the Corporation's Certificate of Incorporation inconsistent with this Article THIRTEENTH, shall eliminate or reduce the effect of this Article THIRTEENTH, in respect of any matter occurring, or any action or proceeding accruing or arising or that, but for this Article TWELFTH, would accrue or arise, prior to such amendment, repeal or adoption of an inconsistent provision. FOURTEENTH: Meetings of stockholders may be held within or without the State of Delaware, as the Bylaws may provide. The books of the Corporation may be kept (subject to any provision contained under Delaware Law) outside of the State of Delaware at such place or places as may be designated from time to time by the Board of Directors or in the Bylaws of the Corporation. FIFTEENTH: The Corporation reserves the right to amend, alter, change or repeal any provision contained in this Amended and Restated Certificate of Incorporation in the manner now or hereafter prescribed herein and under Delaware Law, except as otherwise provided in article THIRTEENTH, and all rights conferred upon stockholders herein are granted subject to this reservation. IN WITNESS WHEREOF, MapQuest.com, Inc. has caused this Amended and Restated Certificate of Incorporation to be signed in its name and on its behalf by James Thomas, Chief Financial Officer and Chief Operating Officer of the Corporation, on the ___ day of _____, 1999. By: --------------------------- James Thomas Chief Financial Officer and Chief Operating Officer Attest: ________________________ EX-3.4 5 AMENDED AND RESTATED BY-LAWS OF MAPQUEST.COM, INC. EXHIBIT 3.4 AMENDED AND RESTATED BYLAWS OF MAPQUEST.COM, INC. (A DELAWARE CORPORATION) BY LAWS OF MAPQUEST.COM, INC. (A DELAWARE CORPORATION) TABLE OF CONTENTS Page ---- ARTICLE I CORPORATE OFFICES 1.1 REGISTERED OFFICE ..................................................... 1 1.2 OTHER OFFICES ......................................................... 1 ARTICLE II MEETINGS OF STOCKHOLDERS 2.1 PLACE OF MEETINGS ..................................................... 1 2.2 ANNUAL MEETING ........................................................ 1 2.3 SPECIAL MEETING ....................................................... 2 2.4 NOTICE OF STOCKHOLDERS' MEETINGS ...................................... 2 2.5 ADVANCE NOTICE OF STOCKHOLDER NOMINEES AND STOCKHOLDER BUSINESS .............................................................. 2 2.6 MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE ......................... 2 2.7 QUORUM ................................................................ 3 2.8 ADJOURNED MEETING; NOTICE ............................................. 3 2.9 VOTING ................................................................ 3 2.10 STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING .............. 4 2.11 RECORD DATE FOR STOCKHOLDER NOTICE; VOTING ............................ 4 2.12 PROXIES ............................................................... 5 2.13 ORGANIZATION .......................................................... 5 2.14 LIST OF STOCKHOLDERS ENTITLED TO VOTE ................................. 5 ARTICLE III DIRECTORS 3.1 POWERS ................................................................. 6 3.2 NUMBER OF DIRECTORS .................................................... 6 3.3 ELECTION AND TERM OF OFFICE OF DIRECTORS ............................... 6 3.4 RESIGNATION AND VACANCIES .............................................. 6 3.5 REMOVAL OF DIRECTORS ................................................... 7 3.6 PLACE OF MEETINGS; MEETINGS BY TELEPHONE ............................... 8 3.7 FIRST MEETINGS ......................................................... 8 3.8 REGULAR MEETINGS ....................................................... 8 3.9 SPECIAL MEETINGS; NOTICE ............................................... 9 3.10 QUORUM ................................................................ 9 3.11 WAIVER OF NOTICE ...................................................... 9 3.12 ADJOURNMENT ........................................................... 10 3.13 NOTICE OF ADJOURNMENT ................................................. 10 3.14 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING ..................... 10 3.15 FEES AND COMPENSATION OF DIRECTORS .................................... 10 3.16 APPROVAL OF LOANS TO OFFICERS ......................................... 10 3.17 SOLE DIRECTOR PROVIDED BY CERTIFICATE OF INCORPORATION ................ 11 3.18 NOMINATION OF DIRECTORS; STOCKHOLDER BUSINESS AT ANNUAL MEETINGS .............................................................. 11 ARTICLE IV COMMITTEES 4.1 COMMITTEES OF DIRECTORS ................................................ 13 4.2 MEETINGS AND ACTION OF COMMITTEES ...................................... 13 4.3 COMMITTEE MINUTES ...................................................... 14 ARTICLE V OFFICERS 5.1 OFFICERS ............................................................. 14 5.2 ELECTION OF OFFICERS ................................................. 14 5.3 SUBORDINATE OFFICERS ................................................. 15 5.4 REMOVAL AND RESIGNATION OF OFFICERS .................................. 15 5.5 VACANCIES IN OFFICES ................................................. 15 5.6 CHAIRMAN OF THE BOARD ................................................ 15 5.7 PRESIDENT ............................................................ 16 5.8 VICE PRESIDENTS ...................................................... 16 5.9 SECRETARY ............................................................ 16 5.10 CHIEF FINANCIAL OFFICER .............................................. 17 5.11 ASSISTANT SECRETARY .................................................. 17 5.12 ADMINISTRATIVE OFFICERS .............................................. 17 5.13 AUTHORITY AND DUTIES OF OFFICERS ..................................... 18 -ii- ARTICLE VI INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEESAND OTHER AGENTS 6.1 INDEMNIFICATION OF DIRECTORS AND OFFICERS .............................. 18 6.2 INDEMNIFICATION OF OTHERS .............................................. 19 6.3 INSURANCE .............................................................. 19 ARTICLE VII RECORDS AND REPORTS 7.1 MAINTENANCE AND INSPECTION OF RECORDS ................................. 19 7.2 INSPECTION BY DIRECTORS ............................................... 20 7.3 REPRESENTATION OF SHARES OF OTHER CORPORATIONS ........................ 20 7.4 CERTIFICATION AND INSPECTION OF BYLAWS ................................ 20 ARTICLE VIII GENERAL MATTERS 8.1 RECORD DATE FOR PURPOSES OTHER THAN NOTICE AND VOTING .................. 20 8.2 CHECKS; DRAFTS; EVIDENCES OF INDEBTEDNESS .............................. 21 8.3 CORPORATE CONTRACTS AND INSTRUMENTS: HOW EXECUTED ...................... 21 8.4 STOCK CERTIFICATES; TRANSFER; PARTLY PAID SHARES ....................... 21 8.5 SPECIAL DESIGNATION ON CERTIFICATES .................................... 22 8.6 LOST CERTIFICATES ...................................................... 22 8.7 TRANSFER AGENTS AND REGISTRARS ......................................... 23 8.8 CONSTRUCTION; DEFINITIONS .............................................. 23 ARTICLE IX AMENDMENTS -iii- BYLAWS OF MAPQUEST.COM, INC. (A DELAWARE CORPORATION) ARTICLE I CORPORATE OFFICES 1.1 REGISTERED OFFICE The registered office of the corporation shall be fixed in the certificate of incorporation of the corporation. 1.2 OTHER OFFICES The board of directors may at any time establish branch or subordinate offices at any place or places where the corporation is qualified to do business. ARTICLE II MEETINGS OF STOCKHOLDERS 2.1 PLACE OF MEETINGS Meetings of stockholders shall be held at any place within or outside the State of Delaware designated by the board of directors. In the absence of any such designation, stockholders' meetings shall be held at the principal executive office of the corporation. 2.2 ANNUAL MEETING The annual meeting of stockholders shall be held each year on a date and at a time designated by the board of directors. In the absence of such designation, the annual meeting of stockholders shall be held on the third Friday in June in each year at 3:00 p.m. However, if such day falls on a legal holiday, then the meeting shall be held at the same time and place on the next succeeding full business day. At the meeting, directors shall be elected, and any other proper business may be transacted. -1- 2.3 SPECIAL MEETING A special meeting of the stockholders may be called at any time by the board of directors, or by the chairman of the board, or by the president. 2.4 NOTICE OF STOCKHOLDERS' MEETINGS All notices of meetings of stockholders shall be sent or otherwise given in accordance with Section 2.5 of these bylaws not less than ten (10) nor more than sixty (60) days before the date of the meeting. The notice shall specify the place, date and hour of the meeting and (i) in the case of a special meeting, the purpose or purposes for which the meeting is called (no business other than that specified in the notice may be transacted) or (ii) in the case of the annual meeting, those matters which the board of directors, at the time of giving the notice, intends to present for action by the stockholders (but any proper matter may be presented at the meeting for such action). The notice of any meeting at which directors are to be elected shall include the name of any nominee or nominees who, at the time of the notice, the board intends to present for election. 2.5 ADVANCE NOTICE OF STOCKHOLDER NOMINEES AND STOCKHOLDER BUSINESS To be properly brought before an annual meeting or special meeting, nominations for the election of directors or other business must be (a) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the board of directors, (b) otherwise properly brought before the meeting by or at the direction of the board of directors or (c) otherwise properly brought before the meeting by a stockholder. For such nominations or other business to be considered properly brought before the meeting by a stockholder, such stockholder must have given timely notice and in proper form of his or her intent to bring such business before such meeting in accordance with Section 3.18 of these bylaws. 2.6 MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE Written notice of any meeting of stockholders shall be given either personally or by first-class mail or by telegraphic or other written communication. Notices not personally delivered shall be sent charges prepaid and shall be addressed to the stockholder at the address of that stockholder appearing on the books of the corporation or given by the stockholder to the corporation for the purpose of notice. Notice shall be deemed to have been given at the time when delivered personally or deposited in the mail or sent by telegram or other means of written communication. An affidavit of the mailing or other means of giving any notice of any stockholders' meeting, executed by the secretary, assistant secretary or any transfer agent of the corporation giving the notice, shall be prima facie evidence of the giving of such notice. -2- 2.7 QUORUM The holders of a majority in voting power of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business except as otherwise provided by statute or by the certificate of incorporation. If, however, such quorum is not present or represented at any meeting of the stockholders, then either (i) the chairman of the meeting or (ii) the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting in accordance with Section 2.8 of these bylaws. When a quorum is present at any meeting, the vote of the holders of a majority of the stock having voting power present in person or represented by proxy shall decide any question brought before such meeting, unless the question is one upon which, by express provision of the laws of the State of Delaware or of the certificate of incorporation or these bylaws, a different vote is required, in which case such express provision shall govern and control the decision of the question. If a quorum be initially present, the stockholders may continue to transact business until adjournment, notwithstanding the withdrawal of enough stockholders to leave less than a quorum, if any action taken is approved by a majority of the stockholders initially constituting the quorum. 2.8 ADJOURNED MEETING; NOTICE When a meeting is adjourned to another time and place, unless these bylaws otherwise require, notice need not be given of the adjourned meeting if the time and place thereof are announced at the meeting at which the adjournment is taken. At the adjourned meeting the corporation may transact any business that might have been transacted at the original meeting. If the adjournment is for more than thirty (30) days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. 2.9 VOTING The stockholders entitled to vote at any meeting of stockholders shall be determined in accordance with the provisions of Section 2.11 of these bylaws, subject to the provisions of Sections 217 and 218 of the General Corporation Law of Delaware (relating to voting rights of fiduciaries, pledgors and joint owners, and to voting trusts and other voting agreements). Except as may be otherwise provided in the certificate of incorporation or these bylaws, each stockholder shall be entitled to one vote for each share of capital stock held by such stockholder. -3- 2.10 STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING Any action required or permitted to be taken at any annual or special meeting of stockholders may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing setting forth the action so taken shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Such consents shall be delivered to the corporation by delivery to its registered office in the state of Delaware, its principal place of business, or an officer or agent of the corporation having custody of the book in which proceedings of meetings of stockholders are recorded. Delivery made to a corporation's registered office shall be by hand or by certified or registered mail, return receipt requested. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing. Effective upon the closing of a firm commitment underwritten initial public offering of any of the corporation's securities pursuant to a registration statement on Form S-1 filed under the Securities Act of 1933, as amended, the stockholders of the corporation may not take action by written consent without a meeting but must take any such actions at a duly called annual or special meeting. 2.11 RECORD DATE FOR STOCKHOLDER NOTICE; VOTING For purposes of determining the stockholders entitled to notice of any meeting or to vote thereat, the board of directors may fix, in advance, a record date, which shall not precede the date upon which the resolution fixing the record date is adopted by the board of directors and which shall not be more than sixty (60) days nor less than ten (10) days before the date of any such meeting, and in such event only stockholders of record on the date so fixed are entitled to notice and to vote, notwithstanding any transfer of any shares on the books of the corporation after the record date. If the board of directors does not so fix a record date, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the business day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the business day next preceding the day on which the meeting is held. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting unless the board of directors fixes a new record date for the adjourned meeting, but the board of directors shall fix a new record date if the meeting is adjourned for more than thirty (30) days from the date set for the original meeting. -4- The record date for any other purpose shall be as provided in Section 8.1 of these bylaws. 2.12 PROXIES Every person entitled to vote for directors, or on any other matter, shall have the right to do so either in person or by one or more agents authorized by a written proxy signed by the person and filed with the secretary of the corporation, but no such proxy shall be voted or acted upon after three (3) years from its date, unless the proxy provides for a longer period. A proxy shall be deemed signed if the stockholder's name is placed on the proxy (whether by manual signature, typewriting, telegraphic transmission, telefacsimile or otherwise) by the stockholder or the stockholder's attorney-in-fact. The revocability of a proxy that states on its face that it is irrevocable shall be governed by the provisions of Section 212(e) of the General Corporation Law of Delaware (relating to the irrevocability of proxies). 2.13 ORGANIZATION The president, or in the absence of the president, the chairman of the board, shall call the meeting of the stockholders to order, and shall act as chairman of the meeting. In the absence of the president, the chairman of the board, and all of the vice presidents, the stockholders shall appoint a chairman for such meeting. The chairman of any meeting of stockholders shall determine the order of business and the procedures at the meeting, including such matters as the regulation of the manner of voting and the conduct of business. The secretary of the corporation shall act as secretary of all meetings of the stockholders, but in the absence of the secretary at any meeting of the stockholders, the chairman of the meeting may appoint any person to act as secretary of the meeting. 2.14 LIST OF STOCKHOLDERS ENTITLED TO VOTE The officer who has charge of the stock ledger of the corporation shall prepare and make, at least ten (10) days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten (10) days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. -5- ARTICLE III DIRECTORS 3.1 POWERS Subject to the provisions of the General Corporation Law of Delaware and to any limitations in the certificate of incorporation or these bylaws relating to action required to be approved by the stockholders or by the outstanding shares, the business and affairs of the corporation shall be managed and all corporate powers shall be exercised by or under the direction of the board of directors. 3.2 NUMBER OF DIRECTORS The number of directors of the corporation shall be not less than three (3) nor more than nine (9). The exact number of directors shall be six (6) until changed, within the limits specified above, by a bylaw amending this Section 3.2, duly adopted by the board of directors or by the stockholders. The indefinite number of directors may be changed, or a definite number may be fixed without provision for an indefinite number, by a duly adopted amendment to the Certificate of Incorporation or by an amendment to this bylaw duly adopted by the board of directors or by the stockholders. 3.3 ELECTION AND TERM OF OFFICE OF DIRECTORS Except as provided in Section 3.4 of these bylaws, directors shall hold office until the expiration of the term for which elected and until a successor has been elected and qualified; except that if any such election shall not be so held, such election shall take place at a stockholders' meeting called and held in accordance with the Delaware General Corporation Law. The Directors shall be classified and their successors elected in accordance with Article EIGHTH of the Certificate of Incorporation. Subject to the requirement of the Certificate of Incorporation that the classes be as nearly equal in number as possible, the size of each class of Directors shall be as determined from time to time by resolution adopted by a majority of the Board of Directors. Any reduction in the size of any class of Directors shall not shorten the term of office of any incumbent Director. Directors need not be stockholders of the corporation. 3.4 RESIGNATION AND VACANCIES Any director may resign effective on giving written notice to the chairman of the board, the president, the secretary or the board of directors, unless the notice specifies a later time for that resignation to become effective. If the resignation of a director is effective at a future time, the board of directors may elect a successor to take office when the resignation becomes effective. Each director so elected shall hold office until the expiration of the term of office of the director whom he has replaced and until a successor has been elected and qualified. -6- Effective upon the closing of a firm commitment underwritten public offering of any of the corporation's securities pursuant to a registration statement on Form S-1 under the Securities Act of 1933, as amended, vacancies occurring on the Board of Directors for any reason and newly created directorships resulting from an increase in the authorized number of directors may be filled only by vote of a majority of the remaining members of the Board of Directors, although less than a quorum, at any meeting of the Board of Directors. A person so elected by the Board of Directors to fill a vacancy or newly created directorship shall hold office until the next election of the Class for which such director shall have been chosen and until his or her successor shall have been duly elected and qualified. Unless otherwise provided in the certificate of incorporation or these bylaws (including, without limitation, the certificate of incorporation and bylaws as amended effective upon the closing of a firm commitment underwritten public offering of any of the corporation's securities pursuant to a registration statement on Form S-1 under the Securities Act of 1933, as amended): (i) Vacancies and newly created directorships resulting from any increase in the authorized number of directors elected by all of the stockholders having the right to vote as a single class may be filled by a majority of the directors then in office, although less than a quorum, or by a sole remaining director. (ii) Whenever the holders of any class or classes of stock or series thereof are entitled to elect one or more directors by the provisions of the certificate of incorporation, vacancies and newly created directorships of such class or classes or series may be filled by a majority of the directors elected by such class or classes or series thereof then in office, or by a sole remaining director so elected. If at any time, by reason of death or resignation or other cause, the corporation should have no directors in office, then any officer or any stockholder or an executor, administrator, trustee or guardian of a stockholder, or other fiduciary entrusted with like responsibility for the person or estate of a stockholder, or other fiduciary entrusted with like responsibility for the person or estate of a stockholder, may call a special meeting of stockholders in accordance with the provisions of the certificate of incorporation or these bylaws, or may apply to the Court of Chancery for a decree summarily ordering an election as provided in Section 211 of the General Corporation Law of Delaware (relating to meetings of shareholders). If, at the time of filling any vacancy or any newly created directorship, the directors then in office constitute less than a majority of the whole board (as constituted immediately prior to any such increase), then the Court of Chancery may, upon application of any stockholder or stockholders holding at least ten (10) percent of the total number of the shares at the time outstanding having the right to vote for such directors, summarily order an election to be held to fill any such vacancies or newly created directorships, or to replace the directors chosen by the directors then in office as aforesaid, which election shall be governed by the provisions of -7- Section 211 of the General Corporation Law of Delaware (relating to meeting of shareholders) as far as applicable. 3.5 REMOVAL OF DIRECTORS Unless otherwise restricted by statute, by the certificate of incorporation or by these bylaws, any director or the entire board of directors may be removed, with or without cause, by the holders of a majority of the shares then entitled to vote at an election of directors; provided, however, that, if stockholders of the corporation are entitled to cumulative voting, if less than the entire board is to be removed, no director may be removed without cause if the votes cast against his removal would be sufficient to elect him if then cumulatively voted at election of the entire board of directors. Whenever the holders of any class or series are entitled to elect one or more directors by the certificate of incorporation, this Section 3.5 shall apply, in respect to the removal without cause of a director or directors so elected, to the vote of the holders of the outstanding shares of that class or series and not to the vote of the outstanding shares as a whole. Effective upon the closing of a firm commitment underwritten public offering of any of the corporation's securities pursuant to a registration statement on Form S-1 under the Securities Act of 1933, as amended, any director may be removed from office by the stockholders of the corporation only for cause. 3.6 PLACE OF MEETINGS; MEETINGS BY TELEPHONE Regular meetings of the board of directors may be held at any place within or outside the State of Delaware that has been designated from time to time by resolution of the board. In the absence of such a designation, regular meetings shall be held at the principal executive office of the corporation. Special meetings of the board may be held at any place within or outside the State of Delaware that has been designated in the notice of the meeting or, if not stated in the notice or if there is no notice, at the principal executive office of the corporation. Any meeting of the board, regular or special, may be held by conference telephone or similar communication equipment, so long as all directors participating in the meeting can hear one another; and all such participating directors shall be deemed to be present in person at the meeting. 3.7 FIRST MEETINGS The first meeting of each newly elected board of directors shall be held at such time and place as shall be fixed by the vote of the stockholders at the annual meeting. In the event of the failure of the stockholders to fix the time or place of such first meeting of the newly elected board of directors, or in the event such meeting is not held at the time and place so fixed by the stockholders, the meeting may be held at such time and place as shall be specified in a notice -8- given as hereinafter provided for special meetings of the board of directors, or as shall be specified in a written waiver signed by all of the directors. 3.8 REGULAR MEETINGS Regular meetings of the board of directors may be held without notice at such time as shall from time to time be determined by the board of directors. If any regular meeting day shall fall on a legal holiday, then the meeting shall be held at the same time and place on the next succeeding full business day. 3.9 SPECIAL MEETINGS; NOTICE Special meetings of the board of directors for any purpose or purposes may be called at any time by the chairman of the board, the president, any vice president, the secretary or any two directors. Notice of the time and place of special meetings shall be delivered personally or by telephone to each director or sent by first-class mail, telecopy or telegram, charges prepaid, addressed to each director at that director's address as it is shown on the records of the corporation. If the notice is mailed, it shall be deposited in the United States mail at least four (4) days before the time of the holding of the meeting. If the notice is delivered personally or by telephone, telecopy or telegram, it shall be delivered personally or by telephone or to the telegraph company at least forty- eight (48) hours before the time of the holding of the meeting. Any oral notice given personally or by telephone may be communicated either to the director or to a person at the office of the director who the person giving the notice has reason to believe will promptly communicate it to the director. The notice need not specify the purpose or the place of the meeting, if the meeting is to be held at the principal executive office of the corporation. 3.10 QUORUM A majority of the authorized number of directors shall constitute a quorum for the transaction of business, except to adjourn as provided in Section 3.12 of these bylaws. Every act or decision done or made by a majority of the directors present at a duly held meeting at which a quorum is present shall be regarded as the act of the board of directors, subject to the provisions of the certificate of incorporation and applicable law. A meeting at which a quorum is initially present may continue to transact business notwithstanding the withdrawal of directors, if any action taken is approved by at least a majority of the quorum for that meeting. 3.11 WAIVER OF NOTICE -9- Notice of a meeting need not be given to any director (i) who signs a waiver of notice, whether before or after the meeting, or (ii) who attends the meeting other than for the express purpose of objecting at the beginning of the meeting to the transaction of any business because the meeting is not lawfully called or convened. All such waivers shall be filed with the corporate records or made part of the minutes of the meeting. A waiver of notice need not specify the purpose of any regular or special meeting of the board of directors. 3.12 ADJOURNMENT A majority of the directors present, whether or not constituting a quorum, may adjourn any meeting of the board to another time and place. 3.13 NOTICE OF ADJOURNMENT Notice of the time and place of holding an adjourned meeting of the board need not be given unless the meeting is adjourned for more than twenty-four (24) hours. If the meeting is adjourned for more than twenty-four (24) hours, then notice of the time and place of the adjourned meeting shall be given before the adjourned meeting takes place, in the manner specified in Section 3.9 of these bylaws, to the directors who were not present at the time of the adjournment. 3.14 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING Any action required or permitted to be taken by the board of directors may be taken without a meeting, provided that all members of the board individually or collectively consent in writing to that action. Such action by written consent shall have the same force and effect as a unanimous vote of the board of directors. Such written consent and any counterparts thereof shall be filed with the minutes of the proceedings of the board of directors. 3.15 FEES AND COMPENSATION OF DIRECTORS Directors and members of committees may receive such compensation, if any, for their services and such reimbursement of expenses as may be fixed or determined by resolution of the board of directors. This Section 3.15 shall not be construed to preclude any director from serving the corporation in any other capacity as an officer, agent, employee or otherwise and receiving compensation for those services. 3.16 APPROVAL OF LOANS TO OFFICERS The corporation may lend money to, or guarantee any obligation of, or otherwise assist any officer or other employee of the corporation or any of its subsidiaries, including any officer or employee who is a director of the corporation or any of its subsidiaries, whenever, in the judgment of the directors, such loan, guaranty or assistance may reasonably be expected to -10- benefit the corporation. The loan, guaranty or other assistance may be with or without interest and may be unsecured, or secured in such manner as the board of directors shall approve, including, without limitation, a pledge of shares of stock of the corporation. Nothing contained in this section shall be deemed to deny, limit or restrict the powers of guaranty or warranty of the corporation at common law or under any statute. 3.17 SOLE DIRECTOR PROVIDED BY CERTIFICATE OF INCORPORATION In the event only one director is required by these bylaws or the certificate of incorporation, then any reference herein to notices, waivers, consents, meetings or other actions by a majority or quorum of the directors shall be deemed to refer to such notice, waiver, etc., by such sole director, who shall have all the rights and duties and shall be entitled to exercise all of the powers and shall assume all the responsibilities otherwise herein described as given to the board of directors. 3.18 NOMINATION OF DIRECTORS; STOCKHOLDER BUSINESS AT ANNUAL MEETINGS Subject to the rights of holders of any class or series of stock having a preference over the Common Stock as to dividends or upon liquidation, nominations for the election of directors may be made by the board of directors or any nominating committee appointed by the board of directors or by any stockholder entitled to be in the election of directors generally. However, a stockholder generally entitled to vote in the election of directors may nominate one or more persons for election as directors at a meeting only if written notice of such stockholder's intent to make such nomination or nominations has been given, either by personal delivery or by U.S. mail, postage prepaid, to the secretary of the corporation not later than (i) with respect to an election to be held at an annual meeting of stockholders, 60 days in advance of such meeting and (ii) with respect to an election to be held at a special meeting of stockholders for the election of directors, the close of business on the seventh day following the date on which notice of such meeting is first given to stockholders. Each such notice shall set forth the following information: (a) the name and address of the stockholder who intends to make the nomination and of the person or persons to be nominated; (b) a representation that the stockholder is a holder of record of stock of the corporation entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice; (c) a description of all arrangements or understandings between the stockholder, each nominee or any other person or persons (naming such person or persons) pursuant to which the nomination or nominations are to be made by the stockholder; (d) such other information regarding each nominee proposed by such stockholder as would be required to be included in a proxy statement filed pursuant to the proxy rules of the Securities and Exchange Commission, had the nominee been nominated, or intended to be nominated, by the board of directors of the corporation; and (e) the consent of each nominee to serve as a director of the corporation if so elected. At the request of the board of directors, any person properly nominated by the board of directors for election as a director shall furnish to the secretary of the corporation that information required to be set forth in a -11- stockholder's notice of nomination which pertains to the nominee. No person shall be eligible for election as a director of the corporation unless nominated in accordance with the procedures set forth herein. A majority of the board of directors may reject any nomination by a stockholder not timely made or otherwise not in accordance with the terms of this Section 3.18. If a majority of the board of directors reasonably determines that the information provided in a stockholder's notice does not satisfy the informational requirements of this Section 3.18 in any material respect, the secretary of the corporation shall promptly notify such stockholder of the deficiency in writing. The stockholder shall have an opportunity within such period of time, not to exceed ten days from the date such deficiency notice is given to the stockholder, as a majority of the board of directors shall reasonably determine. If the deficiency is not cured within such period, or if a majority of the board of directors reasonably determines that the additional information provided by the stockholder, together with the information previously provided, does not satisfy the requirements of this Section 3.18 in any material respect, then a majority of the board of directors may reject such stockholder's nomination. The secretary of the corporation shall notify a stockholder in writing whether the stockholder's nomination has been made in accordance with the time and information requirements of this Section 3.18. At an annual meeting of the stockholders, only such business shall be conducted as shall have been brought before the meeting (i) by or at the direction of the chairman of the meeting or (ii) by any stockholder of the corporation who complies with the notice procedures set forth in this Section 3.18. For business to be properly brought before an annual meeting by a stockholder, the stockholder must have given timely notice thereof in writing to the secretary of the corporation. To be timely, a stockholder's notice must be delivered to or mailed and received at the principal executive offices of the corporation not less than 60 days prior to the meeting; provided, however, that in the event that less than 70 days notice or prior public disclosure of the date of the meeting is given or made to stockholders, notice by the stockholder to be timely must be received not later than the close of business on the tenth day following the earlier of the day on which such notice of the date of the annual meeting was mailed or such public disclosure was made. A stockholder's notice to the secretary shall set forth as to each matter the stockholder proposes to bring before the annual meeting the following information: (a) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, (b) the name and address, as they appear on the corporation's books, of the stockholder proposing such business, (c) the class and number of shares of the corporation which are beneficially owned by the stockholder and (d) any material direct or indirect interest, financial or otherwise of the stockholder or its affiliates or associates in such business. The board of directors may reject any stockholder proposal not timely made in accordance with this Section 3.18. If the board of directors determines that the information provided in a stockholder's notice does not satisfy the informational requirements hereof, the secretary of the corporation shall promptly notify such stockholder of the deficiency in the notice. The stockholder shall then have an opportunity to cure the deficiency by providing additional information to the secretary within such period of time, not to exceed ten days from the date such deficiency notice is given to the stockholder, as the board of directors shall determine. If the deficiency is not cured within such period, or if the board of directors determines that the -12- additional information provided by the stockholder, together with the information previously provided, does not satisfy the requirements of this Section 3.18, then the board of directors may reject such stockholder's proposal. The secretary of the corporation shall notify a stockholder in writing whether the stockholder's proposal has been made in accordance with the time and information requirements hereof. This provision shall not prevent the consideration and approval or disapproval at an annual meeting of reports of officers, directors and committees of the board of directors, but in connection therewith no new business shall be acted upon at any such meeting unless stated, filed and received as herein provided. Notwithstanding anything in these bylaws to the contrary, no business brought before a meeting by a stockholder shall be conducted at an annual meeting except in accordance with procedures set forth in this Section 3.18. ARTICLE IV COMMITTEES 4.1 COMMITTEES OF DIRECTORS The board of directors may, by resolution adopted by a majority of the authorized number of directors, designate one or more committees, each consisting of one or more directors, to serve at the pleasure of the board. The board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. The appointment of members or alternate members of a committee requires the vote of a majority of the authorized number of directors. Any committee, to the extent provided in the resolution of the board, shall have and may exercise all the powers and authority of the board, but no such committee shall have the power or authority to (i) amend the certificate of incorporation (except that a committee may, to the extent authorized in the resolution or resolutions providing for the issuance of shares of stock adopted by the board of directors as provided in Section 151(a) of the General Corporation Law of Delaware, fix the designations and any of the preferences or rights of such shares relating to dividends, redemption, dissolution, any distribution of assets of the corporation or the conversion into, or the exchange of such shares for, shares of any other class or classes or any other series of the same or any other class or classes of stock of the corporation), (ii) adopt an agreement of merger or consolidation under Sections 251 or 252 of the General Corporation Law of Delaware (relating to mergers and consolidations of domestic and foreign corporations), (iii) recommend to the stockholders the sale, lease or exchange of all or substantially all of the corporation's property and assets, (iv) recommend to the stockholders a dissolution of the corporation or a revocation of a dissolution or (v) amend the bylaws of the corporation; and, unless the board resolution establishing the committee, the bylaws or the certificate of incorporation expressly so provide, no such committee shall have the power or authority to declare a dividend, to authorize the issuance of stock, or to -13- adopt a certificate of ownership and merger pursuant to Section 253 of the General Corporation Law of Delaware (relating to mergers of parent and subsidiary corporations). 4.2 MEETINGS AND ACTION OF COMMITTEES Meetings and actions of committees shall be governed by, and held and taken in accordance with, the following provisions of Article III of these bylaws: Section 3.6 (place of meetings; meetings by telephone), Section 3.8 (regular meetings), Section 3.9 (special meetings; notice), Section 3.10 (quorum), Section 3.11 (waiver of notice), Section 3.12 (adjournment), Section 3.13 (notice of adjournment) and Section 3.14 (board action by written consent without meeting), with such changes in the context of those bylaws as are necessary to substitute the committee and its members for the board of directors and its members; provided, however, that the time of regular meetings of committees may be determined either by resolution of the board of directors or by resolution of the committee, that special meetings of committees may also be called by resolution of the board of directors, and that notice of special meetings of committees shall also be given to all alternate members, who shall have the right to attend all meetings of the committee. The board of directors may adopt rules for the government of any committee not inconsistent with the provisions of these bylaws. 4.3 COMMITTEE MINUTES Each committee shall keep regular minutes of its meetings and report the same to the board of directors when required. ARTICLE V OFFICERS 5.1 OFFICERS The Corporate Officers of the corporation shall be a president, a secretary and a chief financial officer. The corporation may also have, at the discretion of the board of directors, a chairman of the board, one or more vice presidents (however denominated), one or more assistant secretaries, one or more assistant treasurers, and such other officers as may be appointed in accordance with the provisions of Section 5.3 of these bylaws. Any number of offices may be held by the same person. In addition to the Corporate Officers of the Company described above, there may also be such Administrative Officers of the corporation as may be designated and appointed from time to time by the president of the corporation in accordance with the provisions of Section 5.12 of these bylaws. -14- 5.2 ELECTION OF OFFICERS The Corporate Officers of the corporation, except such officers as may be appointed in accordance with the provisions of Section 5.3 or Section 5.5 of these bylaws, shall be chosen by the board of directors, subject to the rights, if any, of an officer under any contract of employment, and shall hold their respective offices for such terms as the board of directors may from time to time determine. 5.3 SUBORDINATE OFFICERS The board of directors may appoint, or may empower the president to appoint, such other Corporate Officers as the business of the corporation may require, each of whom shall hold office for such period, have such power and authority, and perform such duties as are provided in these bylaws or as the board of directors may from time to time determine. The president may from time to time designate and appoint Administrative Officers of the corporation in accordance with the provisions of Section 5.12 of these bylaws. 5.4 REMOVAL AND RESIGNATION OF OFFICERS Subject to the rights, if any, of a Corporate Officer under any contract of employment, any Corporate Officer may be removed, either with or without cause, by the board of directors at any regular or special meeting of the board or, except in case of a Corporate Officer chosen by the board of directors, by any Corporate Officer upon whom such power of removal may be conferred by the board of directors. Any Corporate Officer may resign at any time by giving written notice to the corporation. Any resignation shall take effect at the date of the receipt of that notice or at any later time specified in that notice; and, unless otherwise specified in that notice, the acceptance of the resignation shall not be necessary to make it effective. Any resignation is without prejudice to the rights, if any, of the corporation under any contract to which the Corporate Officer is a party. Any Administrative Officer designated and appointed by the president may be removed, either with or without cause, at any time by the president. Any Administrative Officer may resign at any time by giving written notice to the president or to the secretary of the corporation. 5.5 VACANCIES IN OFFICES A vacancy in any office because of death, resignation, removal, disqualification or any other cause shall be filled in the manner prescribed in these bylaws for regular appointments to that office. 5.6 CHAIRMAN OF THE BOARD -15- The chairman of the board, if such an officer be elected, shall, if present, preside at meetings of the board of directors and exercise such other powers and perform such other duties as may from time to time be assigned to him by the board of directors or as may be prescribed by these bylaws. If there is no president, then the chairman of the board shall also be the chief executive officer of the corporation and shall have the powers and duties prescribed in Section 5.7 of these bylaws. 5.7 PRESIDENT Subject to such supervisory powers, if any, as may be given by the board of directors to the chairman of the board, if there be such an officer, the president shall be the chief executive officer of the corporation and shall, subject to the control of the board of directors, have general supervision, direction and control of the business and the officers of the corporation. He or she shall preside at all meetings of the stockholders and, in the absence or nonexistence of a chairman of the board, at all meetings of the board of directors. He or she shall have the general powers and duties of management usually vested in the office of president of a corporation, and shall have such other powers and perform such other duties as may be prescribed by the board of directors or these bylaws. 5.8 VICE PRESIDENTS In the absence or disability of the president, and if there is no chairman of the board, the vice presidents, if any, in order of their rank as fixed by the board of directors or, if not ranked, a vice president designated by the board of directors, shall perform all the duties of the president and when so acting shall have all the powers of, and be subject to all the restrictions upon, the president. The vice presidents shall have such other powers and perform such other duties as from time to time may be prescribed for them respectively by the board of directors, these bylaws, the president or the chairman of the board. 5.9 SECRETARY The secretary shall keep or cause to be kept, at the principal executive office of the corporation or such other place as the board of directors may direct, a book of minutes of all meetings and actions of the board of directors, committees of directors and stockholders. The minutes shall show the time and place of each meeting, whether regular or special (and, if special, how authorized and the notice given), the names of those present at directors' meetings or committee meetings, the number of shares present or represented at stockholders' meetings and the proceedings thereof. The secretary shall keep, or cause to be kept, at the principal executive office of the corporation or at the office of the corporation's transfer agent or registrar, as determined by resolution of the board of directors, a share register or a duplicate share register, showing the names of all stockholders and their addresses, the number and classes of shares held by each, the -16- number and date of certificates evidencing such shares and the number and date of cancellation of every certificate surrendered for cancellation. The secretary shall give, or cause to be given, notice of all meetings of the stockholders and of the board of directors required to be given by law or by these bylaws. He or she shall keep the seal of the corporation, if one be adopted, in safe custody and shall have such other powers and perform such other duties as may be prescribed by the board of directors or by these bylaws. 5.10 CHIEF FINANCIAL OFFICER The chief financial officer shall keep and maintain, or cause to be kept and maintained, adequate and correct books and records of accounts of the properties and business transactions of the corporation, including accounts of its assets, liabilities, receipts, disbursements, gains, losses, capital, retained earnings and shares. The books of account shall at all reasonable times be open to inspection by any director for a purpose reasonably related to his position as a director. The chief financial officer shall deposit all money and other valuables in the name and to the credit of the corporation with such depositaries as may be designated by the board of directors. He or she shall disburse the funds of the corporation as may be ordered by the board of directors, shall render to the president and directors, whenever they request it, an account of all of his or her transactions as chief financial officer and of the financial condition of the corporation, and shall have such other powers and perform such other duties as may be prescribed by the board of directors or these bylaws. 5.11 ASSISTANT SECRETARY The assistant secretary, if any, or, if there is more than one, the assistant secretaries in the order determined by the board of directors (or if there be no such determination, then in the order of their election) shall, in the absence of the secretary or in the event of his or her inability or refusal to act, perform the duties and exercise the powers of the secretary and shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. 5.12 ADMINISTRATIVE OFFICERS In addition to the Corporate Officers of the corporation as provided in Section 5.1 of these bylaws and such subordinate Corporate Officers as may be appointed in accordance with Section 5.3 of these bylaws, there may also be such Administrative Officers of the corporation as may be designated and appointed from time to time by the president of the corporation. Administrative Officers shall perform such duties and have such powers as from time to time may be determined by the president or the board of directors in order to assist the Corporate Officers in the furtherance of their duties. In the performance of such duties and the exercise of such powers, however, such Administrative Officers shall have limited authority to act on behalf -17- of the corporation as the board of directors shall establish, including but not limited to limitations on the dollar amount and on the scope of agreements or commitments that may be made by such Administrative Officers on behalf of the corporation, which limitations may not be exceeded by such individuals or altered by the president without further approval by the board of directors. 5.13 AUTHORITY AND DUTIES OF OFFICERS In addition to the foregoing powers, authority and duties, all officers of the corporation shall respectively have such authority and powers and perform such duties in the management of the business of the corporation as may be designated from time to time by the board of directors. ARTICLE VI INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES AND OTHER AGENTS 6.1 INDEMNIFICATION OF DIRECTORS AND OFFICERS The corporation shall, to the maximum extent and in the manner permitted by the General Corporation Law of Delaware as the same now exists or may hereafter be amended, indemnify any person against expenses (including attorneys' fees), judgments, fines, and amounts paid in settlement actually and reasonably incurred in connection with any threatened, pending or completed action, suit, or proceeding in which such person was or is a party or is threatened to be made a party by reason of the fact that such person is or was a director or officer of the corporation. For purposes of this Section 6.1, a "director" or "officer" of the corporation shall mean any person (i) who is or was a director or officer of the corporation, (ii) who is or was serving at the request of the corporation as a director or officer of another corporation, partnership, joint venture, trust or other enterprise, or (iii) who was a director or officer of a corporation which was a predecessor corporation of the corporation or of another enterprise at the request of such predecessor corporation. The corporation shall be required to indemnify a director or officer in connection with an action, suit, or proceeding (or part thereof) initiated by such director or officer only if the initiation of such action, suit, or proceeding (or part thereof) by the director or officer was authorized by the board of directors of the corporation. The corporation shall pay the expenses (including attorneys' fees) incurred by a director or officer of the corporation entitled to indemnification hereunder in defending any action, suit or proceeding referred to in this Section 6.1 in advance of its final disposition; provided, however, that payment of expenses incurred by a director or officer of the corporation in advance of the final disposition of such action, suit or proceeding shall be made only upon receipt of an undertaking by the director or officer to repay all amounts advanced if it should ultimately be -18- determined that the director or officer is not entitled to be indemnified under this Section 6.1 or otherwise. The rights conferred on any person by this Article shall not be exclusive of any other rights which such person may have or hereafter acquire under any statute, provision of the corporation's Certificate of Incorporation, these bylaws, agreement, vote of the stockholders or disinterested directors or otherwise. Any repeal or modification of the foregoing provisions of this Article shall not adversely affect any right or protection hereunder of any person in respect of any act or omission occurring prior to the time of such repeal or modification. 6.2 INDEMNIFICATION OF OTHERS The corporation shall have the power, to the maximum extent and in the manner permitted by the General Corporation Law of Delaware as the same now exists or may hereafter be amended, to indemnify any person (other than directors and officers) against expenses (including attorneys' fees), judgments, fines, and amounts paid in settlement actually and reasonably incurred in connection with any threatened, pending or completed action, suit, or proceeding, in which such person was or is a party or is threatened to be made a party by reason of the fact that such person is or was an employee or agent of the corporation. For purposes of this Section 6.2, an "employee" or "agent" of the corporation (other than a director or officer) shall mean any person (i) who is or was an employee or agent of the corporation, (ii) who is or was serving at the request of the corporation as an employee or agent of another corporation, partnership, joint venture, trust or other enterprise, or (iii) who was an employee or agent of a corporation which was a predecessor corporation of the corporation or of another enterprise at the request of such predecessor corporation. 6.3 INSURANCE The corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him or her and incurred by him or her in any such capacity, or arising out of his or her status as such, whether or not the corporation would have the power to indemnify him or her against such liability under the provisions of the General Corporation Law of Delaware. ARTICLE VII RECORDS AND REPORTS -19- 7.1 MAINTENANCE AND INSPECTION OF RECORDS The corporation shall, either at its principal executive office or at such place or places as designated by the board of directors, keep a record of its stockholders listing their names and addresses and the number and class of shares held by each stockholder, a copy of these bylaws as amended to date, accounting books and other records of its business and properties. Any stockholder of record, in person or by attorney or other agent, shall, upon written demand under oath stating the purpose thereof, have the right during the usual hours for business to inspect for any proper purpose the corporation's stock ledger, a list of its stockholders, and its other books and records and to make copies or extracts therefrom. A proper purpose shall mean a purpose reasonably related to such person's interest as a stockholder. In every instance where an attorney or other agent is the person who seeks the right to inspection, the demand under oath shall be accompanied by a power of attorney or such other writing that authorizes the attorney or other agent to so act on behalf of the stockholder. The demand under oath shall be directed to the corporation at its registered office in Delaware or at its principal place of business. 7.2 INSPECTION BY DIRECTORS Any director shall have the right to examine the corporation's stock ledger, a list of its stockholders and its other books and records for a purpose reasonably related to his or her position as a director. 7.3 REPRESENTATION OF SHARES OF OTHER CORPORATIONS The chairman of the board, if any, the president, any vice president, the chief financial officer, the secretary or any assistant secretary of this corporation, or any other person authorized by the board of directors or the president or a vice president, is authorized to vote, represent and exercise on behalf of this corporation all rights incident to any and all shares of the stock of any other corporation or corporations standing in the name of this corporation. The authority herein granted may be exercised either by such person directly or by any other person authorized to do so by proxy or power of attorney duly executed by such person having the authority. 7.4 CERTIFICATION AND INSPECTION OF BYLAWS The original or a copy of these bylaws, as amended or otherwise altered to date, certified by the secretary, shall be kept at the corporation's principal executive office and shall be open to inspection by the stockholders of the corporation, at all reasonable times during office hours. ARTICLE VII GENERAL MATTERS -20- 8.1 RECORD DATE FOR PURPOSES OTHER THAN NOTICE AND VOTING For purposes of determining the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights or the stockholders entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the board of directors may fix, in advance, a record date, which shall not precede the date upon which the resolution fixing the record date is adopted and which shall not be more than sixty (60) days before any such action. In that case, only stockholders of record at the close of business on the date so fixed are entitled to receive the dividend, distribution or allotment of rights, or to exercise such rights, as the case may be, notwithstanding any transfer of any shares on the books of the corporation after the record date so fixed, except as otherwise provided by law. If the board of directors does not so fix a record date, then the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the board of directors adopts the applicable resolution. 8.2 CHECKS; DRAFTS; EVIDENCES OF INDEBTEDNESS From time to time, the board of directors shall determine by resolution which person or persons may sign or endorse all checks, drafts, other orders for payment of money, notes or other evidences of indebtedness that are issued in the name of or payable to the corporation, and only the persons so authorized shall sign or endorse those instruments. 8.3 CORPORATE CONTRACTS AND INSTRUMENTS: HOW EXECUTED The board of directors, except as otherwise provided in these bylaws, may authorize and empower any officer or officers, or agent or agents, to enter into any contract or execute any instrument in the name of and on behalf of the corporation; such power and authority may be general or confined to specific instances. Unless so authorized or ratified by the board of directors or within the agency power of an officer, no officer, agent or employee shall have any power or authority to bind the corporation by any contract or engagement or to pledge its credit or to render it liable for any purpose or for any amount. 8.4 STOCK CERTIFICATES; TRANSFER; PARTLY PAID SHARES The shares of the corporation shall be represented by certificates, provided that the board of directors of the corporation may provide by resolution or resolutions that some or all of any or all classes or series of its stock shall be uncertificated shares. Any such resolution shall not apply to shares represented by a certificate until such certificate is surrendered to the corporation. Notwithstanding the adoption of such a resolution by the board of directors, every holder of stock represented by certificates and, upon request, every holder of uncertificated shares, shall be entitled to have a certificate signed by, or in the name of the corporation by, the chairman or -21- vice-chairman of the board of directors, or the president or vice-president, and by the chief financial officer or an assistant treasurer, or the secretary or an assistant secretary of such corporation representing the number of shares registered in certificate form. Any or all of the signatures on the certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate has ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if he or she were such officer, transfer agent or registrar at the date of issue. Certificates for shares shall be of such form and device as the board of directors may designate and shall state the name of the record holder of the shares represented thereby; its number; date of issuance; the number of shares for which it is issued; a summary statement or reference to the powers, designations, preferences or other special rights of such stock and the qualifications, limitations or restrictions of such preferences and/or rights, if any; a statement or summary of liens, if any; a conspicuous notice of restrictions upon transfer or registration of transfer, if any; a statement as to any applicable voting trust agreement; and, if the shares be assessable, or, if assessments are collectible by personal action, a plain statement of such facts. Upon surrender to the secretary or transfer agent of the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books. The corporation may issue the whole or any part of its shares as partly paid and subject to call for the remainder of the consideration to be paid therefor. Upon the face or back of each stock certificate issued to represent any such partly paid shares, or upon the books and records of the corporation in the case of uncertificated partly paid shares, the total amount of the consideration to be paid therefor and the amount paid thereon shall be stated. Upon the declaration of any dividend on fully paid shares, the corporation shall declare a dividend upon partly paid shares of the same class, but only upon the basis of the percentage of the consideration actually paid thereon. 8.5 SPECIAL DESIGNATION ON CERTIFICATES If the corporation is authorized to issue more than one class of stock or more than one series of any class, then the powers, the designations, the preferences and the relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights shall be set forth in full or summarized on the face or back of the certificate that the corporation shall issue to represent such class or series of stock; provided, however, that, except as otherwise provided in Section 202 of the General Corporation Law of Delaware (relating to transfers of stock, stock certificates and uncertificated stock), in lieu of the foregoing requirements there may be set forth on the face or back of the certificate that the corporation shall issue to represent such class or series of stock -22- a statement that the corporation will furnish without charge to each stockholder who so requests the powers, the designations, the preferences and the relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights. 8.6 LOST CERTIFICATES Except as provided in this Section 8.6, no new certificates for shares shall be issued to replace a previously issued certificate unless the latter is surrendered to the corporation and canceled at the same time. The board of directors may, in case any share certificate or certificate for any other security is lost, stolen or destroyed, authorize the issuance of replacement certificates on such terms and conditions as the board may require; the board may require indemnification of the corporation secured by a bond or other adequate security sufficient to protect the corporation against any claim that may be made against it, including any expense or liability, on account of the alleged loss, theft or destruction of the certificate or the issuance of the replacement certificate. 8.7 TRANSFER AGENTS AND REGISTRARS The board of directors may appoint one or more transfer agents or transfer clerks, and one or more registrars, each of which shall be an incorporated bank or trust company -- either domestic or foreign, who shall be appointed at such times and places as the requirements of the corporation may necessitate and the board of directors may designate. 8.8 CONSTRUCTION; DEFINITIONS Unless the context requires otherwise, the general provisions, rules of construction and definitions in the General Corporation Law of Delaware shall govern the construction of these bylaws. Without limiting the generality of this provision, as used in these bylaws, the singular number includes the plural, the plural number includes the singular, and the term "person" includes both an entity and a natural person. ARTICLE IX AMENDMENTS The original or other bylaws of the corporation may be adopted, amended or repealed by the stockholders entitled to vote; provided, however, that the corporation may, in its certificate of incorporation, confer the power to adopt, amend or repeal bylaws upon the directors. The fact that such power has been so conferred upon the directors shall not divest the stockholders of the power, nor limit their power to adopt, amend or repeal bylaws. Whenever an amendment or new bylaw is adopted, it shall be copied in the book of bylaws with the original bylaws, in the -23- appropriate place. If any bylaw is repealed, the fact of repeal with the date of the meeting at which the repeal was enacted or the filing of the operative written consent(s) shall be stated in said book. -24- EX-10.8 6 AMENDMENT NO. 4 TO 1995 STOCK OPTION PLAN EXHIBIT 10.8 GEOSYSTEMS GLOBAL CORPORATION 1995 STOCK OPTION PLAN AMENDMENT NO. 4 -------------------------- I. Purpose. Reference is made to that certain 1995 Stock Option Plan (the ------- "Option Plan") of GeoSystems Global Corporation (the "Company"). To the extent not otherwise defined herein, capitalized terms shall have the meaning accorded to them in the Option Plan. The Board of the Company has determined it to be in the best interest of the Company to amend certain provisions of the Option Plan, and in accordance with applicable law, have adopted resolutions authorizing the amendment set forth below. To the extent not expressly amended hereby, the Option Plan shall remain in full force and effect, in accordance with its terms. II. Amendment of Plan. The Option Plan is amended as follows: ----------------- (i) Effective immediately the Option Plan is amended to: (a) Change the name "GeoSystems Global Corporation" to "MapQuest.com, Inc." each place it appears therein; (b) Change the term "Internal Revenue Code of 1954" in Article I, Section 1 to "Internal Revenue Code of 1986"; (c) Delete the third sentence of Article I, Section 2 which describes the makeup of the Committee which administers the Option Plan and substitute the following: The Committee shall consist of not less than two (2) members of the Board, each of whom shall be an "outside director" within the meaning of Code Section 162(m) and "non-employee director" within the meaning of Rule 16b-3 (or any successor rule or regulation) promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act"); (d) Add the following as the third paragraph of Article I, Section 2: If the Board does not appoint a Stock Option Committee as provided above, the Board itself shall administer the Plan and the term "Committee" shall be deemed to refer to the Board; (e) Add the following as the second paragraph of Article II, Section 2: The maximum number of shares of Common Stock subject to Options that may be granted during any one calendar year to any one individual shall be limited to One Hundred Fifty Thousand (150,000). To the extent required by Section 162(m) of the Code and so long as Section 162(m) of the Code is applicable to persons eligible to participate in the Plan, shares of Common Stock subject to the foregoing limit with respect to which the related Option is terminated, surrendered or canceled shall not again be available for grant under this limit; and (f) Delete all of the words prior to the colon in the second paragraph in Article IV, Section 8 regarding the definition of "Change of Control" and substitute "A Change in Control shall be deemed to have occurred if." (ii) Effective upon the date the Corporation is required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 the Option Plan is amended -2- to delete Article II, Section 4, paragraph (i) which included a repurchase right by the Corporation with respect to shares issued upon option exercise. -3- EX-10.9 7 MAPQUEST 1999 EMPLOYEE STOCK PURCHASE PLAN EXHIBIT 10.9 MAPQUEST.COM, INC. EMPLOYEE STOCK PURCHASE PLAN ARTICLE I --------- PURPOSE ------- 1.01. PURPOSE. The MAPQUEST.COM, INC. EMPLOYEE STOCK PURCHASE PLAN is ---- ------- intended to provide a method whereby employees of MapQuest.com, Inc. (the "Company") and its subsidiary corporations will have an opportunity to acquire a proprietary interest in the Company through the purchase of shares of the Common Stock of the Company. It is the intention of the Company to have the Plan qualify as an "employee stock purchase plan" under (S)423 of the Internal Revenue Code of 1986, as amended (the "Code"). The provisions of the Plan shall be construed so as to extend and limit participation in a manner consistent with the requirements of that section of the Code. ARTICLE II ---------- DEFINITIONS ----------- 2.01 BASE PAY. "Base Pay" means regular straight-time earnings excluding ---- -------- payments for overtime, shift premium, bonuses and other special payments, commissions and other marketing incentive payments. 2.02 BOARD. "Board of Directors" or "Board" means the Board of Directors ---- ----- of the Company. 2.03 COMMITTEE. "Committee" means the individuals described in Article ---- --------- XI. 2.04 COMMON STOCK. "Common Stock" means the common stock of the Company. ---- ------------ 2.05 DESIGNATED SUBSIDIARY CORPORATION. "Designated Subsidiary ---- --------------------------------- Corporation" means a Subsidiary Corporation which is designated by the Company's Board of Directors to participate in the Plan. 2.06 EMPLOYEE. "Employee" means any person who is employed by the Company ---- -------- or a Designated Subsidiary Corporation. 2.07 OFFERINGS AND OFFERING PERIODS. The Plan will be implemented by ---- ------------------------------- "Offerings" of the right to purchase Company Stock through payroll deduction in consecutive "Offering Periods", each constituting a six month period. Such Offering Periods shall commence as provided in Section 4.01 and shall continue until the termination of the Plan in accordance with Section 12.05. 2.08 OFFERING COMMENCEMENT DATE. The "Offering Commencement Date" is the ---- -------------------------- first day of an Offering Period during which the NASDAQ system is open for trading. 2.09 OFFERING TERMINATION DATE. The "Offering Termination Date" is the ---- ------------------------- last day of an Offering Period during which the NASDAQ system is open for trading. 2.10 SUBSIDIARY CORPORATION. "Subsidiary Corporation" means any present ---- ---------------------- or future corporation which would be a "subsidiary corporation" of the Company as that term is defined in (S)424 of the Code. ARTICLE III ----------- ELIGIBILITY AND PARTICIPATION ----------------------------- 3.01 INITIAL ELIGIBILITY. All Employees are eligible to participate ---- ------------------- hereunder, commencing on any Offering Commencement Date. 3.02 COMMENCEMENT OF PARTICIPATION. An eligible Employee may become a ---- ----------------------------- participant by completing an authorization for a payroll deduction on the form provided by the Company and filing it with the office of the Human Resources Director of the Company on or before the date set therefor by the Committee, which date shall be prior to the Offering Commencement Date for the Offering Period. Payroll deductions for a participant shall commence on the applicable Offering Commencement Date when his authorization for a payroll deduction becomes effective and shall end on the Offering Termination Date of the Offering to which such authorization is applicable unless sooner terminated by the participant as provided in Article VIII. 3.03 RESTRICTIONS ON PARTICIPATION. Notwithstanding any provision of the ---- ----------------------------- Plan to the contrary, no Employee shall be granted an option to participate in the Plan: (a) if, immediately after the grant, such Employee would own stock, and/or hold outstanding options to purchase stock, possessing 5% or more of the total combined voting power or value of all classes of stock of the Company or any Subsidiary Corporation. (For purposes of this paragraph, the rules of (S)424(d) of the Code shall apply in determining stock ownership of any Employee); or (b) which permits his rights to purchase stock under all employee stock purchase plans of the Company and its Subsidiary Corporations to accrue at a rate which exceeds $25,000 in fair market value of the stock (determined at the time such option is granted) for each calendar year in which such option is outstanding. 2 3.04 LEAVE OF ABSENCE. For purposes of participation in the Plan, a ---- ---------------- person on leave of absence shall be deemed to be an Employee for the first 90 days of such leave of absence and such Employee's employment shall be deemed to have terminated at the close of business on the 90th day of such leave of absence unless such Employee shall have returned to regular full-time or part- time employment (as the case may be) prior to the close of business on such 90th day. Termination by the Company of any Employee's leave of absence, other than termination of such leave of absence on return to full time or part time employment, shall terminate an Employee's employment for all purposes of the Plan and shall terminate such Employee's participation in the Plan and right to exercise any option. ARTICLE IV ---------- OFFERINGS --------- 4.01 SEMI-ANNUAL OFFERING PERIODS. The first Offering Period shall be the ---- ---------------------------- six month period beginning on July 1, 1999 and ending on December 31, 1999. (Provided, however, that the first Offering Period will not begin before the effective date of the registration statement filed by the Company for the Plan with the Securities and Exchange Commission.) Subsequent Offering Periods will begin on January 1 and July 1 of each year. 4.02 REVISED OFFERING PERIODS. In the discretion of the Committee, semi- ---- ------------------------ annual Offering Periods may be divided into quarterly Offering Periods or combined into annual Offering Periods. The maximum number of shares available during an Offering Period under Section 10.01 shall be adjusted appropriately. ARTICLE V --------- PAYROLL DEDUCTIONS ------------------ 5.01 AMOUNT OF DEDUCTION. At the time a participant files his ---- ------------------- authorization for payroll deduction, he shall elect to have deductions made from his pay on each payday during the Offering Period at the rate of 1, 2, 3, 4, 5, 6, 7, 8, 9 or 10% of his base pay in effect at any such payday. 5.02 PARTICIPANT'S ACCOUNT. All payroll deductions made for a participant ---- --------------------- shall be credited to his account under the Plan. A participant may not make any separate cash payment into such account except when on leave of absence and then only as provided in (S)5.04. 5.03 CHANGES IN PAYROLL DEDUCTIONS. A participant may discontinue his ---- ----------------------------- participation in the Plan as provided in Article VIII, but no other change can be made during an Offering and, specifically, a participant may not alter the amount of his payroll deductions for that Offering. The payroll deduction form may provide that it shall 3 continue from Offering Period to Offering Period unless changed by a participant before the beginning of a subsequent Offering Period. 5.04 LEAVE OF ABSENCE. If a participant goes on a leave of absence, such ---- ---------------- participant shall have the right to elect: (a) to withdraw the balance in his or her account pursuant to (S)7.02, (b) to discontinue contributions to the Plan but remain a participant in the Plan, or (c) remain a participant in the Plan during such leave of absence (provided the individual was eligible to participate at the Offering Commencement Date), authorizing deductions to be made from payments by the Company or its Designated Subsidiary Corporations to the participant during such leave of absence and undertaking to make cash payments to the Plan at the end of each payroll period to the extent that amounts payable by the Company and its Designated Subsidiary Corporations to such participant are insufficient to meet such participant's authorized Plan deductions. ARTICLE VI ---------- GRANTING OF OPTION ------------------ 6.01 NUMBER OF OPTION SHARES. On the Offering Commencement Date of each ---- ----------------------- Offering, a participating Employee shall be deemed to have been granted a qualified option to purchase on the Offering Termination Date of such Offering Period (at the Option Price in Section 6.02) the number of shares of the Company's Common Stock determined by dividing such Employee's payroll deductions accumulated during such Offering Period and retained in the participant's account as of the Offering Termination Date by the applicable Option Price. 6.02 OPTION PRICE. The Option Price of Common Stock purchased with ---- ------------ payroll deductions made during an Offering Period for a participant therein shall be the lower of: (a) 85% of the closing price of the stock on the Offering Commencement Date, or (in the event the stock was not traded on such date) the nearest prior business day on which trading of the Company's Common Stock occurred, on the NASDAQ National Market System; or (b) 85% of the closing price of the stock on the Offering Termination Date, or (in the event the stock was not traded on such date) the nearest prior business day on which trading of the Company's Common Stock occurred, on the NASDAQ National Market System. If the Company's Common Stock is not admitted to trading on the NASDAQ National Market System on any of the aforesaid dates for which closing prices of the stock are to be determined, then reference shall be made to the fair market value of the stock on that date, as determined on such basis as shall be established or specified for the purpose by the Committee. 4 ARTICLE VII ----------- EXERCISE OF OPTION ------------------ 7.01 AUTOMATIC EXERCISE. Unless a participant gives written notice to the ---- ------------------ Company as hereinafter provided, his option for the purchase of stock with payroll deductions made during any Offering will be deemed to have been exercised automatically on the Offering Termination Date applicable to such Offering, for the purchase of the number of full shares of Common Stock which the accumulated payroll deductions in his account at that time will purchase at the applicable Option Price, subject to the maximum stated in Section 10.01. Except as provided in Section 7.03, any excess in his account at that time will be refunded to him. 7.02 WITHDRAWAL OF ACCOUNT. By written notice to the Human Resources ---- --------------------- Director of the Company, at any time prior to the Offering Termination Date applicable to any Offering, a participant may elect to withdraw all of the accumulated payroll deductions in his account at such time. 7.03 FRACTIONAL SHARES. Fractional shares will not be issued under the ---- ----------------- Plan. Any accumulated payroll deductions which would have been used to purchase fractional shares will be carried over and applied to purchase shares in the succeeding Offering Period, if the Employee elects to participate in such Offering Period. If not, such excess payroll deductions will be promptly returned to the Employee. 7.04 TRANSFERABILITY OF OPTION. During a participant's lifetime, options ---- ------------------------- held by such participant shall be exercisable only by that participant. 7.05 DELIVERY OF STOCK. As promptly as practicable after the Offering ---- ----------------- Termination Date of each Offering, the Company will deliver to each participant, as appropriate, the stock purchased upon exercise of his option. ARTICLE VIII ------------ WITHDRAWAL ---------- 8.01 IN GENERAL. As indicated in (S)7.02, a participant may withdraw ---- ---------- payroll deductions credited to his account under the Plan at any time prior to an Offering Termination Date by giving written notice to the Human Resources Director of the Company. All of the participant's payroll deductions credited to his account will be paid to him promptly after receipt of his notice of withdrawal, and no further payroll deductions will be made from his pay during such Offering. The Company may, at its option, treat any attempt to borrow by an Employee on the security of his accumulated payroll deductions as an election, under (S)7.02, to withdraw such deductions. 5 8.02 EFFECT ON SUBSEQUENT PARTICIPATION. A participant's withdrawal from ---- ---------------------------------- any Offering will not have any effect upon his eligibility to participate in any succeeding Offering or in any similar plan which may hereafter be adopted by the Company. 8.03 TERMINATION OF EMPLOYMENT. Upon termination of the participant's ---- ------------------------- employment for any reason, including retirement or death (but excluding continuation of a leave of absence for a period beyond 90 days), the payroll deductions credited to his account will be returned to him, or, in the case of his death, to the person or persons entitled thereto under (S)12.01. ARTICLE IX ---------- INTEREST -------- 9.01 NO PAYMENT OF INTEREST. No interest will be paid or allowed on any ---- ---------------------- money paid into the Plan or credited to the account of any participating Employee. ARTICLE X --------- STOCK ----- 10.01 SHARES SUBJECT TO PLAN. The stock subject to the Plan shall be ----- ---------------------- shares of the Company's Common Stock, which may be (i) authorized but unissued shares, (ii) treasury shares and/or (iii) shares purchased on the open market by a broker designated by the Company. The maximum number of shares of Common Stock which shall be issued under the Plan, subject to adjustment upon changes in capitalization of the Company as provided in (S)12.04, shall be Four Hundred Thirty Eight Thousand, Seven Hundred and Fifty (438,750) shares in each Offering plus in each Offering all unissued shares from prior Offerings, whether offered or not, not to exceed One Million Seven Hundred Fifty Five Thousand (1,755,000) shares for all Offerings. No participant may purchase more than One Thousand Five Hundred (1,500) shares in any one Offering Period. If the total number of shares for which options are exercised on any Offering Termination Date in accordance with Article VI exceeds the maximum number of shares for the applicable offering, the Company shall make a pro rata allocation of the shares available for delivery and distribution in as nearly a uniform manner as shall be practicable and as it shall determine to be equitable, and the balance of payroll deductions credited to the account of each participant under the Plan shall be returned to him as promptly as possible. 10.02 PARTICIPANT'S INTEREST IN OPTION STOCK. The participant will have ----- -------------------------------------- no interest in stock covered by his option until such option has been exercised. 10.03 ISSUANCE OF STOCK. Stock purchased under the Plan will be issued in ----- ----------------- the name of the participant, or, if the participant so directs by written notice to the Human Resources Director of the Company prior to the Offering Termination Date applicable thereto, in the names of the participant and one such other person as may be designated 6 by the participant, as joint tenants with rights of survivorship or as tenants by the entireties, to the extent permitted by applicable law. 10.04 RESTRICTIONS ON EXERCISE. The Board of Directors may, in its ----- ------------------------ discretion, require as conditions to the exercise of any option that the shares of Common Stock reserved for issuance upon the exercise of the option shall have been duly listed, upon official notice of issuance, upon a stock exchange, and that either: (a) a registration statement under the Securities Act of 1933, as amended, with respect to said shares shall be effective, or (b) the participant shall have represented at the time of purchase, in form and substance satisfactory to the Company, that it is his intention to purchase the shares for investment and not for resale or distribution. ARTICLE XI ---------- ADMINISTRATION -------------- 11.01 APPOINTMENT OF COMMITTEE. The Board of Directors shall appoint a ----- ------------------------ committee (the "Committee") to administer the Plan, which shall consist of either (a) the full Board of Directors or (b) no fewer than two members of the Board of Directors. 11.02 AUTHORITY OF COMMITTEE. Subject to the express provisions of the ----- ---------------------- Plan, the Committee shall have plenary authority in its discretion to interpret and construe any and all provisions of the Plan, to adopt rules and regulations for administering the Plan, and to make all other determinations deemed necessary or advisable for administering the Plan. The Committee's determination on the foregoing matters shall be conclusive. 11.03 RULES GOVERNING THE ADMINISTRATION OF THE COMMITTEE. The Board of ----- --------------------------------------------------- Directors may from time to time appoint members of the Committee in substitution for or in addition to members previously appointed and may fill vacancies, however caused, in the Committee. The Committee may select one of its members as its Chairman and shall hold its meetings at such times and places as it shall deem advisable and may hold telephonic meetings. A majority of its members shall constitute a quorum. All determinations of the Committee shall be made by a majority of its members. The Committee may correct any defect or omission or reconcile any inconsistency in the Plan, in the manner and to the extent it shall deem desirable. Any decision or determination reduced to writing and signed by a majority of the members of the Committee shall be as fully effective as if it had been made by a majority vote at a meeting duly called and held. The Committee may appoint a secretary and shall make such rules and regulations for the conduct of its business as it shall deem advisable. 11.04 LIMITED LIABILITY; INDEMNIFICATION. To the maximum extent permitted ----- ---------------------------------- by Delaware law, neither the Company, Board or Committee nor any of its members shall be 7 liable for any action or determination made in good faith with respect to this Plan. In addition to such other rights of indemnification that they may have, the members of the Board and Committee shall be indemnified by the Company to the maximum extent permitted by Delaware law against any and all liabilities and expenses incurred in connection with their service in connection with the Plan in such capacity. ARTICLE XII ----------- MISCELLANEOUS ------------- 12.01 DESIGNATION OF BENEFICIARY. A participant may file a written ----- -------------------------- designation of a beneficiary who is to receive any Common Stock which has not been issued or cash which is in the participant's account at the time of the participant's death. Such designation of beneficiary may be changed by the participant at any time by written notice to the Human Resources Director of the Company. Upon the death of a participant and upon receipt by the Company of proof of identity and existence at the participant's death of a beneficiary validly designated by him under the Plan, the Company shall deliver such stock and/or cash to such beneficiary. In the event of the death of a participant and in the absence of a beneficiary validly designated under the Plan who is living at the time of such participant's death, the Company shall deliver such stock and/or cash to the executor or administrator of the estate of the participant, or if no such executor or administrator has been appointed (to the knowledge of the Company), the Company, in its discretion, may deliver such stock and/or cash to the spouse or to any one or more dependents of the participant as the Company may designate. No beneficiary shall, prior to the death of the participant by whom he has been designated, acquire any interest in the stock or cash credited to the participant under the Plan. 12.02 TRANSFERABILITY. Neither payroll deductions credited to a ----- --------------- participant's account nor any rights with regard to the exercise of an option or to receive stock under the Plan may be assigned, transferred, pledged, or otherwise disposed of in any way by the participant other than by will or the laws of descent and distribution. Any such attempted assignment, transfer, pledge or other disposition shall be without effect, except that the Company may treat such act as an election to withdraw funds in accordance with (S)7.02. 12.03 USE OF FUNDS. All payroll deductions received or held by the ----- ------------ Company under this Plan may be used by the Company for any corporate purpose and the Company shall not be obligated to segregate such payroll deductions. 12.04 ADJUSTMENT UPON CHANGES IN CAPITALIZATION. ----- ----------------------------------------- (a) If, while any options are outstanding, the outstanding shares of Common Stock of the Company have increased, decreased, changed into, or been exchanged for a different number or kind of shares or securities of the Company through reorganization, merger, recapitalization, reclassification, stock split, reverse stock split or 8 similar transaction, appropriate and proportionate adjustments may be made by the Committee in the number and/or kind of shares which are subject to purchase under outstanding options and on the option exercise price or prices applicable to such outstanding options. In addition, in any such event, the maximum number and/or kind of shares which may be offered in the Offerings described in Articles IV and Section 10.01 hereof shall also be proportionately adjusted. No adjustments shall be made for stock dividends. For the purposes of this Paragraph, any distribution of shares to shareholders in an amount aggregating 20% or more of the outstanding shares shall be deemed a stock split and any distributions of shares aggregating less than 20% of the outstanding shares shall be deemed a stock dividend. (b) Upon the dissolution or liquidation of the Company, or upon a reorganization, merger or consolidation of the Company with one or more corporations as a result of which the Company is not the surviving corporation, or upon a sale of substantially all of the property or stock of the Company to another corporation, the Committee shall take such action as it deems appropriate and equitable, which action may include, without limitation, one of the following: (i) refund of payroll deductions for such Offering Period; (ii) shortening of the Offering Period or (iii) providing that the holder of each option then outstanding under the Plan will thereafter be entitled to receive at the next Offering Termination Date upon the exercise of such option for each share as to which such option shall be exercised, as nearly as reasonably may be determined, the cash, securities and/or property which a holder of one share of the Common Stock was entitled to receive upon and at the time of such transaction. In the event the Plan is continued after such event, the Board of Directors shall take such steps in connection with such transactions as the Board shall deem necessary to assure that the provisions of this (S)12.04 shall thereafter be applicable, as nearly as reasonably may be determined, in relation to the said cash, securities and/or property as to which such holder of such option might thereafter be entitled to receive. 12.05 AMENDMENT AND TERMINATION. ----- ------------------------- (a) Action by Board. The Board of Directors shall have complete power and authority to terminate or amend the Plan; provided, however, that the Board of Directors shall not, without the approval of the stockholders of the Company (i) increase the maximum number of shares which may be issued under the Plan or under any Offering (except pursuant to (S)(S)4.02 and 12.04); or (ii) amend the requirements as to the class of employees eligible to purchase stock under the Plan. Upon termination of the Plan during an Offering Period, at the discretion of the Committee, cash balances in participants accounts may be refunded or the Offering Termination Date may be accelerated. No termination, modification, or amendment of the Plan may otherwise, without the consent of an Employee then having an option under the Plan to purchase stock, adversely affect the rights of such Employee under such option. (b) Automatic Termination. The Plan shall automatically terminate on the earlier of the day prior to the tenth anniversary of the adoption of the Plan, or the 9 issuance of the maximum number of shares available under the Plan pursuant to Section 10.01. 12.06 TAX WITHHOLDING. At the time an option is exercised or at the time ----- --------------- some or all of the Company's Common Stock issued under the Plan is disposed of, the participant must make adequate provision for the Company's federal, state, or other tax withholding obligations, if any, which arise upon the exercise of the option or the disposition of the Common Stock. At the request of the Company, the participant will advance cash in an amount sufficient to discharge any such tax withholding obligations. At any time, the Company may, but shall not be obligated to, withhold from the participant's compensation the amount necessary for the Company to meet applicable withholding obligations. 12.07 DISQUALIFYING DISPOSITION. The Committee may require that a ----- ------------------------- participant notify the Company of any disposition of shares of Common Stock purchased under the Plan within a period of two (2) years subsequent to the respective Offering Commencement Date or one (1) year from the Offering Termination Date. 12.08 EFFECTIVE DATE. The Plan shall become effective as of the date it ----- -------------- is adopted by the Board of Directors, subject to approval by the shareholders of the Company within twelve months before or after such date. If the Plan is not so approved, the Plan shall be discontinued, any options which had been issued shall be considered nonqualified options and any payroll deductions then held by the Company shall be refunded to the respective Employees. 12.09 NO EMPLOYMENT RIGHTS. The Plan does not, directly or indirectly, ----- -------------------- create in any Employee or class of Employees any right with respect to continuation of employment by the Company, and it shall not be deemed to interfere in any way with the Company's right to terminate, or otherwise modify, an Employee's employment at any time. 12.10 EXCLUSION FROM RETIREMENT AND FRINGE BENEFIT COMPUTATION. No ----- --------------------------------------------- portion of the award of options under this Plan, or the proceeds from the sale of stock purchased under the Plan, shall be taken into account as "wages," "salary" or "compensation" for any purpose, whether in determining eligibility, benefits or otherwise, under (i) any pension, retirement, profit sharing or other qualified or non-qualified plan of deferred compensation, (ii) any employee welfare or fringe benefit plan including, but not limited to, group insurance, hospitalization, medical, and disability, or (iii) any form of extraordinary pay including, but not limited to, bonuses, sick pay and vacation pay. 12.11 EFFECT OF PLAN. The provisions of the Plan shall, in accordance ----- -------------- with its terms, be binding upon, and inure to the benefit of, all successors of each Employee participating in the Plan, including, without limitation, such Employee's estate and the 10 executors, administrators or trustees thereof, heirs and legatees, and any receiver, trustee in bankruptcy or representative of creditors of such Employee. 12.12 EXPENSES. Expenses of administering the Plan shall be borne by the ----- -------- Company except that brokerage expenses incurred in connection with the purchase of shares shall be included as part of the cost of the shares to participating Employees. 12.13 GOVERNING LAW. The law of the State of Delaware will govern all ----- ------------- matters relating to this Plan except to the extent it is superseded by the laws of the United States. 11 EX-10.10 8 MAPQUEST 1999 STOCK OPTION PLAN EXHIBIT 10.10 MAPQUEST.COM, INC. 1999 STOCK PLAN 1. ESTABLISHMENT, PURPOSE AND TYPES OF AWARDS MapQuest.com, Inc. hereby establishes the MAPQUEST.COM, INC. 1999 STOCK PLAN (the "Plan"). The purpose of the Plan is to promote the long-term growth and profitability of MapQuest.com, Inc. (the "Corporation") by (i) providing key people with incentives to improve stockholder value and to contribute to the growth and financial success of the Corporation, and (ii) enabling the Corporation to attract, retain and reward the best available persons for positions of substantial responsibility. The Plan permits the granting of stock options (including nonqualified stock options and incentive stock options qualifying under Section 422 of the Code), stock appreciation rights (including free-standing, tandem and limited stock appreciation rights), restricted or unrestricted share awards, phantom stock, performance awards, or any combination of the foregoing (collectively, "Awards"). The Plan is a compensatory benefit plan within the meaning of Rule 701 under the Securities Act of 1933 (the "Securities Act"). Except to the extent any other exemption from the Securities Act is expressly relied upon in connection with any agreement entered into pursuant to the Plan or the securities issuable hereunder are registered under the Securities Act, the issuance of Common Stock pursuant to the Plan is intended to qualify for the exemption from registration under the Securities Act provided by Rule 701. To the extent that an exemption from registration under the Securities Act provided by Rule 701 is unavailable, all unregistered offers and sales of Awards and shares of Common Stock issuable upon exercise of an Award are intended to be exempt from registration under the Securities Act in reliance upon the private offering exemption contained in Section 4(2) of the Securities Act, or other available exemption, and the Plan shall be so administered. 2. DEFINITIONS Under this Plan, except where the context otherwise indicates, the following definitions apply: (a) "Award" shall mean any stock option, stock appreciation right, stock award, phantom stock award, or performance award. (b) "Board" shall mean the Board of Directors of the Corporation. (c) "Change in Control" shall mean (i) any sale, exchange or other disposition of substantially all of the Corporation's assets; or (ii) any merger, share exchange, consolidation or other reorganization or business combination in which the Corporation is not the surviving or continuing corporation, or in which the Corporation's stockholders become entitled to receive cash, securities of the Corporation other than voting common stock, or securities of another issuer. (d) "Code" shall mean the Internal Revenue Code of 1986, as amended, and any regulations issued thereunder. (e) Committee" shall mean the compensation committee of the Board; provided, however, that in the event all the members of such compensation committee do not constitute both "Non-Employee Directors" within the meaning of Rule 16b-3 and "outside directors" within the meaning of Section 162(m) of the Code, than the term "Committee" shall mean such other committee of two or more Board members appointed by the Board to administer the Plan whose members do constitute both "Non-Employee Directors" within the meaning of Rule 16b-3 and, to the extent that Section 162(m) of the Code is applicable to Awards granted under the Plan, "outside directors" within the meaning of Section 162(m) of the Code. (f) "Common Stock" shall mean shares of the Corporation's common stock, par value of $0.001 per share. (g) "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended. (h) "Fair Market Value" of a share of the Corporation's Common Stock for any purpose on a particular date shall be determined in a manner such as the Committee shall in good faith determine to be appropriate; provided, however, that if the Common Stock is publicly traded, then Fair Market Value shall mean the last reported sale price per share of Common Stock, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way, in either case as reported in the principal consolidated transaction reporting system with respect to securities listed or admitted to trading on a national securities exchange or included for quotation on the Nasdaq-National Market, or if the Common Stock is not so listed or admitted to trading or included for quotation, the last quoted price, or if the Common Stock is not so quoted, the average of the high bid and low asked prices, regular way, in the over-the-counter market, as reported by the National Association of Securities Dealers, Inc. Automated Quotation System or, if such system is no longer in use, the principal other automated quotations system that may then be in use or, if the Common Stock is not quoted by any such organization, the average of the closing bid and asked prices, regular way, as furnished by a professional market maker making a market in the Common Stock as selected in good faith by the Committee or by such other source or sources as shall be selected in good faith by the Committee; and provided further, that in the case of incentive stock options, the determination of Fair Market Value shall be made by the Committee in good faith in conformance with the Treasury Regulations under Section 422 of the Code. If, as the case may be, the relevant date is not a trading day, the determination shall be made as of the next preceding trading day. As used herein, the term "trading day" shall mean a day on which public trading of securities occurs and is reported in the principal consolidated reporting system referred to above, or if the Common Stock is not listed or admitted to trading on a national securities exchange or included for quotation on the Nasdaq-National Market, any day other than a Saturday, a Sunday or a day in which banking institutions in the State of New York are closed. (i) "Grant Agreement" shall mean a written agreement between the Corporation and a grantee memorializing the terms and conditions of an Award granted pursuant to the Plan. -2- (j) "Grant Date" shall mean the date on which the Committee formally acts to grant an Award to a grantee or such other date as the Committee shall so designate at the time of taking such formal action. (k) "Parent" shall mean a corporation, whether now or hereafter existing, within the meaning of the definition of "parent corporation" provided in Section 424(e) of the Code, or any successor thereto of similar import. (l) "Rule 16b-3" shall mean Rule 16b-3 as in effect under the Exchange Act on the effective date of the Plan, or any successor provision prescribing conditions necessary to exempt the issuance of securities under the Plan (and further transactions in such securities) from Section 16(b) of the Exchange Act. (m) "Subsidiary" and "subsidiaries" shall mean only a corporation or corporations, whether now or hereafter existing, within the meaning of the definition of "subsidiary corporation" provided in Section 424(f) of the Code, or any successor thereto of similar import. 3. ADMINISTRATION (a) Procedure. The Plan shall be administered by a Committee appointed by the Board consisting of not less than two (2) members of the Board to administer the Plan on behalf of the Board, subject to such terms and conditions as the Board may prescribe. Once appointed, the Committee shall continue to serve until otherwise directed by the Board. From time to time, the Board may increase the size of the Committee and appoint additional members thereof, remove members (with or without cause) and appoint new members in substitution therefor, fill vacancies, however caused, and remove all members of the Committee and, thereafter, directly administer the Plan. In the event that the Board is the administrator of the Plan in lieu of a Committee, the term "Committee" as used herein shall be deemed to mean the Board. Members of the Committee who are either eligible for Awards or have been granted Awards may vote on any matters affecting the administration of the Plan or the grant of Awards pursuant to the Plan, except that no such member shall act upon the granting of an Award to himself or herself, but any such member may be counted in determining the existence of a quorum at any meeting of the Committee during which action is taken with respect to the granting of an Award to him or her. The Committee shall meet at such times and places and upon such notice as it may determine. A majority of the Committee shall constitute a quorum. Any acts by the Committee may be taken at any meeting at which a quorum is present and shall be by majority vote of those members entitled to vote. Additionally, any acts reduced to writing or approved in writing by all of the members of the Committee shall be valid acts of the Committee. (b) Procedure After Registration of Common Stock. Notwithstanding the provisions of subsection (a) above, unless the Board itself is deemed to be the Committee, in the event that the Common Stock or any other capital stock of the Corporation becomes registered under Section 12 of the Exchange Act, the members of the Committee shall be both "Non-Employee Directors" within the meaning of Rule 16b-3, and "outside directors" within the meaning of Section 162(m) of the Code. Upon and after the point in time that the Common -3- Stock or any other capital stock of the Corporation becomes registered under Section 12 of the Exchange Act, the Board shall take all action necessary to cause the Plan to be administered in accordance with the then effective provisions of Rule 16b-3, provided that any amendment to the Plan required for compliance with such provisions shall be made in accordance with Section 13 of the Plan. (c) Powers of the Committee. The Committee shall have all the powers vested in it by the terms of the Plan, such powers to include authority, in its sole and absolute discretion, to grant Awards under the Plan, prescribe Grant Agreements evidencing such Awards and establish programs for granting Awards. The Committee shall have full power and authority to take all other actions necessary to carry out the purpose and intent of the Plan, including, but not limited to, the authority to: (i) determine the eligible persons to whom, and the time or times at which Awards shall be granted, (ii) determine the types of Awards to be granted, (iii) determine the number of shares to be covered by or used for reference purposes for each Award, (iv) impose such terms, limitations, restrictions and conditions upon any such Award as the Committee shall deem appropriate, (v) modify, extend or renew outstanding Awards, accept the surrender of outstanding Awards and substitute new Awards, provided that no such action shall be taken with respect to any outstanding Award which would adversely affect the grantee without the grantee's consent, (vi) accelerate or otherwise change the time in which an Award may be exercised or becomes payable and to waive or accelerate the lapse, in whole or in part, of any restriction or condition with respect to such Award, including, but not limited to, any restriction or condition with respect to the vesting or exercisability of an Award following termination of any grantee's employment, and (vii) to establish objectives and conditions, if any, for earning Awards and determining whether Awards will be paid after the end of a performance period. The Committee shall have full power and authority to administer and interpret the Plan and to adopt such rules, regulations, agreements, guidelines and instruments for the administration of the Plan and for the conduct of its business as the Committee deems necessary or advisable and to interpret same, all within the Committee's sole and absolute discretion. (d) Limited Liability. To the maximum extent permitted by law, no member of the Board or Committee shall be liable for any action taken or decision made in good faith relating to the Plan or any Award thereunder. -4- (e) Indemnification. To the maximum extent permitted by law, the members of the Board and Committee shall be indemnified by the Corporation in respect of all their activities under the Plan. (f) Effect of Committee's Decision. All actions taken and decisions and determinations made by the Committee on all matters relating to the Plan pursuant to the powers vested in it hereunder shall be in the Committee's sole and absolute discretion and shall be conclusive and binding on all parties concerned, including the Corporation, its stockholders, any participants in the Plan and any other employee of the Corporation, and their respective successors in interest. 4. SHARES AVAILABLE FOR THE PLAN; MAXIMUM AWARDS Subject to adjustments as provided in Section 12 of the Plan, the shares of Common Stock that may be delivered or purchased or used for reference purposes (with respect to stock appreciation rights, phantom stock units or performance awards payable in cash) with respect to Awards granted under the Plan, including with respect to incentive stock options intended to qualify under Section 422 of the Code, shall not exceed an aggregate of Three Million Six Hundred and Forty- Five Thousand (3,645,000) shares of Common Stock of the Corporation. The Corporation shall reserve said number of shares for Awards under the Plan, subject to adjustments as provided in Section 12 of the Plan. If any Award, or portion of an Award, under the Plan expires or terminates unexercised, becomes unexercisable or is forfeited or otherwise terminated, surrendered or canceled as to any shares without the delivery of shares of Common Stock or other consideration, the shares subject to such Award shall thereafter be available for further Awards under the Plan unless such shares would not be deemed available for future grants pursuant to Rule 16b-3 of the General Rules and Regulations under the Exchange Act, or any successor rule or regulation ("Rule 16b-3"). The maximum number of shares of Common Stock subject to Awards of any combination that may be granted during any one calendar year to any one individual shall be limited to Nine Hundred and Eleven Thousand Two Hundred and Fifty (911,250). To the extent required by Section 162(m) of the Code and so long as Section 162(m) of the Code is applicable to persons eligible to participate in the Plan, shares of Common Stock subject to the foregoing limit with respect to which the related Award is terminated, surrendered or canceled shall not again be available for grant under this limit. 5. PARTICIPATION Participation in the Plan shall be open to all employees, officers, directors and consultants of the Corporation, or of any Parent or Subsidiary of the Corporation, as may be selected by the Committee from time to time. Notwithstanding the foregoing, participation in the Plan with respect to Awards of incentive stock options shall be limited to employees of the Corporation or of any Parent or Subsidiary of the Corporation. Awards may be granted to such eligible persons and for or with respect to such number of shares of Common Stock as the Committee shall determine, subject to the limitations in Section 4 of the Plan. A grant of any type of Award made in any one year to an eligible person shall neither guarantee nor preclude a further grant of that or any other type of Award to such person in that year or subsequent years. -5- 6. STOCK OPTIONS Subject to the other applicable provisions of the Plan, the Committee may from time to time grant to eligible participants Awards of nonqualified stock options or incentive stock options as that term is defined in Section 422 of the Code. The stock option Awards granted shall be subject to the following terms and conditions. (a) Grant of Option. The grant of a stock option shall be evidenced by a Grant Agreement, executed by the Corporation and the grantee, stating the number of shares of Common Stock subject to the stock option evidenced thereby and the terms and conditions of such stock option, in such form as the Committee may from time to time determine. (b) Price. The price per share payable upon the exercise of each stock option ("exercise price") shall be determined by the Committee; provided, however, that in the case of incentive stock options, the exercise price shall not be less than 100% of the Fair Market Value of the shares on the date the stock option is granted. (c) Payment. Stock options may be exercised in whole or in part by payment of the exercise price of the shares to be acquired in accordance with the provisions of the Grant Agreement, and/or such rules and regulations as the Committee may have prescribed, and/or such determinations, orders, or decisions as the Committee may have made. Payment may be made in cash (or cash equivalents acceptable to the Committee) or, if allowed by the Committee in its sole discretion, in shares of Common Stock or a combination of cash and shares of Common Stock, or by such other means as the Committee may prescribe. The Fair Market Value of shares of Common Stock delivered on exercise of stock options shall be determined as of the date of exercise. Shares of Common Stock delivered in payment of the exercise price may be previously owned shares or, if approved by the Committee, shares acquired upon exercise of the stock option. Any fractional share will be paid in cash. The Corporation may make or guarantee loans to grantees to assist grantees in exercising stock options and satisfying any related withholding tax obligations. If the Common Stock is registered under Section 12(b) or 12(g) of the Exchange Act, the Committee, subject to such limitations as it may determine, may authorize payment of the exercise price, in whole or in part, by delivery of a properly executed exercise notice, together with irrevocable instructions, to: (i) a brokerage firm designated by the Corporation to deliver promptly to the Corporation the aggregate amount of sale or loan proceeds to pay the exercise price and any withholding tax obligations that may arise in connection with the exercise, and (ii) the Corporation to deliver the certificates for such purchased shares directly to such brokerage firm. (d) Terms of Options. The term during which each stock option may be exercised shall be determined by the Committee. In no event shall a stock option be exercisable more than ten years from the date it is granted. Prior to the exercise of the stock option and delivery of the shares certificates represented thereby, the grantee shall have none of the rights of a stockholder with respect to any shares represented by an outstanding stock option. (e) Reload Options. The terms of a stock option may provide for the automatic grant of a new stock option Award when the exercise price of the stock option and/or any related tax withholding obligation is paid by tendering shares of Common Stock, provided that such automatic replenishment feature shall be limited to any extent required by rules, -6- regulations, or interpretations under the Exchange Act with respect to any particular grant of an Award in the case of a grantee who is or becomes subject to Section 16 of the Exchange Act. Any stock option Award which would automatically be granted pursuant to this Section 6(e) without any further Committee action may be exercisable for not more than the number of shares tendered to exercise the initial stock option and/or to pay any tax withholding obligation related to such exercise, shall have an exercise price set at the then Fair Market Value of such shares, and shall have a term that does not extend beyond the term of the initial stock option. The Committee may include such a reload feature in a stock option Award at the time of the initial grant of the Award or may add such a reload feature to an outstanding stock option Award as the Committee deems desirable; provided, however, that a reload feature shall not be added to any outstanding incentive stock option Award without the consent of the grantee. (f) Restrictions on Incentive Stock Options. Incentive stock option Awards granted under the Plan shall comply in all respects with Code Section 422 and, as such, shall meet the following additional requirements: (i) Grant Date. An incentive stock option must be granted within 10 years of the earlier of the Plan's adoption by the Board of Directors or approval by the Corporation's shareholders. (ii) Exercise Price and Term. The exercise price of an incentive stock option shall not be less than 100% of the Fair Market Value of the shares on the date the stock option is granted and the term of an incentive stock option may not be greater than 10 years. Also, the exercise price of any incentive stock option granted to a grantee who owns (within the meaning of Section 422(b)(6) of the Code, after the application of the attribution rules in Section 424(d) of the Code) more than 10% of the total combined voting power of all classes of shares of the Corporation or its Parent or Subsidiary corporations (within the meaning of Sections 422 and 424 of the Code) shall be not less than 110% of the Fair Market Value of the Common Stock on the grant date and the term of such stock option shall not exceed five years. (iii) Maximum Grant. The aggregate Fair Market Value (determined as of the Grant Date) of shares of Common Stock with respect to which all incentive stock options first become exercisable by any grantee in any calendar year under this or any other plan of the Corporation and its Parent and Subsidiary corporations may not exceed $100,000 or such other amount as may be permitted from time to time under Section 422 of the Code. To the extent that such aggregate Fair Market Value shall exceed $100,000, or other applicable amount, such stock options shall be treated as nonqualified stock options. In such case, the Corporation may designate the shares of Common Stock that are to be treated as stock acquired pursuant to the exercise of an incentive stock option by issuing a separate certificate for such shares and identifying the certificate as incentive stock option shares in the stock transfer records of the Corporation. (iv) Grantee. Incentive stock options shall only be issued to employees of the Corporation, or of a Parent or Subsidiary of the Corporation. (v) Designation. No stock option shall be an incentive stock option unless so designated by the Committee at the time of grant or in the Grant Agreement evidencing such stock option. -7- (g) Other Terms and Conditions. Stock options may contain such other provisions, not inconsistent with the provisions of the Plan, as the Committee shall determine appropriate from time to time. 7. STOCK APPRECIATION RIGHTS (a) Award of Stock Appreciation Rights. Subject to the other applicable provisions of the Plan, the Committee may at any time and from time to time grant stock appreciation rights ("SARs") to eligible participants, either on a free-standing basis (without regard to or in addition to the grant of a stock option) or on a tandem basis (related to the grant of an underlying stock option), as it determines. SARs granted in tandem with or in addition to a stock option may be granted either at the same time as the stock option or at a later time; provided, however, that a tandem SAR shall not be granted with respect to any outstanding incentive stock option Award without the consent of the grantee. SARs shall be evidenced by Grant Agreements, executed by the Corporation and the grantee, stating the number of shares of Common Stock subject to the SAR evidenced thereby and the terms and conditions of such SAR, in such form as the Committee may from time to time determine. The term during which each SAR may be exercised shall be determined by the Committee. In no event shall a SAR be exercisable more than ten years from the date it is granted. The grantee shall have none of the rights of a stockholder with respect to any shares of Common Stock represented by an SAR. (b) Restrictions of Tandem SARs. No incentive stock option may be surrendered in connection with the exercise of a tandem SAR unless the Fair Market Value of the Common Stock subject to the incentive stock option is greater than the exercise price for such incentive stock option. SARs granted in tandem with stock options shall be exercisable only to the same extent and subject to the same conditions as the stock options related thereto are exercisable. The Committee may, in its discretion, prescribe additional conditions to the exercise of any such tandem SAR. (c) Amount of Payment Upon Exercise of SARs. An SAR shall entitle the grantee to receive, subject to the provisions of the Plan and the Grant Agreement, a payment having an aggregate value equal to the product of (i) the excess of (A) the Fair Market Value on the exercise date of one share of Common Stock over (B) the base price per share specified in the Grant Agreement (which shall be determined by the Committee but which shall not be less than 100% of the Fair Market Value of one share of Common Stock on the date of grant of the SAR), times (ii) the number of shares specified by the SAR, or portion thereof, which is exercised. In the case of exercise of a tandem SAR, such payment shall be made in exchange for the surrender of the unexercised related stock option (or any portion or portions thereof which the grantee from time to time determines to surrender for this purpose). (d) Form of Payment Upon Exercise of SARs. Payment by the Corporation of the amount receivable upon any exercise of an SAR may be made by the delivery of Common Stock or cash, or any combination of Common Stock and cash, as determined in the sole discretion of the Committee from time to time. If upon settlement of the exercise of an SAR a grantee is to receive a portion of such payment in shares of Common Stock, the number of shares shall be determined by dividing such portion by the Fair Market Value of a share of Common Stock on the exercise date. No fractional shares shall be used for such payment and the Committee shall determine whether cash shall be given in lieu of such fractional shares or whether such fractional shares shall be eliminated. -8- 8. STOCK AWARDS (INCLUDING RESTRICTED AND UNRESTRICTED SHARES AND PHANTOM STOCK) (a) Stock Awards, In General. Subject to the other applicable provisions of the Plan, the Committee may at any time and from time to time grant stock Awards to eligible participants in such amounts and for such consideration, including no consideration or such minimum consideration as may be required by law, as it determines. A stock Award may be denominated in shares of Common Stock or stock- equivalent units ("phantom stock"), and may be paid in Common Stock, in cash, or in a combination of Common Stock and cash, as determined in the sole discretion of the Committee from time to time. (b) Restricted Shares. Each stock Award shall specify the applicable restrictions, if any, on such shares of Common Stock, the duration of such restrictions, and the time or times at which such restrictions shall lapse with respect to all or a specified number of shares of Common Stock that are part of the Award. Notwithstanding the foregoing, the Committee may reduce or shorten the duration of any restriction applicable to any shares of Common Stock awarded to any grantee under the Plan. Share certificates with respect to restricted shares of Common Stock granted pursuant to a stock Award may be issued at the time of grant of the stock Award, subject to forfeiture if the restrictions do not lapse, or upon lapse of the restrictions. If share certificates are issued at the time of grant of the stock Award, the certificates shall bear an appropriate legend with respect to the restrictions applicable to such stock Award or, alternatively, the grantee may be required to deposit the certificates with the Corporation during the period of any restriction thereon and to execute a blank stock power or other instrument of transfer therefor. Except as otherwise provided by the Committee, during such period of restriction following issuance of share certificates, the grantee shall have all of the rights of a holder of Common Stock, including but not limited to the rights to receive dividends (or amounts equivalent to dividends) and to vote with respect to the restricted shares. If share certificates are issued upon lapse of restrictions on a stock Award, the Committee may provide that the grantee will be entitled to receive any amounts per share pursuant to any dividend or distribution paid by the Corporation on its Common Stock to stockholders of record after grant of the stock Award and prior to the issuance of the share certificates. (c) Phantom Stock. The grant of phantom stock units shall be evidenced by a Grant Agreement, executed by the Corporation and the grantee, that incorporates the terms of the Plan and states the number of phantom stock units evidenced thereby and the terms and conditions of such phantom stock units in such form as the Committee may from time to time determine. Phantom stock units granted to a participant shall be credited to a bookkeeping reserve account solely for accounting purposes and shall not require a segregation of any of the Corporation's assets. Phantom stock units may be exercised in whole or in part by delivery of an appropriate exercise notice to the Committee in accordance with the provisions of the Grant Agreement, and/or such rules and regulations as the Committee may prescribe, and/or such determinations, orders, or decisions as the Committee may make. Except as otherwise provided in the applicable Grant Agreement, the grantee shall have none of the rights of a stockholder with respect to any shares of Common Stock represented by a phantom stock unit as a result of the grant of a phantom stock unit to the grantee. Phantom stock units may contain such other provisions, not inconsistent with the provisions of the Plan, as the Committee shall determine appropriate from time to time. -9- 9. PERFORMANCE AWARDS The Committee may in its discretion grant performance Awards which become payable on account of attainment of one or more performance goals established by the Committee. Performance Awards may be paid by the delivery of Common Stock or cash, or any combination of Common Stock and cash, as determined in the sole discretion of the Committee from time to time. Performance goals established by the Committee may be based on the Corporation's operating income or one or more other business criteria selected by the Committee that apply to an individual or group of individuals, a business unit, or the Corporation as a whole, over such performance period as the Committee may designate. The Committee in its discretion may recommend to the Board of Directors of the Corporation that the material terms of any Performance Award or program with respect to some or all eligible participants be submitted for approval by the stockholders. 10. WITHHOLDING OF TAXES The Corporation may require, as a condition to the grant of any Award under the Plan or exercise pursuant to such Award or to the delivery of certificates for shares issued or payments of cash to a grantee pursuant to the Plan or a Grant Agreement (hereinafter collectively referred to as a "taxable event"), that the grantee pay to the Corporation, in cash or, unless otherwise determined by the Corporation, in shares of Common Stock, including shares acquired upon grant of the Award or exercise of the Award, valued at Fair Market Value on the date as of which the withholding tax liability is determined, any federal, state or local taxes of any kind required by law to be withheld with respect to any taxable event under the Plan. The Corporation, to the extent permitted or required by law, shall have the right to deduct from any payment of any kind (including salary or bonus) otherwise due to a grantee any federal, state or local taxes of any kind required by law to be withheld with respect to any taxable event under the Plan, or to retain or sell without notice a sufficient number of the shares to be issued to such grantee to cover any such taxes. 11. TRANSFERABILITY Unless determined otherwise by the Committee and in any event in the case of an incentive stock option or a stock appreciation right granted with respect to an incentive stock option, no Award granted under the Plan shall be transferable by a grantee otherwise than by will or the laws of descent and distribution. Unless otherwise determined by the Committee in accord with the provisions of the immediately preceding sentence, an Award may be exercised during the lifetime of the grantee, only by the grantee or, during the period the grantee is under a legal disability, by the grantee's guardian or legal representative. 12. ADJUSTMENTS; BUSINESS COMBINATIONS In the event of a reclassification, recapitalization, stock split, stock dividend, combination of shares, or other similar event, the maximum number and kind of shares reserved for issuance or with respect to which Awards may be granted under the Plan as provided in Section 4 shall be adjusted to reflect such event, and the Committee shall make such adjustments as it deems appropriate and equitable in the number, kind and price of shares covered by outstanding Awards made under the Plan, and in any other matters which relate to Awards and which are affected by the changes in the Common Stock referred to above. -10- In the event of any proposed Change in Control, the Committee shall take such action as it deems appropriate and equitable to effectuate the purposes of this Plan and to protect the grantees of Awards, which action may include, but without limitation, any one or more of the following: (i) acceleration or change of the exercise dates of any Award; (ii) arrangements with grantees for the payment of appropriate consideration to them for the cancellation and surrender of any Award; and (iii) in any case where equity securities other than Common Stock of the Corporation are proposed to be delivered in exchange for or with respect to Common Stock of the Corporation, arrangements providing that any Award shall become one or more Awards with respect to such other equity securities. The Committee is authorized to make adjustments in the terms and conditions of, and the criteria included in, Awards in recognition of unusual or nonrecurring events (including, without limitation, the events described in the preceding two paragraphs of this Section 12) affecting the Corporation, or the financial statements of the Corporation or any Subsidiary, or of changes in applicable laws, regulations, or accounting principles, whenever the Committee determines that such adjustments are appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan. In the event the Corporation dissolves and liquidates (other than pursuant to a plan of merger or reorganization), then notwithstanding any restrictions on exercise set forth in this Plan or any Grant Agreement, or other agreement evidencing a stock option, stock appreciation right or restricted stock Award: (i) each grantee shall have the right to exercise his stock option or stock appreciation right, or to require delivery of share certificates representing any such restricted stock Award, at any time up to ten (10) days prior to the effective date of such liquidation and dissolution; and (ii) the Committee may make arrangements with the grantees for the payment of appropriate consideration to them for the cancellation and surrender of any stock option, stock appreciation right or restricted stock Award that is so canceled or surrendered at any time up to ten (10) days prior to the effective date of such liquidation and dissolution. The Committee may establish a different period (and different conditions) for such exercise, delivery, cancellation, or surrender to avoid subjecting the grantee to liability under Section 16(b) of the Exchange Act. Any stock option or stock appreciation right not so exercised, canceled, or surrendered shall terminate on the last day for exercise prior to such effective date; and any restricted stock as to which there has not been such delivery of share certificates or that has not been so canceled or surrendered, shall be forfeited on the last day prior to such effective date. The Committee shall give to each grantee written notice of the commencement of any proceedings for such liquidation and dissolution of the Corporation and the grantee's rights with respect to his outstanding Award. 13. TERMINATION AND MODIFICATION OF THE PLAN The Board, without further approval of the stockholders, may modify or terminate the Plan or any portion thereof at any time, except that no modification shall become effective without prior approval of the stockholders of the Corporation if stockholder approval is necessary to comply with any tax or regulatory requirement or rule of any exchange or Nasdaq System upon which the Common Stock is listed or quoted; including for this purpose stockholder approval that is required for continued compliance with Rule 16b-3 or stockholder approval that is required to enable the Committee to grant incentive stock options pursuant to the Plan. -11- The Committee shall be authorized to make minor or administrative modifications to the Plan as well as modifications to the Plan that may be dictated by requirements of federal or state laws applicable to the Corporation or that may be authorized or made desirable by such laws. The Committee may amend or modify the grant of any outstanding Award in any manner to the extent that the Committee would have had the authority to make such Award as so modified or amended. 14. NON-GUARANTEE OF EMPLOYMENT Nothing in the Plan or in any Grant Agreement thereunder shall confer any right on an employee to continue in the employ of the Corporation or shall interfere in any way with the right of the Corporation to terminate an employee at any time. 15. Termination of Employment For purposes of maintaining a grantee's continuous status as an employee and accrual of rights under any Award, transfer of an employee among the Corporation and the Corporation's Parent or Subsidiaries shall not be considered a termination of employment. Nor shall it be considered a termination of employment for such purposes if an employee is placed on military or sick leave or such other leave of absence which is considered as continuing intact the employment relationship; in such a case, the employment relationship shall be continued until the date when an employee's right to reemployment shall no longer be guaranteed either by law or contract. 16. WRITTEN AGREEMENT Each Grant Agreement entered into between the Corporation and a grantee with respect to an Award granted under the Plan shall incorporate the terms of this Plan and shall contain such provisions, consistent with the provisions of the Plan, as may be established by the Committee. 17. NON-UNIFORM DETERMINATIONS The Committee's determinations under the Plan (including without limitation determinations of the persons to receive Awards, the form, amount and timing of such Awards, the terms and provisions of such Awards and the agreements evidencing same) need not be uniform and may be made by it selectively among persons who receive, or are eligible to receive, Awards under the Plan, whether or not such persons are similarly situated. 18. LIMITATION ON BENEFITS With respect to persons subject to Section 16 of the Exchange Act, transactions under this Plan are intended to comply with all applicable conditions of Rule 16b-3. To the extent any provision of the Plan or action by the Committee fails to so comply, it shall be deemed null and void, to the extent permitted by law and deemed advisable by the Committee. 19. LISTING AND REGISTRATION If the Corporation determines that the listing, registration or qualification upon any securities exchange or upon any listing or quotation system established by the National -12- Association of Securities Dealers, Inc. ("Nasdaq System") or under any law, of shares subject to any Award is necessary or desirable as a condition of, or in connection with, the granting of same or the issue or purchase of shares thereunder, no such Award may be exercised in whole or in part and no restrictions on such Award shall lapse, unless such listing, registration or qualification is effected free of any conditions not acceptable to the Corporation. 20. COMPLIANCE WITH SECURITIES LAW The Corporation may require that a grantee, as a condition to exercise of an Award, and as a condition to the delivery of any share certificate, provide to the Corporation, at the time of each such exercise and each such delivery, a written representation that the shares of Common Stock being acquired shall be acquired by the grantee solely for investment and will not be sold or transferred without registration or the availability of an exemption from registration under the Securities Act and applicable state securities laws. The Corporation may also require that a grantee submit other written representations which will permit the Corporation to comply with federal and applicable state securities laws in connection with the issuance of the Common Stock, including representations as to the knowledge and experience in financial and business matters of the grantee and the grantee's ability to bear the economic risk of the grantee's investment. The Corporation may require that the grantee obtain a "purchaser representative" as that term is defined in applicable federal and state securities laws. The stock certificates for any shares of Common Stock issued pursuant to this Plan may bear a legend restricting transferability of the shares of Common Stock unless such shares are registered or an exemption from registration is available under the Securities Act and applicable state securities laws. The Corporation may notify its transfer agent to stop any transfer of shares of Common Stock not made in compliance with these restrictions. Common Stock shall not be issued with respect to an Award granted under the Plan unless the exercise of such Award and the issuance and delivery of share certificates for such Common Stock pursuant thereto shall comply with all relevant provisions of law, including, without limitation, the Securities Act, the Exchange Act, the rules and regulations promulgated thereunder, and the requirements of any national securities exchange or Nasdaq System upon which the Common Stock may then be listed or quoted, and shall be further subject to the approval of counsel for the Corporation with respect to such compliance to the extent such approval is sought by the Committee. 21. NO LIMIT ON OTHER COMPENSATION ARRANGEMENTS Nothing contained in the Plan shall prevent the Corporation or its Parent or Subsidiary corporations from adopting or continuing in effect other compensation arrangements (whether such arrangements be generally applicable or applicable only in specific cases) as the Committee in its discretion determines desirable, including without limitation the granting of stock options, stock awards, stock appreciation rights or phantom stock units otherwise than under the Plan. 22. NO TRUST OR FUND CREATED Neither the Plan nor any Award shall create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Corporation and a grantee or any other person. To the extent that any grantee or other person acquires a right to receive payments from the Corporation pursuant to an Award, such right shall be no greater than the right of any unsecured general creditor of the Corporation. -13- 23. GOVERNING LAW The validity, construction and effect of the Plan, of Grant Agreements entered into pursuant to the Plan, and of any rules, regulations, determinations or decisions made by the Board or Committee relating to the Plan or such Grant Agreements, and the rights of any and all persons having or claiming to have any interest therein or thereunder, shall be determined exclusively in accordance with applicable federal laws and the laws of the State of Delaware, without regard to its conflict of laws rules and principles. 24. PLAN SUBJECT TO CHARTER AND BY-LAWS This Plan is subject to the Charter and By-Laws of the Corporation, as they may be amended from time to time. 25. EFFECTIVE DATE; TERMINATION DATE The Plan is effective as of the date on which the Plan was adopted by the Board, subject to approval of the stockholders within twelve months before or after such date. No Award shall be granted under the Plan after the close of business on the day immediately preceding the tenth anniversary of the effective date of the Plan. Subject to other applicable provisions of the Plan, all Awards made under the Plan prior to such termination of the Plan shall remain in effect until such Awards have been satisfied or terminated in accordance with the Plan and the terms of such Awards. Date Approved by the Board: ________________________ Date Approved by the Shareholders: ___________________ -14- EX-10.11 9 FORM OF RECAPITALIZATION AGREEMENT EXHIBIT 10.11 ================================================================================ RECAPITALIZATION AGREEMENT by and among MAPQUEST.COM, INC. and THE OTHER SECURITY HOLDERS PARTY HERETO ------------------------------- Dated as of April ____, 1999 ------------------------------- ================================================================================ Table of Contents ----------------- ARTICLE I Section 1.1. DEFINITIONS ARTICLE IIREPRESENTATIONS AND WARRANTIES OF THE COMPANY Page Section 2.1. Due Authorization......................................... 5 Section 2.2. Authority; No Conflicts................................... 5 Section 2.3. Capital Stock............................................. 6 Section 2.4. Other Representations..................................... 6 ARTICLE IIIREPRESENTATIONS AND WARRANTIES OF THE OTHER PARTIES Section 3.1. Due Authorization......................................... 7 Section 3.2. Authority; No Conflicts................................... 7 Section 3.3. Capital Stock............................................. 7 Section 3.4. Purchase of Shares........................................ 8 Section 3.5. Disclosure of Information................................. 8 Section 3.6. Investment Experience; Accredited Investor Status......... 8 Section 3.7. Accuracy of Registration Statement Disclosure............. 8 ARTICLE IVTHE CLOSING; EFFECTIVENESS Section 4.1. Closing................................................... 8 Section 4.2. Effectiveness of this Agreement........................... 8 ARTICLE VTHE RECAPITALIZATION Section 5.1. General................................................... 9 Section 5.2. Preferred Stock........................................... 9 -i- Section 5.3. Amended Charter Documents................................. 10 Section 5.4. Stock Split............................................... 10 Section 5.5. Amendment, Waiver and Release of Series C Preferred Stock Purchase Agreement....................................... 10 Section 5.6. Waivers of Registration Rights and Piggy-Back Registration Rights...................................... 10 Section 5.7. Termination of Rights of First Offer and Co-Sale.......... 11 Section 5.8. Termination of Affirmative Covenants...................... 11 Section 5.9. Termination of Voting Agreement for Board of Directors.... 11 Section 5.10. Option Plans............................................. 11 Section 5.11. Board of Directors and Committees........................ 11 Section 5.12. Directors Compensation................................... 12 Section 5.13. D & O Insurance and Indemnities.......................... 12 Section 5.14. Lock-Ups and Waivers..................................... 12 Section 5.15. Stockholder Consents..................................... 12 Section 5.16. Insider Trading Policy................................... 13 Section 5.17. National Geographic Acknowledgment and Agreement......... 13 ARTICLE VICONDITIONS OF THE PARTIES(OTHER THAN THE COMPANY) OBLIGATIONS Section 6.1. Conditions of the Securityholders' Obligations............ 13 Section 6.2. Delivery of closing documents; acknowledgement............ 14 ARTICLE VIICONDITIONS OF THE COMPANY'S OBLIGATIONS Section 7.1. Conditions of the Company's Obligations................... 14 ARTICLE VIIIMISCELLANEOUS Section 8.1. Notices................................................... 15 Section 8.2. Consent to Amendments and Waivers......................... 15 Section 8.3. Successors and Assigns.................................... 15 Section 8.4. Survival.................................................. 16 Section 8.5. Attorneys' Fees........................................... 16 Section 8.6. Ratification of Prior Acts of Board of Directors of Company............................................... 16 Section 8.7. LITIGATION; SPECIFIC PERFORMANCE.......................... 16 Section 8.8. WAIVER OF JURY TRIAL; ARBITRATION......................... 16 Section 8.9. Counterparts.............................................. 17 -ii- SCHEDULES --------- 1. Stockholder Chart 2. Lock-Up Parties EXHIBITS -------- A-1 First 1999 Amendment to Charter A-2 Second 1999 Amendment to Charter B Amended Company By-Laws C Directors Fee Policy D Director Indemnification Agreements E-1 1999 Stock Option Plan E-2 1999 Stock Option Plan Option Issuances F Employee Stock Purchase Plan G Amendment No. 4 to 1995 Stock Option Plan H-1 Directors H-2 Audit Committee Members H-3 Compensation Committee Members H-4 Pricing Committee Members I Stockholder Written Consent in Lieu of a Meeting J Insider Trading Policy -iii- RECAPITALIZATION AGREEMENT RECAPITALIZATION AGREEMENT, dated as of April _____, 1999, by and among MapQuest.com, Inc., a Delaware corporation and formerly known as GeoSystems Global Corporation (the "Company"), and the other stockholders, optionholders ------- and warrantholders of the Company named on the signature pages hereto (such other stockholders, optionholders and warrantholders, are collectively referred to as the "Securityholders", and the Securityholders, together with the Company, --------------- are referred to as the "Parties"). ------- R E C I T A L S - - - - - - - - The Parties desire to recapitalize the Company, and in connection therewith, the Company have filed a Registration Statement on Form S-1 (No. 333- 72667) (as amended or supplemented, and including all financial statements and exhibits thereto, the "Registration Statement") relating to the proposed Common ---------------------- Stock Offering (this and other capitalized terms used and not defined in these recitals shall have the meaning given such terms in Article I) by the Company. More specifically, the recapitalization ("Recapitalization") includes the ---------------- following primary components: (a) the Common Stock Offering by the Company; (b) the Company's redemption of 1,354,802 of shares of Series B Preferred Stock of the Company, par value $0.01 per share held by the Series B Preferred Stock Investors (the "Series B Preferred Stock"); (c) the conversion of (i) 6,550,000 ------------------------ shares of the Company's Series A Preferred Stock, par value $0.01 per share (the "Series A Preferred Stock"), and (ii) 3,495,354 shares of the Company's Series C ------------------------ Preferred Stock, par value $0.01 per share (the "Series C Preferred Stock"), ------------------------ into 10,045,354 shares (prior to the stock split referred to in class (e)) of Common Stock in the aggregate (the "Preferred Exchange"); (d) the 2.7 for one ------------------ stock split (the "Stock Split") of the Company's Common Stock, par value $0.001 ----------- per share, (e) the termination of the Rights Agreement (including the covenants and other agreements therein) to the extent provided herein, (f) all other related transactions, agreements and instruments contemplated by this Agreement and/or described, and based upon the assumptions described, in the Registration Statement. It is a condition to the engagement of the Underwriters in the Common Stock Offering that this Agreement is executed and delivered prior to the distribution of the Company's preliminary prospectus in respect of the Common Stock Offering. In order to implement the Recapitalization, the parties hereto agree as follows: ARTICLE I Section 1.1 DEFINITIONS As used in this Agreement, the following terms shall have the meanings specified below: "Amended Company Charter" means the Company's Restated Certificate of ----------------------- Incorporation, as amended by the First 1999 Amendment to Charter and the Second 1999 Amendment to Charter. "Amended By-Laws" means the Company's By-laws substantially in the form of --------------- Exhibit B hereto. - --------- "Amendment No. 4 to 1995 Stock Option Plan" means Amendment No. 4 to the ----------------------------------------- 1995 Stock Option Plan substantially in the form of Exhibit G hereto. --------- "Anti-Dilution Warrants" means the 522,230 warrants granted to certain ---------------------- Series C Preferred Stock Investors to purchase shares of Common Stock at an exercise price of $.004 per share pursuant to the Agreement, dated as of May 9, 1998, among the Company and the Series C Preferred Stock Investors named therein. "Closing" has the meaning specified in Section 4.1. ------- ----------- "Closing Time" has the meaning specified in Section 4.1. ------------ ----------- "Common Stock" has the meaning specified in the recitals to this Agreement. ------------ "Common Stock Offering" shall mean the initial public offering of 4,600,000 --------------------- shares (and 690,000 additional shares pursuant to over-allotment options) of Common Stock by the Underwriters pursuant to the Registration Statement. "Company" has the meaning specified in the preamble to this Agreement. ------- "Consultant Warrant" means the warrant granted to Ramsey/Beirne Associates, ------------------ Inc. to purchase 41,265 shares of Common Stock at an exercise price of $1.30 per share pursuant to the warrant agreement, effective as of September 22 1998. "Director Indemnification Agreements" means the Director Indemnification ----------------------------------- Agreements substantially in the form of Exhibit D hereto. --------- "Director's Fee Policy" means the Company's Director Fee Policy --------------------- substantially in the form of Exhibit C hereto. --------- "Employee Stock Purchase Plan" means the Employee Stock Purchase Plan of ---------------------------- the Company substantially in the form of Exhibit F hereto. -2- "Equity Securities" of the Company means the Series A Preferred Stock, ----------------- Series B Preferred Stock, Series C Preferred Stock, Common Stock, options under the 1995 Stock Plan and the 1999 Stock Plan, the Warrants, and capital stock of the Company issuable upon conversion, exchange or exercise thereof or as dividends thereon. "First 1999 Amendment to Charter" means the amendment to the Restated ------------------------------- Certificate of Incorporation of the Company substantially in the form of Exhibit A-1 hereto. "Liens" means any security interest, lien, charge, restriction, encumbrance ----- or other interest of another Person. "Material Adverse Effect" means any circumstances or event that (i) has, or ----------------------- may be reasonably expected to have, any materially adverse effect upon the validity or enforceability of this Agreement or any of the other Recapitalization Documents, or (ii) is, or may be reasonably expected to be, materially adverse to the condition (financial or otherwise), business, operations or property of the Company and its subsidiaries, taken as a whole. "National Geographic Warrant" means the warrants to purchase 954,147 shares --------------------------- of common stock with an exercise price of $1.04 per share pursuant to the NG Agreement. "NG Agreement" means the Carthographic Product Development Publishing, ------------ Marketing and Distribution Agreement, dated as of April 22, 1997, between the Company, NGE Inc. d/b/a National Geographic Maps and the National Geographic Society. "1995 Stock Option Plan" means the Company's 1995 Stock Option Plan, as ---------------------- amended by Amendments Numbers 1 through 4 thereto. "1999 Stock Plan" means the 1999 Stock Plan of the Company substantially in --------------- the form of Exhibit E hereto. --------- "Parties" has the meaning specified in the preamble to this Agreement. ------- -------- "Person" means any individual, corporation, partnership, joint venture, ------ association, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof or any other entity. "Preferred Exchange" has the meaning specified in the recitals to this ------------------ Agreement. "Preferred Stock" means the Company's Preferred Stock, par value $.01 per --------------- share, the terms of which are described in the Amended Company Charter. -3- "Prudential Warrant" means the Common Stock Purchase Warrant, dated July, ------------------ 1997, granted by the Company to Prudential Securities Incorporated to purchase 406,709 shares of Common Stock at an exercise price of $1.30 per share. "Recapitalization" has the meaning specified in the recitals to this ---------------- Agreement. "Recapitalization Documents" means this Agreement (including all Schedules -------------------------- and Exhibits hereto) and each of the agreements, actions, instruments, consents and documents referred to in Sections 5.2 through 5.16, the Registration ------------ ---- Statement, and the Underwriting Agreement. "Registrable Securities" has the meaning given such term in the Rights ---------------------- Agreement. "Registration Statement" has the meaning specified in the recitals to this ---------------------- Agreement. "Rights Agreement" means the Amended and Restated Rights Agreement, dated ---------------- as of July 17, 1997, among the Company and the Stockholders named therein. "Second 1999 Amendment to Charter" means the amendment to the Restated -------------------------------- Certificate of Incorporation of the Company substantially in the form of Exhibit A-2 hereto. "Series A Preferred Stock" has the meaning specified in the recitals to ------------------------ this Agreement. "Series B Preferred Stock" has the meaning specified in the Recitals to ------------------------ this Agreement. "Series C Preferred Stock" has the meaning specified in the recitals to ------------------------ this Agreement. "Series C Preferred Stock Investors" means the holders of the Series C ---------------------------------- Preferred Stock, as of the date hereof. "Series C Preferred Stock Purchase Agreement" means the Series C ------------------------------------------- Convertible Preferred Stock Purchase Agreement, dated as of July 17, 1997, among the Company and the Series C Preferred Stock Investors. "Stockholder Chart" means the stockholder chart described in Section 2.3 ----------------- ----------- and set forth as Schedule 1 hereto. ---------- "Stock Split" has the meaning specified in the recitals to this Agreement. ----------- "Stockholders" means the holders, as of the date hereof, of Series A ------------ Preferred Stock, the Series B Preferred Stock, the Series C Preferred Stock and Common Stock. "Trident Warrants" means the Common Stock Purchase Warrants granted by the ---------------- Company (i) to Trident Partners Capital Fund-I, L.P. to purchase 325,805 shares of Common -4- Stock at an exercise price of $0.004 per share and (ii) to Trident Partners Capital Fund-I, C.V. to purchase 64,451 shares of Common Stock at an exercise price of $0.004 per share, in each case dated November 2, 1994. "Underwriters" means BancBoston Robertson Stephens, Inc., US Bancorp Piper ------------ Jaffray Inc., Thomas Weisel Partners LLC and Volpe Brown Whelan & Company, LLC. "Underwriting Agreement" means the Common Stock Offering Underwriting ---------------------- Agreement, to be entered into, among the Company and the Underwriters. "Warrants" means the National Geographic Warrant, the Prudential Warrant, -------- the Trident Warrants, the Consultant Warrant and the Anti-Dilution Warrants. Section 1.2 Construction. References to agreements are to such agreements ------------ as amended from time to time. Unless otherwise specified, references to numbers of Equity Securities are to such Equity Securities, as adjusted by the Stock Split. ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE COMPANY The Company represents and warrants to each of the other Parties to this Agreement, as of the Closing Date, as follows: Section 2.1 Due Authorization. The Company is duly organized, validly ----------------- existing corporation under the laws of the State of Delaware. Each of this Agreement and the other Recapitalization Documents have been duly authorized, executed and delivered by the Company, as required, and each of this Agreement and such other Recapitalization Documents is a legal, valid and binding obligation of the Company, enforceable against the Company, in accordance with its terms, except as enforcement thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting the enforceability of creditors' rights generally and by general principles of equity (whether arising under a proceeding at law or in equity). The Amended Company Charter will have been duly filed with the Secretary of State of the State of Delaware prior to the Common Stock Offering. Section 2.2 Authority; No Conflicts. The Company has the corporate power ----------------------- and authority and the legal right to make, deliver and perform, and has taken all necessary corporate action to authorize the transactions contemplated by, this Agreement and the other Recapitalization Documents and to conduct their respective businesses as described in the Registration Statement. Neither the execution and delivery of this Agreement or the other Recapitalization Documents nor the consummation of any of the transactions contemplated herein or therein nor compliance with the terms and provisions hereof or thereof (a) violates or -5- will violate any law or regulation or any order or decree of any court or government instrumentality applicable to the Company or any of their respective subsidiaries or properties, except such violations as would not, in the aggregate, have a Material Adverse Effect, or (b) conflicts with or would result in the breach of, or constitutes a default under, any contract, lease, indenture, loan agreement, mortgage, deed of trust or other agreement or instrument to which the Company or any of its subsidiaries, is a party or by which any of them or any of their respective assets may be bound, except such conflicts, breaches or defaults as have been waived or consents therefor have been obtained or such conflicts, breaches or defaults as would not, in the aggregate, have a Material Adverse Effect. No consent, approval, authorization or order is presently required in connection with the execution and delivery of this Agreement or the Recapitalization Documents by the Company or the consummation of the transactions contemplated hereby or thereby that has not been obtained, except for such consents, approvals, authorizations or orders as would not, in the aggregate, have a Material Adverse Effect. Section 2.3 Capital Stock. ------------- (a) At the Closing Time and upon the Recapitalization (including the Stock Split), the Company's authorized capital stock shall consist of 100,000,000 shares of Common Stock (of which 32,166,699 shares are outstanding), 5,000,000 shares of Preferred Stock (of which zero shares are outstanding). At the Closing Time, the Company will have reserved for issuance 5,907,453 shares of common stock issuable upon exercise of outstanding options, 2,314,612 shares of common stock issuable upon exercise of outstanding warrants, 188,959 shares of common stock reserved for future issuance under the 1995 Stock Option Plan; 3,645,000 shares of common stock that have been reserved for future issuance under the 1999 Stock Plan; and 1,755,000 shares of common stock that have been reserved for future issuance under the Employee Stock Purchase Plan. (b) Set forth on Schedule 1 hereto (the "Stockholder Chart") is a ---------- ----------------- true, complete and correct chart showing, among other things, (a) the record ownership of the Company's Equity Securities prior to the Recapitalization, and (b) the record ownership of the Company's Equity Securities after giving pro forma effect to the Recapitalization, including the Common Stock Offering and the redemption of the Series B Redeemable Preferred Stock, the conversion into Common Stock on a one for one share basis of the Series A Convertible Preferred Stock and the Series C Convertible Preferred Stock, and the issuance of options under the 1999 Stock Plan as contemplated by this Agreement. Section 2.4 Other Representations. The representations and warranties of --------------------- the Company set forth in the Underwriting Agreement, taken as a whole, are true and correct in all material respects, except to the extent of any waivers, modifications or supplements thereunder. -6- ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE OTHER PARTIES Each of the Parties to this Agreement (other than the Company) represent and warrant, severally as to themselves and not jointly, to each of the other Parties to this Agreement, as of the Closing Date, as follows: Section 3.1 Due Authorization. Each of this Agreement and the other ----------------- Recapitalization Documents to which such Party is a party have been duly authorized, executed and delivered by such Party, as required, and each of this Agreement and such other Recapitalization Documents is a legal, valid and binding obligation of such Party, enforceable against such Party, in accordance with its terms, except as enforcement thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting the enforceability of creditors' rights generally and by general principles of equity (whether arising under a proceeding at law or in equity). Section 3.2 Authority; No Conflicts. Such Party has the power and ----------------------- authority and the legal right to make, deliver and perform, and has taken all necessary corporate action to authorize the transactions contemplated by, this Agreement and the other Recapitalization Documents to which such Party is a party. Neither the execution and delivery of this Agreement or such Recapitalization Documents nor the consummation of any of the transactions contemplated herein or therein nor compliance with the terms and provisions hereof or thereof (a) violates or will violate any law or regulation or any order or decree of any court or government instrumentality applicable to such Party, except such violations as would not, in the aggregate, have a Material Adverse Effect, or (b) conflicts with or would result in the breach of, or constitutes a default under, any contract, lease, indenture, loan agreement, mortgage, deed of trust or other agreement or instrument to which such Party is a party or by which they or any of their respective assets may be bound, except such conflicts, breaches or defaults as have been waived or obtained or consents therefor have been obtained or such conflicts, breaches or defaults as would not, in the aggregate, have a Material Adverse Effect. No consent, approval, authorization or order of any governmental authority is presently required in connection with the execution and delivery of this Agreement or the Recapitalization Documents by such Party or the consummation of the transactions contemplated hereby or thereby that has not been obtained. Section 3.3 Capital Stock. Such Party, if a Stockholder, is the record ------------- and beneficial owner of the Company's Equity Securities ascribed to such Party, as set forth in the Stockholder Chart, free and clear of any Liens, other than those arising under applicable securities laws, this Agreement and the Lock-Up Agreements. -7- Section 3.4 Purchase of Shares. Such Party, if a Stockholder, has ------------------- acquired its Equity Securities for its own account and not with a view to or for sale in connection with any distribution thereof. Section 3.5 Disclosure of Information. Each Party acknowledges that it ------------------------- (i) has reviewed such information about the Company as it considers necessary or appropriate as the time it purchased its Equity Securities and (ii) had an opportunity to ask questions and receive answers from the Company regarding its investment in its Equity Securities. Section 3.6 Investment Experience; Accredited Investor Status. Such Party ------------------------------------------------- acknowledges that (i) it can bear the economic risk of its investment in the Common Stock, (ii) has such knowledge and experience in financial or business matters that it is, and at the time it purchased its Equity Securities it was, capable of evaluating the merits and risks of an investment in the Common Stock, (iii) that it is, and at the time it purchased its Equity Securities it was, an "accredited investor" as defined in Rule 501(a) of Regulation D under the Securities Act of 1933, as amended, or (iv) purchased its Equity Securities in reliance on Section 4(2) of the Securities Act. Section 3.7 Accuracy of Registration Statement Disclosure. Such Party --------------------------------------------- (i) has received a copy of Amendment No. 1 to the Company's registration statement on Form S-1 which was filed with the Securities and Exchange Commission on April 12, 1999 (together with the financial statements contained therein and all exhibits to the Registration Statement, "Amendment No. 1 to the ---------------------- Registration Statement"), (ii) has read carefully Amendment No 1 to the - ---------------------- Registration Statement, and (iii) represents and warrants that the information concerning such Party, its affiliates, partners, employees, directors and officers and its ownership interest in the Company does not contain any untrue statement of a material fact or to state any material fact necessary in order to make the such information not misleading. ARTICLE IV THE CLOSING; EFFECTIVENESS Section 4.1 Closing. Upon satisfaction of the conditions set forth ------- herein, the transactions contemplated by this Agreement shall be consummated at the closing (the "Closing") thereof, which shall occur on the closing date of ------- the Common Stock Offering (the "Closing Time") at the offices of Mayer, Brown & ------------ Platt, New York, New York, or at such other place as shall be agreed upon by the Securityholders and the Company. Section 4.2 Effectiveness of this Agreement. This Agreement shall be ------------------------------- effective as of the date the Registration Statement is declared effective by the Securities and Exchange Commission; provided, that, if the Underwriting -------- Agreement is executed by the Company and the Underwriters and the Common Stock Offering is not consummated within 15 days -8- thereafter, none of the Parties hereto shall have any obligations under Article ------- V or otherwise under this Agreement, and this Agreement will automatically - - terminate and have no further effect. All of the transactions contemplated by this Agreement shall be deemed to have been consummated simultaneously and none of such transactions shall be deemed consummated unless all of such transactions are consummated. ARTICLE V THE RECAPITALIZATION Section 5.1 General. Each of the Parties (in whatever capacity, ------- including as Securityholders) will take all actions, including executing and delivering all of the Recapitalization Documents to which it is a party, necessary or reasonably requested by the Company, to authorize, adopt, approve, implement, consummate and close the Recapitalization Documents and the Recapitalization generally, provided that, with regard to Parties that are directors of the Company, the foregoing will be subject to their fiduciary duties as directors. Section 5.2 Preferred Stock. --------------- (a) At the Closing, the holders of all of the outstanding shares of Series A Preferred Stock and Series C Preferred Stock will exchange and convert their shares of Series A Convertible and Series C Preferred Stock for shares of Common Stock on a one-for-one share basis as described in the Registration Statement, the Stockholder Chart and the terms and conditions of such preferred stock, pursuant to the Preferred Exchange, irrespective of any limitations on conversion set forth in the terms and conditions of such Preferred Stock, and such conversion shall be effective as of the Closing Time. At the Closing, such holders will deliver to the Company their certificates evidencing such shares of Preferred Stock for exchange and conversion, together with written instructions to complete such exchange and conversion. Upon such exchange and conversion, such shares of preferred stock will be surrendered to the Company and will be canceled by the Company. (b) At the Closing, the Company will redeem the Series B Preferred Stock from the holders thereof as described in the Registration Statement and the Stockholder Chart, irrespective of any limitations on redemption set forth in the terms of such preferred stock, and such redemption will be effective as of the Closing Time. At the Closing, such holders will deliver to the Company their certificates evidencing their shares of Series B Preferred Stock for redemption, together with written instructions to complete such redemption. Upon such redemption, such shares of Series B Preferred Stock will be surrendered to the Company and will be canceled by the Company. Section 5.3 Amended Charter Documents. ------------------------- -9- (a) At or prior to the Closing, the Amended Company Charter will be duly approved and adopted as the Charter of the Company, and, as of the Closing, will be filed by the Company with the Secretary of State of the State of Delaware. Each Securityholder adopts and approves the Amended Company Charter and consents to its filing with the Secretary of State of the State of Delaware. (b) At or prior to the Closing, the Amended Company By-Laws will be duly approved and adopted as the By-Laws of the Company. Each Securityholder adopts and approves the Amended Company By-laws. Section 5.4 Stock Split. (a) At or prior to the Closing the Stock Split ----------- will be duly approved and adopted, and (b) As of the Closing, all outstanding shares of Common Stock and all of the outstanding Equity Securities of the Company will be adjusted to reflect the Stock Split as described in the Stockholder Chart. Section 5.5 Amendment, Waiver and Release of Series C Preferred Stock --------------------------------------------------------- Purchase Agreement. - ------------------ Each Series C Preferred Stock Investor agrees as follows: (a) Articles III [Affirmative Covenants of the Company] and IV [Negative Covenants of the Company] of the Series C Preferred Stock Purchase Agreement are hereby terminated and shall be of no further effect. Each Series C Preferred Stock Investor releases and discharges the Company, its officers, directors, employees, agents, affiliates, parents, subsidiaries, divisions, predecessors, purchasers, assigns, representatives, successors, successors-in-interest, and customers from any and all grievances, claims, demands, debts, defenses, actions or causes of action, obligations, contracts, promises, damages, judgments, expenses, and liabilities, known or unknown, whatsoever, in any way arising from or relating to any act, occurrence, or transaction before the date of this Agreement, from any arising under each of Article III and Article IV of the Series C Preferred Stock Purchase Agreement. (b) Subject to and upon the Closing Time, the Rights Agreement (other than Sections 5.1, 5.2, 5.5, 5,6 and 5.7 thereof) will automatically terminate and expire. Section 5.6 Waivers of Registration Rights and Piggy-Back Registration ---------------------------------------------------------- Rights. - ------ (a) Each holder of Registrable Securities agrees not to assert its rights under Section 5.2 [Company Registration] in connection with the Common Stock Offering. (b) Each holder of Registrable Securities agrees that, pursuant to Section 5.11 of the Rights Agreement [Standoff Agreement], it shall not sell, make any short sale of, -10- loan, grant any option for the purchase of, or otherwise dispose of any Registrable Securities effective as of the date of this Agreement. Section 5.7 Termination of Rights of First Offer and Co-Sale. ------------------------------------------------ Each party hereto hereby agrees to the termination in full of Section 6 [Rights of First Offer and Co-Sale] of the Rights Agreement, effective as of the date of this Agreement and agrees not to assert any right thereunder in respect of Common Stock issued under the Common Stock Offering. Section 5.8 Termination of Affirmative Covenants. ------------------------------------ Each party hereto hereby agrees to the termination in full of Section 7 [Affirmative Covenants of the Company] of the Rights Agreement, effective as of the date of this Agreement. Section 5.9 Termination of Voting Agreement for Board of Directors. ------------------------------------------------------ Each party hereto hereby agrees to the termination in full of Section 8 [Voting Agreement for Board of Directors] of the Rights Agreement, effective as of the date of this Agreement. Section 5.10 Option Plans. ------------ (a) The Company will duly approve and adopt, at or prior to Closing, the 1999 Stock Option Plan and the Employee Stock Purchase Plan. (b) At or prior to the Closing, the Company will issue stock options under the 1999 Stock Option Plan to director participants and employee participants in the amounts and to the persons as determined by the Board of Directors or any duly authorized committee thereof. Section 5.11 Board of Directors and Committees. --------------------------------- (a) At the Closing, the Board of Directors of the Company will consist of the persons set forth in Exhibit H-1 hereto. (b) At the Closing, the Audit Committee of the Company will consist of those persons set forth in Exhibit H-2 hereto. (c) At the Closing, the Compensation Committee of the Company will consist of those persons set forth in Exhibit H-3 hereto. The Compensation Committee will be delegated authority by the Board of Directors to duly consider the recommendations of -11- the Chief Executive Officer concerning the issuance of options under the 1995 Stock Option Plan, the 1999 Stock Option Plan and Employee Stock Purchase Plan and to make compensation decisions regarding the Company's executive officers. (d) At the Closing, the Pricing Committee of the Company for purposes of the Common Stock Offering will consist of those persons set forth in Exhibit H-4 hereto, who will be fully and irrevocably authorized to make decisions on behalf of the Company and the Board of Directors thereof in respect of the Common Stock Offering, including without limitation, negotiating, entering into and executing agreements binding on the Company, determining and approving stock splits in respect of Equity Securities, and determining the price per share of the Common Stock Offering. Upon the decision of the Pricing Committee, the Company will make such adjustments and modifications as are necessary to reflect and implement such decision in the Recapitalization Documents and the Recapitalization generally, and such adjustments and modifications will not require the Parties' consent, and will not affect the Parties' obligations hereunder or thereunder, as so adjusted or modified. Section 5.12 Directors Compensation. At the Closing, the Company will ---------------------- duly approve and adopt the Director's Fee Policy. Section 5.13 D & O Insurance and Indemnities. ------------------------------- (a) By the Closing, the Company will have obtained a customary and standard Directors and Officers insurance policy providing coverage for their directors and officers of at least $10.0 million (with a sublimit of at least $5.0 million for the Common Stock Offering), which coverage, subject to the foregoing, will apply to the Common Stock Offering. (b) By the Closing, the Company will have entered into the Director Indemnification Agreements with its directors. Section 5.14 Lock-Ups and Waivers. Each Party listed on Schedule 2 will -------------------- have executed and delivered to the Company and the Underwriters in connection with the Common Stock Offering and under the Underwriting Agreement, a standard and customary "lock-up" agreement under which they agree not to register offer, sell or contract to sell any of the Company's Equity Securities for 180 days following the date of the final prospectus relating to the Common Stock Offering, subject to waiver by the representatives of the Underwriters. Section 5.15 Stockholder Consents. The Parties will execute and deliver -------------------- stockholder consents substantially in the form of Exhibit I hereto, as --------- stockholders of the Company, with regard to (a) the Amended Company Charter and Amended Company By-Laws, (b) Amendment No. 4 to the 1995 Stock Option Plan, the 1999 Stock Option Plan, and the Employee Stock Purchase Plan, (c) the election of directors of the Company, (d) the approval -12- of such Recapitalization Documents, (f) the listing of the Company on the Nasdaq National Market System, (e) the filing of the Registration Statement with the Securities and Exchange Commission, (f) the ratifying of all acts of the directors and the officers of the Company (whether current or former) prior to the Common Stock Offering other than acts of wilful misconduct, and (g) any other transactions contemplated by clauses (a) through (f) as are reasonably requested by the Company. Section 5.16 Insider Trading Policy. At the Closing, the Company will ---------------------- adopt the Insider Trading Policy substantially in the form of Exhibit J hereto, --------- and each of the Parties agrees to observe and comply with the Insider Trading Policy Section 5.17 National Geographic Acknowledgment and Agreement. National ------------------------------------------------ Geographic agrees that, effective as of the date of this Agreement, it shall have no further right to appoint, and forfeits the right to appoint, a director to the Board of Directors of the Company in accordance with Section 5 of the NG Agreement. ARTICLE VI CONDITIONS OF THE PARTIES (OTHER THAN THE COMPANY) OBLIGATIONS Section 6.1 Conditions of the Securityholders' Obligations. The ---------------------------------------------- obligation of each of the Parties (other than the Company) on the Closing Time to consummate the transactions contemplated by Article V of this Agreement will --------- be subject to the prior or concurrent satisfaction on the Closing Time of the following conditions: (a) Representations and Warranties; Agreements; No Default. The ------------------------------------------------------ representations and warranties of the Company set forth in this Agreement will be true in all material respects at and as if repeated on and as of the Closing Time after giving effect to the transactions contemplated hereby; and the Company will have executed, delivered and consummated all Recapitalization Documents on their part to be performed pursuant to this Agreement on or prior to the Closing Time. (b) Certificate as to Representations, Etc. The Parties (other than -------------------------------------- the Company) will each have received an Officer's Certificate signed by the Chief Financial Officer of the Company, addressed to the Parties (other than the Company) and dated as of the Closing Date, to the effect set forth in clause (a) above. (c) Recapitalization and Recapitalization Documents. Subject to the ----------------------------------------------- proviso at the end of Section 4.1, (a) each of the other Parties to the ----------- Recapitalization Documents will have executed, delivered and consummated the Recapitalization Documents to which they are parties, (b) the Common Stock Offering will result in at least -13- $40,000,000 gross proceeds to the Company, (c) the Recapitalization will have been consummated. (d) Closing Papers. The Parties will have received copies of the -------------- following: (i) copies of the resolutions adopted by the Board of Directors and Stockholders authorizing the execution, delivery and performance of this Agreement and each of the Recapitalization Documents and the other transactions contemplated hereby; (ii) copies of each of the Recapitalization Documents; and (iii) an incumbency certificate in respect of officers of the Company executing the Recapitalization Documents, a standard good standing certificate from the Secretary of the State of Delaware in respect of the Company dated as of a recent date of the Closing, and such other customary and standard documents reasonably requested by any of the Parties. Section 6.2 Delivery of closing documents; acknowledgement. Each party ---------------------------------------------- hereto (other than the Company) acknowledges that any obligation of the Company to deliver documents or certificates to such Party under Section 6.1 shall be satisfied in full by the Company making such document or certificate available for inspection by such Party and copying at the Company's address set forth in Section 8.1 upon notice to the Company ARTICLE VII CONDITIONS OF THE COMPANY'S OBLIGATIONS Section 7.1 Conditions of the Company's Obligations. The obligation of --------------------------------------- the Company on the Closing Time to consummate the transactions contemplated by this Agreement will be subject to the prior or concurrent satisfaction on the Closing Time of the following conditions: (a) Representations and Warranties. The representations and ------------------------------ warranties of the other Parties set forth in this Agreement shall be true in all material respects at and as if repeated on and as of the Closing Time after giving effect to the transactions contemplated hereby and the other Parties will have performed all agreements on their part to be performed pursuant to this Agreement on or prior to the Closing Time. (b) Recapitalization and Recapitalization Documents. Subject to ----------------------------------------------- Section 4.2, (a) each of the other Parties to the Recapitalization ----------- Documents will have executed, delivered and consummated the Recapitalization Documents to which they are parties, -14- (b) the Common Stock Offering will have been consummated, and (c) the Recapitalization will generally have been consummated. ARTICLE VIII MISCELLANEOUS Section 8.1 Notices. All notices and other communications pertaining to ------- this Agreement shall be in writing and shall be delivered in person with receipt acknowledged, or telecopied and confirmed immediately in writing by a copy mailed by registered or certified mail, return receipt requested, postage prepaid, addressed as hereafter set forth, or mailed by registered or certified mail, return receipt requested, postage prepaid, addressed as follows: (i) If to the Company: MapQuest.com, Inc. 3710 Hempland Road Mountville, PA 17554-1542 Attention: James Thomas, Chief Financial Officer Telecopy No.: (717) 285-8577 with copies to: Mayer, Brown & Platt 1675 Broadway New York, New York 10019 Attention: James B. Carlson, Esq. Telecopy No.: (212) 262-1910 or to such other person or address as shall be furnished to the other party in compliance with this Section. Section 8.2 Consent to Amendments and Waivers. The provisions of this --------------------------------- Agreement may be amended only if the Company has obtained the written consent of each of the Parties, provided that (a) determinations by the Pricing Committee and any resulting adjustments to the Recapitalization Documents and the Recapitalization generally will not be considered amendments, and (b) waivers, supplements and modifications with regard to the representations and warranties in the Underwriting Agreement will not be considered amendments. Section 8.3 Successors and Assigns. Whenever in this Agreement any of ---------------------- the parties hereto is referred to, such reference shall be deemed to include the successors and assigns of such party; and all covenants and agreements of the Company contained herein shall -15- bind their respective successors and assigns. The Company may not assign or transfer any of its rights or obligations hereunder (by operation of law or otherwise) without the prior written consent of each of the Parties. Section 8.4 Survival. All representations, warranties, covenants and -------- agreements herein will survive the Closing. Section 8.5 Attorneys' Fees. In any action or proceeding brought to --------------- enforce any provision of this Agreement, or where any provision hereof is validly asserted as a defense, the successful party shall be entitled to recover reasonable attorneys' fees in addition to any other valuable remedy. Section 8.6 Ratification of Prior Acts of Board of Directors of Company. ----------------------------------------------------------- Each of the Stockholders hereby adopts, ratifies and confirms all of the actions heretofore taken by the Board of Directors in all respects. Section 8.7 LITIGATION; SPECIFIC PERFORMANCE. THIS AGREEMENT SHALL BE -------------------------------- GOVERNED BY, CONSTRUED, APPLIED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. EACH OF THE PARTIES HERETO ACKNOWLEDGES AND AGREES THAT IN THE EVENT OF ANY BREACH OF THIS AGREEMENT, THE NON-BREACHING PARTY WOULD BE IRREPARABLY HARMED AND COULD NOT BE MADE WHOLE BY MONETARY DAMAGES, AND THAT, IN ADDITION TO ANY OTHER REMEDY TO WHICH THEY MAY BE ENTITLED AT LAW OR IN EQUITY, THE PARTIES SHALL BE ENTITLED TO SUCH EQUITABLE OR INJUNCTIVE RELIEF AS MAY BE APPROPRIATE. EACH PARTY AGREES THAT JURISDICTION AND VENUE WILL BE PROPER IN THE SOUTHERN DISTRICT OF NEW YORK AND WAIVES ANY OBJECTIONS BASED UPON FORUM NON CONVENIENS. EACH PARTY WAIVES PERSONAL SERVICE OF PROCESS AND AGREES THAT A SUMMONS AND COMPLAINT COMMENCING AN ACTION OR PROCEEDING SHALL BE PROPERLY SERVED AND SHALL CONFER PERSONAL JURISDICTION IF SERVED BY REGISTERED OR CERTIFIED MAIL TO THE PARTY AT THE ADDRESS SET FORTH IN THIS AGREEMENT, OR AS OTHERWISE PROVIDED BY THE LAWS OF THE STATE OF NEW YORK OR THE UNITED STATES. THE CHOICE OF FORUM SET FORTH IN THIS SECTION 8.7 SHALL NOT BE DEEMED TO PRECLUDE THE ENFORCEMENT OF ANY JUDGMENT OBTAINED IN ANY OTHER FORUM OR THE TAKING OF ANY ACTION UNDER THIS AGREEMENT TO ENFORCE SAME IN ANY OTHER APPROPRIATE JURISDICTION. Section 8.8 WAIVER OF JURY TRIAL; ARBITRATION. THE STOCKHOLDERS AFTER --------------------------------- CONSULTING WITH COUNSEL WAIVE THEIR RIGHTS, IF ANY, TO JURY TRIAL IN RESPECT TO ANY DISPUTE OR CLAIMS BETWEEN OR AMONG THE PARTIES TO THIS AGREEMENT RELATING TO OR IN RESPECT OF THIS AGREEMENT, ITS NEGOTIATION, EXECUTION, PERFORMANCE, SUBJECT -16- MATTER, OR ANY COURSE OF CONDUCT OR DEALING OR ACTIONS UNDER OR IN RESPECT OF THIS AGREEMENT, INCLUDING, WITHOUT LIMITATION ANY CLAIM UNDER THE SECURITIES ACT, THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, ANY OTHER STATE OR FEDERAL LAW RELATING TO SECURITIES OR FRAUD OR BOTH, THE RACKETEER INFLUENCED AND CORRUPT ORGANIZATIONS ACT, AS AMENDED, OR FEDERAL OR STATE COMMON LAW, AND ANY SUCH DISPUTE OR CLAIMS SHALL BE SUBMITTED TO, AND RESOLVED EXCLUSIVELY PURSUANT TO, ARBITRATION IN ACCORDANCE WITH THE COMMERCIAL ARBITRATION RULES OF THE AMERICAN ARBITRATION ASSOCIATION. SUCH ARBITRATION SHALL TAKE PLACE IN NEW YORK, NEW YORK, AND SHALL BE SUBJECT TO THE SUBSTANTIVE LAW OF THE STATE OF NEW YORK. DECISIONS AS TO FINDINGS OF FACT AND CONCLUSIONS OF LAW PURSUANT TO SUCH ARBITRATION SHALL BE FINAL, CONCLUSIVE AND BINDING ON THE PARTIES, SUBJECT TO CONFIRMATION, MODIFICATION OR CHALLENGE PURSUANT TO 9 U.S.C. (S)(S) 1 ET SEQ. ANY FINAL AWARD SHALL BE ENFORCEABLE AS A JUDGMENT OF A COURT OF RECORD. Section 8.9 Counterparts. This Agreement may be executed in two or more ------------ counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument. -17- IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the date first above written. MAPQUEST.COM, INC. By: _______________________________ Title: SCHEDULE 1 ---------- STOCKHOLDER CHART SCHEDULE 2 ---------- LOCK-UP PARTIES C. Richard Allen Robert Binford Michael Crosson Scott Edmonds Barton Faber Highland Capital Partners III Limited Partnership Highland Entrepreneurs' Fund III Limited Partnership James Hilliard David Ingerman James Killick Robert McCormack John Moragne Michael Mulligan William Muenster Michael Nappi National Geographic Holdings, Inc. Dan Nova John Radziszewski The Roman Arch Fund L.P. The Roman Arch Fund II L.P. Carlo von Schroeter Stet & Query, L.P. Victoria Taylor James Thomas Trident Capital Partners Fund - I, L.P. Trident Capital Partners Fund - I, C.V. Weston Presidio Capital II, L.P. EXHIBIT A.1 AMENDMENT NO. 2 TO THE AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF MAPQUEST.COM, INC. I, THE UNDERSIGNED, James Thomas, being the Secretary of MapQuest.com, Inc. (the "Corporation"), hereby certify: ----------- 1. The Amended and Restated Certificate of Incorporation of the Corporation is amended so that the second and third sentences of Article FOURTH are deleted and replaced with the following: "The total number of shares which this Corporation is authorized to issue is one hundred five million (105,000,000) shares. One hundred million (100,000,000) shares shall be designated Common Stock, par value per share equal to $0.001 upon the effectiveness of the two and seven- tenths-for-one stock split (the "Stock Split") to be effected by the Corporation upon the effectiveness of the Registration Statement on Form S- 1 filed with the Securities and Exchange Commission relating to the initial public offering of the Common Stock." 2. This amendment was authorized and duly adopted by the unanimous written consent of the Board of Directors and by the stockholders of the Corporation in accordance with Sections 242 and 245 of the General Corporation Law of the State of Delaware, as amended. IN WITNESS WHEREOF, the undersigned has executed this certificate as of the ____ day of April, 1999, and hereby affirms under penalty of perjury that this certificate is the act and deed of the Corporation and that the facts contained herein are true. By:______________________________ Name: James Thomas Title: Secretary EXHIBIT A2 AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF MAPQUEST.COM, INC. a Delaware corporation MapQuest.com, Inc., a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware (the "Corporation") does hereby certify as follows: WHEREAS: The original Certificate of Incorporation of the Corporation was filed under the name of "Geosystems Global Corporation" with the Secretary of State of the State of Delaware on March 28, 1994. WHEREAS: This Amended and Restated Certificate of Incorporation has been duly adopted in accordance with the provisions of Sections 242 and 245 of the General Corporation Law of the State of Delaware by the Board of Directors of the Corporation. WHEREAS: This Amended and Restated Certificate of Incorporation was approved by written consent of the stockholders pursuant to Section 228 of the General Corporation Law of the State of Delaware ("Delaware Law"). WHEREAS: Written notice of this Amended and Restated Certificate of Incorporation was duly given to stockholders of this Corporation who did not consent in writing to the foregoing resolutions. THEREFORE BE IT RESOLVED: The Certificate of Incorporation of this Corporation is amended and restated in its entirety to read as follows: "FIRST: The name of this corporation is MapQuest.com, Inc. SECOND: The address of the Corporation's registered office in the State of Delaware is 1209 Orange Street, Wilmington, New Castle County, Delaware 19801. The name of its registered agent at such address is The Corporation Trust Company. THIRD: The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware. FOURTH: The Corporation is authorized to issue two classes of stock to be designated, respectively, "common stock" and "preferred stock." The total number of shares which this Corporation is authorized to issue is one hundred and five million (105,000,000) shares. One hundred million (100,000,000) shares shall be designated common stock (the "Common Stock"), and five million (5,000,000) shares shall be undesignated preferred stock (the "Preferred Stock"). Each share of Preferred Stock shall have a par value of $0.01, and each share of Common Stock shall have a par value of $0.001. Any Preferred Stock not previously designated as to series may be issued from time to time in one or more series pursuant to a resolution or resolutions providing for such issue duly adopted by the Board of Directors (authority to do so being hereby expressly vested in the Board), and such resolution or resolutions shall also set forth the voting powers, full or limited or none, of each such series of Preferred Stock and shall fix the designations, preferences and relative, participating, optional or other special rights and qualifications, limitations or restrictions of each such series of Preferred Stock. The Board of Directors is authorized to alter the designation, rights, preferences, privileges and restrictions granted to or imposed upon any wholly unissued series of Preferred Stock and, within the limits and restrictions stated in any resolution or resolutions of the Board of Directors originally fixing the number of shares constituting any series of Preferred Stock, to increase or decrease (but not below the number of shares of any such series then outstanding) the number of shares of any such series subsequent to the issue of shares of that series. Each share of Preferred Stock issued by the Corporation, if reacquired by the Corporation (whether by redemption, repurchase, conversion to Common Stock or other means), shall upon such reacquisition resume the status of authorized and unissued shares of Preferred Stock, undesignated as to series and available for designation and issuance by the Corporation in accordance with the immediately preceding paragraph. FIFTH: 1. Dividends. The holders of Common Stock shall be entitled to receive, on --------- a share-for-share basis, such dividends if and when declared from time to time by the Board of Directors of the Corporation. 2. Voting. Except as otherwise required by law, each holder of Common Stock ------ shall be entitled to one (1) vote for each share of Common Stock held by such holder. SIXTH: Any action required or permitted to be taken at any annual or special meeting of stockholders may be taken only upon the vote of stockholders at an annual or special meeting duly noticed and called in accordance with Delaware Law and may not be taken by written consent of stockholders without a meeting. SEVENTH: The management of the business and the conduct of the affairs of the Corporation shall be vested in its Board of Directors. The number of directors which shall constitute the whole Board of Directors shall be fixed exclusively by one or more resolutions adopted from time to time by the Board of Directors. EIGHTH: - ------ A. CLASSIFIED DIRECTORS The directors (subject to the last paragraph of this Article Eighth) shall be divided into three classes, designated Class I, Class II and Class III. Each class shall consist, as nearly as may be possible, of one-third of the total number of directors constituting the entire Board of Directors. Each director shall serve for a term ending on the date of the third annual meeting of stockholders next following the annual meeting at which such director was elected, provided that directors initially designated as Class I directors shall -------- serve for a term ending on the date of the 2002 annual meeting, directors initially designated as Class II directors shall serve for a term ending on the 2001 annual meeting, and directors initially designated as Class III directors shall serve for a term ending on the date of the 2000 annual meeting. Notwithstanding the foregoing, each director shall hold office until such director's successor shall have been duly elected and qualified or until such director's earlier death resignation or removal. In the event of any change in the number of directors, the Board of Directors shall apportion any newly created directorships among, or reduce the number of directorships in, such class or classes as shall equalize, as nearly as possible, the number of directors in each class. In no event will a decrease in the number of directors shorten the term of any incumbent director. The names and mailing addresses of the persons who are to serve initially as directors of each Class are: Class I Michael Mulligan Rick Allen Class II Robert McCormack Daniel Nova Class III Carlo von Schroeter John Moragne B. DIRECTORS 3. No Written Ballot. Election of directors need not be by written ballot ----------------- unless the bylaws of the Corporation so provide. 4. Vacancies. Vacancies on the Board of Directors resulting from death, --------- resignation, removal or otherwise and newly created directorships resulting from any increase in the number of directors may be filled solely by a majority of the directors then in office (although less than a quorum) or by the sole remaining director, and each director so elected shall hold office for a term that shall coincide with the term of the class to which such director shall have been elected. 5. Removal. No director may be removed from office by the stockholders ------- except for cause with the affirmative vote of the holders of not less than a majority of the outstanding shares of stock generally entitled to vote. 6. Preferred Stock Directors. Notwithstanding the foregoing, whenever the ------------------------- holders of one or more classes or series of Preferred Stock shall have the right, voting separately as a class or series, to elect directors, the election, term of office, filing of vacancies, removal and other features of such directorships shall be governed by the terms of the resolution or resolutions adopted by the Board of Directors pursuant to ARTICLE FOURTH applicable thereto, and each director so elected shall not be subject to the provisions of this ARTICLE SIXTH unless otherwise provided therein. NINTH: Subject to Article Thirteenth, The Board of Directors shall have the ----- power to adopt, amend or repeal the By-laws of the Corporation. TENTH: Any action required or permitted to be taken at any annual or ----- special meeting of stockholders may be taken only upon the vote of stockholders at an annual or special meeting duly noticed and called in accordance with the Delaware Law, as amended from time to time, and may not be taken by written consent of stockholders without a meeting, except with regard to election, removed and filling of vacancies of directors by holders of Preferred Stock, voting separately, as and if so provided by the terms of the resolution or resolutions adopted by the Board of Directors pursuant to Article Fourth applicable thereto. At all meetings of stockholders, each stockholder shall be entitled to vote, in person or by proxy, the shares owned by such stockholders of record on the record date for the meeting. When a quorum is present or represented at any meeting, the vote of the holders of a majority of those of the outstanding shares of stock generally entitled to vote and represented, in person or proxy, at the meeting on any matter, question, or proposal properly brought before such meeting shall decide such question, unless the question is one upon which, by express provision of law, this Amended and Restated Certificate of Incorporation or the By-Laws, a different vote is required, in which case such express provision shall govern and control the decision of such question. NINTH: Meetings of the stockholders shall only be called by the Secretary ----- of the Corporation upon written request signed by either (a) stockholders holding at least 20% of those of the outstanding shares of stock generally entitled to vote or (b) by a majority of the Board of Directors, or (c) the Chairman of the Board of Directors, or (d) the President of the Corporation, and may not be called by any other person. Notwithstanding the foregoing, whenever holders of one or more classes or series of Preferred Stock shall have the right, voting separately as a class or series, to elect directors, such holders may call, pursuant to the terms of the resolution or resolutions adopted by the Board of Directors pursuant to ARTICLE FOURTH hereto, special meetings of the holders of such Preferred Stock. Any call for a special meetings of holders of such Preferred Stock. Any call for a special meeting of the stockholders must specify the matters to be acted upon at such meeting; only those matters set forth in such notice may be considered or acted upon at the meeting, unless otherwise provided by law. NINTH: In furtherance and not in limitation of the powers conferred by statute, the Board of Directors is expressly authorized to make, alter, amend or repeal the Bylaws of the Corporation. TENTH: The directors of the Corporation need not be elected by written ballot unless a stockholder or stockholders holding a majority of the voting power of the outstanding capital stock entitled to vote demands election by written ballot at the meeting and before voting. ELEVENTH: Advance notice of stockholder nomination for the election of directors and of business to be brought by stockholders before any meeting of the stockholders of the Corporation shall be given in the manner provided in the Bylaws of the Corporation. TWELFTH: Special meetings of the stockholders of the Corporation may be called, for any purpose or purposes, by (i) the Chairman of the Board of Directors, (ii) the Chief Executive Officer or (iii) the Board of Directors. THIRTEENTH: 1. To the fullest extent permitted by the Delaware Law as the same exists or as may hereafter be amended, a director of the Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages for a breach of fiduciary duty as a director. 2. The Corporation may indemnify to the fullest extent permitted by law any person made or threatened to be made a party to an action or proceeding, whether criminal, civil, administrative or investigative, by reason of the fact that he, his testator or intestate is or was a director, officer or employee of the Corporation or any predecessor of the Corporation or serves or served at any other enterprise as a director, officer or employee at the request of the Corporation or any predecessor to the Corporation. The Board of Directors of the Corporation may, in its discretion, extend such indemnification to former, current or future directors, employees and other agents of the Corporation or any predecessor to the Corporation. 3. Neither any amendment nor repeal of this Article THIRTEENTH, nor the adoption of any provision of the Corporation's Certificate of Incorporation inconsistent with this Article THIRTEENTH, shall eliminate or reduce the effect of this Article THIRTEENTH, in respect of any matter occurring, or any action or proceeding accruing or arising or that, but for this Article TWELFTH, would accrue or arise, prior to such amendment, repeal or adoption of an inconsistent provision. FOURTEENTH: Meetings of stockholders may be held within or without the State of Delaware, as the Bylaws may provide. The books of the Corporation may be kept (subject to any provision contained under Delaware Law) outside of the State of Delaware at such place or places as may be designated from time to time by the Board of Directors or in the Bylaws of the Corporation. FIFTEENTH: The Corporation reserves the right to amend, alter, change or repeal any provision contained in this Amended and Restated Certificate of Incorporation in the manner now or hereafter prescribed herein and under Delaware Law, except as otherwise provided in article THIRTEENTH, and all rights conferred upon stockholders herein are granted subject to this reservation. IN WITNESS WHEREOF, MapQuest.com, Inc. has caused this Amended and Restated Certificate of Incorporation to be signed in its name and on its behalf by James Thomas, Chief Financial Officer and Chief Operating Officer of the Corporation, on the ___ day of _____, 1999. By: --------------------------- James Thomas Chief Financial Officer and Chief Operating Officer Attest: ________________________ EXHIBIT B AMENDED AND RESTATED BYLAWS OF MAPQUEST.COM, INC. (A DELAWARE CORPORATION) BY LAWS OF MAPQUEST.COM, INC. (A DELAWARE CORPORATION) TABLE OF CONTENTS Page ---- ARTICLE I CORPORATE OFFICES 1.1 REGISTERED OFFICE ..................................................... 1 1.2 OTHER OFFICES ......................................................... 1 ARTICLE II MEETINGS OF STOCKHOLDERS 2.1 PLACE OF MEETINGS ..................................................... 1 2.2 ANNUAL MEETING ........................................................ 1 2.3 SPECIAL MEETING ....................................................... 2 2.4 NOTICE OF STOCKHOLDERS' MEETINGS ...................................... 2 2.5 ADVANCE NOTICE OF STOCKHOLDER NOMINEES AND STOCKHOLDER BUSINESS .............................................................. 2 2.6 MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE ......................... 2 2.7 QUORUM ................................................................ 3 2.8 ADJOURNED MEETING; NOTICE ............................................. 3 2.9 VOTING ................................................................ 3 2.10 STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING .............. 4 2.11 RECORD DATE FOR STOCKHOLDER NOTICE; VOTING ............................ 4 2.12 PROXIES ............................................................... 5 2.13 ORGANIZATION .......................................................... 5 2.14 LIST OF STOCKHOLDERS ENTITLED TO VOTE ................................. 5 ARTICLE III DIRECTORS 3.1 POWERS ................................................................. 6 3.2 NUMBER OF DIRECTORS .................................................... 6 3.3 ELECTION AND TERM OF OFFICE OF DIRECTORS ............................... 6 3.4 RESIGNATION AND VACANCIES .............................................. 6 3.5 REMOVAL OF DIRECTORS ................................................... 7 3.6 PLACE OF MEETINGS; MEETINGS BY TELEPHONE ............................... 8 3.7 FIRST MEETINGS ......................................................... 8 3.8 REGULAR MEETINGS ....................................................... 8 3.9 SPECIAL MEETINGS; NOTICE ............................................... 9 3.10 QUORUM ................................................................ 9 3.11 WAIVER OF NOTICE ...................................................... 9 3.12 ADJOURNMENT ........................................................... 10 3.13 NOTICE OF ADJOURNMENT ................................................. 10 3.14 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING ..................... 10 3.15 FEES AND COMPENSATION OF DIRECTORS .................................... 10 3.16 APPROVAL OF LOANS TO OFFICERS ......................................... 10 3.17 SOLE DIRECTOR PROVIDED BY CERTIFICATE OF INCORPORATION ................ 11 3.18 NOMINATION OF DIRECTORS; STOCKHOLDER BUSINESS AT ANNUAL MEETINGS .............................................................. 11 ARTICLE IV COMMITTEES 4.1 COMMITTEES OF DIRECTORS ................................................ 13 4.2 MEETINGS AND ACTION OF COMMITTEES ...................................... 13 4.3 COMMITTEE MINUTES ...................................................... 14 ARTICLE V OFFICERS 5.1 OFFICERS ............................................................. 14 5.2 ELECTION OF OFFICERS ................................................. 14 5.3 SUBORDINATE OFFICERS ................................................. 15 5.4 REMOVAL AND RESIGNATION OF OFFICERS .................................. 15 5.5 VACANCIES IN OFFICES ................................................. 15 5.6 CHAIRMAN OF THE BOARD ................................................ 15 5.7 PRESIDENT ............................................................ 16 5.8 VICE PRESIDENTS ...................................................... 16 5.9 SECRETARY ............................................................ 16 5.10 CHIEF FINANCIAL OFFICER .............................................. 17 5.11 ASSISTANT SECRETARY .................................................. 17 5.12 ADMINISTRATIVE OFFICERS .............................................. 17 5.13 AUTHORITY AND DUTIES OF OFFICERS ..................................... 18 -ii- ARTICLE VI INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEESAND OTHER AGENTS 6.1 INDEMNIFICATION OF DIRECTORS AND OFFICERS .............................. 18 6.2 INDEMNIFICATION OF OTHERS .............................................. 19 6.3 INSURANCE .............................................................. 19 ARTICLE VII RECORDS AND REPORTS 7.1 MAINTENANCE AND INSPECTION OF RECORDS ................................. 19 7.2 INSPECTION BY DIRECTORS ............................................... 20 7.3 REPRESENTATION OF SHARES OF OTHER CORPORATIONS ........................ 20 7.4 CERTIFICATION AND INSPECTION OF BYLAWS ................................ 20 ARTICLE VIII GENERAL MATTERS 8.1 RECORD DATE FOR PURPOSES OTHER THAN NOTICE AND VOTING .................. 20 8.2 CHECKS; DRAFTS; EVIDENCES OF INDEBTEDNESS .............................. 21 8.3 CORPORATE CONTRACTS AND INSTRUMENTS: HOW EXECUTED ...................... 21 8.4 STOCK CERTIFICATES; TRANSFER; PARTLY PAID SHARES ....................... 21 8.5 SPECIAL DESIGNATION ON CERTIFICATES .................................... 22 8.6 LOST CERTIFICATES ...................................................... 22 8.7 TRANSFER AGENTS AND REGISTRARS ......................................... 23 8.8 CONSTRUCTION; DEFINITIONS .............................................. 23 ARTICLE IX AMENDMENTS -iii- BYLAWS OF MAPQUEST.COM, INC. (A DELAWARE CORPORATION) ARTICLE I CORPORATE OFFICES 1.1 REGISTERED OFFICE The registered office of the corporation shall be fixed in the certificate of incorporation of the corporation. 1.2 OTHER OFFICES The board of directors may at any time establish branch or subordinate offices at any place or places where the corporation is qualified to do business. ARTICLE II MEETINGS OF STOCKHOLDERS 2.1 PLACE OF MEETINGS Meetings of stockholders shall be held at any place within or outside the State of Delaware designated by the board of directors. In the absence of any such designation, stockholders' meetings shall be held at the principal executive office of the corporation. 2.2 ANNUAL MEETING The annual meeting of stockholders shall be held each year on a date and at a time designated by the board of directors. In the absence of such designation, the annual meeting of stockholders shall be held on the third Friday in June in each year at 3:00 p.m. However, if such day falls on a legal holiday, then the meeting shall be held at the same time and place on the next succeeding full business day. At the meeting, directors shall be elected, and any other proper business may be transacted. -1- 2.3 SPECIAL MEETING A special meeting of the stockholders may be called at any time by the board of directors, or by the chairman of the board, or by the president. 2.4 NOTICE OF STOCKHOLDERS' MEETINGS All notices of meetings of stockholders shall be sent or otherwise given in accordance with Section 2.5 of these bylaws not less than ten (10) nor more than sixty (60) days before the date of the meeting. The notice shall specify the place, date and hour of the meeting and (i) in the case of a special meeting, the purpose or purposes for which the meeting is called (no business other than that specified in the notice may be transacted) or (ii) in the case of the annual meeting, those matters which the board of directors, at the time of giving the notice, intends to present for action by the stockholders (but any proper matter may be presented at the meeting for such action). The notice of any meeting at which directors are to be elected shall include the name of any nominee or nominees who, at the time of the notice, the board intends to present for election. 2.5 ADVANCE NOTICE OF STOCKHOLDER NOMINEES AND STOCKHOLDER BUSINESS To be properly brought before an annual meeting or special meeting, nominations for the election of directors or other business must be (a) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the board of directors, (b) otherwise properly brought before the meeting by or at the direction of the board of directors or (c) otherwise properly brought before the meeting by a stockholder. For such nominations or other business to be considered properly brought before the meeting by a stockholder, such stockholder must have given timely notice and in proper form of his or her intent to bring such business before such meeting in accordance with Section 3.18 of these bylaws. 2.6 MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE Written notice of any meeting of stockholders shall be given either personally or by first-class mail or by telegraphic or other written communication. Notices not personally delivered shall be sent charges prepaid and shall be addressed to the stockholder at the address of that stockholder appearing on the books of the corporation or given by the stockholder to the corporation for the purpose of notice. Notice shall be deemed to have been given at the time when delivered personally or deposited in the mail or sent by telegram or other means of written communication. An affidavit of the mailing or other means of giving any notice of any stockholders' meeting, executed by the secretary, assistant secretary or any transfer agent of the corporation giving the notice, shall be prima facie evidence of the giving of such notice. -2- 2.7 QUORUM The holders of a majority in voting power of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business except as otherwise provided by statute or by the certificate of incorporation. If, however, such quorum is not present or represented at any meeting of the stockholders, then either (i) the chairman of the meeting or (ii) the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting in accordance with Section 2.8 of these bylaws. When a quorum is present at any meeting, the vote of the holders of a majority of the stock having voting power present in person or represented by proxy shall decide any question brought before such meeting, unless the question is one upon which, by express provision of the laws of the State of Delaware or of the certificate of incorporation or these bylaws, a different vote is required, in which case such express provision shall govern and control the decision of the question. If a quorum be initially present, the stockholders may continue to transact business until adjournment, notwithstanding the withdrawal of enough stockholders to leave less than a quorum, if any action taken is approved by a majority of the stockholders initially constituting the quorum. 2.8 ADJOURNED MEETING; NOTICE When a meeting is adjourned to another time and place, unless these bylaws otherwise require, notice need not be given of the adjourned meeting if the time and place thereof are announced at the meeting at which the adjournment is taken. At the adjourned meeting the corporation may transact any business that might have been transacted at the original meeting. If the adjournment is for more than thirty (30) days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. 2.9 VOTING The stockholders entitled to vote at any meeting of stockholders shall be determined in accordance with the provisions of Section 2.11 of these bylaws, subject to the provisions of Sections 217 and 218 of the General Corporation Law of Delaware (relating to voting rights of fiduciaries, pledgors and joint owners, and to voting trusts and other voting agreements). Except as may be otherwise provided in the certificate of incorporation or these bylaws, each stockholder shall be entitled to one vote for each share of capital stock held by such stockholder. -3- 2.10 STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING Any action required or permitted to be taken at any annual or special meeting of stockholders may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing setting forth the action so taken shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Such consents shall be delivered to the corporation by delivery to its registered office in the state of Delaware, its principal place of business, or an officer or agent of the corporation having custody of the book in which proceedings of meetings of stockholders are recorded. Delivery made to a corporation's registered office shall be by hand or by certified or registered mail, return receipt requested. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing. Effective upon the closing of a firm commitment underwritten initial public offering of any of the corporation's securities pursuant to a registration statement on Form S-1 filed under the Securities Act of 1933, as amended, the stockholders of the corporation may not take action by written consent without a meeting but must take any such actions at a duly called annual or special meeting. 2.11 RECORD DATE FOR STOCKHOLDER NOTICE; VOTING For purposes of determining the stockholders entitled to notice of any meeting or to vote thereat, the board of directors may fix, in advance, a record date, which shall not precede the date upon which the resolution fixing the record date is adopted by the board of directors and which shall not be more than sixty (60) days nor less than ten (10) days before the date of any such meeting, and in such event only stockholders of record on the date so fixed are entitled to notice and to vote, notwithstanding any transfer of any shares on the books of the corporation after the record date. If the board of directors does not so fix a record date, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the business day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the business day next preceding the day on which the meeting is held. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting unless the board of directors fixes a new record date for the adjourned meeting, but the board of directors shall fix a new record date if the meeting is adjourned for more than thirty (30) days from the date set for the original meeting. -4- The record date for any other purpose shall be as provided in Section 8.1 of these bylaws. 2.12 PROXIES Every person entitled to vote for directors, or on any other matter, shall have the right to do so either in person or by one or more agents authorized by a written proxy signed by the person and filed with the secretary of the corporation, but no such proxy shall be voted or acted upon after three (3) years from its date, unless the proxy provides for a longer period. A proxy shall be deemed signed if the stockholder's name is placed on the proxy (whether by manual signature, typewriting, telegraphic transmission, telefacsimile or otherwise) by the stockholder or the stockholder's attorney-in-fact. The revocability of a proxy that states on its face that it is irrevocable shall be governed by the provisions of Section 212(e) of the General Corporation Law of Delaware (relating to the irrevocability of proxies). 2.13 ORGANIZATION The president, or in the absence of the president, the chairman of the board, shall call the meeting of the stockholders to order, and shall act as chairman of the meeting. In the absence of the president, the chairman of the board, and all of the vice presidents, the stockholders shall appoint a chairman for such meeting. The chairman of any meeting of stockholders shall determine the order of business and the procedures at the meeting, including such matters as the regulation of the manner of voting and the conduct of business. The secretary of the corporation shall act as secretary of all meetings of the stockholders, but in the absence of the secretary at any meeting of the stockholders, the chairman of the meeting may appoint any person to act as secretary of the meeting. 2.14 LIST OF STOCKHOLDERS ENTITLED TO VOTE The officer who has charge of the stock ledger of the corporation shall prepare and make, at least ten (10) days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten (10) days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. -5- ARTICLE III DIRECTORS 3.1 POWERS Subject to the provisions of the General Corporation Law of Delaware and to any limitations in the certificate of incorporation or these bylaws relating to action required to be approved by the stockholders or by the outstanding shares, the business and affairs of the corporation shall be managed and all corporate powers shall be exercised by or under the direction of the board of directors. 3.2 NUMBER OF DIRECTORS The number of directors of the corporation shall be not less than three (3) nor more than nine (9). The exact number of directors shall be six (6) until changed, within the limits specified above, by a bylaw amending this Section 3.2, duly adopted by the board of directors or by the stockholders. The indefinite number of directors may be changed, or a definite number may be fixed without provision for an indefinite number, by a duly adopted amendment to the Certificate of Incorporation or by an amendment to this bylaw duly adopted by the board of directors or by the stockholders. 3.3 ELECTION AND TERM OF OFFICE OF DIRECTORS Except as provided in Section 3.4 of these bylaws, directors shall hold office until the expiration of the term for which elected and until a successor has been elected and qualified; except that if any such election shall not be so held, such election shall take place at a stockholders' meeting called and held in accordance with the Delaware General Corporation Law. The Directors shall be classified and their successors elected in accordance with Article EIGHTH of the Certificate of Incorporation. Subject to the requirement of the Certificate of Incorporation that the classes be as nearly equal in number as possible, the size of each class of Directors shall be as determined from time to time by resolution adopted by a majority of the Board of Directors. Any reduction in the size of any class of Directors shall not shorten the term of office of any incumbent Director. Directors need not be stockholders of the corporation. 3.4 RESIGNATION AND VACANCIES Any director may resign effective on giving written notice to the chairman of the board, the president, the secretary or the board of directors, unless the notice specifies a later time for that resignation to become effective. If the resignation of a director is effective at a future time, the board of directors may elect a successor to take office when the resignation becomes effective. Each director so elected shall hold office until the expiration of the term of office of the director whom he has replaced and until a successor has been elected and qualified. -6- Effective upon the closing of a firm commitment underwritten public offering of any of the corporation's securities pursuant to a registration statement on Form S-1 under the Securities Act of 1933, as amended, vacancies occurring on the Board of Directors for any reason and newly created directorships resulting from an increase in the authorized number of directors may be filled only by vote of a majority of the remaining members of the Board of Directors, although less than a quorum, at any meeting of the Board of Directors. A person so elected by the Board of Directors to fill a vacancy or newly created directorship shall hold office until the next election of the Class for which such director shall have been chosen and until his or her successor shall have been duly elected and qualified. Unless otherwise provided in the certificate of incorporation or these bylaws (including, without limitation, the certificate of incorporation and bylaws as amended effective upon the closing of a firm commitment underwritten public offering of any of the corporation's securities pursuant to a registration statement on Form S-1 under the Securities Act of 1933, as amended): (i) Vacancies and newly created directorships resulting from any increase in the authorized number of directors elected by all of the stockholders having the right to vote as a single class may be filled by a majority of the directors then in office, although less than a quorum, or by a sole remaining director. (ii) Whenever the holders of any class or classes of stock or series thereof are entitled to elect one or more directors by the provisions of the certificate of incorporation, vacancies and newly created directorships of such class or classes or series may be filled by a majority of the directors elected by such class or classes or series thereof then in office, or by a sole remaining director so elected. If at any time, by reason of death or resignation or other cause, the corporation should have no directors in office, then any officer or any stockholder or an executor, administrator, trustee or guardian of a stockholder, or other fiduciary entrusted with like responsibility for the person or estate of a stockholder, or other fiduciary entrusted with like responsibility for the person or estate of a stockholder, may call a special meeting of stockholders in accordance with the provisions of the certificate of incorporation or these bylaws, or may apply to the Court of Chancery for a decree summarily ordering an election as provided in Section 211 of the General Corporation Law of Delaware (relating to meetings of shareholders). If, at the time of filling any vacancy or any newly created directorship, the directors then in office constitute less than a majority of the whole board (as constituted immediately prior to any such increase), then the Court of Chancery may, upon application of any stockholder or stockholders holding at least ten (10) percent of the total number of the shares at the time outstanding having the right to vote for such directors, summarily order an election to be held to fill any such vacancies or newly created directorships, or to replace the directors chosen by the directors then in office as aforesaid, which election shall be governed by the provisions of -7- Section 211 of the General Corporation Law of Delaware (relating to meeting of shareholders) as far as applicable. 3.5 REMOVAL OF DIRECTORS Unless otherwise restricted by statute, by the certificate of incorporation or by these bylaws, any director or the entire board of directors may be removed, with or without cause, by the holders of a majority of the shares then entitled to vote at an election of directors; provided, however, that, if stockholders of the corporation are entitled to cumulative voting, if less than the entire board is to be removed, no director may be removed without cause if the votes cast against his removal would be sufficient to elect him if then cumulatively voted at election of the entire board of directors. Whenever the holders of any class or series are entitled to elect one or more directors by the certificate of incorporation, this Section 3.5 shall apply, in respect to the removal without cause of a director or directors so elected, to the vote of the holders of the outstanding shares of that class or series and not to the vote of the outstanding shares as a whole. Effective upon the closing of a firm commitment underwritten public offering of any of the corporation's securities pursuant to a registration statement on Form S-1 under the Securities Act of 1933, as amended, any director may be removed from office by the stockholders of the corporation only for cause. 3.6 PLACE OF MEETINGS; MEETINGS BY TELEPHONE Regular meetings of the board of directors may be held at any place within or outside the State of Delaware that has been designated from time to time by resolution of the board. In the absence of such a designation, regular meetings shall be held at the principal executive office of the corporation. Special meetings of the board may be held at any place within or outside the State of Delaware that has been designated in the notice of the meeting or, if not stated in the notice or if there is no notice, at the principal executive office of the corporation. Any meeting of the board, regular or special, may be held by conference telephone or similar communication equipment, so long as all directors participating in the meeting can hear one another; and all such participating directors shall be deemed to be present in person at the meeting. 3.7 FIRST MEETINGS The first meeting of each newly elected board of directors shall be held at such time and place as shall be fixed by the vote of the stockholders at the annual meeting. In the event of the failure of the stockholders to fix the time or place of such first meeting of the newly elected board of directors, or in the event such meeting is not held at the time and place so fixed by the stockholders, the meeting may be held at such time and place as shall be specified in a notice -8- given as hereinafter provided for special meetings of the board of directors, or as shall be specified in a written waiver signed by all of the directors. 3.8 REGULAR MEETINGS Regular meetings of the board of directors may be held without notice at such time as shall from time to time be determined by the board of directors. If any regular meeting day shall fall on a legal holiday, then the meeting shall be held at the same time and place on the next succeeding full business day. 3.9 SPECIAL MEETINGS; NOTICE Special meetings of the board of directors for any purpose or purposes may be called at any time by the chairman of the board, the president, any vice president, the secretary or any two directors. Notice of the time and place of special meetings shall be delivered personally or by telephone to each director or sent by first-class mail, telecopy or telegram, charges prepaid, addressed to each director at that director's address as it is shown on the records of the corporation. If the notice is mailed, it shall be deposited in the United States mail at least four (4) days before the time of the holding of the meeting. If the notice is delivered personally or by telephone, telecopy or telegram, it shall be delivered personally or by telephone or to the telegraph company at least forty- eight (48) hours before the time of the holding of the meeting. Any oral notice given personally or by telephone may be communicated either to the director or to a person at the office of the director who the person giving the notice has reason to believe will promptly communicate it to the director. The notice need not specify the purpose or the place of the meeting, if the meeting is to be held at the principal executive office of the corporation. 3.10 QUORUM A majority of the authorized number of directors shall constitute a quorum for the transaction of business, except to adjourn as provided in Section 3.12 of these bylaws. Every act or decision done or made by a majority of the directors present at a duly held meeting at which a quorum is present shall be regarded as the act of the board of directors, subject to the provisions of the certificate of incorporation and applicable law. A meeting at which a quorum is initially present may continue to transact business notwithstanding the withdrawal of directors, if any action taken is approved by at least a majority of the quorum for that meeting. 3.11 WAIVER OF NOTICE -9- Notice of a meeting need not be given to any director (i) who signs a waiver of notice, whether before or after the meeting, or (ii) who attends the meeting other than for the express purpose of objecting at the beginning of the meeting to the transaction of any business because the meeting is not lawfully called or convened. All such waivers shall be filed with the corporate records or made part of the minutes of the meeting. A waiver of notice need not specify the purpose of any regular or special meeting of the board of directors. 3.12 ADJOURNMENT A majority of the directors present, whether or not constituting a quorum, may adjourn any meeting of the board to another time and place. 3.13 NOTICE OF ADJOURNMENT Notice of the time and place of holding an adjourned meeting of the board need not be given unless the meeting is adjourned for more than twenty-four (24) hours. If the meeting is adjourned for more than twenty-four (24) hours, then notice of the time and place of the adjourned meeting shall be given before the adjourned meeting takes place, in the manner specified in Section 3.9 of these bylaws, to the directors who were not present at the time of the adjournment. 3.14 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING Any action required or permitted to be taken by the board of directors may be taken without a meeting, provided that all members of the board individually or collectively consent in writing to that action. Such action by written consent shall have the same force and effect as a unanimous vote of the board of directors. Such written consent and any counterparts thereof shall be filed with the minutes of the proceedings of the board of directors. 3.15 FEES AND COMPENSATION OF DIRECTORS Directors and members of committees may receive such compensation, if any, for their services and such reimbursement of expenses as may be fixed or determined by resolution of the board of directors. This Section 3.15 shall not be construed to preclude any director from serving the corporation in any other capacity as an officer, agent, employee or otherwise and receiving compensation for those services. 3.16 APPROVAL OF LOANS TO OFFICERS The corporation may lend money to, or guarantee any obligation of, or otherwise assist any officer or other employee of the corporation or any of its subsidiaries, including any officer or employee who is a director of the corporation or any of its subsidiaries, whenever, in the judgment of the directors, such loan, guaranty or assistance may reasonably be expected to -10- benefit the corporation. The loan, guaranty or other assistance may be with or without interest and may be unsecured, or secured in such manner as the board of directors shall approve, including, without limitation, a pledge of shares of stock of the corporation. Nothing contained in this section shall be deemed to deny, limit or restrict the powers of guaranty or warranty of the corporation at common law or under any statute. 3.17 SOLE DIRECTOR PROVIDED BY CERTIFICATE OF INCORPORATION In the event only one director is required by these bylaws or the certificate of incorporation, then any reference herein to notices, waivers, consents, meetings or other actions by a majority or quorum of the directors shall be deemed to refer to such notice, waiver, etc., by such sole director, who shall have all the rights and duties and shall be entitled to exercise all of the powers and shall assume all the responsibilities otherwise herein described as given to the board of directors. 3.18 NOMINATION OF DIRECTORS; STOCKHOLDER BUSINESS AT ANNUAL MEETINGS Subject to the rights of holders of any class or series of stock having a preference over the Common Stock as to dividends or upon liquidation, nominations for the election of directors may be made by the board of directors or any nominating committee appointed by the board of directors or by any stockholder entitled to be in the election of directors generally. However, a stockholder generally entitled to vote in the election of directors may nominate one or more persons for election as directors at a meeting only if written notice of such stockholder's intent to make such nomination or nominations has been given, either by personal delivery or by U.S. mail, postage prepaid, to the secretary of the corporation not later than (i) with respect to an election to be held at an annual meeting of stockholders, 60 days in advance of such meeting and (ii) with respect to an election to be held at a special meeting of stockholders for the election of directors, the close of business on the seventh day following the date on which notice of such meeting is first given to stockholders. Each such notice shall set forth the following information: (a) the name and address of the stockholder who intends to make the nomination and of the person or persons to be nominated; (b) a representation that the stockholder is a holder of record of stock of the corporation entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice; (c) a description of all arrangements or understandings between the stockholder, each nominee or any other person or persons (naming such person or persons) pursuant to which the nomination or nominations are to be made by the stockholder; (d) such other information regarding each nominee proposed by such stockholder as would be required to be included in a proxy statement filed pursuant to the proxy rules of the Securities and Exchange Commission, had the nominee been nominated, or intended to be nominated, by the board of directors of the corporation; and (e) the consent of each nominee to serve as a director of the corporation if so elected. At the request of the board of directors, any person properly nominated by the board of directors for election as a director shall furnish to the secretary of the corporation that information required to be set forth in a -11- stockholder's notice of nomination which pertains to the nominee. No person shall be eligible for election as a director of the corporation unless nominated in accordance with the procedures set forth herein. A majority of the board of directors may reject any nomination by a stockholder not timely made or otherwise not in accordance with the terms of this Section 3.18. If a majority of the board of directors reasonably determines that the information provided in a stockholder's notice does not satisfy the informational requirements of this Section 3.18 in any material respect, the secretary of the corporation shall promptly notify such stockholder of the deficiency in writing. The stockholder shall have an opportunity within such period of time, not to exceed ten days from the date such deficiency notice is given to the stockholder, as a majority of the board of directors shall reasonably determine. If the deficiency is not cured within such period, or if a majority of the board of directors reasonably determines that the additional information provided by the stockholder, together with the information previously provided, does not satisfy the requirements of this Section 3.18 in any material respect, then a majority of the board of directors may reject such stockholder's nomination. The secretary of the corporation shall notify a stockholder in writing whether the stockholder's nomination has been made in accordance with the time and information requirements of this Section 3.18. At an annual meeting of the stockholders, only such business shall be conducted as shall have been brought before the meeting (i) by or at the direction of the chairman of the meeting or (ii) by any stockholder of the corporation who complies with the notice procedures set forth in this Section 3.18. For business to be properly brought before an annual meeting by a stockholder, the stockholder must have given timely notice thereof in writing to the secretary of the corporation. To be timely, a stockholder's notice must be delivered to or mailed and received at the principal executive offices of the corporation not less than 60 days prior to the meeting; provided, however, that in the event that less than 70 days notice or prior public disclosure of the date of the meeting is given or made to stockholders, notice by the stockholder to be timely must be received not later than the close of business on the tenth day following the earlier of the day on which such notice of the date of the annual meeting was mailed or such public disclosure was made. A stockholder's notice to the secretary shall set forth as to each matter the stockholder proposes to bring before the annual meeting the following information: (a) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, (b) the name and address, as they appear on the corporation's books, of the stockholder proposing such business, (c) the class and number of shares of the corporation which are beneficially owned by the stockholder and (d) any material direct or indirect interest, financial or otherwise of the stockholder or its affiliates or associates in such business. The board of directors may reject any stockholder proposal not timely made in accordance with this Section 3.18. If the board of directors determines that the information provided in a stockholder's notice does not satisfy the informational requirements hereof, the secretary of the corporation shall promptly notify such stockholder of the deficiency in the notice. The stockholder shall then have an opportunity to cure the deficiency by providing additional information to the secretary within such period of time, not to exceed ten days from the date such deficiency notice is given to the stockholder, as the board of directors shall determine. If the deficiency is not cured within such period, or if the board of directors determines that the -12- additional information provided by the stockholder, together with the information previously provided, does not satisfy the requirements of this Section 3.18, then the board of directors may reject such stockholder's proposal. The secretary of the corporation shall notify a stockholder in writing whether the stockholder's proposal has been made in accordance with the time and information requirements hereof. This provision shall not prevent the consideration and approval or disapproval at an annual meeting of reports of officers, directors and committees of the board of directors, but in connection therewith no new business shall be acted upon at any such meeting unless stated, filed and received as herein provided. Notwithstanding anything in these bylaws to the contrary, no business brought before a meeting by a stockholder shall be conducted at an annual meeting except in accordance with procedures set forth in this Section 3.18. ARTICLE IV COMMITTEES 4.1 COMMITTEES OF DIRECTORS The board of directors may, by resolution adopted by a majority of the authorized number of directors, designate one or more committees, each consisting of one or more directors, to serve at the pleasure of the board. The board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. The appointment of members or alternate members of a committee requires the vote of a majority of the authorized number of directors. Any committee, to the extent provided in the resolution of the board, shall have and may exercise all the powers and authority of the board, but no such committee shall have the power or authority to (i) amend the certificate of incorporation (except that a committee may, to the extent authorized in the resolution or resolutions providing for the issuance of shares of stock adopted by the board of directors as provided in Section 151(a) of the General Corporation Law of Delaware, fix the designations and any of the preferences or rights of such shares relating to dividends, redemption, dissolution, any distribution of assets of the corporation or the conversion into, or the exchange of such shares for, shares of any other class or classes or any other series of the same or any other class or classes of stock of the corporation), (ii) adopt an agreement of merger or consolidation under Sections 251 or 252 of the General Corporation Law of Delaware (relating to mergers and consolidations of domestic and foreign corporations), (iii) recommend to the stockholders the sale, lease or exchange of all or substantially all of the corporation's property and assets, (iv) recommend to the stockholders a dissolution of the corporation or a revocation of a dissolution or (v) amend the bylaws of the corporation; and, unless the board resolution establishing the committee, the bylaws or the certificate of incorporation expressly so provide, no such committee shall have the power or authority to declare a dividend, to authorize the issuance of stock, or to -13- adopt a certificate of ownership and merger pursuant to Section 253 of the General Corporation Law of Delaware (relating to mergers of parent and subsidiary corporations). 4.2 MEETINGS AND ACTION OF COMMITTEES Meetings and actions of committees shall be governed by, and held and taken in accordance with, the following provisions of Article III of these bylaws: Section 3.6 (place of meetings; meetings by telephone), Section 3.8 (regular meetings), Section 3.9 (special meetings; notice), Section 3.10 (quorum), Section 3.11 (waiver of notice), Section 3.12 (adjournment), Section 3.13 (notice of adjournment) and Section 3.14 (board action by written consent without meeting), with such changes in the context of those bylaws as are necessary to substitute the committee and its members for the board of directors and its members; provided, however, that the time of regular meetings of committees may be determined either by resolution of the board of directors or by resolution of the committee, that special meetings of committees may also be called by resolution of the board of directors, and that notice of special meetings of committees shall also be given to all alternate members, who shall have the right to attend all meetings of the committee. The board of directors may adopt rules for the government of any committee not inconsistent with the provisions of these bylaws. 4.3 COMMITTEE MINUTES Each committee shall keep regular minutes of its meetings and report the same to the board of directors when required. ARTICLE V OFFICERS 5.1 OFFICERS The Corporate Officers of the corporation shall be a president, a secretary and a chief financial officer. The corporation may also have, at the discretion of the board of directors, a chairman of the board, one or more vice presidents (however denominated), one or more assistant secretaries, one or more assistant treasurers, and such other officers as may be appointed in accordance with the provisions of Section 5.3 of these bylaws. Any number of offices may be held by the same person. In addition to the Corporate Officers of the Company described above, there may also be such Administrative Officers of the corporation as may be designated and appointed from time to time by the president of the corporation in accordance with the provisions of Section 5.12 of these bylaws. -14- 5.2 ELECTION OF OFFICERS The Corporate Officers of the corporation, except such officers as may be appointed in accordance with the provisions of Section 5.3 or Section 5.5 of these bylaws, shall be chosen by the board of directors, subject to the rights, if any, of an officer under any contract of employment, and shall hold their respective offices for such terms as the board of directors may from time to time determine. 5.3 SUBORDINATE OFFICERS The board of directors may appoint, or may empower the president to appoint, such other Corporate Officers as the business of the corporation may require, each of whom shall hold office for such period, have such power and authority, and perform such duties as are provided in these bylaws or as the board of directors may from time to time determine. The president may from time to time designate and appoint Administrative Officers of the corporation in accordance with the provisions of Section 5.12 of these bylaws. 5.4 REMOVAL AND RESIGNATION OF OFFICERS Subject to the rights, if any, of a Corporate Officer under any contract of employment, any Corporate Officer may be removed, either with or without cause, by the board of directors at any regular or special meeting of the board or, except in case of a Corporate Officer chosen by the board of directors, by any Corporate Officer upon whom such power of removal may be conferred by the board of directors. Any Corporate Officer may resign at any time by giving written notice to the corporation. Any resignation shall take effect at the date of the receipt of that notice or at any later time specified in that notice; and, unless otherwise specified in that notice, the acceptance of the resignation shall not be necessary to make it effective. Any resignation is without prejudice to the rights, if any, of the corporation under any contract to which the Corporate Officer is a party. Any Administrative Officer designated and appointed by the president may be removed, either with or without cause, at any time by the president. Any Administrative Officer may resign at any time by giving written notice to the president or to the secretary of the corporation. 5.5 VACANCIES IN OFFICES A vacancy in any office because of death, resignation, removal, disqualification or any other cause shall be filled in the manner prescribed in these bylaws for regular appointments to that office. 5.6 CHAIRMAN OF THE BOARD -15- The chairman of the board, if such an officer be elected, shall, if present, preside at meetings of the board of directors and exercise such other powers and perform such other duties as may from time to time be assigned to him by the board of directors or as may be prescribed by these bylaws. If there is no president, then the chairman of the board shall also be the chief executive officer of the corporation and shall have the powers and duties prescribed in Section 5.7 of these bylaws. 5.7 PRESIDENT Subject to such supervisory powers, if any, as may be given by the board of directors to the chairman of the board, if there be such an officer, the president shall be the chief executive officer of the corporation and shall, subject to the control of the board of directors, have general supervision, direction and control of the business and the officers of the corporation. He or she shall preside at all meetings of the stockholders and, in the absence or nonexistence of a chairman of the board, at all meetings of the board of directors. He or she shall have the general powers and duties of management usually vested in the office of president of a corporation, and shall have such other powers and perform such other duties as may be prescribed by the board of directors or these bylaws. 5.8 VICE PRESIDENTS In the absence or disability of the president, and if there is no chairman of the board, the vice presidents, if any, in order of their rank as fixed by the board of directors or, if not ranked, a vice president designated by the board of directors, shall perform all the duties of the president and when so acting shall have all the powers of, and be subject to all the restrictions upon, the president. The vice presidents shall have such other powers and perform such other duties as from time to time may be prescribed for them respectively by the board of directors, these bylaws, the president or the chairman of the board. 5.9 SECRETARY The secretary shall keep or cause to be kept, at the principal executive office of the corporation or such other place as the board of directors may direct, a book of minutes of all meetings and actions of the board of directors, committees of directors and stockholders. The minutes shall show the time and place of each meeting, whether regular or special (and, if special, how authorized and the notice given), the names of those present at directors' meetings or committee meetings, the number of shares present or represented at stockholders' meetings and the proceedings thereof. The secretary shall keep, or cause to be kept, at the principal executive office of the corporation or at the office of the corporation's transfer agent or registrar, as determined by resolution of the board of directors, a share register or a duplicate share register, showing the names of all stockholders and their addresses, the number and classes of shares held by each, the -16- number and date of certificates evidencing such shares and the number and date of cancellation of every certificate surrendered for cancellation. The secretary shall give, or cause to be given, notice of all meetings of the stockholders and of the board of directors required to be given by law or by these bylaws. He or she shall keep the seal of the corporation, if one be adopted, in safe custody and shall have such other powers and perform such other duties as may be prescribed by the board of directors or by these bylaws. 5.10 CHIEF FINANCIAL OFFICER The chief financial officer shall keep and maintain, or cause to be kept and maintained, adequate and correct books and records of accounts of the properties and business transactions of the corporation, including accounts of its assets, liabilities, receipts, disbursements, gains, losses, capital, retained earnings and shares. The books of account shall at all reasonable times be open to inspection by any director for a purpose reasonably related to his position as a director. The chief financial officer shall deposit all money and other valuables in the name and to the credit of the corporation with such depositaries as may be designated by the board of directors. He or she shall disburse the funds of the corporation as may be ordered by the board of directors, shall render to the president and directors, whenever they request it, an account of all of his or her transactions as chief financial officer and of the financial condition of the corporation, and shall have such other powers and perform such other duties as may be prescribed by the board of directors or these bylaws. 5.11 ASSISTANT SECRETARY The assistant secretary, if any, or, if there is more than one, the assistant secretaries in the order determined by the board of directors (or if there be no such determination, then in the order of their election) shall, in the absence of the secretary or in the event of his or her inability or refusal to act, perform the duties and exercise the powers of the secretary and shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. 5.12 ADMINISTRATIVE OFFICERS In addition to the Corporate Officers of the corporation as provided in Section 5.1 of these bylaws and such subordinate Corporate Officers as may be appointed in accordance with Section 5.3 of these bylaws, there may also be such Administrative Officers of the corporation as may be designated and appointed from time to time by the president of the corporation. Administrative Officers shall perform such duties and have such powers as from time to time may be determined by the president or the board of directors in order to assist the Corporate Officers in the furtherance of their duties. In the performance of such duties and the exercise of such powers, however, such Administrative Officers shall have limited authority to act on behalf -17- of the corporation as the board of directors shall establish, including but not limited to limitations on the dollar amount and on the scope of agreements or commitments that may be made by such Administrative Officers on behalf of the corporation, which limitations may not be exceeded by such individuals or altered by the president without further approval by the board of directors. 5.13 AUTHORITY AND DUTIES OF OFFICERS In addition to the foregoing powers, authority and duties, all officers of the corporation shall respectively have such authority and powers and perform such duties in the management of the business of the corporation as may be designated from time to time by the board of directors. ARTICLE VI INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES AND OTHER AGENTS 6.1 INDEMNIFICATION OF DIRECTORS AND OFFICERS The corporation shall, to the maximum extent and in the manner permitted by the General Corporation Law of Delaware as the same now exists or may hereafter be amended, indemnify any person against expenses (including attorneys' fees), judgments, fines, and amounts paid in settlement actually and reasonably incurred in connection with any threatened, pending or completed action, suit, or proceeding in which such person was or is a party or is threatened to be made a party by reason of the fact that such person is or was a director or officer of the corporation. For purposes of this Section 6.1, a "director" or "officer" of the corporation shall mean any person (i) who is or was a director or officer of the corporation, (ii) who is or was serving at the request of the corporation as a director or officer of another corporation, partnership, joint venture, trust or other enterprise, or (iii) who was a director or officer of a corporation which was a predecessor corporation of the corporation or of another enterprise at the request of such predecessor corporation. The corporation shall be required to indemnify a director or officer in connection with an action, suit, or proceeding (or part thereof) initiated by such director or officer only if the initiation of such action, suit, or proceeding (or part thereof) by the director or officer was authorized by the board of directors of the corporation. The corporation shall pay the expenses (including attorneys' fees) incurred by a director or officer of the corporation entitled to indemnification hereunder in defending any action, suit or proceeding referred to in this Section 6.1 in advance of its final disposition; provided, however, that payment of expenses incurred by a director or officer of the corporation in advance of the final disposition of such action, suit or proceeding shall be made only upon receipt of an undertaking by the director or officer to repay all amounts advanced if it should ultimately be -18- determined that the director or officer is not entitled to be indemnified under this Section 6.1 or otherwise. The rights conferred on any person by this Article shall not be exclusive of any other rights which such person may have or hereafter acquire under any statute, provision of the corporation's Certificate of Incorporation, these bylaws, agreement, vote of the stockholders or disinterested directors or otherwise. Any repeal or modification of the foregoing provisions of this Article shall not adversely affect any right or protection hereunder of any person in respect of any act or omission occurring prior to the time of such repeal or modification. 6.2 INDEMNIFICATION OF OTHERS The corporation shall have the power, to the maximum extent and in the manner permitted by the General Corporation Law of Delaware as the same now exists or may hereafter be amended, to indemnify any person (other than directors and officers) against expenses (including attorneys' fees), judgments, fines, and amounts paid in settlement actually and reasonably incurred in connection with any threatened, pending or completed action, suit, or proceeding, in which such person was or is a party or is threatened to be made a party by reason of the fact that such person is or was an employee or agent of the corporation. For purposes of this Section 6.2, an "employee" or "agent" of the corporation (other than a director or officer) shall mean any person (i) who is or was an employee or agent of the corporation, (ii) who is or was serving at the request of the corporation as an employee or agent of another corporation, partnership, joint venture, trust or other enterprise, or (iii) who was an employee or agent of a corporation which was a predecessor corporation of the corporation or of another enterprise at the request of such predecessor corporation. 6.3 INSURANCE The corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him or her and incurred by him or her in any such capacity, or arising out of his or her status as such, whether or not the corporation would have the power to indemnify him or her against such liability under the provisions of the General Corporation Law of Delaware. ARTICLE VII RECORDS AND REPORTS -19- 7.1 MAINTENANCE AND INSPECTION OF RECORDS The corporation shall, either at its principal executive office or at such place or places as designated by the board of directors, keep a record of its stockholders listing their names and addresses and the number and class of shares held by each stockholder, a copy of these bylaws as amended to date, accounting books and other records of its business and properties. Any stockholder of record, in person or by attorney or other agent, shall, upon written demand under oath stating the purpose thereof, have the right during the usual hours for business to inspect for any proper purpose the corporation's stock ledger, a list of its stockholders, and its other books and records and to make copies or extracts therefrom. A proper purpose shall mean a purpose reasonably related to such person's interest as a stockholder. In every instance where an attorney or other agent is the person who seeks the right to inspection, the demand under oath shall be accompanied by a power of attorney or such other writing that authorizes the attorney or other agent to so act on behalf of the stockholder. The demand under oath shall be directed to the corporation at its registered office in Delaware or at its principal place of business. 7.2 INSPECTION BY DIRECTORS Any director shall have the right to examine the corporation's stock ledger, a list of its stockholders and its other books and records for a purpose reasonably related to his or her position as a director. 7.3 REPRESENTATION OF SHARES OF OTHER CORPORATIONS The chairman of the board, if any, the president, any vice president, the chief financial officer, the secretary or any assistant secretary of this corporation, or any other person authorized by the board of directors or the president or a vice president, is authorized to vote, represent and exercise on behalf of this corporation all rights incident to any and all shares of the stock of any other corporation or corporations standing in the name of this corporation. The authority herein granted may be exercised either by such person directly or by any other person authorized to do so by proxy or power of attorney duly executed by such person having the authority. 7.4 CERTIFICATION AND INSPECTION OF BYLAWS The original or a copy of these bylaws, as amended or otherwise altered to date, certified by the secretary, shall be kept at the corporation's principal executive office and shall be open to inspection by the stockholders of the corporation, at all reasonable times during office hours. ARTICLE VII GENERAL MATTERS -20- 8.1 RECORD DATE FOR PURPOSES OTHER THAN NOTICE AND VOTING For purposes of determining the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights or the stockholders entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the board of directors may fix, in advance, a record date, which shall not precede the date upon which the resolution fixing the record date is adopted and which shall not be more than sixty (60) days before any such action. In that case, only stockholders of record at the close of business on the date so fixed are entitled to receive the dividend, distribution or allotment of rights, or to exercise such rights, as the case may be, notwithstanding any transfer of any shares on the books of the corporation after the record date so fixed, except as otherwise provided by law. If the board of directors does not so fix a record date, then the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the board of directors adopts the applicable resolution. 8.2 CHECKS; DRAFTS; EVIDENCES OF INDEBTEDNESS From time to time, the board of directors shall determine by resolution which person or persons may sign or endorse all checks, drafts, other orders for payment of money, notes or other evidences of indebtedness that are issued in the name of or payable to the corporation, and only the persons so authorized shall sign or endorse those instruments. 8.3 CORPORATE CONTRACTS AND INSTRUMENTS: HOW EXECUTED The board of directors, except as otherwise provided in these bylaws, may authorize and empower any officer or officers, or agent or agents, to enter into any contract or execute any instrument in the name of and on behalf of the corporation; such power and authority may be general or confined to specific instances. Unless so authorized or ratified by the board of directors or within the agency power of an officer, no officer, agent or employee shall have any power or authority to bind the corporation by any contract or engagement or to pledge its credit or to render it liable for any purpose or for any amount. 8.4 STOCK CERTIFICATES; TRANSFER; PARTLY PAID SHARES The shares of the corporation shall be represented by certificates, provided that the board of directors of the corporation may provide by resolution or resolutions that some or all of any or all classes or series of its stock shall be uncertificated shares. Any such resolution shall not apply to shares represented by a certificate until such certificate is surrendered to the corporation. Notwithstanding the adoption of such a resolution by the board of directors, every holder of stock represented by certificates and, upon request, every holder of uncertificated shares, shall be entitled to have a certificate signed by, or in the name of the corporation by, the chairman or -21- vice-chairman of the board of directors, or the president or vice-president, and by the chief financial officer or an assistant treasurer, or the secretary or an assistant secretary of such corporation representing the number of shares registered in certificate form. Any or all of the signatures on the certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate has ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if he or she were such officer, transfer agent or registrar at the date of issue. Certificates for shares shall be of such form and device as the board of directors may designate and shall state the name of the record holder of the shares represented thereby; its number; date of issuance; the number of shares for which it is issued; a summary statement or reference to the powers, designations, preferences or other special rights of such stock and the qualifications, limitations or restrictions of such preferences and/or rights, if any; a statement or summary of liens, if any; a conspicuous notice of restrictions upon transfer or registration of transfer, if any; a statement as to any applicable voting trust agreement; and, if the shares be assessable, or, if assessments are collectible by personal action, a plain statement of such facts. Upon surrender to the secretary or transfer agent of the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books. The corporation may issue the whole or any part of its shares as partly paid and subject to call for the remainder of the consideration to be paid therefor. Upon the face or back of each stock certificate issued to represent any such partly paid shares, or upon the books and records of the corporation in the case of uncertificated partly paid shares, the total amount of the consideration to be paid therefor and the amount paid thereon shall be stated. Upon the declaration of any dividend on fully paid shares, the corporation shall declare a dividend upon partly paid shares of the same class, but only upon the basis of the percentage of the consideration actually paid thereon. 8.5 SPECIAL DESIGNATION ON CERTIFICATES If the corporation is authorized to issue more than one class of stock or more than one series of any class, then the powers, the designations, the preferences and the relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights shall be set forth in full or summarized on the face or back of the certificate that the corporation shall issue to represent such class or series of stock; provided, however, that, except as otherwise provided in Section 202 of the General Corporation Law of Delaware (relating to transfers of stock, stock certificates and uncertificated stock), in lieu of the foregoing requirements there may be set forth on the face or back of the certificate that the corporation shall issue to represent such class or series of stock -22- a statement that the corporation will furnish without charge to each stockholder who so requests the powers, the designations, the preferences and the relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights. 8.6 LOST CERTIFICATES Except as provided in this Section 8.6, no new certificates for shares shall be issued to replace a previously issued certificate unless the latter is surrendered to the corporation and canceled at the same time. The board of directors may, in case any share certificate or certificate for any other security is lost, stolen or destroyed, authorize the issuance of replacement certificates on such terms and conditions as the board may require; the board may require indemnification of the corporation secured by a bond or other adequate security sufficient to protect the corporation against any claim that may be made against it, including any expense or liability, on account of the alleged loss, theft or destruction of the certificate or the issuance of the replacement certificate. 8.7 TRANSFER AGENTS AND REGISTRARS The board of directors may appoint one or more transfer agents or transfer clerks, and one or more registrars, each of which shall be an incorporated bank or trust company -- either domestic or foreign, who shall be appointed at such times and places as the requirements of the corporation may necessitate and the board of directors may designate. 8.8 CONSTRUCTION; DEFINITIONS Unless the context requires otherwise, the general provisions, rules of construction and definitions in the General Corporation Law of Delaware shall govern the construction of these bylaws. Without limiting the generality of this provision, as used in these bylaws, the singular number includes the plural, the plural number includes the singular, and the term "person" includes both an entity and a natural person. ARTICLE IX AMENDMENTS The original or other bylaws of the corporation may be adopted, amended or repealed by the stockholders entitled to vote; provided, however, that the corporation may, in its certificate of incorporation, confer the power to adopt, amend or repeal bylaws upon the directors. The fact that such power has been so conferred upon the directors shall not divest the stockholders of the power, nor limit their power to adopt, amend or repeal bylaws. Whenever an amendment or new bylaw is adopted, it shall be copied in the book of bylaws with the original bylaws, in the -23- appropriate place. If any bylaw is repealed, the fact of repeal with the date of the meeting at which the repeal was enacted or the filing of the operative written consent(s) shall be stated in said book. -24- EXHIBIT C MapQuest.com, Inc. Independent Directors Fee Policy -------------------------------- (April, 1999) "Independent Directors" refers to directors who are not (a) executives or employees of MapQuest.com, Inc., (the "Company") or (b) nominees, partners, directors, executives or employees of any institutional investor. Until further modified by the Board of Directors, Independent Directors of the Company will be paid fees, according to whether they are Chairmen of Committees, and based on the number of meetings of the Board of Directors and Committees thereof that they attend. Independent Directors of the Company, for service as directors of the Company, will be paid (a) $10,000 per annum. If, for any reason, any Independent Director is prohibited or restricted from personally receiving the foregoing fees by his employer or otherwise, or otherwise notifies either company that such Independent Director waives such fees, then such fees will not be paid to such director. All Directors will be reimbursed for their reasonable and documented out- of-pocket expenses incurred by them in connection, in connection with attending such meetings, including travel, meals and lodging. EXHIBIT D DIRECTORS INDEMNIFICATION AGREEMENT ----------------------------------- This Indemnification Agreement ("Agreement") is effective as of, April __, by and between MapQuest.com, Inc., a Delaware corporation (the "Company"), and each of the persons listed on Schedule 1 hereto as a director of the Company ---------- (each an "Indemnitee"). WHEREAS, the Company desires to attract and retain the services of highly qualified individuals, such as Indemnitee, to serve the Company and its related entities; WHEREAS, in order to induce Indemnitee to continue to provide services to the Company, the Company wishes to provide for the indemnification of, and the advancement of expenses to, Indemnitee to the maximum extent permitted by law; WHEREAS, the Company and Indemnitee recognize the continued difficulty in obtaining liability insurance for the Company's directors, officers, employees, agents and fiduciaries, the significant increases in the cost of such insurance and the general reductions in the coverage of such insurance; WHEREAS, the Company and Indemnitee further recognize the substantial increase in corporate litigation in general, subjecting directors, officers, employees, agents and fiduciaries to expensive litigation risks at the same time as the availability and coverage of liability insurance has been severely limited; and WHEREAS, in view of the considerations set forth above, the Company desires that Indemnitee shall be indemnified and advanced expenses by the Company as set forth herein; NOW, THEREFORE, the Company and Indemnitee hereby agree as set forth below. 1. CERTAIN DEFINITIONS. ------------------- a. "Change in Control" shall mean, and shall be deemed to have occurred ----------------- if, on or after the date of this Agreement, (i) any "person" (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended), other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company acting in such capacity or a corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company, becomes the "beneficial owner" (as defined in Rule 13d-3 under said Act), directly or indirectly, of securities of the Company representing more than 50% of the total voting power represented by the Company's then outstanding Voting Securities (as defined below), (ii) during any period of two consecutive years, individuals who at the beginning of such period constitute the Board of Directors of the Company and any new director whose election by the Board of Directors or nomination for election by the Company's stockholders was approved by a vote of at least two thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof, or (iii) the stockholders of the Company approve a merger or consolidation of the Company with any other corporation other than a merger or consolidation which would result in the Voting Securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into Voting Securities of the surviving entity) at least 80% of the total voting power represented by the Voting Securities of the Company or such surviving entity outstanding immediately after such merger or consolidation, or the stockholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of (in one transaction or a series of related transactions) all or substantially all of the Company's assets. b. "Claim" shall mean with respect to a Covered Event (as defined ----- below): any threatened, pending or completed action, suit, proceeding or alternative dispute resolution mechanism, or any hearing, inquiry or investigation that Indemnitee in good faith believes might lead to the institution of any such action, suit, proceeding or alternative dispute resolution mechanism, whether civil, criminal, administrative, investigative or other. c. References to the "Company" shall include, in addition to ------- MapQuest.com, Inc., any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger to which MapQuest.com, Inc. (or any of its wholly owned subsidiaries) is a party which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, employees, agents or fiduciaries, so that if Indemnitee is or was a director, officer, employee, agent or fiduciary of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee, agent or fiduciary of another corporation, partnership, joint venture, employee benefit plan, trust or other enterprise, Indemnitee shall stand in the same position under the provisions of this Agreement with respect to the resulting or surviving corporation as Indemnitee would have with respect to such constituent corporation if its separate existence had continued. d. "Covered Event" shall mean any event or occurrence (whether arising ------------- prior to or subsequent to this Agreement) related to the fact that Indemnitee is or was a director, officer, employee, agent or fiduciary of the Company, or any subsidiary of the Company, or is or was serving at the request of the Company as a director, officer, employee, agent or fiduciary of another corporation, partnership, joint venture, trust or other enterprise, or by reason of any action or inaction on the part of Indemnitee while serving in such capacity and shall include, without limitation, (i) the declaration of dividends to stockholders in the absence of a surplus, (ii) the approval of the issuance of securities and the failure to register such securities under relevant securities laws, including the Securities Act of 1933, as amended, in the absence of a qualified exemption from such registration requirements, and (iii) the approval of amendments to stock option plans without obtaining the necessary consent of then option holders prior to such amendment. e. "Expenses" shall mean any and all expenses (including attorneys' -------- fees and all other costs, expenses and obligations incurred in connection with investigating, defending, being a witness in or participating in (including on appeal), or preparing to defend, to be a witness in or to participate in, any action, suit, proceeding, alternative dispute resolution mechanism, hearing, inquiry or investigation), judgments, fines, penalties and amounts paid in settlement (if such settlement is approved in advance by the Company, which approval shall not be unreasonably withheld), actually and reasonably incurred, of any Claim and any federal, state, local or foreign taxes imposed on the Indemnitee as a result of the actual or deemed receipt of any payments under this Agreement. f. "Expense Advance" shall mean a payment to Indemnitee pursuant to --------------- Section 3 of Expenses in advance of the settlement of or final judgement in any action, suit, proceeding or alternative dispute resolution mechanism, hearing, inquiry or investigation which constitutes a Claim. g. "Independent Legal Counsel" shall mean an attorney or firm of ------------------------- attorneys, selected in accordance with the provisions of Section 2(d) hereof, who shall not have otherwise performed services for the Company or Indemnitee within the last three years (other than with respect to matters concerning the rights of Indemnitee under this Agreement, or of other indemnitees under similar indemnity agreements). h. References to "Other Enterprises" shall include employee benefit ----------------- plans; references to "Fines" shall include any excise taxes assessed on Indemnitee with respect to an employee benefit plan; and references to "Serving at the Request of the Company" shall include any service as a director, officer, employee, agent or fiduciary of the Company which imposes duties on, or involves services by, such director, officer, employee, agent or fiduciary with respect to an employee benefit plan, its participants or its beneficiaries; and if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan, Indemnitee shall be deemed to have acted in a manner "Not Opposed to the Best Interests of the Company" as referred to in this Agreement. i. "Reviewing Party" shall mean, subject to the provisions of Section --------------- 2(d), any person or body appointed by the Board of Directors in accordance with applicable law to review the Company's obligations hereunder and under applicable law, which may include a member or members of the Company's Board of Directors, Independent Legal Counsel or any other person or body not a party to the particular Claim for which Indemnitee is seeking indemnification. j. "Section" refers to a section of this Agreement unless otherwise ------- indicated. k. "Voting Securities" shall mean any securities of the Company that ----------------- vote generally in the election of directors. 2. INDEMNIFICATION. --------------- a. Indemnification of Expenses. Subject to the provisions of Section --------------------------- 2(b) below, the Company shall indemnify Indemnitee for Expenses to the fullest extent permitted by law if Indemnitee was or is or becomes a party to or witness or other participant in, or is threatened to be made a party to or witness or other participant in, any Claim (whether by reason of or arising in part out of a Covered Event), including all interest, assessments and other charges paid or payable in connection with or in respect of such Expenses. b. Review of Indemnification Obligations. Notwithstanding the ------------------------------------- foregoing, in the event any Reviewing Party shall have determined (in a written opinion, in any case in which Independent Legal Counsel is the Reviewing Party) that Indemnitee is not entitled to be indemnified hereunder under applicable law, (i) the Company shall have no further obligation under Section 2(a) to make any payments to Indemnitee not made prior to such determination by such Reviewing Party, and (ii) the Company shall be entitled to be reimbursed by Indemnitee (who hereby agrees to reimburse the Company) for all Expenses theretofore paid in indemnifying Indemnitee; provided, however, that if Indemnitee has -------- ------- commenced or thereafter commences legal proceedings in a court of competent jurisdiction to secure a determination that Indemnitee is entitled to be indemnified hereunder under applicable law, any determination made by any Reviewing Party that Indemnitee is not entitled to be indemnified hereunder under applicable law shall not be binding and Indemnitee shall not be required to reimburse the Company for any Expenses theretofore paid in indemnifying Indemnitee until a final judicial determination is made with respect thereto (as to which all rights of appeal therefrom have been exhausted or lapsed). Indemnitee's obligation to reimburse the Company for any Expenses shall be unsecured and no interest shall be charged thereon. c. Indemnitee Rights on Unfavorable Determination; Binding Effect. If -------------------------------------------------------------- any Reviewing Party determines that Indemnitee substantively is not entitled to be indemnified hereunder in whole or in part under applicable law, Indemnitee shall have the right to commence litigation seeking an initial determination by the court or challenging any such determination by such Reviewing Party or any aspect thereof, including the legal or factual bases therefor, and, subject to the provisions of Section 15, the Company hereby consents to service of process and to appear in any such proceeding. Absent such litigation, any determination by any Reviewing Party shall be conclusive and binding on the Company and Indemnitee. d. Selection of Reviewing Party; Change in Control. If there has not ----------------------------------------------- been a Change in Control, any Reviewing Party shall be selected by the Board of Directors, and if there has been such a Change in Control (other than a Change in Control which has been approved by a majority of the Company's Board of Directors who were directors immediately prior to such Change in Control), any Reviewing Party with respect to all matters thereafter arising concerning the rights of Indemnitee to indemnification of Expenses under this Agreement or any other agreement or under the Company's certificate of incorporation or bylaws as now or hereafter in effect, or under any other applicable law, if desired by Indemnitee, shall be Independent Legal Counsel selected by Indemnitee and approved by the Company (which approval shall not be unreasonably withheld). Such counsel, among other things, shall render its written opinion to the Company and Indemnitee as to whether and to what extent Indemnitee would be entitled to be indemnified hereunder under applicable law and the Company agrees to abide by such opinion. The Company agrees to pay the reasonable fees of the Independent Legal Counsel referred to above and to indemnify fully such counsel against any and all expenses (including attorneys' fees), claims, liabilities and damages arising out of or relating to this Agreement or its engagement pursuant hereto. Notwithstanding any other provision of this Agreement, the Company shall not be required to pay Expenses of more than one Independent Legal Counsel in connection with all matters concerning a single Indemnitee, and such Independent Legal Counsel shall be the Independent Legal Counsel for any or all other Indemnitees unless (i) the Company otherwise determines or (ii) any Indemnitee shall provide a written statement setting forth in detail a reasonable objection to such Independent Legal Counsel representing other Indemnitees. e. Mandatory Payment of Expenses. Notwithstanding any other provision ----------------------------- of this Agreement other than Section 10 hereof, to the extent that Indemnitee has been successful on the merits or otherwise, including, without limitation, the dismissal of an action without prejudice, in defense of any Claim, Indemnitee shall be indemnified against all Expenses incurred by Indemnitee in connection therewith. 3. EXPENSE ADVANCES. ---------------- a. Obligation to Make Expense Advances. The Company shall make Expense ----------------------------------- Advances to Indemnitee upon receipt of a written undertaking by or on behalf of the Indemnitee to repay such amounts if it shall ultimately be determined that the Indemnitee is not entitled to be indemnified therefor by the Company. b. Form of Undertaking. Any written undertaking by the Indemnitee to ------------------- repay any Expense Advances hereunder shall be unsecured and no interest shall be charged thereon. c. Determination of Reasonable Expense Advances. The parties agree -------------------------------------------- that for the purposes of any Expense Advance for which Indemnitee has made written demand to the Company in accordance with this Agreement, all Expenses included in such Expense Advance that are certified by affidavit of Indemnitee's counsel as being reasonable shall be presumed conclusively to be reasonable. 4. PROCEDURES FOR INDEMNIFICATION AND EXPENSE ADVANCES. --------------------------------------------------- a. Timing of Payments. All payments of Expenses (including without ------------------ limitation Expense Advances) by the Company to the Indemnitee pursuant to this Agreement shall be made to the fullest extent permitted by law as soon as practicable after written demand by Indemnitee therefor is presented to the Company, but in no event later than forty-five (45) business days after such written demand by Indemnitee is presented to the Company, except in the case of Expense Advances, which shall be made no later than twenty (20) business days after such written demand by Indemnitee is presented to the Company. b. Notice/Cooperation by Indemnitee. Indemnitee shall, as a condition -------------------------------- precedent to Indemnitee's right to be indemnified or Indemnitee's right to receive Expense Advances under this Agreement, give the Company notice in writing as soon as practicable of any Claim made against Indemnitee for which indemnification will or could be sought under this Agreement. Notice to the Company shall be directed to the Chief Executive officer of the Company at the address shown on the signature page of this Agreement (or such other address as the Company shall designate in writing to Indemnitee). In addition, Indemnitee shall give the Company such information and cooperation as it may reasonably require and as shall be within Indemnitee's power. c. No Presumptions; Burden of Proof. For purposes of this Agreement, -------------------------------- the termination of any Claim by judgment, order, settlement (whether with or without court approval) or conviction, or upon a plea of nolo contendere, or its equivalent, shall not create a presumption that Indemnitee did not meet any particular standard of conduct or have any particular belief or that a court has determined that indemnification is not permitted by this Agreement or applicable law. In addition, neither the failure of any Reviewing Party to have made a determination as to whether Indemnitee has met any particular standard of conduct or had any particular belief, nor an actual determination by any Reviewing Party that Indemnitee has not met such standard of conduct or did not have such belief, prior to the commencement of legal proceedings by Indemnitee to secure a judicial determination that Indemnitee should be indemnified under this Agreement or applicable law, shall be a defense to Indemnitee's claim or create a presumption that Indemnitee has not met any particular standard of conduct or did not have any particular belief. In connection with any determination by any Reviewing Party or otherwise as to whether the Indemnitee is entitled to be indemnified hereunder, the burden of proof shall be on the Company to establish that Indemnitee is not so entitled. d. Notice to Insurers. If, at the time of the receipt by the Company ------------------ of a notice of a Claim pursuant to Section 4(b) hereof, the Company has liability insurance in effect which may cover such Claim, the Company shall give prompt notice of the commencement of such Claim to the insurers in accordance with the procedures set forth in the respective policies. The Company shall thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of the Indemnitee, all amounts payable as a result of such Claim in accordance with the terms of such policies. e. Selection of Counsel. In the event the Company shall be obligated -------------------- hereunder to provide indemnification for or make any Expense Advances with respect to the Expenses of any Claim, the Company, if appropriate, shall be entitled to assume the defense of such Claim with counsel approved by Indemnitee (which approval shall not be unreasonably withheld) upon the delivery to Indemnitee of written notice of the Company's election to do so. After delivery of such notice, approval of such counsel by Indemnitee and the retention of such counsel by the Company, the Company will not be liable to Indemnitee under this Agreement for any fees or expenses of separate counsel subsequently employed by or on behalf of Indemnitee with respect to the same Claim; provided, however, that (i) Indemnitee -------- ------- shall have the right to employ Indemnitee's separate counsel in any such Claim at Indemnitee's expense and (ii) if (A) the employment of separate counsel by Indemnitee has been previously authorized by the Company, (B) Indemnitee shall have reasonably concluded that there may be a conflict of interest between the Company and Indemnitee in the conduct of any such defense, or (C) the Company shall not continue to retain such counsel to defend such Claim, then the fees and expenses of Indemnitee's separate counsel shall be Expenses for which Indemnitee may receive indemnification or Expense Advances hereunder. 5. ADDITIONAL INDEMNIFICATION RIGHTS; NONEXCLUSIVITY. ------------------------------------------------- a. Scope. The Company hereby agrees to indemnify the Indemnitee to the ----- fullest extent permitted by law, notwithstanding that such indemnification is not specifically authorized by the other provisions of this Agreement, the Company's certificate of incorporation, the Company's bylaws or by statute. In the event of any change after the date of this Agreement in any applicable law, statute or rule which expands the right of a Delaware corporation to indemnify a member of its board of directors or an officer, employee, agent or fiduciary, it is the intent of the parties hereto that Indemnitee shall enjoy by this Agreement the greater benefits afforded by such change. In the event of any change in any applicable law, statute or rule which narrows the right of a Delaware corporation to indemnify a member of its board of directors or an officer, employee, agent or fiduciary, such change, to the extent not otherwise required by such law, statute or rule to be applied to this Agreement, shall have no effect on this Agreement or the parties, rights and obligations hereunder except as set forth in Section 10(a) hereof. b. Nonexclusivity. The indemnification and the payment of Expense -------------- Advances provided by this Agreement shall be in addition to any rights to which Indemnitee may be entitled under the Company's certificate of incorporation, its bylaws, any other agreement, any vote of stockholders or disinterested directors, the General Corporation Law of the State of Delaware, or otherwise. The indemnification and the payment of Expense Advances provided under this Agreement shall continue as to Indemnitee for any action taken or not taken while serving in an indemnified capacity even though subsequent thereto Indemnitee may have ceased to serve in such capacity. 6. NO DUPLICATION OF PAYMENTS. The Company shall not be liable under this -------------------------- Agreement to make any payment in connection with any Claim made against Indemnitee to the extent Indemnitee has otherwise actually received payment (under any insurance policy, provision of the Company's certificate of incorporation, bylaws or otherwise) of the amounts otherwise payable hereunder. 7. PARTIAL INDEMNIFICATION. If Indemnitee is entitled under any ----------------------- provision of this Agreement to indemnification by the Company for some or a portion of Expenses incurred in connection with any Claim, but not, however, for all of the total amount thereof, the Company shall nevertheless indemnify Indemnitee for the portion of such Expenses to which Indemnitee is entitled. 8. MUTUAL ACKNOWLEDGMENT. Both the Company and Indemnitee acknowledge --------------------- that in certain instance, federal law or applicable public policy may prohibit the Company from indemnifying its directors, officers, employees, agents or fiduciaries under this Agreement or otherwise. Indemnitee understand and acknowledges that the Company has undertaken or may be required in the future to undertake with the Securities and Exchange Commission to submit the question of indemnification to a court in certain circumstances for a determination of the Company's right under public policy to indemnify Indemnitee. 9. LIABILITY INSURANCE. To the extent the Company maintains liability ------------------- insurance applicable to directors, officers, employees, agents or fiduciaries, Indemnitee shall be covered by such policies in such a manner as to provide Indemnitee the same rights and benefits as are provided to the most favorably insured of the Company's directors, if Indemnitee is a director; or of the Company's officers, if Indemnitee is not a director of the Company but is an officer; or of the Company's key employees, agents or fiduciaries, if Indemnitee is not an officer or director but is a key employee, agent or fiduciary. 10. EXCEPTIONS. Notwithstanding any other provision of this Agreement, the ---------- Company shall not be obligated pursuant to the terms of this Agreement: a. Excluded Action or Omissions. To indemnify Indemnitee for ---------------------------- Expenses resulting from acts, omissions or transactions for which Indemnitee is prohibited from receiving indemnification under this Agreement or applicable law; provided, however, that notwithstanding -------- ------- any limitation set forth in this Section 10(a) regarding the Company's obligation to provide indemnification, Indemnitee shall be entitled under Section 3 to receive Expense Advances hereunder with respect to any such Claim unless and until a court having jurisdiction over the Claim shall have made a final judicial determination (as to which all rights of appeal therefrom have been exhausted or lapsed) that Indemnitee has engaged in acts, omissions or transactions for which Indemnitee is prohibited from receiving indemnification under this Agreement or applicable law. b. Claims Initiated by Indemnitee. To indemnify or make Expense ------------------------------ Advances to Indemnitee with respect to Claims initiated or brought voluntarily by Indemnitee and not by way of defense, counterclaim or crossclaim, except (i) with respect to actions or proceedings brought to establish or enforce a right to indemnification under this Agreement or any other agreement or insurance policy or under the Company's certificate of incorporation or bylaws now or hereafter in effect relating to Claims for Covered Events, (ii) in specific cases if the Board of Directors has approved the initiation or bringing of such Claim, or (iii) as otherwise required under Section 145 of the Delaware General Corporation Law (relating to indemnification of officers, directors, employees and agents; and insurance), regardless of whether Indemnitee ultimately is determined to be entitled to such indemnification or insurance recovery, as the case may be. c. Lack of Good Faith. To indemnify Indemnitee for any Expenses ------------------ incurred by the Indemnitee with respect to any action instituted (i) by Indemnitee to enforce or interpret this Agreement, if a court having jurisdiction over such action determines as provided in Section 13 that each of the material assertions made by the Indemnitee as a basis for such action was not made in good faith or was frivolous, or (ii) by or in the name of the Company to enforce or interpret this Agreement, if a court having jurisdiction over such action determines as provided in Section 13 that each of the material defenses asserted by Indemnitee in such action was made in bad faith or was frivolous. d. Claims under Section 16(b). To indemnify Indemnitee for expenses -------------------------- and the payment of profits arising from the purchase and sale by Indemnitee of securities in violation of Section 16(b) of the Securities Exchange Act of 1934, as amended, or any similar successor statute; provided, however, that notwithstanding any limitation set -------- ------- forth in this Section 10(d) regarding the Company's obligation to provide indemnification, Indemnitee shall be entitled under Section 3 to receive Expense Advances hereunder with respect to any such Claim unless and until a court having jurisdiction over the Claim shall have made a final judicial determination (as to which all rights of appeal therefrom have been exhausted or lapsed) that Indemnitee has violated said statute. 11. COUNTERPARTS. This Agreement may be executed in two or more ------------ counterparts, each of which shall constitute an original and all of which taken together shall constitute one and the same instrument. 12. BINDING EFFECT; SUCCESSORS AND ASSIGNS. This Agreement shall be -------------------------------------- binding upon and inure to the benefit of and be enforceable by the parties hereto and their respective successors, assigns (including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business or assets of the Company), spouses, heirs and personal and legal representatives. The Company shall require and cause any successor (whether direct or indirect, and whether by purchase, merger, consolidation or otherwise) to all, substantially all, or a substantial part, of the business or assets of the Company, by written agreement in form and substance satisfactory to Indemnitee, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place. This Agreement shall continue in effect regardless of whether Indemnitee continues to serve as a director, officer, employee, agent or fiduciary (as applicable) of the Company or of any other enterprise at the Company's request. 13. EXPENSES INCURRED IN ACTION RELATING TO ENFORCEMENT OR INTERPRETATION. --------------------------------------------------------------------- In the event that any action is instituted by Indemnitee under this Agreement or under any liability insurance policies maintained by the Company to enforce or interpret any of the terms hereof or thereof, Indemnitee shall be entitled to be indemnified for all Expenses incurred by Indemnitee with respect to such action (including without limitation attorneys, fees), regardless of whether Indemnitee is ultimately successful in such action, unless as a part of such action a court having jurisdiction over such action makes a final judicial determination (as to which all rights of appeal therefrom have been exhausted or lapsed) that each of the material assertions made by Indemnitee as a basis for such action was not made in good faith or was frivolous; provided, however, that until such -------- ------- final judicial determination is made, Indemnitee shall be entitled under Section 3 to receive payment of Expense Advances hereunder with respect to such action. In the event of an action instituted by or in the name of the Company under this Agreement to enforce or interpret any of the terms of this Agreement, Indemnitee shall be entitled to be indemnified for all Expenses incurred by Indemnitee in defense of such action (including without limitation costs and expenses incurred with respect to Indemnitee's counterclaims and cross-claims made in such action), unless as a part of such action a court having jurisdiction over such action makes a final judicial determination (as to which all rights of appeal therefrom have been exhausted or lapsed) that each of the material defenses asserted by Indemnitee in such action was made in bad faith or was frivolous; PROVIDED, HOWEVER, that until such final judicial determination is made, Indemnitee shall be entitled under Section 3 to receive payment of Expense Advances hereunder with respect to such action. 14. NOTICE. All notices, requests, demands and other communications under ------ this Agreement shall be in writing and shall be deemed duly given (i) if delivered by hand and signed for by the party addressed, on the date of such delivery, or (ii) if mailed by domestic certified or registered mail with postage prepaid, on the third business day after the date postmarked. Addresses for notice to either party are as shown on the signature page of this Agreement or as subsequently modified by written notice. 15. CONSENT TO JURISDICTION. The Company and Indemnitee each hereby ----------------------- irrevocably consent to the jurisdiction of the courts of the State of New York for all purposes in connection with any action or proceeding which arises out of or relates to this Agreement and agree that any action instituted under this Agreement shall be commenced, prosecuted and continued only in the State of New York in and for New York County, which shall be the exclusive and only proper forum for adjudicating such a claim. 16. SEVERABILITY. The provisions of this Agreement shall be severable in ------------ the event that any of the provisions hereof (including any provision within a single section, paragraph or sentence) are held by a court of competent jurisdiction to be invalid, void or otherwise unenforceable, and the remaining provisions shall remain enforceable to the fullest extent permitted by law. Furthermore, to the fullest extent possible, the provisions of this Agreement (including without limitation each portion of this Agreement containing any provision held to be invalid, void or otherwise unenforceable, that is not itself invalid, void or unenforceable) shall be construed so as to give effect to the intent manifested by the provision held invalid, illegal or unenforceable. 17. CHOICE OF LAW. This Agreement, and all rights, remedies, liabilities, ------------- powers and duties of the parties to this Agreement, shall be governed by and construed in accordance with the laws of the State of Delaware without regard to principles of conflicts of laws. 18. SUBROGATION. In the event of payment under this Agreement, the ----------- Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all documents required and shall do all acts that may be necessary to secure such rights and to enable the Company effectively to bring suit to enforce such rights. 19. AMENDMENT AND TERMINATION. No amendment, modification, termination or ------------------------- cancellation of this Agreement shall be effective unless it is in writing signed by both the parties hereto. No waiver of any of the provisions of this Agreement shall be deemed to be or shall constitute a waiver of any other provisions hereof (whether or not similar), nor shall such waiver constitute a continuing waiver. 20. INTEGRATION AND ENTIRE AGREEMENT. This Agreement sets forth the -------------------------------- entire understanding between the parties hereto and supersedes and merges all previous written and oral negotiations, commitments, understandings and agreements relating to the subject matter hereof between the parties hereto. 21. NO CONSTRUCTION AS EMPLOYMENT AGREEMENT. Nothing contained in this --------------------------------------- Agreement shall be construed as giving Indemnitee any right to be retained in the employ of the Company or any of its subsidiaries or affiliated entities. IN WITNESS WHEREOF, the parties hereto have executed this Indemnification Agreement as of the date first above written. MAPQUEST.COM, INC. By:_______________________ Name: Title: Address: MapQuest.com, Inc. 3710 Hempland Road Mountville, PA 17554 AGREED TO AND ACCEPTED BY: INDEMNITEE _______________________________ Michael J. Mulligan AGREED TO AND ACCEPTED BY: INDEMNITEE _______________________________ C. Richard Allen AGREED TO AND ACCEPTED BY: INDEMNITEE _______________________________ Robert McCormack AGREED TO AND ACCEPTED BY: INDEMNITEE _______________________________ John Moragne AGREED TO AND ACCEPTED BY: INDEMNITEE _______________________________ Daniel Nova AGREED TO AND ACCEPTED BY: INDEMNITEE _______________________________ Carlo von Schroeter SCHEDULE I ---------- Michael J. Mulligan C. Richard Allen Robert McCormack John Moragne Daniel Nova Carlo von Schroeter EXHIBIT E MAPQUEST.COM, INC. 1999 STOCK PLAN 1. ESTABLISHMENT, PURPOSE AND TYPES OF AWARDS MapQuest.com, Inc. hereby establishes the MAPQUEST.COM, INC. 1999 STOCK PLAN (the "Plan"). The purpose of the Plan is to promote the long-term growth and profitability of MapQuest.com, Inc. (the "Corporation") by (i) providing key people with incentives to improve stockholder value and to contribute to the growth and financial success of the Corporation, and (ii) enabling the Corporation to attract, retain and reward the best available persons for positions of substantial responsibility. The Plan permits the granting of stock options (including nonqualified stock options and incentive stock options qualifying under Section 422 of the Code), stock appreciation rights (including free-standing, tandem and limited stock appreciation rights), restricted or unrestricted share awards, phantom stock, performance awards, or any combination of the foregoing (collectively, "Awards"). The Plan is a compensatory benefit plan within the meaning of Rule 701 under the Securities Act of 1933 (the "Securities Act"). Except to the extent any other exemption from the Securities Act is expressly relied upon in connection with any agreement entered into pursuant to the Plan or the securities issuable hereunder are registered under the Securities Act, the issuance of Common Stock pursuant to the Plan is intended to qualify for the exemption from registration under the Securities Act provided by Rule 701. To the extent that an exemption from registration under the Securities Act provided by Rule 701 is unavailable, all unregistered offers and sales of Awards and shares of Common Stock issuable upon exercise of an Award are intended to be exempt from registration under the Securities Act in reliance upon the private offering exemption contained in Section 4(2) of the Securities Act, or other available exemption, and the Plan shall be so administered. 2. DEFINITIONS Under this Plan, except where the context otherwise indicates, the following definitions apply: (a) "Award" shall mean any stock option, stock appreciation right, stock award, phantom stock award, or performance award. (b) "Board" shall mean the Board of Directors of the Corporation. (c) "Change in Control" shall mean (i) any sale, exchange or other disposition of substantially all of the Corporation's assets; or (ii) any merger, share exchange, consolidation or other reorganization or business combination in which the Corporation is not the surviving or continuing corporation, or in which the Corporation's stockholders become entitled to receive cash, securities of the Corporation other than voting common stock, or securities of another issuer. (d) "Code" shall mean the Internal Revenue Code of 1986, as amended, and any regulations issued thereunder. (e) Committee" shall mean the compensation committee of the Board; provided, however, that in the event all the members of such compensation committee do not constitute both "Non-Employee Directors" within the meaning of Rule 16b-3 and "outside directors" within the meaning of Section 162(m) of the Code, than the term "Committee" shall mean such other committee of two or more Board members appointed by the Board to administer the Plan whose members do constitute both "Non-Employee Directors" within the meaning of Rule 16b-3 and, to the extent that Section 162(m) of the Code is applicable to Awards granted under the Plan, "outside directors" within the meaning of Section 162(m) of the Code. (f) "Common Stock" shall mean shares of the Corporation's common stock, par value of $0.001 per share. (g) "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended. (h) "Fair Market Value" of a share of the Corporation's Common Stock for any purpose on a particular date shall be determined in a manner such as the Committee shall in good faith determine to be appropriate; provided, however, that if the Common Stock is publicly traded, then Fair Market Value shall mean the last reported sale price per share of Common Stock, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way, in either case as reported in the principal consolidated transaction reporting system with respect to securities listed or admitted to trading on a national securities exchange or included for quotation on the Nasdaq-National Market, or if the Common Stock is not so listed or admitted to trading or included for quotation, the last quoted price, or if the Common Stock is not so quoted, the average of the high bid and low asked prices, regular way, in the over-the-counter market, as reported by the National Association of Securities Dealers, Inc. Automated Quotation System or, if such system is no longer in use, the principal other automated quotations system that may then be in use or, if the Common Stock is not quoted by any such organization, the average of the closing bid and asked prices, regular way, as furnished by a professional market maker making a market in the Common Stock as selected in good faith by the Committee or by such other source or sources as shall be selected in good faith by the Committee; and provided further, that in the case of incentive stock options, the determination of Fair Market Value shall be made by the Committee in good faith in conformance with the Treasury Regulations under Section 422 of the Code. If, as the case may be, the relevant date is not a trading day, the determination shall be made as of the next preceding trading day. As used herein, the term "trading day" shall mean a day on which public trading of securities occurs and is reported in the principal consolidated reporting system referred to above, or if the Common Stock is not listed or admitted to trading on a national securities exchange or included for quotation on the Nasdaq-National Market, any day other than a Saturday, a Sunday or a day in which banking institutions in the State of New York are closed. (i) "Grant Agreement" shall mean a written agreement between the Corporation and a grantee memorializing the terms and conditions of an Award granted pursuant to the Plan. -2- (j) "Grant Date" shall mean the date on which the Committee formally acts to grant an Award to a grantee or such other date as the Committee shall so designate at the time of taking such formal action. (k) "Parent" shall mean a corporation, whether now or hereafter existing, within the meaning of the definition of "parent corporation" provided in Section 424(e) of the Code, or any successor thereto of similar import. (l) "Rule 16b-3" shall mean Rule 16b-3 as in effect under the Exchange Act on the effective date of the Plan, or any successor provision prescribing conditions necessary to exempt the issuance of securities under the Plan (and further transactions in such securities) from Section 16(b) of the Exchange Act. (m) "Subsidiary" and "subsidiaries" shall mean only a corporation or corporations, whether now or hereafter existing, within the meaning of the definition of "subsidiary corporation" provided in Section 424(f) of the Code, or any successor thereto of similar import. 3. ADMINISTRATION (a) Procedure. The Plan shall be administered by a Committee appointed by the Board consisting of not less than two (2) members of the Board to administer the Plan on behalf of the Board, subject to such terms and conditions as the Board may prescribe. Once appointed, the Committee shall continue to serve until otherwise directed by the Board. From time to time, the Board may increase the size of the Committee and appoint additional members thereof, remove members (with or without cause) and appoint new members in substitution therefor, fill vacancies, however caused, and remove all members of the Committee and, thereafter, directly administer the Plan. In the event that the Board is the administrator of the Plan in lieu of a Committee, the term "Committee" as used herein shall be deemed to mean the Board. Members of the Committee who are either eligible for Awards or have been granted Awards may vote on any matters affecting the administration of the Plan or the grant of Awards pursuant to the Plan, except that no such member shall act upon the granting of an Award to himself or herself, but any such member may be counted in determining the existence of a quorum at any meeting of the Committee during which action is taken with respect to the granting of an Award to him or her. The Committee shall meet at such times and places and upon such notice as it may determine. A majority of the Committee shall constitute a quorum. Any acts by the Committee may be taken at any meeting at which a quorum is present and shall be by majority vote of those members entitled to vote. Additionally, any acts reduced to writing or approved in writing by all of the members of the Committee shall be valid acts of the Committee. (b) Procedure After Registration of Common Stock. Notwithstanding the provisions of subsection (a) above, unless the Board itself is deemed to be the Committee, in the event that the Common Stock or any other capital stock of the Corporation becomes registered under Section 12 of the Exchange Act, the members of the Committee shall be both "Non-Employee Directors" within the meaning of Rule 16b-3, and "outside directors" within the meaning of Section 162(m) of the Code. Upon and after the point in time that the Common -3- Stock or any other capital stock of the Corporation becomes registered under Section 12 of the Exchange Act, the Board shall take all action necessary to cause the Plan to be administered in accordance with the then effective provisions of Rule 16b-3, provided that any amendment to the Plan required for compliance with such provisions shall be made in accordance with Section 13 of the Plan. (c) Powers of the Committee. The Committee shall have all the powers vested in it by the terms of the Plan, such powers to include authority, in its sole and absolute discretion, to grant Awards under the Plan, prescribe Grant Agreements evidencing such Awards and establish programs for granting Awards. The Committee shall have full power and authority to take all other actions necessary to carry out the purpose and intent of the Plan, including, but not limited to, the authority to: (i) determine the eligible persons to whom, and the time or times at which Awards shall be granted, (ii) determine the types of Awards to be granted, (iii) determine the number of shares to be covered by or used for reference purposes for each Award, (iv) impose such terms, limitations, restrictions and conditions upon any such Award as the Committee shall deem appropriate, (v) modify, extend or renew outstanding Awards, accept the surrender of outstanding Awards and substitute new Awards, provided that no such action shall be taken with respect to any outstanding Award which would adversely affect the grantee without the grantee's consent, (vi) accelerate or otherwise change the time in which an Award may be exercised or becomes payable and to waive or accelerate the lapse, in whole or in part, of any restriction or condition with respect to such Award, including, but not limited to, any restriction or condition with respect to the vesting or exercisability of an Award following termination of any grantee's employment, and (vii) to establish objectives and conditions, if any, for earning Awards and determining whether Awards will be paid after the end of a performance period. The Committee shall have full power and authority to administer and interpret the Plan and to adopt such rules, regulations, agreements, guidelines and instruments for the administration of the Plan and for the conduct of its business as the Committee deems necessary or advisable and to interpret same, all within the Committee's sole and absolute discretion. (d) Limited Liability. To the maximum extent permitted by law, no member of the Board or Committee shall be liable for any action taken or decision made in good faith relating to the Plan or any Award thereunder. -4- (e) Indemnification. To the maximum extent permitted by law, the members of the Board and Committee shall be indemnified by the Corporation in respect of all their activities under the Plan. (f) Effect of Committee's Decision. All actions taken and decisions and determinations made by the Committee on all matters relating to the Plan pursuant to the powers vested in it hereunder shall be in the Committee's sole and absolute discretion and shall be conclusive and binding on all parties concerned, including the Corporation, its stockholders, any participants in the Plan and any other employee of the Corporation, and their respective successors in interest. 4. SHARES AVAILABLE FOR THE PLAN; MAXIMUM AWARDS Subject to adjustments as provided in Section 12 of the Plan, the shares of Common Stock that may be delivered or purchased or used for reference purposes (with respect to stock appreciation rights, phantom stock units or performance awards payable in cash) with respect to Awards granted under the Plan, including with respect to incentive stock options intended to qualify under Section 422 of the Code, shall not exceed an aggregate of Three Million Six Hundred and Forty- Five Thousand (3,645,000) shares of Common Stock of the Corporation. The Corporation shall reserve said number of shares for Awards under the Plan, subject to adjustments as provided in Section 12 of the Plan. If any Award, or portion of an Award, under the Plan expires or terminates unexercised, becomes unexercisable or is forfeited or otherwise terminated, surrendered or canceled as to any shares without the delivery of shares of Common Stock or other consideration, the shares subject to such Award shall thereafter be available for further Awards under the Plan unless such shares would not be deemed available for future grants pursuant to Rule 16b-3 of the General Rules and Regulations under the Exchange Act, or any successor rule or regulation ("Rule 16b-3"). The maximum number of shares of Common Stock subject to Awards of any combination that may be granted during any one calendar year to any one individual shall be limited to Nine Hundred and Eleven Thousand Two Hundred and Fifty (911,250). To the extent required by Section 162(m) of the Code and so long as Section 162(m) of the Code is applicable to persons eligible to participate in the Plan, shares of Common Stock subject to the foregoing limit with respect to which the related Award is terminated, surrendered or canceled shall not again be available for grant under this limit. 5. PARTICIPATION Participation in the Plan shall be open to all employees, officers, directors and consultants of the Corporation, or of any Parent or Subsidiary of the Corporation, as may be selected by the Committee from time to time. Notwithstanding the foregoing, participation in the Plan with respect to Awards of incentive stock options shall be limited to employees of the Corporation or of any Parent or Subsidiary of the Corporation. Awards may be granted to such eligible persons and for or with respect to such number of shares of Common Stock as the Committee shall determine, subject to the limitations in Section 4 of the Plan. A grant of any type of Award made in any one year to an eligible person shall neither guarantee nor preclude a further grant of that or any other type of Award to such person in that year or subsequent years. -5- 6. STOCK OPTIONS Subject to the other applicable provisions of the Plan, the Committee may from time to time grant to eligible participants Awards of nonqualified stock options or incentive stock options as that term is defined in Section 422 of the Code. The stock option Awards granted shall be subject to the following terms and conditions. (a) Grant of Option. The grant of a stock option shall be evidenced by a Grant Agreement, executed by the Corporation and the grantee, stating the number of shares of Common Stock subject to the stock option evidenced thereby and the terms and conditions of such stock option, in such form as the Committee may from time to time determine. (b) Price. The price per share payable upon the exercise of each stock option ("exercise price") shall be determined by the Committee; provided, however, that in the case of incentive stock options, the exercise price shall not be less than 100% of the Fair Market Value of the shares on the date the stock option is granted. (c) Payment. Stock options may be exercised in whole or in part by payment of the exercise price of the shares to be acquired in accordance with the provisions of the Grant Agreement, and/or such rules and regulations as the Committee may have prescribed, and/or such determinations, orders, or decisions as the Committee may have made. Payment may be made in cash (or cash equivalents acceptable to the Committee) or, if allowed by the Committee in its sole discretion, in shares of Common Stock or a combination of cash and shares of Common Stock, or by such other means as the Committee may prescribe. The Fair Market Value of shares of Common Stock delivered on exercise of stock options shall be determined as of the date of exercise. Shares of Common Stock delivered in payment of the exercise price may be previously owned shares or, if approved by the Committee, shares acquired upon exercise of the stock option. Any fractional share will be paid in cash. The Corporation may make or guarantee loans to grantees to assist grantees in exercising stock options and satisfying any related withholding tax obligations. If the Common Stock is registered under Section 12(b) or 12(g) of the Exchange Act, the Committee, subject to such limitations as it may determine, may authorize payment of the exercise price, in whole or in part, by delivery of a properly executed exercise notice, together with irrevocable instructions, to: (i) a brokerage firm designated by the Corporation to deliver promptly to the Corporation the aggregate amount of sale or loan proceeds to pay the exercise price and any withholding tax obligations that may arise in connection with the exercise, and (ii) the Corporation to deliver the certificates for such purchased shares directly to such brokerage firm. (d) Terms of Options. The term during which each stock option may be exercised shall be determined by the Committee. In no event shall a stock option be exercisable more than ten years from the date it is granted. Prior to the exercise of the stock option and delivery of the shares certificates represented thereby, the grantee shall have none of the rights of a stockholder with respect to any shares represented by an outstanding stock option. (e) Reload Options. The terms of a stock option may provide for the automatic grant of a new stock option Award when the exercise price of the stock option and/or any related tax withholding obligation is paid by tendering shares of Common Stock, provided that such automatic replenishment feature shall be limited to any extent required by rules, -6- regulations, or interpretations under the Exchange Act with respect to any particular grant of an Award in the case of a grantee who is or becomes subject to Section 16 of the Exchange Act. Any stock option Award which would automatically be granted pursuant to this Section 6(e) without any further Committee action may be exercisable for not more than the number of shares tendered to exercise the initial stock option and/or to pay any tax withholding obligation related to such exercise, shall have an exercise price set at the then Fair Market Value of such shares, and shall have a term that does not extend beyond the term of the initial stock option. The Committee may include such a reload feature in a stock option Award at the time of the initial grant of the Award or may add such a reload feature to an outstanding stock option Award as the Committee deems desirable; provided, however, that a reload feature shall not be added to any outstanding incentive stock option Award without the consent of the grantee. (f) Restrictions on Incentive Stock Options. Incentive stock option Awards granted under the Plan shall comply in all respects with Code Section 422 and, as such, shall meet the following additional requirements: (i) Grant Date. An incentive stock option must be granted within 10 years of the earlier of the Plan's adoption by the Board of Directors or approval by the Corporation's shareholders. (ii) Exercise Price and Term. The exercise price of an incentive stock option shall not be less than 100% of the Fair Market Value of the shares on the date the stock option is granted and the term of an incentive stock option may not be greater than 10 years. Also, the exercise price of any incentive stock option granted to a grantee who owns (within the meaning of Section 422(b)(6) of the Code, after the application of the attribution rules in Section 424(d) of the Code) more than 10% of the total combined voting power of all classes of shares of the Corporation or its Parent or Subsidiary corporations (within the meaning of Sections 422 and 424 of the Code) shall be not less than 110% of the Fair Market Value of the Common Stock on the grant date and the term of such stock option shall not exceed five years. (iii) Maximum Grant. The aggregate Fair Market Value (determined as of the Grant Date) of shares of Common Stock with respect to which all incentive stock options first become exercisable by any grantee in any calendar year under this or any other plan of the Corporation and its Parent and Subsidiary corporations may not exceed $100,000 or such other amount as may be permitted from time to time under Section 422 of the Code. To the extent that such aggregate Fair Market Value shall exceed $100,000, or other applicable amount, such stock options shall be treated as nonqualified stock options. In such case, the Corporation may designate the shares of Common Stock that are to be treated as stock acquired pursuant to the exercise of an incentive stock option by issuing a separate certificate for such shares and identifying the certificate as incentive stock option shares in the stock transfer records of the Corporation. (iv) Grantee. Incentive stock options shall only be issued to employees of the Corporation, or of a Parent or Subsidiary of the Corporation. (v) Designation. No stock option shall be an incentive stock option unless so designated by the Committee at the time of grant or in the Grant Agreement evidencing such stock option. -7- (g) Other Terms and Conditions. Stock options may contain such other provisions, not inconsistent with the provisions of the Plan, as the Committee shall determine appropriate from time to time. 7. STOCK APPRECIATION RIGHTS (a) Award of Stock Appreciation Rights. Subject to the other applicable provisions of the Plan, the Committee may at any time and from time to time grant stock appreciation rights ("SARs") to eligible participants, either on a free-standing basis (without regard to or in addition to the grant of a stock option) or on a tandem basis (related to the grant of an underlying stock option), as it determines. SARs granted in tandem with or in addition to a stock option may be granted either at the same time as the stock option or at a later time; provided, however, that a tandem SAR shall not be granted with respect to any outstanding incentive stock option Award without the consent of the grantee. SARs shall be evidenced by Grant Agreements, executed by the Corporation and the grantee, stating the number of shares of Common Stock subject to the SAR evidenced thereby and the terms and conditions of such SAR, in such form as the Committee may from time to time determine. The term during which each SAR may be exercised shall be determined by the Committee. In no event shall a SAR be exercisable more than ten years from the date it is granted. The grantee shall have none of the rights of a stockholder with respect to any shares of Common Stock represented by an SAR. (b) Restrictions of Tandem SARs. No incentive stock option may be surrendered in connection with the exercise of a tandem SAR unless the Fair Market Value of the Common Stock subject to the incentive stock option is greater than the exercise price for such incentive stock option. SARs granted in tandem with stock options shall be exercisable only to the same extent and subject to the same conditions as the stock options related thereto are exercisable. The Committee may, in its discretion, prescribe additional conditions to the exercise of any such tandem SAR. (c) Amount of Payment Upon Exercise of SARs. An SAR shall entitle the grantee to receive, subject to the provisions of the Plan and the Grant Agreement, a payment having an aggregate value equal to the product of (i) the excess of (A) the Fair Market Value on the exercise date of one share of Common Stock over (B) the base price per share specified in the Grant Agreement (which shall be determined by the Committee but which shall not be less than 100% of the Fair Market Value of one share of Common Stock on the date of grant of the SAR), times (ii) the number of shares specified by the SAR, or portion thereof, which is exercised. In the case of exercise of a tandem SAR, such payment shall be made in exchange for the surrender of the unexercised related stock option (or any portion or portions thereof which the grantee from time to time determines to surrender for this purpose). (d) Form of Payment Upon Exercise of SARs. Payment by the Corporation of the amount receivable upon any exercise of an SAR may be made by the delivery of Common Stock or cash, or any combination of Common Stock and cash, as determined in the sole discretion of the Committee from time to time. If upon settlement of the exercise of an SAR a grantee is to receive a portion of such payment in shares of Common Stock, the number of shares shall be determined by dividing such portion by the Fair Market Value of a share of Common Stock on the exercise date. No fractional shares shall be used for such payment and the Committee shall determine whether cash shall be given in lieu of such fractional shares or whether such fractional shares shall be eliminated. -8- 8. STOCK AWARDS (INCLUDING RESTRICTED AND UNRESTRICTED SHARES AND PHANTOM STOCK) (a) Stock Awards, In General. Subject to the other applicable provisions of the Plan, the Committee may at any time and from time to time grant stock Awards to eligible participants in such amounts and for such consideration, including no consideration or such minimum consideration as may be required by law, as it determines. A stock Award may be denominated in shares of Common Stock or stock- equivalent units ("phantom stock"), and may be paid in Common Stock, in cash, or in a combination of Common Stock and cash, as determined in the sole discretion of the Committee from time to time. (b) Restricted Shares. Each stock Award shall specify the applicable restrictions, if any, on such shares of Common Stock, the duration of such restrictions, and the time or times at which such restrictions shall lapse with respect to all or a specified number of shares of Common Stock that are part of the Award. Notwithstanding the foregoing, the Committee may reduce or shorten the duration of any restriction applicable to any shares of Common Stock awarded to any grantee under the Plan. Share certificates with respect to restricted shares of Common Stock granted pursuant to a stock Award may be issued at the time of grant of the stock Award, subject to forfeiture if the restrictions do not lapse, or upon lapse of the restrictions. If share certificates are issued at the time of grant of the stock Award, the certificates shall bear an appropriate legend with respect to the restrictions applicable to such stock Award or, alternatively, the grantee may be required to deposit the certificates with the Corporation during the period of any restriction thereon and to execute a blank stock power or other instrument of transfer therefor. Except as otherwise provided by the Committee, during such period of restriction following issuance of share certificates, the grantee shall have all of the rights of a holder of Common Stock, including but not limited to the rights to receive dividends (or amounts equivalent to dividends) and to vote with respect to the restricted shares. If share certificates are issued upon lapse of restrictions on a stock Award, the Committee may provide that the grantee will be entitled to receive any amounts per share pursuant to any dividend or distribution paid by the Corporation on its Common Stock to stockholders of record after grant of the stock Award and prior to the issuance of the share certificates. (c) Phantom Stock. The grant of phantom stock units shall be evidenced by a Grant Agreement, executed by the Corporation and the grantee, that incorporates the terms of the Plan and states the number of phantom stock units evidenced thereby and the terms and conditions of such phantom stock units in such form as the Committee may from time to time determine. Phantom stock units granted to a participant shall be credited to a bookkeeping reserve account solely for accounting purposes and shall not require a segregation of any of the Corporation's assets. Phantom stock units may be exercised in whole or in part by delivery of an appropriate exercise notice to the Committee in accordance with the provisions of the Grant Agreement, and/or such rules and regulations as the Committee may prescribe, and/or such determinations, orders, or decisions as the Committee may make. Except as otherwise provided in the applicable Grant Agreement, the grantee shall have none of the rights of a stockholder with respect to any shares of Common Stock represented by a phantom stock unit as a result of the grant of a phantom stock unit to the grantee. Phantom stock units may contain such other provisions, not inconsistent with the provisions of the Plan, as the Committee shall determine appropriate from time to time. -9- 9. PERFORMANCE AWARDS The Committee may in its discretion grant performance Awards which become payable on account of attainment of one or more performance goals established by the Committee. Performance Awards may be paid by the delivery of Common Stock or cash, or any combination of Common Stock and cash, as determined in the sole discretion of the Committee from time to time. Performance goals established by the Committee may be based on the Corporation's operating income or one or more other business criteria selected by the Committee that apply to an individual or group of individuals, a business unit, or the Corporation as a whole, over such performance period as the Committee may designate. The Committee in its discretion may recommend to the Board of Directors of the Corporation that the material terms of any Performance Award or program with respect to some or all eligible participants be submitted for approval by the stockholders. 10. WITHHOLDING OF TAXES The Corporation may require, as a condition to the grant of any Award under the Plan or exercise pursuant to such Award or to the delivery of certificates for shares issued or payments of cash to a grantee pursuant to the Plan or a Grant Agreement (hereinafter collectively referred to as a "taxable event"), that the grantee pay to the Corporation, in cash or, unless otherwise determined by the Corporation, in shares of Common Stock, including shares acquired upon grant of the Award or exercise of the Award, valued at Fair Market Value on the date as of which the withholding tax liability is determined, any federal, state or local taxes of any kind required by law to be withheld with respect to any taxable event under the Plan. The Corporation, to the extent permitted or required by law, shall have the right to deduct from any payment of any kind (including salary or bonus) otherwise due to a grantee any federal, state or local taxes of any kind required by law to be withheld with respect to any taxable event under the Plan, or to retain or sell without notice a sufficient number of the shares to be issued to such grantee to cover any such taxes. 11. TRANSFERABILITY Unless determined otherwise by the Committee and in any event in the case of an incentive stock option or a stock appreciation right granted with respect to an incentive stock option, no Award granted under the Plan shall be transferable by a grantee otherwise than by will or the laws of descent and distribution. Unless otherwise determined by the Committee in accord with the provisions of the immediately preceding sentence, an Award may be exercised during the lifetime of the grantee, only by the grantee or, during the period the grantee is under a legal disability, by the grantee's guardian or legal representative. 12. ADJUSTMENTS; BUSINESS COMBINATIONS In the event of a reclassification, recapitalization, stock split, stock dividend, combination of shares, or other similar event, the maximum number and kind of shares reserved for issuance or with respect to which Awards may be granted under the Plan as provided in Section 4 shall be adjusted to reflect such event, and the Committee shall make such adjustments as it deems appropriate and equitable in the number, kind and price of shares covered by outstanding Awards made under the Plan, and in any other matters which relate to Awards and which are affected by the changes in the Common Stock referred to above. -10- In the event of any proposed Change in Control, the Committee shall take such action as it deems appropriate and equitable to effectuate the purposes of this Plan and to protect the grantees of Awards, which action may include, but without limitation, any one or more of the following: (i) acceleration or change of the exercise dates of any Award; (ii) arrangements with grantees for the payment of appropriate consideration to them for the cancellation and surrender of any Award; and (iii) in any case where equity securities other than Common Stock of the Corporation are proposed to be delivered in exchange for or with respect to Common Stock of the Corporation, arrangements providing that any Award shall become one or more Awards with respect to such other equity securities. The Committee is authorized to make adjustments in the terms and conditions of, and the criteria included in, Awards in recognition of unusual or nonrecurring events (including, without limitation, the events described in the preceding two paragraphs of this Section 12) affecting the Corporation, or the financial statements of the Corporation or any Subsidiary, or of changes in applicable laws, regulations, or accounting principles, whenever the Committee determines that such adjustments are appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan. In the event the Corporation dissolves and liquidates (other than pursuant to a plan of merger or reorganization), then notwithstanding any restrictions on exercise set forth in this Plan or any Grant Agreement, or other agreement evidencing a stock option, stock appreciation right or restricted stock Award: (i) each grantee shall have the right to exercise his stock option or stock appreciation right, or to require delivery of share certificates representing any such restricted stock Award, at any time up to ten (10) days prior to the effective date of such liquidation and dissolution; and (ii) the Committee may make arrangements with the grantees for the payment of appropriate consideration to them for the cancellation and surrender of any stock option, stock appreciation right or restricted stock Award that is so canceled or surrendered at any time up to ten (10) days prior to the effective date of such liquidation and dissolution. The Committee may establish a different period (and different conditions) for such exercise, delivery, cancellation, or surrender to avoid subjecting the grantee to liability under Section 16(b) of the Exchange Act. Any stock option or stock appreciation right not so exercised, canceled, or surrendered shall terminate on the last day for exercise prior to such effective date; and any restricted stock as to which there has not been such delivery of share certificates or that has not been so canceled or surrendered, shall be forfeited on the last day prior to such effective date. The Committee shall give to each grantee written notice of the commencement of any proceedings for such liquidation and dissolution of the Corporation and the grantee's rights with respect to his outstanding Award. 13. TERMINATION AND MODIFICATION OF THE PLAN The Board, without further approval of the stockholders, may modify or terminate the Plan or any portion thereof at any time, except that no modification shall become effective without prior approval of the stockholders of the Corporation if stockholder approval is necessary to comply with any tax or regulatory requirement or rule of any exchange or Nasdaq System upon which the Common Stock is listed or quoted; including for this purpose stockholder approval that is required for continued compliance with Rule 16b-3 or stockholder approval that is required to enable the Committee to grant incentive stock options pursuant to the Plan. -11- The Committee shall be authorized to make minor or administrative modifications to the Plan as well as modifications to the Plan that may be dictated by requirements of federal or state laws applicable to the Corporation or that may be authorized or made desirable by such laws. The Committee may amend or modify the grant of any outstanding Award in any manner to the extent that the Committee would have had the authority to make such Award as so modified or amended. 14. NON-GUARANTEE OF EMPLOYMENT Nothing in the Plan or in any Grant Agreement thereunder shall confer any right on an employee to continue in the employ of the Corporation or shall interfere in any way with the right of the Corporation to terminate an employee at any time. 15. Termination of Employment For purposes of maintaining a grantee's continuous status as an employee and accrual of rights under any Award, transfer of an employee among the Corporation and the Corporation's Parent or Subsidiaries shall not be considered a termination of employment. Nor shall it be considered a termination of employment for such purposes if an employee is placed on military or sick leave or such other leave of absence which is considered as continuing intact the employment relationship; in such a case, the employment relationship shall be continued until the date when an employee's right to reemployment shall no longer be guaranteed either by law or contract. 16. WRITTEN AGREEMENT Each Grant Agreement entered into between the Corporation and a grantee with respect to an Award granted under the Plan shall incorporate the terms of this Plan and shall contain such provisions, consistent with the provisions of the Plan, as may be established by the Committee. 17. NON-UNIFORM DETERMINATIONS The Committee's determinations under the Plan (including without limitation determinations of the persons to receive Awards, the form, amount and timing of such Awards, the terms and provisions of such Awards and the agreements evidencing same) need not be uniform and may be made by it selectively among persons who receive, or are eligible to receive, Awards under the Plan, whether or not such persons are similarly situated. 18. LIMITATION ON BENEFITS With respect to persons subject to Section 16 of the Exchange Act, transactions under this Plan are intended to comply with all applicable conditions of Rule 16b-3. To the extent any provision of the Plan or action by the Committee fails to so comply, it shall be deemed null and void, to the extent permitted by law and deemed advisable by the Committee. 19. LISTING AND REGISTRATION If the Corporation determines that the listing, registration or qualification upon any securities exchange or upon any listing or quotation system established by the National -12- Association of Securities Dealers, Inc. ("Nasdaq System") or under any law, of shares subject to any Award is necessary or desirable as a condition of, or in connection with, the granting of same or the issue or purchase of shares thereunder, no such Award may be exercised in whole or in part and no restrictions on such Award shall lapse, unless such listing, registration or qualification is effected free of any conditions not acceptable to the Corporation. 20. COMPLIANCE WITH SECURITIES LAW The Corporation may require that a grantee, as a condition to exercise of an Award, and as a condition to the delivery of any share certificate, provide to the Corporation, at the time of each such exercise and each such delivery, a written representation that the shares of Common Stock being acquired shall be acquired by the grantee solely for investment and will not be sold or transferred without registration or the availability of an exemption from registration under the Securities Act and applicable state securities laws. The Corporation may also require that a grantee submit other written representations which will permit the Corporation to comply with federal and applicable state securities laws in connection with the issuance of the Common Stock, including representations as to the knowledge and experience in financial and business matters of the grantee and the grantee's ability to bear the economic risk of the grantee's investment. The Corporation may require that the grantee obtain a "purchaser representative" as that term is defined in applicable federal and state securities laws. The stock certificates for any shares of Common Stock issued pursuant to this Plan may bear a legend restricting transferability of the shares of Common Stock unless such shares are registered or an exemption from registration is available under the Securities Act and applicable state securities laws. The Corporation may notify its transfer agent to stop any transfer of shares of Common Stock not made in compliance with these restrictions. Common Stock shall not be issued with respect to an Award granted under the Plan unless the exercise of such Award and the issuance and delivery of share certificates for such Common Stock pursuant thereto shall comply with all relevant provisions of law, including, without limitation, the Securities Act, the Exchange Act, the rules and regulations promulgated thereunder, and the requirements of any national securities exchange or Nasdaq System upon which the Common Stock may then be listed or quoted, and shall be further subject to the approval of counsel for the Corporation with respect to such compliance to the extent such approval is sought by the Committee. 21. NO LIMIT ON OTHER COMPENSATION ARRANGEMENTS Nothing contained in the Plan shall prevent the Corporation or its Parent or Subsidiary corporations from adopting or continuing in effect other compensation arrangements (whether such arrangements be generally applicable or applicable only in specific cases) as the Committee in its discretion determines desirable, including without limitation the granting of stock options, stock awards, stock appreciation rights or phantom stock units otherwise than under the Plan. 22. NO TRUST OR FUND CREATED Neither the Plan nor any Award shall create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Corporation and a grantee or any other person. To the extent that any grantee or other person acquires a right to receive payments from the Corporation pursuant to an Award, such right shall be no greater than the right of any unsecured general creditor of the Corporation. -13- 23. GOVERNING LAW The validity, construction and effect of the Plan, of Grant Agreements entered into pursuant to the Plan, and of any rules, regulations, determinations or decisions made by the Board or Committee relating to the Plan or such Grant Agreements, and the rights of any and all persons having or claiming to have any interest therein or thereunder, shall be determined exclusively in accordance with applicable federal laws and the laws of the State of Delaware, without regard to its conflict of laws rules and principles. 24. PLAN SUBJECT TO CHARTER AND BY-LAWS This Plan is subject to the Charter and By-Laws of the Corporation, as they may be amended from time to time. 25. EFFECTIVE DATE; TERMINATION DATE The Plan is effective as of the date on which the Plan was adopted by the Board, subject to approval of the stockholders within twelve months before or after such date. No Award shall be granted under the Plan after the close of business on the day immediately preceding the tenth anniversary of the effective date of the Plan. Subject to other applicable provisions of the Plan, all Awards made under the Plan prior to such termination of the Plan shall remain in effect until such Awards have been satisfied or terminated in accordance with the Plan and the terms of such Awards. Date Approved by the Board: ________________________ Date Approved by the Shareholders: ___________________ -14- EXHIBIT F MAPQUEST.COM, INC. EMPLOYEE STOCK PURCHASE PLAN ARTICLE I --------- PURPOSE ------- 1.01. PURPOSE. The MAPQUEST.COM, INC. EMPLOYEE STOCK PURCHASE PLAN is ---- ------- intended to provide a method whereby employees of MapQuest.com, Inc. (the "Company") and its subsidiary corporations will have an opportunity to acquire a proprietary interest in the Company through the purchase of shares of the Common Stock of the Company. It is the intention of the Company to have the Plan qualify as an "employee stock purchase plan" under (S)423 of the Internal Revenue Code of 1986, as amended (the "Code"). The provisions of the Plan shall be construed so as to extend and limit participation in a manner consistent with the requirements of that section of the Code. ARTICLE II ---------- DEFINITIONS ----------- 2.01 BASE PAY. "Base Pay" means regular straight-time earnings excluding ---- -------- payments for overtime, shift premium, bonuses and other special payments, commissions and other marketing incentive payments. 2.02 BOARD. "Board of Directors" or "Board" means the Board of Directors ---- ----- of the Company. 2.03 COMMITTEE. "Committee" means the individuals described in Article ---- --------- XI. 2.04 COMMON STOCK. "Common Stock" means the common stock of the Company. ---- ------------ 2.05 DESIGNATED SUBSIDIARY CORPORATION. "Designated Subsidiary ---- --------------------------------- Corporation" means a Subsidiary Corporation which is designated by the Company's Board of Directors to participate in the Plan. 2.06 EMPLOYEE. "Employee" means any person who is employed by the Company ---- -------- or a Designated Subsidiary Corporation. 2.07 OFFERINGS AND OFFERING PERIODS. The Plan will be implemented by ---- ------------------------------- "Offerings" of the right to purchase Company Stock through payroll deduction in consecutive "Offering Periods", each constituting a six month period. Such Offering Periods shall commence as provided in Section 4.01 and shall continue until the termination of the Plan in accordance with Section 12.05. 2.08 OFFERING COMMENCEMENT DATE. The "Offering Commencement Date" is the ---- -------------------------- first day of an Offering Period during which the NASDAQ system is open for trading. 2.09 OFFERING TERMINATION DATE. The "Offering Termination Date" is the ---- ------------------------- last day of an Offering Period during which the NASDAQ system is open for trading. 2.10 SUBSIDIARY CORPORATION. "Subsidiary Corporation" means any present ---- ---------------------- or future corporation which would be a "subsidiary corporation" of the Company as that term is defined in (S)424 of the Code. ARTICLE III ----------- ELIGIBILITY AND PARTICIPATION ----------------------------- 3.01 INITIAL ELIGIBILITY. All Employees are eligible to participate ---- ------------------- hereunder, commencing on any Offering Commencement Date. 3.02 COMMENCEMENT OF PARTICIPATION. An eligible Employee may become a ---- ----------------------------- participant by completing an authorization for a payroll deduction on the form provided by the Company and filing it with the office of the Human Resources Director of the Company on or before the date set therefor by the Committee, which date shall be prior to the Offering Commencement Date for the Offering Period. Payroll deductions for a participant shall commence on the applicable Offering Commencement Date when his authorization for a payroll deduction becomes effective and shall end on the Offering Termination Date of the Offering to which such authorization is applicable unless sooner terminated by the participant as provided in Article VIII. 3.03 RESTRICTIONS ON PARTICIPATION. Notwithstanding any provision of the ---- ----------------------------- Plan to the contrary, no Employee shall be granted an option to participate in the Plan: (a) if, immediately after the grant, such Employee would own stock, and/or hold outstanding options to purchase stock, possessing 5% or more of the total combined voting power or value of all classes of stock of the Company or any Subsidiary Corporation. (For purposes of this paragraph, the rules of (S)424(d) of the Code shall apply in determining stock ownership of any Employee); or (b) which permits his rights to purchase stock under all employee stock purchase plans of the Company and its Subsidiary Corporations to accrue at a rate which exceeds $25,000 in fair market value of the stock (determined at the time such option is granted) for each calendar year in which such option is outstanding. 2 3.04 LEAVE OF ABSENCE. For purposes of participation in the Plan, a ---- ---------------- person on leave of absence shall be deemed to be an Employee for the first 90 days of such leave of absence and such Employee's employment shall be deemed to have terminated at the close of business on the 90th day of such leave of absence unless such Employee shall have returned to regular full-time or part- time employment (as the case may be) prior to the close of business on such 90th day. Termination by the Company of any Employee's leave of absence, other than termination of such leave of absence on return to full time or part time employment, shall terminate an Employee's employment for all purposes of the Plan and shall terminate such Employee's participation in the Plan and right to exercise any option. ARTICLE IV ---------- OFFERINGS --------- 4.01 SEMI-ANNUAL OFFERING PERIODS. The first Offering Period shall be the ---- ---------------------------- six month period beginning on July 1, 1999 and ending on December 31, 1999. (Provided, however, that the first Offering Period will not begin before the effective date of the registration statement filed by the Company for the Plan with the Securities and Exchange Commission.) Subsequent Offering Periods will begin on January 1 and July 1 of each year. 4.02 REVISED OFFERING PERIODS. In the discretion of the Committee, semi- ---- ------------------------ annual Offering Periods may be divided into quarterly Offering Periods or combined into annual Offering Periods. The maximum number of shares available during an Offering Period under Section 10.01 shall be adjusted appropriately. ARTICLE V --------- PAYROLL DEDUCTIONS ------------------ 5.01 AMOUNT OF DEDUCTION. At the time a participant files his ---- ------------------- authorization for payroll deduction, he shall elect to have deductions made from his pay on each payday during the Offering Period at the rate of 1, 2, 3, 4, 5, 6, 7, 8, 9 or 10% of his base pay in effect at any such payday. 5.02 PARTICIPANT'S ACCOUNT. All payroll deductions made for a participant ---- --------------------- shall be credited to his account under the Plan. A participant may not make any separate cash payment into such account except when on leave of absence and then only as provided in (S)5.04. 5.03 CHANGES IN PAYROLL DEDUCTIONS. A participant may discontinue his ---- ----------------------------- participation in the Plan as provided in Article VIII, but no other change can be made during an Offering and, specifically, a participant may not alter the amount of his payroll deductions for that Offering. The payroll deduction form may provide that it shall 3 continue from Offering Period to Offering Period unless changed by a participant before the beginning of a subsequent Offering Period. 5.04 LEAVE OF ABSENCE. If a participant goes on a leave of absence, such ---- ---------------- participant shall have the right to elect: (a) to withdraw the balance in his or her account pursuant to (S)7.02, (b) to discontinue contributions to the Plan but remain a participant in the Plan, or (c) remain a participant in the Plan during such leave of absence (provided the individual was eligible to participate at the Offering Commencement Date), authorizing deductions to be made from payments by the Company or its Designated Subsidiary Corporations to the participant during such leave of absence and undertaking to make cash payments to the Plan at the end of each payroll period to the extent that amounts payable by the Company and its Designated Subsidiary Corporations to such participant are insufficient to meet such participant's authorized Plan deductions. ARTICLE VI ---------- GRANTING OF OPTION ------------------ 6.01 NUMBER OF OPTION SHARES. On the Offering Commencement Date of each ---- ----------------------- Offering, a participating Employee shall be deemed to have been granted a qualified option to purchase on the Offering Termination Date of such Offering Period (at the Option Price in Section 6.02) the number of shares of the Company's Common Stock determined by dividing such Employee's payroll deductions accumulated during such Offering Period and retained in the participant's account as of the Offering Termination Date by the applicable Option Price. 6.02 OPTION PRICE. The Option Price of Common Stock purchased with ---- ------------ payroll deductions made during an Offering Period for a participant therein shall be the lower of: (a) 85% of the closing price of the stock on the Offering Commencement Date, or (in the event the stock was not traded on such date) the nearest prior business day on which trading of the Company's Common Stock occurred, on the NASDAQ National Market System; or (b) 85% of the closing price of the stock on the Offering Termination Date, or (in the event the stock was not traded on such date) the nearest prior business day on which trading of the Company's Common Stock occurred, on the NASDAQ National Market System. If the Company's Common Stock is not admitted to trading on the NASDAQ National Market System on any of the aforesaid dates for which closing prices of the stock are to be determined, then reference shall be made to the fair market value of the stock on that date, as determined on such basis as shall be established or specified for the purpose by the Committee. 4 ARTICLE VII ----------- EXERCISE OF OPTION ------------------ 7.01 AUTOMATIC EXERCISE. Unless a participant gives written notice to the ---- ------------------ Company as hereinafter provided, his option for the purchase of stock with payroll deductions made during any Offering will be deemed to have been exercised automatically on the Offering Termination Date applicable to such Offering, for the purchase of the number of full shares of Common Stock which the accumulated payroll deductions in his account at that time will purchase at the applicable Option Price, subject to the maximum stated in Section 10.01. Except as provided in Section 7.03, any excess in his account at that time will be refunded to him. 7.02 WITHDRAWAL OF ACCOUNT. By written notice to the Human Resources ---- --------------------- Director of the Company, at any time prior to the Offering Termination Date applicable to any Offering, a participant may elect to withdraw all of the accumulated payroll deductions in his account at such time. 7.03 FRACTIONAL SHARES. Fractional shares will not be issued under the ---- ----------------- Plan. Any accumulated payroll deductions which would have been used to purchase fractional shares will be carried over and applied to purchase shares in the succeeding Offering Period, if the Employee elects to participate in such Offering Period. If not, such excess payroll deductions will be promptly returned to the Employee. 7.04 TRANSFERABILITY OF OPTION. During a participant's lifetime, options ---- ------------------------- held by such participant shall be exercisable only by that participant. 7.05 DELIVERY OF STOCK. As promptly as practicable after the Offering ---- ----------------- Termination Date of each Offering, the Company will deliver to each participant, as appropriate, the stock purchased upon exercise of his option. ARTICLE VIII ------------ WITHDRAWAL ---------- 8.01 IN GENERAL. As indicated in (S)7.02, a participant may withdraw ---- ---------- payroll deductions credited to his account under the Plan at any time prior to an Offering Termination Date by giving written notice to the Human Resources Director of the Company. All of the participant's payroll deductions credited to his account will be paid to him promptly after receipt of his notice of withdrawal, and no further payroll deductions will be made from his pay during such Offering. The Company may, at its option, treat any attempt to borrow by an Employee on the security of his accumulated payroll deductions as an election, under (S)7.02, to withdraw such deductions. 5 8.02 EFFECT ON SUBSEQUENT PARTICIPATION. A participant's withdrawal from ---- ---------------------------------- any Offering will not have any effect upon his eligibility to participate in any succeeding Offering or in any similar plan which may hereafter be adopted by the Company. 8.03 TERMINATION OF EMPLOYMENT. Upon termination of the participant's ---- ------------------------- employment for any reason, including retirement or death (but excluding continuation of a leave of absence for a period beyond 90 days), the payroll deductions credited to his account will be returned to him, or, in the case of his death, to the person or persons entitled thereto under (S)12.01. ARTICLE IX ---------- INTEREST -------- 9.01 NO PAYMENT OF INTEREST. No interest will be paid or allowed on any ---- ---------------------- money paid into the Plan or credited to the account of any participating Employee. ARTICLE X --------- STOCK ----- 10.01 SHARES SUBJECT TO PLAN. The stock subject to the Plan shall be ----- ---------------------- shares of the Company's Common Stock, which may be (i) authorized but unissued shares, (ii) treasury shares and/or (iii) shares purchased on the open market by a broker designated by the Company. The maximum number of shares of Common Stock which shall be issued under the Plan, subject to adjustment upon changes in capitalization of the Company as provided in (S)12.04, shall be Four Hundred Thirty Eight Thousand, Seven Hundred and Fifty (438,750) shares in each Offering plus in each Offering all unissued shares from prior Offerings, whether offered or not, not to exceed One Million Seven Hundred Fifty Five Thousand (1,755,000) shares for all Offerings. No participant may purchase more than One Thousand Five Hundred (1,500) shares in any one Offering Period. If the total number of shares for which options are exercised on any Offering Termination Date in accordance with Article VI exceeds the maximum number of shares for the applicable offering, the Company shall make a pro rata allocation of the shares available for delivery and distribution in as nearly a uniform manner as shall be practicable and as it shall determine to be equitable, and the balance of payroll deductions credited to the account of each participant under the Plan shall be returned to him as promptly as possible. 10.02 PARTICIPANT'S INTEREST IN OPTION STOCK. The participant will have ----- -------------------------------------- no interest in stock covered by his option until such option has been exercised. 10.03 ISSUANCE OF STOCK. Stock purchased under the Plan will be issued in ----- ----------------- the name of the participant, or, if the participant so directs by written notice to the Human Resources Director of the Company prior to the Offering Termination Date applicable thereto, in the names of the participant and one such other person as may be designated 6 by the participant, as joint tenants with rights of survivorship or as tenants by the entireties, to the extent permitted by applicable law. 10.04 RESTRICTIONS ON EXERCISE. The Board of Directors may, in its ----- ------------------------ discretion, require as conditions to the exercise of any option that the shares of Common Stock reserved for issuance upon the exercise of the option shall have been duly listed, upon official notice of issuance, upon a stock exchange, and that either: (a) a registration statement under the Securities Act of 1933, as amended, with respect to said shares shall be effective, or (b) the participant shall have represented at the time of purchase, in form and substance satisfactory to the Company, that it is his intention to purchase the shares for investment and not for resale or distribution. ARTICLE XI ---------- ADMINISTRATION -------------- 11.01 APPOINTMENT OF COMMITTEE. The Board of Directors shall appoint a ----- ------------------------ committee (the "Committee") to administer the Plan, which shall consist of either (a) the full Board of Directors or (b) no fewer than two members of the Board of Directors. 11.02 AUTHORITY OF COMMITTEE. Subject to the express provisions of the ----- ---------------------- Plan, the Committee shall have plenary authority in its discretion to interpret and construe any and all provisions of the Plan, to adopt rules and regulations for administering the Plan, and to make all other determinations deemed necessary or advisable for administering the Plan. The Committee's determination on the foregoing matters shall be conclusive. 11.03 RULES GOVERNING THE ADMINISTRATION OF THE COMMITTEE. The Board of ----- --------------------------------------------------- Directors may from time to time appoint members of the Committee in substitution for or in addition to members previously appointed and may fill vacancies, however caused, in the Committee. The Committee may select one of its members as its Chairman and shall hold its meetings at such times and places as it shall deem advisable and may hold telephonic meetings. A majority of its members shall constitute a quorum. All determinations of the Committee shall be made by a majority of its members. The Committee may correct any defect or omission or reconcile any inconsistency in the Plan, in the manner and to the extent it shall deem desirable. Any decision or determination reduced to writing and signed by a majority of the members of the Committee shall be as fully effective as if it had been made by a majority vote at a meeting duly called and held. The Committee may appoint a secretary and shall make such rules and regulations for the conduct of its business as it shall deem advisable. 11.04 LIMITED LIABILITY; INDEMNIFICATION. To the maximum extent permitted ----- ---------------------------------- by Delaware law, neither the Company, Board or Committee nor any of its members shall be 7 liable for any action or determination made in good faith with respect to this Plan. In addition to such other rights of indemnification that they may have, the members of the Board and Committee shall be indemnified by the Company to the maximum extent permitted by Delaware law against any and all liabilities and expenses incurred in connection with their service in connection with the Plan in such capacity. ARTICLE XII ----------- MISCELLANEOUS ------------- 12.01 DESIGNATION OF BENEFICIARY. A participant may file a written ----- -------------------------- designation of a beneficiary who is to receive any Common Stock which has not been issued or cash which is in the participant's account at the time of the participant's death. Such designation of beneficiary may be changed by the participant at any time by written notice to the Human Resources Director of the Company. Upon the death of a participant and upon receipt by the Company of proof of identity and existence at the participant's death of a beneficiary validly designated by him under the Plan, the Company shall deliver such stock and/or cash to such beneficiary. In the event of the death of a participant and in the absence of a beneficiary validly designated under the Plan who is living at the time of such participant's death, the Company shall deliver such stock and/or cash to the executor or administrator of the estate of the participant, or if no such executor or administrator has been appointed (to the knowledge of the Company), the Company, in its discretion, may deliver such stock and/or cash to the spouse or to any one or more dependents of the participant as the Company may designate. No beneficiary shall, prior to the death of the participant by whom he has been designated, acquire any interest in the stock or cash credited to the participant under the Plan. 12.02 TRANSFERABILITY. Neither payroll deductions credited to a ----- --------------- participant's account nor any rights with regard to the exercise of an option or to receive stock under the Plan may be assigned, transferred, pledged, or otherwise disposed of in any way by the participant other than by will or the laws of descent and distribution. Any such attempted assignment, transfer, pledge or other disposition shall be without effect, except that the Company may treat such act as an election to withdraw funds in accordance with (S)7.02. 12.03 USE OF FUNDS. All payroll deductions received or held by the ----- ------------ Company under this Plan may be used by the Company for any corporate purpose and the Company shall not be obligated to segregate such payroll deductions. 12.04 ADJUSTMENT UPON CHANGES IN CAPITALIZATION. ----- ----------------------------------------- (a) If, while any options are outstanding, the outstanding shares of Common Stock of the Company have increased, decreased, changed into, or been exchanged for a different number or kind of shares or securities of the Company through reorganization, merger, recapitalization, reclassification, stock split, reverse stock split or 8 similar transaction, appropriate and proportionate adjustments may be made by the Committee in the number and/or kind of shares which are subject to purchase under outstanding options and on the option exercise price or prices applicable to such outstanding options. In addition, in any such event, the maximum number and/or kind of shares which may be offered in the Offerings described in Articles IV and Section 10.01 hereof shall also be proportionately adjusted. No adjustments shall be made for stock dividends. For the purposes of this Paragraph, any distribution of shares to shareholders in an amount aggregating 20% or more of the outstanding shares shall be deemed a stock split and any distributions of shares aggregating less than 20% of the outstanding shares shall be deemed a stock dividend. (b) Upon the dissolution or liquidation of the Company, or upon a reorganization, merger or consolidation of the Company with one or more corporations as a result of which the Company is not the surviving corporation, or upon a sale of substantially all of the property or stock of the Company to another corporation, the Committee shall take such action as it deems appropriate and equitable, which action may include, without limitation, one of the following: (i) refund of payroll deductions for such Offering Period; (ii) shortening of the Offering Period or (iii) providing that the holder of each option then outstanding under the Plan will thereafter be entitled to receive at the next Offering Termination Date upon the exercise of such option for each share as to which such option shall be exercised, as nearly as reasonably may be determined, the cash, securities and/or property which a holder of one share of the Common Stock was entitled to receive upon and at the time of such transaction. In the event the Plan is continued after such event, the Board of Directors shall take such steps in connection with such transactions as the Board shall deem necessary to assure that the provisions of this (S)12.04 shall thereafter be applicable, as nearly as reasonably may be determined, in relation to the said cash, securities and/or property as to which such holder of such option might thereafter be entitled to receive. 12.05 AMENDMENT AND TERMINATION. ----- ------------------------- (a) Action by Board. The Board of Directors shall have complete power and authority to terminate or amend the Plan; provided, however, that the Board of Directors shall not, without the approval of the stockholders of the Company (i) increase the maximum number of shares which may be issued under the Plan or under any Offering (except pursuant to (S)(S)4.02 and 12.04); or (ii) amend the requirements as to the class of employees eligible to purchase stock under the Plan. Upon termination of the Plan during an Offering Period, at the discretion of the Committee, cash balances in participants accounts may be refunded or the Offering Termination Date may be accelerated. No termination, modification, or amendment of the Plan may otherwise, without the consent of an Employee then having an option under the Plan to purchase stock, adversely affect the rights of such Employee under such option. (b) Automatic Termination. The Plan shall automatically terminate on the earlier of the day prior to the tenth anniversary of the adoption of the Plan, or the 9 issuance of the maximum number of shares available under the Plan pursuant to Section 10.01. 12.06 TAX WITHHOLDING. At the time an option is exercised or at the time ----- --------------- some or all of the Company's Common Stock issued under the Plan is disposed of, the participant must make adequate provision for the Company's federal, state, or other tax withholding obligations, if any, which arise upon the exercise of the option or the disposition of the Common Stock. At the request of the Company, the participant will advance cash in an amount sufficient to discharge any such tax withholding obligations. At any time, the Company may, but shall not be obligated to, withhold from the participant's compensation the amount necessary for the Company to meet applicable withholding obligations. 12.07 DISQUALIFYING DISPOSITION. The Committee may require that a ----- ------------------------- participant notify the Company of any disposition of shares of Common Stock purchased under the Plan within a period of two (2) years subsequent to the respective Offering Commencement Date or one (1) year from the Offering Termination Date. 12.08 EFFECTIVE DATE. The Plan shall become effective as of the date it ----- -------------- is adopted by the Board of Directors, subject to approval by the shareholders of the Company within twelve months before or after such date. If the Plan is not so approved, the Plan shall be discontinued, any options which had been issued shall be considered nonqualified options and any payroll deductions then held by the Company shall be refunded to the respective Employees. 12.09 NO EMPLOYMENT RIGHTS. The Plan does not, directly or indirectly, ----- -------------------- create in any Employee or class of Employees any right with respect to continuation of employment by the Company, and it shall not be deemed to interfere in any way with the Company's right to terminate, or otherwise modify, an Employee's employment at any time. 12.10 EXCLUSION FROM RETIREMENT AND FRINGE BENEFIT COMPUTATION. No ----- --------------------------------------------- portion of the award of options under this Plan, or the proceeds from the sale of stock purchased under the Plan, shall be taken into account as "wages," "salary" or "compensation" for any purpose, whether in determining eligibility, benefits or otherwise, under (i) any pension, retirement, profit sharing or other qualified or non-qualified plan of deferred compensation, (ii) any employee welfare or fringe benefit plan including, but not limited to, group insurance, hospitalization, medical, and disability, or (iii) any form of extraordinary pay including, but not limited to, bonuses, sick pay and vacation pay. 12.11 EFFECT OF PLAN. The provisions of the Plan shall, in accordance ----- -------------- with its terms, be binding upon, and inure to the benefit of, all successors of each Employee participating in the Plan, including, without limitation, such Employee's estate and the 10 executors, administrators or trustees thereof, heirs and legatees, and any receiver, trustee in bankruptcy or representative of creditors of such Employee. 12.12 EXPENSES. Expenses of administering the Plan shall be borne by the ----- -------- Company except that brokerage expenses incurred in connection with the purchase of shares shall be included as part of the cost of the shares to participating Employees. 12.13 GOVERNING LAW. The law of the State of Delaware will govern all ----- ------------- matters relating to this Plan except to the extent it is superseded by the laws of the United States. 11 EXHIBIT G GEOSYSTEMS GLOBAL CORPORATION 1995 STOCK OPTION PLAN AMENDMENT NO. 4 -------------------------- I. Purpose. Reference is made to that certain 1995 Stock Option Plan (the ------- "Option Plan") of GeoSystems Global Corporation (the "Company"). To the extent not otherwise defined herein, capitalized terms shall have the meaning accorded to them in the Option Plan. The Board of the Company has determined it to be in the best interest of the Company to amend certain provisions of the Option Plan, and in accordance with applicable law, have adopted resolutions authorizing the amendment set forth below. To the extent not expressly amended hereby, the Option Plan shall remain in full force and effect, in accordance with its terms. II. Amendment of Plan. The Option Plan is amended as follows: ----------------- (i) Effective immediately the Option Plan is amended to: (a) Change the name "GeoSystems Global Corporation" to "MapQuest.com, Inc." each place it appears therein; (b) Change the term "Internal Revenue Code of 1954" in Article I, Section 1 to "Internal Revenue Code of 1986"; (c) Delete the third sentence of Article I, Section 2 which describes the makeup of the Committee which administers the Option Plan and substitute the following: The Committee shall consist of not less than two (2) members of the Board, each of whom shall be an "outside director" within the meaning of Code Section 162(m) and "non-employee director" within the meaning of Rule 16b-3 (or any successor rule or regulation) promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act"); (d) Add the following as the third paragraph of Article I, Section 2: If the Board does not appoint a Stock Option Committee as provided above, the Board itself shall administer the Plan and the term "Committee" shall be deemed to refer to the Board; (e) Add the following as the second paragraph of Article II, Section 2: The maximum number of shares of Common Stock subject to Options that may be granted during any one calendar year to any one individual shall be limited to One Hundred Fifty Thousand (150,000). To the extent required by Section 162(m) of the Code and so long as Section 162(m) of the Code is applicable to persons eligible to participate in the Plan, shares of Common Stock subject to the foregoing limit with respect to which the related Option is terminated, surrendered or canceled shall not again be available for grant under this limit; and (f) Delete all of the words prior to the colon in the second paragraph in Article IV, Section 8 regarding the definition of "Change of Control" and substitute "A Change in Control shall be deemed to have occurred if." (ii) Effective upon the date the Corporation is required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 the Option Plan is amended -2- to delete Article II, Section 4, paragraph (i) which included a repurchase right by the Corporation with respect to shares issued upon option exercise. -3- EXHIBIT H-1 ----------- DIRECTORS Michael Mulligan Robert McCormack John Moragne Dan Nova Carlo von Schroeter C. Richard Allen EXHIBIT H-2 ----------- AUDIT COMMITTEE MEMBERS Robert McCormack Carlo von Schroeter EXHIBIT H-3 ----------- COMPENSATION COMMITTEE MEMBERS John Moragne Dan Nova EXHIBIT H-4 ----------- PRICING COMMITTEE MEMBERS Michael Mulligan Robert McCormack John Moragne Dan Nova Carlo von Schroeter EXHIBIT I MAPQUEST.COM, INC. ACTION BY WRITTEN CONSENT OF THE STOCKHOLDERS THE UNDERSIGNED STOCKHOLDERS of MapQuest.com, Inc., a Delaware corporation (the "Company"), waiving all call and notice of the time, place and purpose of a meeting of the stockholders, do hereby consent to and adopt the following resolutions pursuant to Section 228 of the Delaware General Corporation Law: WHEREAS, the undersigned stockholders of the Company (the "Stockholders") own more than fifty percent of the Company's outstanding Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock and Common Stock voting as a single class entitled to vote on matters herein set forth as if the same had been submitted at a meeting of the stockholders; and WHEREAS, the Company desires to further amend and restate its Restated Certificate of Incorporation and amend and restate its By-laws; and WHEREAS, the Board of Directors believes it is in the best interest of the Company to effect a recapitalization (the "Recapitalization") of the Company as more fully described in the Recapitalization Agreement (including the exhibits and schedules thereto) in the form presented to this meeting, terms not otherwise defined herein having the meanings given to them in the Recapitalization Agreement; and WHEREAS, the Board of Directors has previously approved the adoption of Amendment No. 4 to the 1995 Stock Option Plan, the 1999 Stock Plan and the Employee Stock Purchase Plan (together, the "Plans"); and WHEREAS, the Company has previously filed a Registration Statement on Form S-1 (No. 333-72667) with the Securities and Exchange Commission (the "SEC") (the "Registration Statement") under which the Company proposes to offer and sell shares of the Company's common stock which provide gross proceeds to the Company of approximately $40,000,000 (the "Common Stock Offering"); and WHEREAS, the Board of Directors believes it is in the best interest of the Company to list the Common Stock on the Nasdaq National Market System ("Nasdaq"); and WHEREAS, under rules adopted by the SEC, grants of options and securities under employee benefit plans, such as the Plans, that have been approved by the Company's Stockholders are, provided certain additional conditions are met, exempt from the prohibitions of Section 16(b) of the Exchange Act of 1934 (the "Exchange Act"); and WHEREAS, the Board of Directors believes that it would be beneficial to the Company to obtain the vote of the Stockholders approving the Plans in order to qualify the Plans under the SEC rules and qualify for an exemption from Section 16(b); and WHEREAS, in connection with the Recapitalization and Common Stock Offering, the Stockholders wish to approve the Plans, the Recapitalization and the Common Stock Offering, and the execution, delivery and performance of all documents and transactions contemplated thereby; NOW, THEREFORE, the Stockholders do hereby adopt the following resolutions and authorize the following actions: 1. APPROVAL OF AMENDED COMPANY CHARTER ----------------------------------- RESOLVED, that the Stockholders hereby determine that it is advisable that the Company's amended and restated certificate of incorporation (the "Certificate of Incorporation") be further amended in the form submitted to the Stockholders and attached hereto as Exhibit A-1 (the "Amendment No. 2 to the ----------- Certificate of Incorporation"); and FURTHER RESOLVED, that the Stockholders hereby determine that it is advisable that the Certificate of Incorporation be amended and restated in the form submitted to the Stockholders and attached hereto as Exhibit A-2 (the ----------- "Amended and Restated Certificate of Incorporation" and together with Amendment No. 2 to the Certificate of Incorporation, the "Amended Company Charter"); and FURTHER RESOLVED, that the Amended and Restated Certificate of Incorporation is hereby adopted and approved. 2. AMENDMENT OF BY-LAWS. -------------------- FURTHER RESOLVED, that the By-laws of the Company are hereby amended and restated, and adopted in the form attached hereto as Exhibit B presented to this --------- meeting as the By-laws of the Company and that the amended and restated By-laws of the Company provide for the staggered election of the Board of Directors of the Company through the appointment of directors in three separate classes (Classes, I, II and III), with the term of class I to expire in 2002, the term of class II to expire in 2001 and the term of class III to expire in 2000. 3. STOCK SPLIT. ----------- FURTHER RESOLVED, the Company cause each share of its Common Stock, par value $0.001 per share (the "Original Common Stock"), to split on a two and seven-tenths-for-one basis ("Stock Split"), and each certificate representing shares of Original Common Stock now outstanding shall hereby be canceled and shall only represent the right to receive a new certificate or certificates representing the appropriate number of shares of Common Stock; FURTHER RESOLVED, that the Authorized Officers of, and counsel for, the Company, or any of them, be, and each of them hereby is, authorized and directed to take all further steps and to execute all documents necessary or desirable to procure the Stock Split; 4. BOARD OF DIRECTORS. ------------------ FURTHER RESOLVED, that the persons listed on Exhibit C are hereby elected --------- to serve as directors of the Company. Each of Michael Mulligan and Richard Allen are hereby initially appointed as Class I directors; each of Robert McCormack and Daniel Nova are hereby initially appointed as Class II directors; and each of Carlo von Schroeter and John Moragne are hereby initially appointed as Class III directors. 5. APPROVAL OF STOCK PLANS. ----------------------- (a) 1999 Stock Plan --------------- FURTHER RESOLVED, that it is in the best interests of the Company that it offer an omnibus stock plan in order to attract and retain persons of ability as employees, officers, directors and consultants of the Company or of any present or future subsidiary; and FURTHER RESOLVED, that the MapQuest.com, Inc. 1999 Stock Plan, in substantially the form attached hereto as Exhibit D (the "1999 Stock Plan"), be --------- and hereby is approved and adopted by the Stockholders to take effect upon the satisfaction of (a) the effectiveness of the Company's Registration Statement in connection with the Common Stock Offering, and (b) the absence of any further resolution by the Board of Directors to abandon such Common Stock Offering or related matters (the conditions referred to in clauses (a) and (b) are referred to as the "Pre-Conditions"). The Pre-Conditions will be considered satisfied in all aspects if so certified by James W. Thomas to the Board of Directors; and FURTHER RESOLVED, that awards may be granted pursuant to the 1999 Stock Plan for a total of 3,645,000 shares (following the Stock Split) of the Company's Common Stock, par value $0.001 per share, which shall be available to grant incentive stock options (as defined in Section 422 of the Internal Revenue Code), nonqualified stock options, stock appreciation rights, restricted stock and such other awards as described in the 1999 Stock Plan; and FURTHER RESOLVED, that the 1999 Stock Plan shall be administered by, and awards thereunder shall be granted by, the Compensation Committee whose members, upon the -3- consummation of the Common Stock Offering (as hereinafter defined), shall constitute nonemployee directors as defined under Rule 16b-3 of the Exchange Act and outside directors as defined under Internal Revenue Code Section 162(m); and FURTHER RESOLVED, that the Stockholders hereby ratify and approve the adoption of the 1999 Stock Plan and authorize the Board to direct that 1,350,000 authorized but unissued shares (subject to adjustment) of the Company's Common Stock be set aside for awards under the 1999 Stock Plan. (b) Employee Stock Purchase Plan ---------------------------- FURTHER RESOLVED, that it is in the best interests of the Company that it offer an employee stock purchase plan in order to attract and retain persons of ability as employees of the Company or of any present or future subsidiary; and FURTHER RESOLVED, that the MapQuest.com, Inc. Employee Stock Purchase Plan, in substantially the form attached hereto as Exhibit E (the "Employee Stock --------- Purchase Plan"), be and hereby is approved and adopted by the Stockholders to take effect only upon the satisfaction of the Pre-Conditions; and FURTHER RESOLVED, that awards may be granted pursuant to the Employee Stock Purchase Plan for a total of 1,755,000 shares (following the Stock Split) of the Company's common stock, par value $0.001 per share, which shall be available for purchase by eligible employees by payroll deduction as described in the Employee Stock Purchase Plan; and FURTHER RESOLVED, that all subsidiaries of the Company within the meaning of Internal Revenue Code Section 424(f), or a successor provision, shall be considered Designated Subsidiaries whose employees will be eligible for participation in the Employee Stock Purchase Plan, along with the Company's employees, in accordance with its terms; and FURTHER RESOLVED, that the effective date of the Employee Stock Purchase Plan shall be the effective date of a registration statement filed by the Company for the plan on Form S-8 (the "S-8 Registration Statement") (or such other appropriate form) with the Securities Exchange Commission ("SEC") following the Common Stock Offering; provided, however, that the Employee Stock Purchase Plan shall become effective only if the conditions stated above are met; and FURTHER RESOLVED, that the Employee Stock Purchase Plan shall be administered by the Compensation Committee which shall consist solely of the individuals whose members, upon the consummation of the Common Stock Offering, shall constitute nonemployee directors as defined under Rule 16b-3 of the Exchange Act and outside directors as defined under Internal Revenue Code Section 162(m); and -4- FURTHER RESOLVED, that the Stockholders hereby ratify and approve the adoption of the Employee Stock Purchase Plan and authorize the Board to direct that 650,000 authorized but unissued shares (subject to adjustment) of the Company's common stock be set aside for options under the Employee Stock Purchase Plan. (c) Amendment No. 4 to 1995 Stock Option Plan ----------------------------------------- FURTHER RESOLVED, that the GeoSystems Global Company 1995 Stock Option Plan (the 1995 "Option Plan") is hereby amended effective as provided below by Amendment No. 4 substantially in the form attached hereto as Exhibit F which --------- provides as follows: (i) Effective immediately the 1995 Option Plan is amended to: (A) Change the name "GeoSystems Global Company" to "MapQuest.com, Inc." each place it appears therein; (B) Change the term "Internal Revenue Code of 1954" in Article I, Section I to "Internal Revenue Code of 1986"; (C) Delete the third sentence of Article 1, Section 2 which describes the makeup of the Committee which administers the Option Plan and substitute the following: The Committee shall consist of not less than two (2) members of the Board, each of whom shall be an "outside director" within the meaning of Code Section 162(m) and "non-employee director" within the meaning of Rule l6b-3 (or any successor rule or regulation) promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act"); (D) Add the following as the third paragraph of Article I, Section 2: If the Board does not appoint a Stock Option Committee as provided above, the Board itself shall administer the Plan and the term "Committee" shall be deemed to refer to the Board; (E) Add the following as the second paragraph to Article II, Section 2: The maximum number of shares of Common Stock subject to Options that may be granted during any one calendar year to anyone individual shall be limited to 188,959 options. To the extent required by Section 162(m) of the Code and so long as Section 162(m) of the Code is applicable to persons eligible to -5- participate in the Plan, shares of Common Stock subject to the foregoing limit with respect to which the related Option is terminated, surrendered or canceled shall not again be available for grant under this limit; and (F) Delete all of the words prior to the colon in the second paragraph in Article IV, Section 8 regarding the definition of "Change of Control" and substitute "A Change in Control shall be deemed to have occurred if". (ii) Effective upon the date the Company is required to file reports pursuant to Section 13 or 15(d) of the Exchange Act the Option Plan is amended to delete Article II, Section 4, paragraph (i) which included a repurchase right by the Company with respect to shares issued upon option exercise. 6. APPROVAL OF RECAPITALIZATION DOCUMENTS -------------------------------------- FURTHER RESOLVED, that the Authorized Officers, or any of them, be, and each of them hereby is, authorized and directed, in the name and on behalf of the Company, to execute and deliver the Recapitalization Agreement (including all Schedules and Exhibits thereto) and each of the agreements, instruments, certificates and other documents contemplated thereby or required in connection therewith including, without limitation, those set forth in Exhibit G attached --------- hereto (together the "Recapitalization Documents") and take any and all such -------------------------- action and do any and all such things in connection with the execution and performance of the Recapitalization Agreement as the Authorized Officers, or any of them, may deem necessary or appropriate, subject to the provisions of these resolutions. 7. APPROVAL OF THE COMMON STOCK OFFERING ------------------------------------- FURTHER RESOLVED, that the Company shall cause the Common Stock to be registered with the SEC under the Securities Act of 1933, as amended (the "Act"); and the Authorized Officers, or any of them, be, and each of them hereby is, authorized and directed, in the name and on behalf of the Company, to execute and file the Registration Statement in substantially the form heretofore submitted to and considered by the Stockholders, with such changes therein as the Authorized Officers, or any of them, may approve, such approval to be conclusively evidenced by the execution thereof by them or any of them; and FURTHER RESOLVED, that the Company shall cause the Common Stock to be registered with the SEC under the Exchange Act, as amended, and the Authorized Officers, or any of them, be, and each of them hereby is, authorized and directed, in the name and on behalf of the Company, to execute and file a registration statement on Form 8-A (the "8-A Registration Statement") relating to registration of the Common Stock in substantially the form heretofore submitted to and considered by the Stockholders, with such changes therein as the Authorized -6- Officers, or any of them, may approve, such approval to be conclusively evidenced by the execution thereof by them or any of them; and FURTHER RESOLVED, that the Authorized Officers, or any of them, be, and each of them hereby is, authorized, in the name and on behalf of the Company, to prepare, deliver, file, issue and circulate a preliminary prospectus in substantially the form heretofore submitted to and considered by the Stockholders, with such changes therein as the Authorized Officers, or any of them, may approve; and FURTHER RESOLVED, that the Authorized Officers, or any of them, be, and each of them hereby is, authorized and directed, in the name and on behalf of the Company, to prepare, execute and file any amendments or supplements to the Registration Statement or the prospectus contained therein or to the 8-A Registration Statement, to prepare, execute and file such exhibits thereto and take any and all such action and do any and all such things in connection with the issuance and sale of the Common Stock as the Authorized Officers, or any of them, may deem necessary or appropriate, subject to the provisions of these resolutions; and FURTHER RESOLVED, that the Board of Directors or the majority of members of any Pricing Committee thereof shall be irrevocably authorized to determine the price per share at which the Common Stock Offering shall take place and that the Board of Directors or the majority of members of any Pricing Committee thereof shall be irrevocably authorized to adjust the Stock Split and to execute any documents and to enter into any agreements, which shall be binding on the Company, in connection therewith. FURTHER RESOLVED, that the Authorized Officers, or any of them, be, and each of them hereby is, authorized and directed, in the name and on behalf of the Company, to take, or cause to be taken, all actions necessary or appropriate to effect the listing of the Company's Common Stock, outstanding and to be issued, on Nasdaq, including the preparation, execution and filing of any listing application and all other necessary or appropriate applications, documents, forms and agreements with Nasdaq and the SEC, and the payment by the Company of filing, listing and application fees; and to take all other steps and do all other things necessary or appropriate to effect the listing of the Company's Common Stock on Nasdaq;. 8. MISCELLANEOUS ------------- FURTHER RESOLVED, that any and all action prior to the Common Stock Offering taken by any officer or director (whether current or former), other than acts of wilful misconduct, be and hereby is, ratified and confirmed as the act and deed of the Company; and FURTHER RESOLVED, that the directors and officers of the Company are authorized to do or cause to be done any and all such acts and things and execute and deliver any and all documents and papers as they may deem necessary or appropriate to carry out the purposes of the foregoing resolutions. -7- IN WITNESS WHEREOF, the undersigned have executed this Action By Written Consent as of the first above written TRIDENT CAPITAL PARTNERS FUND-I, L.P. By: Trident Capital, L.P., its General Partner By: Trident Capital, Inc., its General Partner By: ----------------------------------- Its: TRIDENT CAPITAL PARTNERS FUND-I, C.V. By: Trident Capital, L.P., its Investment General Partner By: Trident Capital, Inc., its Investment General Partner By: ----------------------------------- Its: -8- HIGHLAND CAPITAL PARTNERS III LIMITED PARTNERSHIP By: Highland Management Partners III Limited Partnership, its General Partner By: ---------------------------------- General Partner HIGHLAND ENTREPRENEURS' FUND III LIMITED PARTNERSHIP By: HEP III, LLC, its General Partner By: ---------------------------------- Member -9- WESTON PRESIDIO CAPITAL II, L.P. By: ---------------------------------- General Partner -10- NATIONAL GEOGRAPHIC SOCIETY By: ---------------------------------- -11- NGE MAPS, D/B/A/ NATIONAL GEOGRAPHIC MAPS ---------------------------------- By: -12- ---------------------------------- Michael J. Mulligan -13- EXHIBIT A-1 ----------- Amendment No. 2 to the Certificate of Incorporation --------------------------------------------------- -14- EXHIBIT A-2 ----------- Amended and Restated Certificate of Incorporation ------------------------------------------------- -15- EXHIBIT B --------- By-laws ------- -16- EXHIBIT C --------- Directors --------- Michael Mulligan Robert McCormack John Moragne Dan Nova Carlo von Schroeter C. Richard Allen -17- EXHIBIT D --------- 1999 Stock Plan --------------- -18- EXHIBIT E --------- Employee Stock Purchase Plan ---------------------------- -19- EXHIBIT F --------- Amendment No. 4 to 1995 Stock Option Plan ----------------------------------------- -20- EXHIBIT G --------- Recapitalization Documents -------------------------- Recapitalization Agreement Registration Statement Underwriting Agreement Director's Fee Policy Directors and Officers insurance policy Director Indemnity Agreements Insider Trading Policy -21- EXHIBIT J MAPQUEST.COM, INC. STATEMENT OF POLICY CONCERNING TRADING POLICIES AND CONFLICTS OF INTEREST DATED APRIL , 1999 TABLE OF CONTENTS -----------------
Page ---- I. SUMMARY OF THE COMPANY POLICY CONCERNINGTRADING POLICIES AND CONFLICTS OF INTEREST............................................ 2 A. Compliance with Laws......................................... 2 B. Avoidance of Conflicts of Interest........................... 2 II. THE USE OF INSIDE INFORMATION IN CONNECTION WITH TRADING IN SECURITIES............................................................ 3 A. General Rule................................................. 3 B. Who Does the Policy Apply To?................................ 4 C. Other Companies' Stocks...................................... 5 D. Trading in Options........................................... 5 E. Margin Accounts.............................................. 6 F. Guidelines................................................... 6 1. Nondisclosure............................................ 6 2. Trading in the Company's Securities...................... 6 3. Avoid Speculation........................................ 7 4. Trading in Other Securities.............................. 7 5. Restrictions on the Window Group......................... 7 [6. Trading within the 401(k) Plan.......................... 8 G. Insider Trading Compliance Officer........................... 9 H. Procedures for Approving Trades by Section 16 Individuals, Key Employees and Hardship Cases............................. 10 1. Section 16 Individual/Key Employee Trades................ 10
-i- 2. Hardship Trades.......................................... 11 3. No Obligation to Approve Trades.......................... 11 III. OTHER LIMITATIONS ON SECURITIES TRANSACTIONS......................... 11 A. Public Resales - Rule 144.................................... 11 B. Private Resales.............................................. 12 C. Underwriter Lock-Up Agreements............................... 13 D. Restrictions on Purchases of Company Securities.............. 13 E. Disgorgement of Profits on Short-Swing Transactions -- Section 16(b)................................ 13 F. Prohibition of Short Sales................................... 14 G. Filing Requirements.......................................... 14 1. Forms 3, 4 and 5......................................... 14 2. Schedule 13D and 13G..................................... 16 3. Form 144................................................. 16 IV. CONFLICTS OF INTEREST................................................ 16
-ii- Page ---- Exhibits Exhibit A Section 16 Individuals Exhibit B Key Employees Exhibit C Forms 3,4 and 5 Exhibit D Schedule 13D and 13G Exhibit E Rule 144 Notice -iii- I. SUMMARY OF THE COMPANY POLICY CONCERNING TRADING POLICIES AND CONFLICTS OF INTEREST This Statement covers two fundamental principles which each employee and director must follow: A. Compliance with Laws. It is the Company's policy that it will without exception comply with all applicable laws and regulations in conducting its business. Each employee and each director is expected to abide by this policy. When carrying out Company business, employees and directors must avoid any activity that violates applicable laws or regulations. B. Avoidance of Conflicts of Interest. Each employee and each director must avoid any activity or interest which conflicts with, or even appears to conflict with, the best interests of the Company. In other words, each employee and each director has a duty of utmost loyalty to the Company. The foregoing principles are described in more detail below. A description of certain applicable laws and related policies is set forth in Sections II and III of the Statement and conflicts of interest and general policies for avoiding them are discussed in Section IV. The Statement does not describe every law or regulation which will affect the Company and its business, but attempts to familiarize employees and directors with the laws which they must pay particular attention to in an effort to assure the Company's compliance. Of course, employees and directors are expected to comply with all applicable laws. In meeting the standards set out in this Statement, it is essential that each employee and director conduct the Company's business with honesty and integrity. Each employee and each director contributes to the Company's overall reputation. Therefore, each employee and each director must accept individual responsibility for ensuring that these standards are implemented. II. THE USE OF INSIDE INFORMATION IN CONNECTION WITH TRADING IN SECURITIES A. General Rule. The U.S. securities laws regulate the sale and purchase of securities in the interest of protecting the investing public. U.S. securities laws give MapQuest.com, Inc. (the "Company"), its officers and directors, and other employees the responsibility to ensure that information about the Company is not used unlawfully in the purchase and sale of securities. All employees and directors should pay particularly close attention to the laws against trading on "inside" information. These laws are based upon the belief that all persons trading in a company's securities should have equal access to all "material" information about that company. For example, if an employee or a director of a company knows material non-public financial information, that employee or director is prohibited from buying or selling stock in the company until the information has been disclosed to the public: This is because the employee or director knows information that will probably cause the stock price to change, and it would be unfair for the employee or director to have an advantage (knowledge that the stock price will change) that the rest of the investing public does not have. In fact, it is more than unfair. It is considered to be fraudulent and illegal. Civil and criminal penalties for this kind of activity are severe. The general rule can be stated as follows: It is a violation of the ---------------- federal securities laws for any person to buy or sell securities if he or she is in possession of material inside information. Information is material if it could affect a person's decision whether to buy, sell or hold the securities. It is inside information if it has not been publicly disclosed. Furthermore, it ------ is illegal for any person in possession of material inside information to provide other people with such information or to recommend that they buy or sell the securities. (This is called "tipping".) In that case, they may both be held liable. While it is not possible to identify all information that would be deemed "material," the following types of information ordinarily would be considered material: - Financial performance, especially quarterly and year-end results of operations, and significant changes in financial performance, conditions or liquidity. - Company projections and strategic plans. - Potential mergers and acquisitions or the sale of Company assets or subsidiaries. - New major contracts, collaborations, orders, suppliers, customers, or finance sources, or the loss thereof. - Significant changes or developments in products or product lines. - Significant changes or developments in supplies or inventory, including significant product defects, recalls or product returns. Significant pricing changes. -3- - Stock splits, public or private securities/debt offerings, or changes in Company dividend policies or amounts. - Significant changes in senior management. Significant labor disputes or negotiations. - Actual or threatened major litigation, or the resolution of such litigation. The rule applies to any and all transactions in the Company's securities, including its common stock and options and warrants to purchase common stock (other than the exercise of employee stock options or warrants), and any other type of securities that the Company may issue, such as preferred stock, convertible debentures, warrants and exchange-traded options or other derivative securities. The Securities and Exchange Commission (the "SEC"), the stock exchanges and plaintiffs' lawyers focus on uncovering insider trading. A breach of the insider trading laws could expose the insider to criminal fines up to three times the profits earned or loss avoided and imprisonment of up to ten years, in addition to civil penalties (up to three times the profits earned), and injunctive actions. In addition, punitive damages may be imposed under applicable state laws. Securities laws also subject controlling persons to civil penalties or illegal insider trading by employees, including employees located outside the United States. Controlling persons include directors, officers, and supervisors. These persons may be subject to fines up to the greater of $1,000,000 or three times the profit or loss avoided by the insider trader. Inside information does not belong to the individual directors, officers or other employees who may handle it or otherwise become knowledgeable about it. It is an asset of the Company. For any person to use such information for personal benefit or to disclose it to others outside the Company violates the Company's interests. More particularly, in connection with trading in the Company securities, it is a fraud against members of the investing public and against the Company. B. Who Does the Policy Apply To? The prohibition against trading on inside information applies to directors, officers and all other employees, and to other people who gain access to that information. Because of their access to confidential information on a regular basis, Company policy subjects its directors and certain employees (the "Window Group" as defined below) to additional restrictions on trading in the Company securities. The restrictions for the Window Group are discussed in Section F below. In addition, directors and certain employees with inside knowledge of material information may be subject to ad hoc restrictions on trading from time to time. Additionally, the Company has designated those persons listed on Exhibit A --------- attached hereto ("Section 16 Individuals") as the directors and officers who are subject to the reporting provisions and trading restrictions of Section 16 of the Exchange Act of 1934 (the "Exchange Act"). Section 16 Individuals must obtain prior approval of all trades in Company securities from the Compliance Officer in accordance with the procedures set forth in Section H below. -4- The Company will amend Exhibit A from time to time as necessary to reflect the --------- addition, resignation or departure of Section 16 Individuals. The Company has designated those persons listed on Exhibit B attached --------- hereto as Key Employees who, because of their position with the Company and/or their access to material nonpublic information, must obtain the prior approval of all trades in Company securities from the Compliance Officer in accordance with the procedures set forth in Section H below. The Company will amend Exhibit ------- B from time to time as necessary to reflect the addition, resignation or - - departure of Key Employees. C. Other Companies' Stocks. The same rules apply to other companies' stocks. Employees and directors who learn material information about suppliers, customers, or competitors through their work at the Company should keep it confidential and not buy or sell stock in such companies until the information becomes public. Employees and directors should not give tips about such stocks. D. Trading in Options. The insider trading prohibition also applies to trading in exchange traded options, such as put and call options. Options trading is highly speculative and very risky. People who buy options are betting that the stock price will move rapidly. For that reason, when a person trades in options in his or her employer's stock, it will arouse suspicion in the eyes of the SEC that the person was trading on the basis of inside information, particularly where the trading occurs before a Company announcement or major event. It is difficult for an employee or director to prove that he or she did know about the announcement or event. If the SEC or Nasdaq were to notice active options trading by one or more employees or directors of the Company prior to an announcement, they would investigate. Such an investigation could be embarrassing to the Company (as well as expensive), and could result in severe penalties and expense for the persons involved. For all of these reasons, the Company prohibits its employees and directors from trading in options on the Company stock. This policy does not pertain to the exercise of stock options or warrants granted by the Company to its employees, which cannot be traded. E. Margin Accounts. Securities held in a margin account may be sold by the broker without the customer's consent if the customer fails to meet a margin call. Because such a sale may occur at a time when an employee or a director had material inside information or is otherwise not permitted to trade in Company securities, the Company prohibits employees and directors from purchasing Company securities on margin or holding Company securities in a margin account. F. Guidelines. -5- The following guidelines should be followed in order to ensure compliance with applicable antifraud laws and with the Company's policies: 1. Nondisclosure. Material inside information must not be disclosed ------------- to anyone, except to persons within the Company whose positions require them to know it. No one may "tip" or disclose material nonpublic information concerning the Company to any outside person (including, but not limited to family members, analysts, individual investors, and members of the investment community and news media), unless required as part of that person's regular duties for the Company and authorized by the Compliance Officer and/or the Board of Directors. In any instance in which such information is disclosed to outsiders, the Company will take such steps as are necessary to preserve the confidentiality of the information, including requiring the outsider to agree in writing to comply with the terms of this policy and/or to sign a confidentiality agreement. All inquiries from outsiders regarding material nonpublic information about the Company must be forwarded to the Compliance Officer. In addition, care should be taken so that material, non-public information is secure. For example, files containing material, non-public information should be sealed and access to computer files containing such information should be restricted. No one may give trading advice of any kind about the Company to anyone while possessing material nonpublic information about the Company, except to advise others not to trade if doing so might violate the law or this policy. The Company strongly discourages all directors and officers from giving trading advice concerning the Company to third parties even when the director or officer does not possess material nonpublic information about the Company. 2. Trading in the Company's Securities. No employee or director ----------------------------------- should place a purchase or sale order, or recommend that another person place a purchase or sale order in the Company's securities, when he or she has knowledge of material, non-public information concerning the Company. This includes orders for purchases and sales of stock and convertible securities. The exercise of employee stock options and warrants is not subject to this policy. However, stock that was acquired upon exercise of a stock option or warrant will be treated like any other stock, and may not be sold by an employee who is in possession of material inside information. Employees or directors who possess material inside information should wait until the start of the third business day after the information has been publicly released before trading. 3. Avoid Speculation. Investing in the Company's Common Stock ----------------- provides an opportunity to share in the future growth of the Company. But investment in the Company and sharing in the growth of the Company does not mean short range speculation based on fluctuations in the market. Such activities put the personal gain of the employee or director in conflict with the best interests of the Company and its stockholders. Although this policy does not mean that employees or directors may never sell shares, the Company encourages employees and directors to avoid frequent -6- trading in Company stock. Speculating in Company stock is not part of the Company culture. 4. Trading in Other Securities. No employee or director should --------------------------- place a purchase or sale order, or recommend that another person place a purchase or sale order, in the securities of another corporation, if the employee or director learns in the course of his or her employment confidential information about the other corporation that is likely to affect the value of those securities. For example, it would be a violation of the securities laws if an employee or director learned through Company sources that the Company intended to purchase assets from a company, and then bought or sold stock in that other company because of the likely increase or decrease in the value of its securities. 5. Restrictions on the Window Group. The Window Group consists of -------------------------------- (i) directors and executive officers of the Company and their secretaries, (ii) officers of the Company with the title Vice President or above and their secretaries and (iii) such other persons as may be designated from time to time and informed of such status by the Company's Chief Financial Officer. The Window Group is subject to the following restrictions on trading in Company securities: - trading is permitted from the close of the fifth business day following the filing by the Company of a Form 10Q or 10K with the SEC until the close of trading on the day which is 10 days prior to the date which is the earlier of (a) the date on which any such filing is required to be made or (b) is in fact made (the "Window"), subject to the restrictions below; - all trades are subject to prior review; - clearance for all trades should be obtained from the Company's Chief Financial Officer; - no trading in Company securities even during applicable trading Windows while in the possession of material inside information. Persons possessing such information may trade during a trading Window only after the close of trading on the second full trading day following the Company's widespread public release of such material inside information; - no trading in Company securities outside of the applicable trading windows or during any special blackout periods that the Compliance Officer may designate. No one may disclose to any outside third party that a special blackout period has been designated; and - the Compliance Officer may, on a case-by-case basis, authorize trading in Company securities outside of the applicable trading Windows (but -7- not during special blackout periods) due to financial hardship or other hardships. [6. Trading within the 401(k) Plan. Most transactions under the ------------------------------ 401(k) Plan (the "Plan") are not subject to the Section 16(b) short-swing profits rule (described at III.E. below) or the Section 16(a) reporting requirements (described at III.G below). An example of an exempt, non- reportable transaction would be a contribution to the Plan, such as, any employee pre-tax or after-tax contributions and any Company match or profit sharing contributions, even if the participant for whose benefit the contributions are made has the right to direct that some or all of the contributions will be invested in the Plan's Company stock fund. Similarly, cash distributions from the Plan's Company stock fund to a participant by reason of the participant's retirement or other termination of employment would be an exempt, non-reportable transaction. In contrast, discretionary transactions by a participant in the Plan who is a Section 16 Individual are subject to the Section 16(a) reporting --- requirements. Discretionary transactions include (1) a participant's election to transfer part or all of the participant's Plan balance into (or out of) the Company stock fund (after such monies are originally contributed to the Plan and invested, when contributed, in the Company stock fund) and (2) any voluntary request by a participant for a cash withdrawal from the Company's stock fund on an occasion other than the participant's retirement or other termination of employment (e.g., a hardship withdrawal request). Discretionary transactions by a Plan participant who is a Section 16 Individual will be exempt from the Section 16(b) short-swing profits rule only if the participant's election to effect the transaction (e.g., the election to move out of the Company stock fund or the request for a hardship withdrawal) occurs at least six months after the participant's most recent discretionary "opposite-way" purchase or sale election under the Plan. The election by a Plan participant who is a Section 16 Individual to effect a discretionary transaction under the Plan less than six months before or after an opposite-way discretionary transaction under the Plan will be subject to Section 16(b). For instance, if a participant elected to move some of his Plan account balance into the Company stock fund in October after he had elected to move some of his Plan account out of the Company stock fund in August, the transaction would be subject to the Section 16(b) short-swing profits rule as well as to the Section 16(a) reporting requirements. Plan participants who are Section 16 Individuals are urged to consult with the Company's Compliance Officer, prior to engaging in any Plan transaction that would be treated as a discretionary transaction. The general prohibition against trading based on inside information (described at II.F.2. above) is equally applicable to Plan transactions. Therefore, discretionary transactions, including changes by a participant in the amount invested in the Company stock fund, while the participant is in possession of material inside information are prohibited. Additionally, Window Group members are prohibited from making changes in Plan designations outside of the applicable trading windows or during any -8- other blackout period, even if the participant is not in possession of material inside information. Plan participants who are Window Group members are urged to consult with the Company's Compliance Officer, prior to making any changes in Plan designations outside of the applicable trading windows.] [Does MapQuest have a Company stock fund?] G. Insider Trading Compliance Officer. The Company has designated James Thomas, Chief Financial Officer and Secretary as its insider trading Compliance Officer (the "Compliance Officer"). The Compliance Officer will review and either approve or prohibit all proposed trades by Section 16 Individuals and Key Employees in accordance with the procedures set forth in Section H below. In addition to the trading approval duties described in Section H below, the duties of the Compliance Officer will include the following: 1. Administering this policy and monitoring and enforcing compliance with all policy provisions and procedures. 2. Responding to all inquiries relating to this policy and its procedures. 3. Designating and announcing special trading blackout periods during which no Window Group members may trade in Company securities. 4. Providing copies of this policy and other appropriate materials to all current and new directors, officers and employees, and such other persons who the Compliance Officer determines have access to material nonpublic information concerning the Company. 5. Administering, monitoring and enforcing compliance with all federal and state insider trading laws and regulations, including without limitation Sections 10(b), 16, 20A and 21A of the Exchange Act and the rules and regulations promulgated thereunder, and Rule 144 under the Securities Act of 1933 (the "Securities Act"); and assisting in the preparation and filing of all required SEC reports relating to insider trading in Company securities, including without limitation Forms 3, 4, 5 and 144 and Schedules 13D and 13G. 6. Revising the policy as necessary to reflect changes in federal or state insider trading laws and regulations. 7. Maintaining as Company records originals or copies of all documents required by the provisions of this policy or the procedures set forth herein, and copies of all required SEC reports relating to insider trading, including without limitation Forms 3, 4, 5 and 144 and Schedules 13D and 13G. -9- 8. Maintaining the accuracy of the list of Section 16 Individuals and Key Employees as attached on Exhibits A and B, and updating them ---------- - periodically as necessary to reflect additions to or deletions from each category of individuals. The Compliance Officer may designate one or more individuals, which may include outside counsel, who may perform the Compliance Officer's duties. H. Procedures for Approving Trades by Section 16 Individuals, Key Employees and Hardship Cases. 1. Section 16 Individual/Key Employee Trades. No Section 16 ----------------------------------------- Individual or Key Employee may trade in Company securities until (1) the person trading has notified the Compliance Officer in writing of the amount and nature of the proposed trade(s), (2) the person trading has certified to the Compliance Officer that (i) he or she is not in possession of material nonpublic information concerning the Company and (ii) the proposed trade(s) do not violate the trading restrictions of Section 16 of the Exchange Act or Rule 144 of the Securities Act, and (3) the Compliance Officer has approved the trade(s), and has certified the approval in writing. 2. Hardship Trades. The Compliance Officer may, on a case-by-case --------------- basis, authorize trading in Company securities outside of the applicable trading windows due to financial hardship or other hardships only after (1) the person trading has notified the Compliance Officer in writing of the circumstances of the hardship and the amount and nature of the proposed trade(s), (2) the person trading has certified to the Compliance Officer in writing no earlier than two business days prior to the proposed trades(s) that he or she is not in possession of material nonpublic information concerning the Company, and (3) the Compliance Officer has approved the trade(s) and has certified the approval in writing. Only the Compliance Officer's approval is necessary for hardship trades by insiders who are not Section 16 Individuals or Key Employees. 3. No Obligation to Approve Trades. The existence of the foregoing ------------------------------- approval procedures does not in any way obligate the Compliance Officer to approve any trades -10- requested by Section 16 Individuals, Key Employees or hardship applicants. The Compliance Officer may reject any trading requests at his/her sole discretion. III OTHER LIMITATIONS ON SECURITIES TRANSACTIONS A. Public Resales - Rule 144. The Securities Act requires every person who offers or sells a security to register such transaction with the SEC unless an exemption from registration is available. Rule 144 under the Securities Act is the exemption typically relied upon (i) for public resales by any person of "restricted securities" (i.e., securities acquired in a private offering) and (ii) for public resales by officers, directors and other control persons of a company (known as "affiliates") of any of the Company's securities, whether restricted or unrestricted. All outstanding shares of the Company's Common Stock, other than those sold to the public in the Company's initial public offering in [April] 1999, are "restricted securities." Rule 144 contains five conditions, although the applicability of some of these conditions will depend on the circumstances of the sale: (1) Current Public Information. Current information about the -------------------------- Company must be publicly available at the time of sale. The Company's periodic reports filed with the SEC ordinarily satisfy this requirement. (2) Holding Period. Restricted securities must be held and fully -------------- paid for by the seller for a period of one year prior to the sale. The holding period requirement, however, does not apply to securities held by affiliates that were acquired either in the open market or in a public offering of securities registered under the Securities Act. If the seller acquired the securities from someone other than the Company or an affiliate of the Company, the holding period of the person from whom the seller acquired such securities can be "tacked" to the seller's holding period in determining if the two-year requirement has been satisfied. In the case of options you have received under the Company's 1995 Stock Option Plan or Omnibus Stock Option Plan more than one year prior to the sale of the underlying common stock, the holding period will have been satisfied. (3) Volume Limitations. The amount of securities which can be sold ------------------ during any three month period cannot exceed the greater of (i) one percent of the outstanding shares of the class or (ii) the average weekly reported trading volume for shares of the class during the four calendar weeks preceding the filing of the notice of sale referred to below. -11- (4) Manner of Sale. The securities must be sold in unsolicited -------------- brokers' transactions or directly to a market-maker. (5) Notice of Sale. The seller must file a notice of the proposed -------------- sale with the SEC at the time the order to sell is placed with the broker, unless the amount to be sold neither exceeds 500 shares nor involves sale proceeds greater than $10,000. See "Filing Requirements." The foregoing conditions do not have to be complied with by holders of restricted securities who have held (and fully paid for in cash) their restricted shares for at least two years and who were not affiliates during the three months preceding the sale under the rule. Bona fide gifts are not deemed to involve sales of stock for purposes of Rule 144, so they can be made at any time without limitation on the amount of the gift. Donors who receive restricted securities from an affiliate generally will be subject to the same restrictions under Rule 144 that would have applied to the donor for a period of up to one year following the gift, depending on the circumstances. B. Private Resales. Directors and officers also may sell securities in a private transaction without registration. Although there is no statutory provision or SEC rule expressly dealing with private sales, the general view is that such sales can safely be made by affiliates if the party acquiring the securities understands he is acquiring restricted securities that must be held for at least two years before the securities will be eligible for resale to the public under Rule 144. Private resales raise certain documentation and other issues and must be reviewed in advance by the Company's Compliance Officer. C. Underwriter Lock-Up Agreements. Certain holders of the Company's Common Stock outstanding immediately prior to the Company's initial public offering in [April] 1999 have agreed not to offer, sell, contract to sell or otherwise dispose of any shares of Common Stock or any securities convertible into or exercisable or exchangeable for Common Stock for a period of 180 days from the date of the initial public offering without the prior written consent of the Underwriters. The foregoing limitation is also quite broad and would prohibit gifts of Common Stock or pledging Common Stock as collateral for a loan. In addition, the Lock-up Agreements restrict the disposition of any shares of Common Stock whether or not acquired after the Company's initial public offering. D. Restrictions on Purchases of Company Securities. In order to prevent market manipulation, the SEC has adopted Rules 10b-6 and 10b-18 under the Exchange Act. Rule 10b-6 generally prohibits the Company or any of its affiliates from buying Company stock in the open market during certain periods while a public offering -12- is taking place. Rule 10b-18 sets forth guidelines for purchases of Company stock by the Company or its affiliates while a stock buyback program is occurring. While the guidelines are optional, compliance with them provides immunity from a stock manipulation charge. You should consult with the Company's Compliance Officer, if you desire to make purchases of Company stock during any period that the Company is making a public offering or buying stock from the public. E. Disgorgement of Profits on Short-Swing Transactions -- Section 16(b). Section 16 of the Exchange Act applies to directors and officers of the Company and to any person owning more than ten percent of any registered class of the Company's equity securities. The section is intended to deter such persons (collectively referred to below as "insiders") from misusing confidential information about their companies for personal trading gain. Section 16(a) requires insiders to publicly disclose any changes in their beneficial ownership of the Company's equity securities (see "Filing Requirements," below). Section 16(b) requires insiders to disgorge to the Company any "profit" resulting from "short-swing" trades, as discussed more fully below. Section 16(c) effectively prohibits insiders from engaging in short sales (see "Prohibition of Short Sales," below). Under Section 16(b), any profit realized by an insider on a "short-swing" transaction (i.e., a purchase and sale, or sale and purchase, of the Company's equity securities within a period of less than six months) must be disgorged to the Company upon demand by the Company or a stockholder acting on its behalf. By law, the Company cannot waive or release any claim it may have under Section 16(b), or enter into an enforceable agreement to provide indemnification for amounts recovered under the section. Liability under Section 16(b) is imposed in a mechanical fashion without regard to whether the insider intended to violate the section. Good faith, therefore, is not a defense. All that is necessary for a successful claim is to show that the insider realized "profits" on a short-swing transaction; however, profit, for this purpose, is calculated as the difference between the sale price and the purchase price in the matching transactions, and may be unrelated to the actual gain on the shares sold. When computing recoverable profits on multiple purchases and sales within a six month period, the courts maximize the recovery by matching the lowest purchase price with the highest sale price, the next lowest purchase price with the next highest sale price, and so on. The use of this method makes it possible for an insider to sustain a net loss on a series of transactions while having recoverable profits. The terms "purchase" and "sale" are construed under Section 16(b) to cover a broad range of transactions, including acquisitions and dispositions in tender offers and certain corporate reorganizations. Moreover, purchases and sales by an insider may be matched with transactions by any person (such as certain family members) whose securities are deemed to be beneficially owned by the insider. The Section 16 rules are complicated and present ample opportunity for inadvertent error. To avoid unnecessary costs and potential embarrassment for insiders and the Company, officers and directors are strongly urged to consult with the Company's Compliance Officer, -13- prior to engaging in any transaction or other transfer of Company equity securities regarding the potential applicability of Section 16(b). F. Prohibition of Short Sales. Under Section 16(c), insiders are prohibited from effecting "short sales" of the Company's equity securities. A "short sale" is one involving securities which the seller does not own at the time of sale, or, if owned, are not delivered within 20 days after the sale or deposited in the mail or other usual channels of transportation within five days after the sale. Wholly apart from Section 16(c), the Company prohibits directors and employees from selling the Company's stock short. This type of activity is inherently speculative in nature and it will arouse suspicion in the eyes of the SEC that the person was trading on the basis of inside information, particularly when the trading occurs before a major Company announcement or event. G. Filing Requirements. 1. Forms 3, 4 and 5. Under Section 16(a) of the Exchange Act, ---------------- insiders must file with the SEC and any stock exchange on which the Company's equity securities are quoted (i.e., the Nasdaq National Market System) public reports disclosing their holdings of and transactions involving, the Company's equity securities. Copies of these reports must also be submitted to the Company. An initial report on Form 3 must be filed by every insider within 10 days after election or appointment disclosing all equity securities of the Company beneficially owned by the reporting person on the date he became an insider. Even if no securities were owned on that date, the insider must file a report. Any subsequent change in the nature or amount of beneficial ownership by the insider must be reported on Form 4 and filed within ten days after the close of the month in which the change occurred. Certain exempt transactions may be reported on Form 5 within 45 days after the end of the fiscal year. The fact that an insider's transactions during the month resulted in no net change, or the fact that no securities were owned after the transactions were completed, does not provide a basis for failing to report. All changes in the amount or the form (i.e., direct or indirect) of beneficial ownership (not just purchases and sales) must be reported. Thus, such transactions as gifts and stock dividends ordinarily are reportable. Moreover, an officer or director who has ceased to be an officer or director must report any transactions after termination which occurred within six months of a transaction that occurred while the person was an insider. Attached hereto as Exhibit C are Forms 3, 4 and 5 respectively. --------- The reports under Section 16(a) are intended to cover all securities beneficially owned either directly by the insider or indirectly through others. An insider is considered the direct owner of all Company equity securities held in his or her own name or held jointly with others. An insider is considered the indirect owner of any securities from which he obtains benefits substantially equivalent to those of ownership. Thus, equity securities of the Company beneficially owned through partnerships, corporations, trusts, estates, and by family members generally are subject to reporting. -14- Absent countervailing facts, an insider is presumed to be the beneficial owner of securities held by his or her spouse and other family members sharing the same home. But an insider is free to disclaim beneficial ownership of these or any other securities being reported if the insider believes there is a reasonable basis for doing so. It is important that reports under Section 16(a) be prepared properly and filed on a timely basis. The reports must be received at the SEC by the filing deadline. There is no provision for an extension of the filing deadlines, and the SEC can take enforcement action against insiders who do not comply fully with the filing requirements. In addition, the Company is required to disclose in its annual proxy statement the names of insiders who failed to file Section 16(a) reports properly during the fiscal year, along with the particulars of such instances of noncompliance. Accordingly, the Company strongly urges all directors and officers to notify the Company's Compliance Officer, prior to any transactions or changes in their or their family members' beneficial ownership involving Company stock and to avail themselves of the assistance available from Mayer, Brown & Platt in satisfying the reporting requirements. 2. Schedule 13D and 13G. Section 13(d) of the Exchange Act requires -------------------- the filing of a statement on Schedule 13G by any person or group which acquires beneficial ownership of more than five percent of a class of equity securities registered under the Exchange Act. The threshold for reporting is met if the stock owned, when coupled with the amount of stock subject to options exercisable within 60 days, exceeds the five percent limit. Reports on Schedule 13D and 13G are required to be filed with the SEC and submitted to the Company within ten days after the reporting threshold is reached. If a material change occurs in the facts set forth in the Schedule 13D or 13G, such as an increase or decrease of one percent or more in the percentage of stock beneficially owned, an amendment disclosing the change must be filed promptly. A decrease in beneficial ownership to less than five percent or twenty percent is per se material and must be --- -- reported. A person is deemed the beneficial owner of securities for purposes of Section 13(d) if such person has or shares voting power (i.e., the power to vote or direct the voting of the securities) or dispositive power (i.e., the power to sell or direct the sale of the securities). As is true under Section 16(a) of the Exchange Act, a person filing a Schedule 13D or 13G may disclaim beneficial ownership of any securities attributed to him or her if he or she believes there is a reasonable basis for doing so. Attached hereto as Exhibit D are forms of Schedule 13D and 13G, --------- respectively. 3. Form 144. As described above under the discussion of Rule 144, a -------- seller relying on Rule 144 must file a notice of proposed sale with the SEC at the time the order to sell is placed with the broker unless (x) the amount to be sold neither exceeds 500 shares nor involves sale proceeds greater than $10,000 or (y) the seller is not at the -15- time of the sale, and has not been for the three months preceding such date, an affiliate of the Company and, if the securities to be sold are restricted securities, such restricted securities have been held (and fully paid for) for at least two years. Attached hereto as Exhibit E is a form of --------- notice of proposed sale under Rule 144. IV. CONFLICTS OF INTEREST The Company relies on the integrity and undivided loyalty of its employees to maintain the highest level of objectivity in performing their duties. Each employee is expected to avoid engaging in activities that conflict with, or have the appearance of conflicting with, the best interests of the Company and its stockholders. Any personal activities or interests of an employee that could negatively influence, or which could have the appearance of negatively influencing, his or her judgment, decisions or actions must be disclosed to the Company's Compliance Officer, who will determine if there is a conflict and, if so, how to resolve it without compromising the Company's interests. Prompt and ---------- full disclosure is always the correct first step towards identifying and - ------------------------------------------------------------------------ resolving any potential conflict of interest or problem. - ------------------------------------------------------- This policy applies not only to each employee but also to members of the employee's immediate family, any trust in which an employee (or a member of the employee's immediate family) has a beneficial interest, and any person with whom the employee (or a member of the employee's immediate family) has a substantial business relationship. Immediate family includes any relatives of the employee or the employee's spouse who live in the same household as the employee. This policy applies to officers and directors to the same extent as employees. Conflicts involving officers will be reviewed by the Audit Committee of the Board. Conflicts involving the Chief Executive Officer and directors will be reviewed by the Board. In certain limited cases, activities giving rise to potential conflicts of interest may be permitted if they are determined not to be harmful to the Company. That determination will be made by the Board in the case of the Chief Executive Officer or directors, by the Audit Committee in the case of other officers, and by the Company's Compliance Officer, in the case of other employees. The following discussion sets out some of the more common conflicts that an employee may confront and is intended to serve as a guide to the standards to which all employees are expected to adhere. The list is unavoidably incomplete. It is the special responsibility of each employee to use his or her best judgement to assess objectively whether a conflict or the appearance of a conflict exists and to engage in open and candid communication with the Company about the conflict. In addition, an employee should be prudent in his or her personal investments and other activities to ensure that they do not put the employee in a position -- -16- financial or otherwise -- which might influence or give the appearance of influencing his or her actions as a Company employee. No employee may have any direct or indirect financial interest in, or any business relationship with, a private company, partnership, or other privately- held entity that currently is or becomes a supplier of materials to the Company, a provider of services to the Company or a competitor of the Company. A financial interest includes any ownership or creditor interest. This policy does apply to either an employee's arms-length purchases of goods and services for personal or familial use or an employee's normal arms-length dealings with companies, banks, insurance companies and utilities that have a relationship with the Company that is merely incidental to the Company's operations. Any employee or director that has a direct or indirect material financial interest -------- in, or business relationship with, a public company that currently is or becomes a supplier of materials to the Company, a provider of services to the Company or a competitor of the Company must disclose such interest to the Company's Compliance Officer, who will determine if there is a conflict and, if so, how to resolve it without compromising the Company's interests. A financial interest includes any ownership or creditor interest. This policy does not apply to either an employee's arms-length purchases of goods and services for personal or familial use or an employee's normal arms-length dealings with companies, banks, insurance companies and utilities that have a relationship with the Company that is merely incidental to the Company's operations. No employee should accept gifts, credits, payments, services, excessive entertainment or anything else of value from an actual or potential competitor, supplier or customer unless such gift is of insubstantial value and a refusal to accept it would be discourteous or otherwise harmful to the Company. In addition, receiving advertising novelties such as calendars does not violate this policy. Permitting a supplier's or customer's employee to pick up the check at a meal is not inappropriate so long as business was discussed at arms- length and there is no suggestion of undue or unfair influence. If a gift or other service or object of value is offered to an employee, he or she should immediately report the offer to a responsible Company manager so that an appropriate response can be made to the offeror. Please remember, however, that local, state and federal laws often impose special rules on relations with government customers and suppliers which may differ from commercial relations. Payments for expenses of government representatives should be reviewed by the Company's Compliance Officer, prior to making the payment. No employee may use Company information for personal gain (i) if it would harm the Company's interests or (ii) if the information has not been previously disclosed to the public. For example, if the employee is aware that the Company intends to purchase or is considering the purchase of a specific parcel of land, it would be a breach of the employee's duty of loyalty to the Company to purchase that property or inform others of the Company's intent. Any confidential or proprietary information concerning the Company belongs to the Company and should not be disclosed or used by the employee. Any unauthorized disclosure of such information would be a breach of the employee's duty of loyalty. See Section II of this Statement for a discussion of federal securities laws prohibiting the trading in securities based on non-public Company information. -17- Exhibit A --------- Exhibit A to Statement of Policy Concerning Trading Policies and Conflicts of Interest. Individuals subject to reporting provisions and trading restrictions of Section 16 of the Securities and Exchange Act of 1934, as amended. Directors - --------- Officers - -------- -18- Exhibit B --------- Exhibit B to Statement of Policy Concerning Trading Policies and Conflicts of Interest. Individuals subject to reporting provisions and trading restrictions of Section 16 of the Securities and Exchange Act of 1934, as amended. Key Employees of the Company - ---------------------------- -19- Exhibit C --------- Exhibit C to Statement of Policy Concerning Trading Policies and Conflicts of Interest. Sample Forms 3, 4 and 5 - ----------------------- -20- Exhibit D --------- Exhibit D to Statement of Policy Concerning Trading Policies and Conflicts of Interest. Sample Schedule 13D and 13G - --------------------------- -21- Exhibit E --------- Exhibit E to Statement of Policy Concerning Trading Policies and Conflicts of Interest. Sample Rule 144 Notice - ---------------------- -22- EX-10.12 10 AGREEMENT BETWEEN MAPQUEST & QWEST COMMMUNICATION EXHIBIT 10.12 [QWEST LOGO] Qwest CoLocation Service Agreement Qwest Communications Inc. and Mapquest, A Business Unit of Geosystems Global ---------------------------------------------- Corporation. (herein after referred to as "Subscriber") enter into this - ------------ Subscription Agreement ("Agreement") this day of May 18, 1998 and agree as ------------ follows: 1. Qwest shall allow Subscriber to connect computing facilities at Subscriber's site (identified in Paragraph 4 below) to the Qwest Network (the "Network") and transmit data over the Network in accordance with the terms of this Agreement and the Qwest Communications Inc. Statement of Policies and Procedures attached hereto as Exhibit A and incorporated herein by this reference (the "Policies and Procedures"). 2. Subscriber service: Co-Location Service. The monthly fees for a -------------------- 12 Month term membership, connection to and use of the Network are as -------- follows: A. Rack Space 1. Install - $1,000 ------ 2. Monthly Reoccurring Charge (MRC) - $6,392 ($64,700 annually) ------------------------- B. 100MB Network Uplink 1. Install - Waived With Term ---------------- 2. MRC - Waived With Term ---------------- C. Bandwidth 1. MRC Local Loop $274 2. MRC (9.0-10.5Mbps)-$8,333 3. MRC (10.5-12Mbps)-$9,833 4. MRC (12-13.5Mbps)-$11,333 5. MRC (13.5-15Mbps)-$14,250 6. MRC (15-16.5Mbps)-$17,166 7. MRC (16.5-18Mbps)-$20,083 8. MRC (18-19.5Mbps)-$23,000 9. MRC (19.5-21Mbps)-$26,000 The first such fee plus the installation fee (if applicable) shall be due within 30 days after connection to the Network. Renewal fees shall be invoiced on the first day of the calendar month immediately preceding the anniversary date of this Agreement and shall be paid within 30 days of the invoice date. In addition to annual subscription fees, Subscriber must pay the telecommunications costs from its facilities to the nearest network node and the costs of hardware/software required to connect Subscriber's site to the nearest Qwest node for TCP/IP inferfacing. Qwest will provide the interface port at its site. Telecommunications service may be purchased directly from common carriers. Qwest technical advisors will provide the necessary specifications for the required hardwire data link. 3. Miscellaneous costs as described in the Policies and Procedures shall be due 30 days after billing by Qwest. 4. Subscriber shall be entitled to physically connect 8 Racks located within the Machine Room at 960 17th St., Ste. 1900 to the Network with a 100BaseT Uplink. 5. Neither party shall have the right to use the other's name, trademarks or trade name without the prior written consent of the other party. 6. Qwest, any and all participating Qwest contractors and grantees, and Qwest's directors, officers and employees are not authorized to make any affirmation of fact or warranty with respect to the software or hardware supplied under this Agreement. QWEST HEREBY EXPRESSLY DISCLAIMS ALL EXPRESSED AND IMPLIED WARRANTIES, INCLUDING, WITHOUT LIMITATION, WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, AND NON-INFRINGEMENT, AND SHALL NOT BE LIABLE TO SUBSCRIBER FOR DIRECT, INCIDENTAL, SPECIAL, OR CONSEQUENTIAL DAMAGES OF ANY KIND WHATSOEVER ARISING OUT OF OR RELATED TO THE USE OR INABILITY TO USE THE QWEST HARDWARE OR SOFTWARE. 7. Subscriber shall indemnify and hold Qwest, its directors, officers, employees and agents harmless from and against any and all damages, liabilities, losses, costs and expenses, including reasonable attorney's fees caused by, arising out of or related to Subscriber's use of the Network or Subscriber's breach of the terms and conditions of this Agreement or the Policies and Procedures. 8. This Agreement may be terminated by either party immediately upon written notice to the other party; provided, however, that the provisions of Paragraphs 6, 7 and Exhibit A shall survive any such termination. 9. This Agreement, including the Policies and Procedures, is the sole Agreement between the parties respecting the subject matter hereof. By signing this Agreement, Subscriber acknowledges it has received and read the Policies and Procedures and fully understands the terms thereof. This Agreement supersedes all prior agreements and understandings, whether oral or written. This Agreement may be amended only in writing, and signed by both parties to this Agreement. 10. No information exchanged between the parties shall be considered confidential unless it is the subject of a separate, written non-disclosure agreement. 11. This Agreement and the legal relationships between the parties shall be governed by and construed in accordance with the laws of the State of Colorado. Qwest Communications, Inc. Subscriber - -------------------------- ---------- Signed: /s/ N. Weiner Signed: /s/ Marc B. Haverland ------------------ ------------------------ Rep Name: N. Weiner Name: Marc B. Haverland --------------- ------------------------- Rep Title: Major Acct Exec Title: Dir, Internet Engineering --------------- ------------------------- Date: 5/18/98 Date: 5-18-98 --------------- ------------------------- Exhibit A: Qwest Communications Inc. Statement of Policies and Procedures Use of Network 1. Subscriber will be subject to the Network usage rules as promulgated and modified from time to time by Qwest. Failure to comply with these Policies and Procedures and Network usage rules may result in the termination of Subscriber's access to or use of the Network. 2. Subscriber is responsible for appointing a primary and secondary Administrative Liaison, who will implement these policies within the organization. The Administrative Liaisons will report violations of these Policies and Procedures and Network usage rules, and stops being taken to prevent future violations. 3. The Network is not a secure network. Confidential or sensitive data, proprietary software, and other secret information should not be transmitted over the Network. Qwest assumes no responsibility for loss, damage, or theft of information transmitted over the Network. 4. Subscriber and its affiliates are expected to comply with all applicable State and Federal laws, including laws governing technology and software. Connections to the Network 1. Qwest will provide the following hardware/software and hardware/software support. a) Interface port at a Network host site. b) Testing of all relevant hardware required prior to connection. c) Installation of relevant hardware at Subscriber and Network sites. d) Assistance in application for IP address(es) and Domain name. e) Network monitoring and management. 2. Subscriber will provide the following hardware/software and technical support. a) TCP/IP compatibility. b) Data communication circuit between Subscriber site and Network host site. c) DSU/CSUs or modems at Subscriber end of circuit. d) All cables at Subscriber site. e) Appropriate router or other connection hardware as agreed upon with Qwest. f) Designated liaison to Network. If Subscriber chooses non-recommended hardware, it is subject to Time and Materials charges if Qwest is involved in related installation effort. Disconnection From the Network If, for any reason, Subscriber's connection causes technical disturbances on the Network, Subscriber and Qwest will work jointly to correct the disturbances. If the problem is insurmountable or too costly to correct, Qwest reserves the right to disconnect Subscriber from the Network and refund any payments not already spent. 5. In addition to annual subscription fees, Subscriber must pay the telecommunications costs from its facilities to the nearest network node and the costs of hardware/software required to connect Subscriber's site to the nearest Qwest node for TCP/IP interfacing. Qwest will provide the interface port at its site. Telecommunications service may be purchased directly from common carriers. Qwest technical advisors will provide the necessary specifications for the required hardwire data link. Remittance Address Please send all Purchase Orders, payments and billing inquiries to: Qwest Communications Inc. 950 17th Street Suite 1900 Denver, Colorado 80202 Cancellation of Subscription 1. The customer shall have 90 days from the install date in which to notify Qwest, in writing, of any service problems. If Qwest cannot resolve the problem(s) within ten days of receipt of written request for service, then the Customer has the option to cancel this Agreement. If this Agreement is cancelled within 90 days, the Customer will not be held responsible for the Monthly Reoccurring Charges following the effective date of such cancellation, but maybe responsible for any Qwest provided access, including installation fees. If the customer otherwise discontinues service prior to the end of the agreement term, the Customer may be responsible for an amount equal to 25% of the Monthly Reoccurring Charges for Internet Service for each month remaining on the term. The customer may switch to any other Qwest service with an equal or greater volume and term commitment, at any time during the term of the Agreement. 2. Qwest reserves the right to cancel the subscription of Subscriber for misuse of the Network as outlined herein. A Subscriber who has had its subscription cancelled will not be entitled to a refund of any of its subscription fee. Miscellaneous Matters A. Neither Qwest nor Subscriber shall acquire any rights in the data transmitted over the Network by virtue of the Subscription Agreement or their use of the Network. B. Qwest shall not have the right to gain access to or to make use of Subscriber's computing facilities by virtue of the Subscription Agreement. C. Qwest shall not mediate agreements between Subscriber and other subscribers on the Network. D. Mail Exchange - Qwest will provide mail exchange services to its customers at no extra charge. E. NNTP - An NNTP news feed will be provided for free so long as the customer has their own NNTP server and at least a T1 dedicated Internet connection or above. As a prerequisite to News Feed Service, the customer must install a news server at their premises; news reading software should also be installed on the customer's desktop PCs and/or workstations as appropriate. Once the server is in place and the service is established, Qwest feeds (downloads) customer-selected news information from Qwest's central news server to the customer's server via NNTP (Network News Transfer Protocol), where it is then available to be read by all authorized users on the customer's internal network. Note that network news articles are never directly accessed by clients' news reading software from Qwest's central news server, but rather all news must be read from the customer's news server. F. Domain Name Service (DNS): Up to 5 domains and 50 kilobytes of associated zone file data are included. This package is comprised of three components: domain name registration, secondary DNS administration, and primary DNS administration. Included in the service is registration and administration of up to 3 domain names. Customers may purchase additional DNS service in units of 5 domains. The charge for additional DNS service will be $50 setup and $50 per month. G. For those Internet Service customers who are designated as Gateway Customers (GCs), whereby they resell Internet access services to customers of their own via their Internet connection, Qwest will only provide domain name registration and primary and secondary DNS administration for the GC's own domain names, not for those of the GC's customers. Qwest will provide secondary DNS administration for domain names registered to customers of the GC only in those cases where the primary DNS administration for those domain names is being provided directly by the GC. EX-10.13 11 LEASE AGREEMENT DATED DECEMBER 9, 1996 Exhibit 10.13 MOUNTVILLE PENNSYLVANIA Part I MADE and executed this 9th day of December, 1996. By and between DONNERVILLE ASSOCIATES, a Pennsylvania limited partnership having its principal place of business at 2350 Springwood Road, York, Pennsylvania 17402, herein called "Landlord"; and GEOSYSTEMS GLOBAL CORPORATION, a Delaware corporation, having its principal place of business at 227 Granite Run Drive, Lancaster, Pennsylvania 17601, herein called "Tenant." Landlord does hereby Lease unto Tenant the "Premises" at the "Rent" for the "Term" for the "Permitted Use" upon and under the Terms and Conditions set forth in this Part I and Part II of the Lease Agreement (collectively, the "Lease") all as follows. In case of conflict in definitions or other provisions of Part I and of Part II, Part II shall control. 1. Premises. 1.1 Location: 3700-3750 Electronics Way, Township of West Hempfield, County of Lancaster, Lancaster, Pennsylvania 17601. 1.2 Tenant's Rentable Square Footage: 62,000 Square Feet. 1.3 Building Rentable Square Footage: 62,000 Square Feet, comprising 2 buildings connected by a corridor. See Exhibit A. 1.4 Tenant's Pro-Rate Share of Building: 100 Percent (100.00%). 1.5 The garage located on the Premises, comprising approximately 400 square feet, is included within the Leased Premises at no cost. 1.6 All unimproved area covered by legal description attached as Exhibit A. 2. Improvements: 2.1 ( ) Premises Leased with existing improvements. 2.2 (X) Repairs/Improvements by Landlord to be completed for Occupancy by April 1, 1997, excepting landscaping and parking lot repairs which will be completed as weather permits, but no later than June 15, 1997. (As per Exhibit B and Section 2 of Part II attached, which includes provision for a tenant improvement allowance of $275,000). No later than December 20, 1996, Tenant will provide Landlord with a complete Tenant's Scope of Work which shall delineate those items which Tenant intends to contract with Harold H. Hogg, Inc. to perform and which must be completed prior to occupancy. Tenant will respond to requests for information by Landlord's Contractor, Harold H. Hogg, Inc., within five (5) business days of any such request. Every day of delay past the five (5) days allowed will be considered one (1) day of Tenant Delay as set forth in Section 2.1 of Part II. 3. Term: 3.1 Number of Years: Ten (10) Years. 3.2 Term Begins: April 1, 1997, subject to adjustment pursuant to Section 3.1 of Part II attached. 3.3 Term Ends: March 31, 2007, subject to adjustment pursuant to Section 3.1 of Part II attached. 3.4 Purchase Option as per attached Rider. 3.5 Option to Renew as per Section 3.2 of Part II. 4. Rent: 4.1 Base Rent for Entire Term: $6,198,262.65 4.2 Monthly Installments (subject to adjustment pursuant to Section 3.1 of Part II attached): April 1, 1997 through July 31, 1997 - $22,604.17 August 1, 1997 through October 31, 1997 - $33,906.25 November 1, 1997 through March 31, 1999 -$45,208.33 April 1, 1999 through March 31, 2000 - $49,083.33 April 1, 2000 through March 31, 2001 - $50,555.83 April 1, 2001 through March 31, 2002 - $52,072.50 April 1, 2002 through March 31, 2003 - $53,634.68 April 1, 2003 through March 31, 2004 - $55,243.72 April 1, 2004 through March 31, 2005 - $56,901.03 April 1, 2005 through March 31, 2006 - $58,608.06 - 2 - April 1, 2006 through March 31, 2007 - $60,366.30 4.3 Intentionally Deleted. 4.4 Last Month's Rent: $32,604.17 paid by Tenant at signing of Lease shall be credited toward the last month's rent. This payment shall earn interest at a three percent (3%) annual rate compounded monthly which also shall be credited towards the Tenant's last month's rent. 4.5 Pre-Commencement Operating Expenses: Tenant's obligation to pay Operating Expenses attributable to the Premises shall commence February 1, 1997, however, Landlord agrees that the cost to the Tenant for electrical service to the Premises will not exceed $3,000 per month from February 1 through April 1 or the completion of construction, whichever occurs last, any such excess to be paid by Landlord. The only other exception shall be the obligation to maintain and pay for liability and fire insurance, which shall be the responsibility of the Landlord until March 30, 1997. 5. Permitted Use: Office, R&D, light assembly, warehouse, wholesale sales and storage. 6. First Right of Refusal: Tenant shall have the First Right of Refusal to purchase the Building, exerciseable by Tenant within thirty (30) days of Tenant's receipt of a copy of the bona fide offer received by Landlord from another party on the same terms and conditions as the offer. This right shall not apply to the sale or transfer of the property to an entity in which Harold H. Hogg or Springwood Group, Limited or their successors as general partner of Landlord (such entity being and "Approved Entity") owns a controlling interest provided that the sale or transfer of the property to the Approved Entity is not done for the purpose of defeating Tenant's First Right of Refusal. - 3 - IN WITNESS WHEREOF, intending to be legally bound, the Landlord and Tenant have caused this Part I presents to be signed by their duly authorized officers or agents and their appropriate seals to be hereunto affixed, the day and year first above written. WITNESS: DONNERVILLE ASSOCIATES, "Landlord" By: /s/ [ILLEGIBLE] ------------------------------- Name: /s/ [ILLEGIBLE] ------------------------------- Title: General Partner /s/ [ILLEGIBLE] ____________________ By: ------------------------------ Name: ------------------------------ Title: General Partner ____________________ By: ------------------------------- Name: ------------------------------- Title: General Partner WITNESS/ATTEST: GEOSYSTEMS GLOBAL CORPORATION "Tenant" /s/ [ILLEGIBLE] ____________________ By: /s/ BARRY J. GLICK ------------------------------- Name: Barry J. Glick ------------------------------- Title: President & CEO - 4 - PART II OF LEASE DATED December 9,1996 between DONNERVILLE ASSOCIATES, "Landlord" and GEOSYSTEMS GLOBAL CORPORATION, "Tenant" 1. PREMISES. The Landlord does hereby Lease unto the Tenant and the Tenant does hereby lease from the Landlord the Premises with the improvements erected or to be erected thereon, which is outlined in red on Exhibit "A", attached hereto and made a part hereof, on the terms and conditions set forth in Parts I and II. The rentable areas of the Building have been calculated on the basis of the following definitions and it is hereby stipulated, absent manifest error, that for all purposes of this Lease that the rentable areas are as set forth in Part I of this Lease, whether the same be in fact more or less as a result of minor variations resulting from actual construction and completion of the leased premises for occupancy so long as such work is done in accordance with the terms and provisions hereof. In the event the Premises are part of a warehouse, flex building, business center, or retail strip center, defined herein as a building where Tenants are provided with their own private entrances, private restrooms and without any interior common areas shared by Tenants, the "rentable area" shall refer to all floor area measured from the outside surface of any exterior walls to the middle of any demising walls. 2. IMPROVEMENTS 2.1 Tenant and Landlord agree that at the signing of this Lease, Tenant has provided Landlord with all information necessary to prepare a Landlord's Scope of Work for all build-out to be done by Landlord at Landlord's expense, and the Landlord's Scope of Work is set forth in Exhibit B attached hereto. Landlord's Scope of Work as described in Exhibit B (the "Landlord's Work") shall be completed by or at the direction of Landlord, on or before April 1, 1997, subject only to completion of "punch list" items agreed to in writing by Landlord and Tenant, which items are not necessary for Tenant's reasonable use and occupancy of the Premises ("Substantial Completion"). In the event the Landlord's Work or Tenant's Scope of Work to the extent Tenant contracted with Harold H. Hogg, Inc. to perform the same (the "Hogg Work") is not substantially completed in a manner which would allow Tenant to occupy the Premises for its intended use as aforesaid by April 1, 1997, Landlord will pay Tenant, except in the case of Tenant caused delay (a "Tenant Delay"), the sum of $350 for each business day completion of the Premises is delayed beyond May 1, 1997 (the "Per Diem Damages"), such payment shall be tendered within thirty (30) days of occupancy of the Premises by Tenant. In the event Landlord's Work or Hogg Work is not completed on or before May 1, 1997, Tenant shall have the option of (a) completing Landlord's Work and the Hogg Work at the cost and expense of Tenant, by using contractors and/or laborers of Tenant's choosing, whereby any such reasonable expenses so incurred by Tenant and not repaid to Tenant by Landlord within thirty (30) days of Tenant's delivery to Landlord of an invoice therefor, shall be credited as an offset against Tenant's obligation to pay rent hereunder, or (b) allowing Landlord to complete Landlord's Work and accepting the Per Diem Damages. It is agreed that "reasonable expenses" shall mean the actual cost to the Tenant of materials, labor, fringe benefits, payments to subcontractors, and any sales taxeS or permit fees on same incurred by Tenant in connection with performing Landlord's Work or Hogg Work. "Reasonable expenses" does not include charges for management personnel of Tenant who administer the work, the cost of utilities, any general allocations, or any costs not directly related to the completion of Landlord's Work or Hogg Work. Landlord's obligation to repay Tenant shall not arise until Tenant has supplied Landlord with reasonable substantiation for all such charges. Should the parties disagree on whether Tenant has supplied reasonable substantiation, Tenant shall have the right of offset as set forth above pending the outcome of mediation of the matter. Landlord hereby indemnifies Tenant against any and all liability, claims, actions or damages arising from the performance of Landlord's Work by Landlord, its contractors or agents. Landlord shall procure and file a stipulation against liens and all releases and waivers from mechanics liens prior to commencement of Landlord's Work. Notwithstanding Tenant's agreement to assume the payment of defined Operating Expenses effective February 1, 1997, such obligation shall not extend to the payment of expenses attributable to Landlord's Work and Landlord's activities within the Premises. 2.2 Landlord agrees to provide Tenant with a $275,000 construction allowance to be used any way that Tenant desires. Such funds must be used within the first three years of occupancy. Any funds not utilized by Tenant will be applied to the monthly rent as directed by Tenant in writing and within thirty (30) days of receipt of such direction by Tenant. Upon Tenant's presentation to Landlord of paid receipts or invoices for work completed within or on the Premises, Landlord shall reimburse Tenant for those expenses up to the maximum construction allowance of $275,000. The parties have agreed that the Tenant improvement allowance of $275,000 is to be spent on the following improvements: (1) complete carpet replacement; (2) demolition, renovation, and/or build-out of the bottom-half of the Annex; and (3) to the extent Tenant elects to do so, upon of the work described by the "Tenant's Scope of Work" as outlined in Exhibits B-1 through B-5, as can be performed and Tenant elects to cover with the $275,000 allowance. Landlord hereby grants its consent to Tenant's Scope of Work. At Tenant's election, Tenant may contract with Harold H. Hogg, Inc. to perform any of the work set forth on Tenant's Scope of Work on a lump sum basis, as specified by Tenant as set forth in Section 2.2 of Part I above. An itemized listing of the potential work is listed in Exhibit B-1 through B-5. - 2 - 3. TERM. Tenant shall have and hold the Premises for a ten (10) year term commencing on the later to occur of April 1, 1997, or that date on which Landlord (or Tenant, as the case may be) substantially completes construction of the Landlord's Work and/or Hogg Work (less punch list items) as provided in Section 2 of Part II hereof (the "Commencement Date"). Notwithstanding the foregoing, in the event Substantial Completion is delayed as a result of a Tenant Delay or a delay associated with Tenant's unreasonable actions or inactions following Tenant's take-over of Landlord's Work or the Hogg Work, the Commencement Date shall not be delayed by that number of days attributable to such delays. If the delay was due to the actions (or inactions) of both Landlord and Tenant, the parties shall apportion the number of day delays between them by mutual agreement. Should the parties be unable to agree, the matter shall be settled through mediation. In the event the Commencement Date is a day other than April 1, 1997, the dates governing the monthly installments of rental due as set forth in Section 4.2 of Part I shall be adjusted accordingly, provided, however, that in the event the Commencement Date falls on a day other than the first day of the month, rental shall be apportioned for that first partial month at a per diem rate so that the date designations as set forth in Section 4.2 shall always reflect the first and last day of a month. So long as Tenant is not in default of this Lease, Tenant shall have one option to renew this Lease for an additional renewal term of three (3) years, exerciseable by delivery of written notice to Landlord not later than the last day of the ninth (9th) year of the Lease term. All terms and conditions of this Lease shall apply to such renewal term except rent, which shall be established prior to the first day of the renewal term at the then current fair market rent for the area in which the Premises is located as determined by the mutual agreement of the parties. This option expires and terminates on the last day of the 9th year of the Lease Term. For purposes of this Lease, use of the word "term" shall be deemed to include both the original ten (10) year term as well as the three (3) year renewal term, to the extent applicable. 4. RENT. 4.1 Minimum Rent: The parties agree that the Minimum Rent (the "Rent") for the Premises shall be as set forth in Section 4.1 of Part I, and so long as Tenant is not in default Tenant shall pay such rent in the equal monthly installments as set forth in Section 4.2 of Part I, in advance, on the first day of each calendar month during the Term. In addition, Tenant shall pay Landlord, without notice, demand, deduction or set-off, except as specifically set forth herein, the Additional Rent (as hereinafter set forth) regardless of other accommodations granted by Landlord to Tenant regarding the payment of minimum annual rent. Landlord will promptly forward sewer bills to Tenant for payment. 4.2. Additional Rent: Tenant shall pay as additional rent, all Operating Expenses (as hereinafter defined in 4.3 of Part II) related to the operation and maintenance of or with respect to the Premises. - 3 - 4.3 Operating Expenses: Tenant agrees to pay as additional rent, in addition to the base rental set forth in this Lease, the following expenses (collectively, "Operating Expenses") which are necessary to effectively operate and maintain the Premises: All Real Estate taxes, fees or assessments (excluding any taxes, fees or assessments related to the future extension of Hempland Road); all Fire, Casualty Liability, and Boiler Insurance Premiums attributable specifically to the Premises and required to be maintained pursuant to Section 6.4 and 7 of this Lease; snow removal and lawn maintenance (as required pursuant to Section 5.6); costs of water, sewer, gas, fuel, electricity and all other utilities utilized by Tenant, janitorial service and trash removal (as required pursuant to Section 5.5), including trash recycling as required by government regulation, lighting costs and security as Tenant may from time to time deem necessary, as well as the cost incurred by Tenant in connection with Tenant performing the repairs and maintenance obligations imposed upon Tenant as set forth in section 5.2 below. 5. UTILITIES AND SERVICES. 5.1 Utilities: Tenant shall be responsible for the payment of all electricity, heating and air conditioning and water service utilized for the normal use and occupancy of the Premises. Landlord reserves the right, without any liability to Tenant, and without being in breach of any covenant of this Lease, with as much prior notice to Tenant as is possible under the circumstances, to interrupt or suspend service of any of the heating, ventilating, air-conditioning, electric, sanitary, or other systems serving the Premises, or the rendition of any of the other services required by Landlord under this Lease, whenever and for so long as may be necessary by reason of accident, emergencies, strikes or by reason of any other cause beyond Landlord's reasonable control, excluding, however, difficulties resulting from failure to pay the cost of such items, including without limitation mechanical failure and governmental restrictions on the use of materials or the use of any of the Building systems. With respect to the interruption or suspension of any required service in connection with the making of repairs or changes which Landlord is required by this Lease or by law to make or in good faith deems advisable, Landlord agrees wherever possible to schedule such work outside of normal business hours and in all cases to take such actions as are necessary to minimize interference with Tenant's operations. In each instance, however, Landlord shall exercise reasonable diligence to eliminate the cause of interruption and to effect restoration of service as soon as possible, and shall give Tenant reasonable notice under the circumstances, and in all non-emergency situations at least 72 hours in advance of the commencement and anticipated duration of such interruption. Except as specifically set forth in Section 18.4(b) of this Part II, Tenant shall not be entitled to any diminution or abatement of rent or other compensation or damages nor shall this Lease or any of the obligations of the Tenant be affected or reduced by reason of the interruption, stoppage or suspension of any of the Building systems or services arising out of the causes set forth in this paragraph so long as Landlord observes the terms of this section. - 4 - 5.2 Repairs: The Tenant shall at its sole cost and expense maintain in good repair the Premises and every part thereof, including waste disposal systems, and doors, excluding only the following which Landlord shall maintain in good repair and to the extent necessary, replace, at Landlord's sole cost and expense: heating, ventilating and air-conditioning systems ("HVAC"), roof, skylights, foundation, exterior walls, downspouts and gutters, and damage resulting from Landlord's failure to maintain the foregoing, provided, however, that Tenant shall be required to make repairs to the HVAC, roof, foundation, exterior walls, downspouts and gutters within thirty (30) days of written notice by Landlord, if such repairs are occasioned by the negligence of Tenant, its officers, employees, agents, customers or invitees, ordinary wear and tear excepted. If Tenant requests that Landlord make the repairs on Tenant's behalf or Landlord requires Tenant to perform repairs or maintenance which under the terms of this Lease are Tenant's responsibility, Tenant shall pay the costs associated with such repairs and maintenance, and they shall be considered as additional rent. Tenant shall return the Premises in good condition and repair, ordinary wear and tear excepted, and in a broom-clean condition upon expiration of this Lease. In the event that Tenant fails to comply with any terms of this paragraph then Landlord, following written notice to Tenant, shall undertake such repairs and cleaning with Tenant being liable for all reasonable costs thereof, including any expenses incurred by Landlord to enforce this provision, whether they be court costs, reasonable attorneys' fees or any other cost of collection and enforcement, and these costs shall be considered as Additional Rent. 5.3 Heating Ventilation and Air Conditioning Maintenance and Repair. (a) The Landlord shall perform at its sole cost and expense all preventive and routine maintenance, repair and replacement of the heating, ventilation and air conditioning equipment for the Premises during the entire term of Lease. The Landlord shall procure and keep in effect at Landlord's sole cost a standard preventive maintenance contract (see Exhibit "D"), on all heating, ventilating and air conditioning equipment. (b) Within thirty (30) days following the Commencement Date, Landlord, at its expense, shall perform an air quality test on the HVAC system and deliver the results of such test to Tenant. In the event the results of such test are not reasonably satisfactory to Tenant, Landlord shall, at its sole cost and expense, make the repairs or replacements necessary to provide air quality test results which are satisfactory within thirty (30) days of the issuance of the test results and Landlord shall then conduct a follow-up test confirming satisfactory conditions within sixty (60) days of the date of the issuance of the initial test results, which test results shall be delivered to Tenant. 5.4 Clean Condition: The Tenant shall keep the Premises in a clean, sanitary and safe condition in accordance with the laws, ordinances and regulations of the Federal Government, Commonwealth of Pennsylvania, and of the Township in which the Premises is situated, provided, however, that such obligation shall not impose upon Tenant any responsibility or liability to perform those maintenance, repair and replacement obligations otherwise imposed upon Landlord under the terms of this Lease. Tenant shall comply with all requirements of law, ordinances and regulations, including those relating to occupational safety and health, in connection with Tenant's business operations within the - 5 - Premises. Except for dumpsters, neither trash nor any other material or thing shall be stored outside the Premises and storage in, or use of, above-ground storage tanks is prohibited. Tenant may maintain storage trailers and other similar storage facilities (excluding tanks) on the Premises provided such facilities comply with all applicable laws. In the event the Tenant fails to comply with any terms of this paragraph within thirty (30) days written notice of said violation(s), then Landlord shall, following telephonic notice to Tenant, undertake such steps which are necessary to rectify the violation(s) with Tenant being liable for all cost thereof, including any penalty or fine(s) associated with said violation(s) and any expenses incurred by Landlord to enforce this provision, whether court costs, attorneys' fees or any other cost of collection and enforcement. Tenant shall not be responsible for correcting conditions on the Premises necessary to comply with the Americans With Disabilities Act ("ADA") or laws relating to health, safety or the environment if such conditions existed as of the Commencement Date of the Lease and were then not in compliance with ADA or laws relating to health, safety or the environment; rather, Landlord shall correct such conditions and be obligated to bring the Premises into compliance with such laws at its sole cost and expense. If the conditions did not exist as of the Commencement Date of the Lease or did exist, but were then in compliance with laws relating to health, safety or the environment (excluding ADA), Landlord shall nevertheless correct such conditions and be obligated to bring the Premises into compliance with such laws at its sole cost and expense, but may treat such expenses as "Operating Expenses," to be passed through to Tenant, provided however, that the cost of correction of such conditions shall be amortized over the useful life thereof, together with interest at the actual interest rate incurred by Landlord in connection with such cost of correction, and only that portion attributable to any one Lease year shall be chargeable to Tenant as an Operating Expense in that Lease year, and payable by Tenant within thirty (30) days of receiving an invoice therefor. 5.5 Janitorial Service: Tenant shall contract for and pay for janitorial services and the prompt removal of all trash from the Premises. 5.6 Snow Removal and Lawn Maintenance: Tenant shall mow lawns, trim shrubbery, used where appropriate and remove snow from walkways, roadways and parking areas in accordance with the minimum requirements set forth in Exhibit 6. 6. INSURANCE. 6.1 Fire Insurance. Tenant will not conduct or permit to be conducted, any activity or place any equipment in or about the Premises, which will, in any way, increase the rate of fire insurance or other insurance on the Premises; provided, however, if any increase in the rate of fire insurance or other insurance is stated by any insurance company or by the applicable Insurance Rating Bureau to be due to any activity or equipment of, in or about the Premises controlled by Tenant, such statement shall be conclusive evidence that the increase in such rate is due to such activity or equipment of result thereof, Tenant shall be liable for such increase in the cost of fire insurance, or other - 6 - insurance, which increase shall be considered additional rent payable hereunder, and Tenant shall be responsible for the payment thereof 6.2 Indemnity: The Tenant covenants with the Landlord that Landlord shall not be liable for any damage or liability of any kind or for any injury to or death of persons or damage to property of Tenant or any other person during the term of this Lease, by reason of the use, occupancy and enjoyment of the Premises by the Tenant or any person thereon or holding under said Tenant, absent Landlord's, its designated agents', servants' or employees' negligence or willful misconduct. Tenant will indemnify and save harmless the Landlord from all liability, on account of any such real or claimed damage or injury and from all liens, claims and demands arising out of the Tenant's, its agents employees, contractors, licensees, invitees and others on the Premises for or on behalf of Tenant, use of the Premises and its facilities, or any repairs or alterations which the Tenant may make upon said Premises, but the Tenant shall not be liable for damage or injury occasioned by the negligence or willful misconduct of the Landlord and its designated agents, servants or employees or latent defects on the Premises of which Tenant has no knowledge. This obligation to indemnify shall include reasonable attorney's fees and required investigation costs and all other reasonable costs, expenses and liabilities from the first notice that any claim or demand is to be made or any be made. 6.3 Waiver of Subrogation: Intentionally Deleted. 6.4 Tenant Insurance: Tenant further covenants and agrees that from and after the delivery of the Premises from Landlord to Tenant, Tenant will carry and maintain, at its sole cost and expense, in addition to fire insurance under Section 7 below, the following types of insurance, the amounts specified and in the form hereinafter provided for: 6.4.1 Public Liability and Property Damage: Public liability and property damage insurance with a combined single limit of One Million dollars ($1,000,000.00) insuring against any and all liability of the insured with respect to said Premises or arising out of the maintenance, use or occupancy thereof All such bodily injury liability insurance and property damage liability insurance shall specifically insure the performance by Tenant of the indemnity provisions as to liability for injury to or death of persons and injury or, damage to property in this Section 6 contained. 6.4.2 Tenant Improvements: Insurance covering all of the following items, all leasehold improvements, trade fixtures, merchandise and personal property from time to time in, on or upon the Premises, and personal property, of others in Tenant's possession, in an amount not less than the full replacement costs without deduction for depreciation from time to time during the term of the Lease, providing protection against any peril included within the classification "Fire and Extended Coverage," together with insurance against sprinkler damage, vandalism and malicious mischief Any policy proceeds shall be used for the repair or replacement of the property damaged or destroyed as Tenant may elect. - 7 - 6.4.3 Policy Form: All policies of insurance provided for herein shall be issued by insurance companies with general policyholders' rating of not less than A and a financial rating of AAA as rated in the most current available "Best's Insurance Reports," and qualified to do business in the State of Pennsylvania, and shall be issued in the name of Tenant. Such policies shall include Landlord and such other persons or firms as Landlord specifies as an additional insured and as a certificate holder, and executed copies of such policies of insurance or certificates hereof shall be delivered to the Landlord no later than ten (10) days before delivery of possession of the Premises to Tenant and thereafter no less than thirty (30) days prior to the expiration of the term of such policy. In respect of all public liability and property damage policies Landlord and such other persons or firms as Landlord specifies from time to time, shall be entitled to recovery under said policies for any loss occasioned to it, its servants, agents and employees by reason of the negligence of the Tenant as an additional insured and certificate holder. As often as any such policy shall expire or terminate, renewal or additional policies shall be procured and maintained by the Tenant in like manner and to like extent. All policies of insurance delivered to the Landlord must contain a provision that the company writing said policy will give to the Landlord twenty (20) days' notice in writing in advance of any cancellation or lapse or the effective date of any reduction in the amounts of insurance. All public liability, property damage and other casualty policies shall be written as primary policies, not contributing with and not in excess of coverage which the Landlord may carry. 6.4.4 Failure of Tenant to Obtain: In the event that Tenant fails to procure and/or maintain any insurance required by this Section, or fails to carry insurance required by law or governmental regulation, Landlord may (but without obligation to do so) at any time or from time to time, and without notice (provided however, that notice and an opportunity to obtain such insurance shall be given if the insurance is required by law, but not specifically required by the terms of this Lease), procure such insurance in which event Tenant shall repay the Landlord all sums so paid by Landlord, together with interest thereon as provided in Section 20 hereof, and any incidental costs or expenses incurred by Landlord in connection therewith, within ten (10) days following Landlord's written demand to Tenant for such payment. In case Landlord procures insurance under this section, it will notify Tenant of its doing so within thirty (30) days, but its failure to give' notice will not affect Tenant's obligation to insure under this Lease. 6.5 Blanket Policy: Notwithstanding anything to the contrary contained within this Section 6, the Tenant's obligations to carry the insurance provided for herein may be brought within the coverage of a so called blanket policy or policies of insurance carried and maintained by the Tenant; provided, however, that the Landlord and others hereinabove mentioned shall be named as an additional insured thereunder as their interests may appear and that the coverage afforded the Landlord will be not reduced or diminished by reason of the use of such blanket policy of insurance, and provided further that the requirements set forth herein are otherwise satisfied. The Tenant agrees to permit the Landlord at all reasonable times to inspect the policies of insurance of the Tenant covering risks upon the Premises for which policies or copies thereof are not required to be delivered to the Landlord. - 8 - 7. FIRE INSURANCE. Landlord shall procure and maintain in full force and effect until March 30, 1997, non-assessable fire and extended coverage insurance policies. Commencing on March 30, 1997, and throughout the entire Term, Tenant shall procure and maintain in full force and effect, standard fire and extended coverage insurance insuring the Premises for the full replacement value thereof, but in no event less than $3,500,000 against all risks of direct physical loss and which insurance shall include protection against those occurrences covered by standard "extended coverage" clause. Such policies shall name Landlord as the insured, as well as Landlord's mortgagee, if so requested by Landlord. In the event of loss, insurance proceeds shall be held in escrow by Landlord's mortgagee, if any, and otherwise by an escrow agent selected by Landlord pending repair of the damages by Landlord, and upon completion of the repairs by Landlord, the proceeds shall be paid to Landlord or paid to Landlord's mortgagee if required by it. In the event Landlord or Tenant elects to terminate the Lease on account of fire or other casualty as hereinafter provided, insurance proceeds shall be paid immediately to Landlord or its mortgagee if required by it. Without affecting Tenant's obligations under this Lease to carry insurance, Landlord agrees to maintain liability insurance covering Landlord in an amount and with companies which meet the requirements of Section 6.4.1 and 6.4.3 of this Part II. 8. USE OF BUILDING. The parties hereto agree that the Premises will be used only for the permitted /use set forth in SectionS of Part land uses incidental thereto. Tenant shall not permit the Premises to become vacant unless and until Tenant provides for biweekly security checks, at Tenant's sole cost and expense, for the duration of such vacancy. 9. ALTERATIONS. Tenant shall not make any alterations, additions or improvements to the Premises without the prior obtained written consent of Landlord, which consent will not be unreasonably withheld or delayed. Landlord hereby grants its consent to the alterations set forth on Exhibit B. In no event shall any such alteration, addition, or improvement weaken the structure of or impair any Building on the Property. Any alteration, addition, or improvement to the said Premises shall be done in accordance with the applicable City or Township, County and State laws and ordinances, and building and zoning rules and regulations. Tenant hereby expressly assumes full responsibility for all damages and injuries which may result to any person or property by reason of or resulting from alterations, additions, or improvements made by it to the Premises, and shall hold Landlord harmless with respect thereto. Tenant shall procure and file a stipulation against liens and all releases and waivers from Mechanics Liens prior to commencement of any construction at the Property, and copies of said stipulations, releases and waivers shall be delivered to Landlord not later than forty-eight (48) hours prior to commencement. All alterations, shall remain on the Premises at the termination of the Lease and shall become the property of the Landlord, unless at the time the consent for the alteration was given by Landlord, the Landlord directed the alterations be removed at the termination of the Lease in which event they shall be - 9 - removed and the Premises shall be returned, at the expense of Tenant, to its condition prior to the alteration. All machines, equipment, and supplies to be placed upon the Premises by the Tenant and not included on the plans and specifications for the Building shall remain the property of the Tenant and shall be removed by Tenant at the termination of the Lease; but the Tenant agrees to repair any damage to the Premises caused by the removal of such machines, equipment, or supplies. Notwithstanding anything contained in this section to the contrary, prior written consent of Landlord shall not be required for any alteration or course of alterations made within any one (1) calendar year that have an aggregate value of less than $10,000. 10. SIGNS AND EXTERIOR ATTACHMENTS. 10.1 Signs: Tenant, at its cost, will obtain and maintain in good repair any exterior signage Tenant installs on the Premises. All signage will comply with all applicable laws, ordinances, codes and regulations. 10.2 Exterior: Intentionally Deleted. 10.3 Interior: Tenant shall have the right, at its sole cost and expense, to erect and maintain within the interior of the Premises all signs and advertising matter customary or appropriate in the conduct of Tenant's business. 10.4 Windows: Tenant shall at all times maintain all windows on the Premises in a neat, clean and orderly condition. 10.5 General Appearance. Tenant acknowledges the appearance of the Premises affects the value of other nearby real estate and that Landlord has a direct economic interest in the appearance of the Premises. Accordingly, Tenant shall keep the exterior of the Premises in a neat and orderly condition in accordance with Tenant's obligations under the terms of this Lease. 11. FIRE OR CASUALTY. In case of damage to the Premises by a risk insured against under Paragraph 7 of this Part II, Landlord, unless the Lease is terminated as hereinafter provided, shall repair or cause to be repaired such damages with reasonable dispatch after receiving from the Tenant written notice of the damage. If the damage is such as to render the Premises untenantable, the rent shall be abated to an extent corresponding with the period during which and the extent to which the Premises have become untenantable; provided, however, if such damage is caused by the negligence or willful misconduct of Tenant or of a subtenant, or the agents, employees, visitors, invitees or licensees of Tenant or of a subtenant, then notwithstanding such damage and untenantability, Tenant shall be liable for rent without abatement. In the event of damage to the Premises to the extent that more than fifty (50%) percent of the value of such Premises, Tenant shall give Landlord written notice of the damage, (but failure to give notice shall not be binding upon Landlord) after which Tenant may determine with reasonable dispatch whether the Lease shall be terminated, and, if - 10 - terminated, all rent shall abate and the Lease terminate as of the date of the occurrences of the event causing such damage. Notwithstanding anything contained herein to the contrary, Landlord shall have no obligation to rebuild the Premises in case of damage to the Premises occurring in the tenth year of the Lease term, which damage would reasonably take more than six (6) months to restore, or if following a reasonable period of time for restoration, would leave less than four (4) months remaining in the unexpired Term of this Lease. Should Landlord elect not to rebuild under such circumstance, and Tenant elect to terminate this Lease, this Lease shall terminate as of the date of the casualty except that Tenant shall have a reasonable time thereafter to remove its equipment, personal property and the like from the Premises. 12. EMINENT DOMAIN. The Tenant may at its option terminate this Lease if any portion of the Premises is condemned by any governmental body or by any other body or organization possessing the power of condemnation provided such condemnation substantially impairs the use or enjoyment by Tenant of the Premises. In case of the taking through eminent domain of all, or any portion, of the Premises, the Landlord shall notify the Tenant in writing of such taking. Within sixty (60) days after receipt of such written notice, the Tenant shall notify the Landlord, in writing, whether such taking through eminent domain, in the opinion of the Tenant substantially impairs its use or enjoyment of the Premises. If Tenant's use or enjoyment is substantially impaired, then Tenant shall given written notice to Landlord of its intent to vacate the Premises, which notice shall include the time when it desires to terminate /the Lease, which time shall not be later than the date on which title vests in the condemning authority. The failure of the Tenant to give notice set forth above as required and within the time limit set forth above, shall be conclusively construed as a decision on the Tenant's part that such taking does not substantially impair its use or enjoyment of the Premises, unless the taking is a total taking. On the other hand, the giving of such notice by the Tenant does not bind the Landlord as to the correctness of the Tenant's decision that its use or enjoyment of the Premises is substantially impaired by the taking, and Landlord may object to same and demand a decision be made by mediation. In the event Tenant does not terminate this Lease as aforesaid, Landlord shall promptly restore the balance of the Premises remaining after the taking. Tenant shall not be entitled to receive any part of any award or awards that may be made to or received by Landlord, relating to the fair market value of the real estate taken or severance damage to the remaining real estate of Landlord. Tenant at its expense may take independent proceedings against the public authority exercising the power of eminent domain to prove and establish any damage Tenant may have sustained relating to Tenant's business and relocation expenses. 13. TOXIC WASTES, ETC. 13.1 Tenant shall not place, locate on, or use any portion of the Premises for the production, storage, deposit or disposal of toxic, dangerous or hazardous substances or pollutants, including, but not limited to, nuclear fuel or wastes in violation of any applicable law or governmental regulation, which substances or pollutants, if found upon the Premises or if found elsewhere, in a form which violated applicable law, and determined to - 11 - have come from the Premises in violation of any applicable law or governmental regulation, would subject Landlord to any damages, penalties or liabilities under any applicable federal, state or local law, or under any civil action. 13.2 Tenant shall not bury or place any underground storage tanks on the Premises whether or not such storage tanks would be subject to the jurisdiction of the Environmental Protection Agency under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 and the Resource Conservation and Recovery Act, as amended. 13.3 Tenant shall not place on or within the Premises in violation of any applicable law or governmental regulation, any hazardous material including, but not limited to, ureformaldehyde foam insulation, polychlorinated biphenyls and asbestos. 13.4 Tenant shall indemnify, defend and hold harmless Landlord, its successors and assigns from and against any and all claims, legal or equitable, damages, liability or loss (including reasonable attorneys' fees) arising out of or in any way connected to any condition caused or created by the Tenant's failure to comply with Sections 13.1, 13.2 and 13.3 during any portion of the Lease term as set forth in Sections 3.2 and 3.3 of Part I, including, but not limited to, damage liability or loss under all federal, state and local environmental laws, strict liability and common law. 13.5 Landlord shall indemnify, defend and hold harmless Tenant, its successors and assigns, from and against any and all claims, legal or equitable damages, liability, or loss (including reasonable attorneys' fees) under federal, state or local environmental laws, where Tenant's liability thereunder is solely due to Tenant's Lease of the Premises, arising from (a) any condition existing on the Premises prior to the date of Tenant's occupancy of the Premises, or (b) Landlord's failure prior to the date of Tenant's occupancy of the Premises to perform its obligations under federal, state or local environmental laws in respect of the Premises. 14. NON-LIABILITY OF LANDLORD. (a) The Landlord shall not be liable to the Tenant, any officer, employee, agent, invitee, licensee or visitor of the Tenant, or any other person, for damage or injury to any person or property caused in whole or in part, by any act, omission or neglect of the Tenant, its contractor, employees or agents, invitee, licensee, or visitor, or any happening in any manner on the Premises and Tenant shall indemnify, defend and hold harmless Landlord from claim, loss or liability therefor provided, however, Landlord shall be liable for its, and its designated agents, servants and employees own negligence or willful misconduct. (b) All property kept, stored or maintained on the Premises shall be so kept, stored or maintained at the risk of the Tenant only, and the Landlord shall not be liable for any loss or damage to the Tenant or his property. - 12 - (c) Landlord's liability to Tenant or anyone claiming through Tenant shall be limited to Landlord's interest in the Premises. The foregoing shall be absolute and without exception whatsoever. 15. SUBLEASE. 15.1 The Tenant shall not have the right to sell, assign, transfer, mortgage or pledge the Premises without the Landlord's prior written consent, which consent shall not be unreasonably withheld or delayed. In the event the Tenant proposes to sublease or sublet the Premises or any portion thereof, Tenant shall give to Landlord its written notice, which notice shall set forth (i) the identity, business and financial condition of the proposed sub-tenant, (ii) the terms and conditions of the proposed sublease, and (iii) and any other relevant information reasonably requested by Landlord. Unless Landlord shall expressly agree in writing to the contrary, no assignment or sublease shall modify or limit any right or power of Landlord hereunder or affect or reduce any obligation of Tenant hereunder. In the event that the proposed sublease is of a portion of the Premises, and Landlord consents to the sublease, the rent in this lease shall be prorated between the portion proposed to be subleased and the balance of the Premises on a square foot basis. Tenant shall pay any costs associated with or resulting from any proposed sublease of the Premises. Landlord and Tenant hereby agree that the requirement that Tenant obtain Landlord's consent prior to mortgaging the Premises does not limit Tenant's right to, or require Tenant to obtain the consent of Landlord in the event /Tenant elects to finance Tenant's personal property, equipment, trade fixtures, accounts receivable or other property. 15.2 Tenant shall pay all of Landlord's reasonable cost and expenses (including attorneys' fees) in connection with Landlord's review of any proposed subletting or assignment. 15.3 Notwithstanding the provisions of Section 15.1 as they apply to subleasing, Tenant hereby agrees to assume the reasonable costs associated with obtaining the local government's consent to a requested subleasing, including the cost of any related development requirements, should such consent or development requirements be required, provided however, that Tenant may withdraw its request to sublease, in the exercise of its sole discretion, if the estimated cost of obtaining such consent and the related development requirements is not acceptable to Tenant. To the extent Tenant agrees to assume such costs or a waiver of any applicable land development plan, processing is granted by the local government with respect to such sublease, Landlord may not withhold its consent to such subleasing. In the event such government approvals are required, Landlord agrees to cooperate with Tenant in connection with obtaining such approvals. - 13 - 16. VOLUNTARY OR INVOLUNTARY ASSIGNMENT. (a) Neither this Lease nor any interest therein shall be assignable or otherwise transferable by operation of law or by voluntary assignment to or for the benefit of creditors without the written consent of the Landlord, and such inhibition against voluntary assignment includes and comprehends any and every assignment which might otherwise be affected or accomplished by bankruptcy, receivership, attachment, execution or other judicial process or proceeding. If any assignment for the benefit of its creditors should be made by the Tenant, or if a voluntary or involuntary petition in bankruptcy, or for reorganization, or for an arrangement should be filed by or against the Tenant, or if the Tenant should be adjudicated a bankrupt or insolvent, or if a receiver is appointed of or for the Tenant, or for all or substantially all of its assets, or if any such assignment or transfer by operation of law should occur, then and in any such event, the Landlord may at its option, terminate this Lease by notice to the Tenant if any such involuntary petition or assignment is not discussed with sixty (60) days. The provisions of this paragraph shall not apply to any of the rights, titles and interest of the Landlord in, to or under this Lease. (b) So long as Tenant is not in default of this Lease, notwithstanding anything contained in this Lease to the contrary, Tenant shall, without the prior written consent of Landlord, have the right to assign this Lease to any parent, subsidiary or affiliate of Tenant, or any other entity which acquires all, or substantially all, of Tenant's business by sale, merger or otherwise, except as may be specifically prohibited in Section 16 hereof, and provided further, such entity acquiring all or substantially all of Tenant's business possesses equal or greater creditworthiness than Tenant in the exercise of Landlord's reasonable judgment and Tenant provides reasonable written evidence of such creditworthiness to Landlord. 17. SURRENDER AT LEASE TERMINATION. The Tenant shall, upon the termination of the Term of this Lease, surrender to the Landlord the Premises, ordinary wear and tear excepted, and all building apparatus, machinery, equipment and fixtures situated thereon except items which may be removed under Section 9 of Part II. All alterations, improvements, and other additions made or installed by either party to, in, upon, or about the Premises shall either be removed by Tenant under Section 9 of Part II or become the property of the Landlord pursuant to Section 9, and if Landlord elected to keep the same they shall be surrendered to the Landlord by the Tenant in good condition or repair, ordinary wear and tear excepted, otherwise Tenant shall repair any damage caused by removal. The Tenant waives notice to quit at the end of the Term or at the termination of the Lease for any cause, except as may be specifically set forth herein. 18. DEFAULT OF TENANT. 18.1 Events of Default: If Tenant shall (i) fail to pay any monthly installment of rent (as required by Section 4 hereof) or shall fail to timely make any other payment required by the terms and provisions hereof and shall continue in default of such payment for a period often (10) days after written notice thereof is given by Landlord, or - 14 - (ii) violate or fail to perform any other terms, conditions, covenants or agreements herein made by Tenant and shall continue in default of such term, condition, covenant or agreement for a period of thirty (30) days after written notice thereof is given by Landlord, or if Tenant commences a cure and is diligently proceeding to complete such cure, the aforesaid thirty (30) day period will be extended as reasonably required to complete such cure, or (iii) abandon or vacate the Premises and fail to provide the security checks required by Section 8 hereof, or (iv) make or consent to an assignment for the benefit of creditors or a common law composition of creditors, or a receiver of Tenant's assets is appointed, or Tenant files a voluntary petition in any bankruptcy or insolvency proceeding, or an involuntary petition in any bankruptcy or insolvency proceeding is filed against Tenant and not discharged by Tenant within sixty (60) days, or adjudicated a bankrupt, then Tenant shall be deemed to have committed an Event of Default, and not withstanding any other remedies allowable by law, and in any of said events, this Lease shall, at the option of Landlord, cease and terminate and the provisions of this Section 18 shall automatically operate as a notice to quit (any notice to quit, or of Landlord's intention to re-enter, being expressly waived) and Landlord may proceed to recover possession under and by virtue of the provisions of the Laws of the Commonwealth of Pennsylvania or by such other proceedings, including reentry and possession, as may be applicable. Should this Lease be terminated before the expiration of the term of this Lease by reason of Tenant's default as hereinabove provided, the Premises may be relet by Landlord for such rent and upon such terms as are not unreasonable under the circumstances and, if the full rental hereinabove provided and any of the costs, expenses, or damages indicated below, shall not be realized by Landlord, Tenant shall be liable for all damages sustained by Landlord, including without limitation, deficiency in rent, reasonable attorneys' fees, brokerage fees, and reasonable expenses of placing the Premises in first class rentable condition, normal wear and tear excepted. Any damage or loss of rent sustained by Landlord may be recovered by Landlord, at Landlord's option, at the time of the reletting, or in separate actions, from time to time, as said damage shall have been made more easily ascertainable by successive relettings, or, at Landlord's option may be deferred until the expiration of the term of this Lease, in which event Tenant hereby agrees that the cause of action shall not be deemed to have accrued until the date of expiration of said term. 18.2 Landlord's Remedies: (a) Upon the occurrence of an Event of Default hereunder, Landlord, at Landlord's sole option, shall have the right to exercise any or all of the remedies set forth herein, all of which shall be cumulative and in addition to any and all rights and remedies now or at any time hereafter provided at law or in equity. The exercise of any one or more remedies provided herein shall not act as a waiver of or preclude exercise of any other right or remedy of Landlord. (b) Upon the occurrence of an Event of Default hereunder, Landlord may declare the entire rent for the balance of the term immediately due and - 15 - payable. Said rent shall be discounted back to present value using the five (5) year U.S. Treasury Bond rate in effect at the date of default. (c) Upon the occurrence of an Event of Default hereunder, Landlord shall have the right immediately and without notice to Tenant to terminate the term of this Lease whereupon the estate hereby granted shall expire and terminate on the date of such Event of Default or such later date as Landlord shall, in its sole discretion determine, as fully and completely and with the same effect as if such date were the date herein fixed for the expiration of the term of this Lease, and all rights of Tenant hereunder shall expire and terminate, but Tenant shall remain liable for all amounts due to Landlord hereunder, including but not limited to the entire amount of rent including additional rent for the unexpired balance of the Term discounted back to present value in accordance with subsection (b) above. (d) Upon the occurrence of an Event of Default hereunder, Landlord shall have the immediate right to reenter and repossess the Premises by summary proceedings, ejectment or in any manner Landlord determines to be necessary or desirable and Landlord shall have the right to remove all persons and property therefrom. Landlord shall be under no liability by reason of any such re-entry, repossession or removal. No such reentry or repossession of the Premises shall be construed as an election by Landlord to terminate the term of this Lease unless a written notice of such intention is given to Tenant pursuant to this paragraph, or unless such termination is decreed by a court of competent jurisdiction. (e) For the purpose of obtaining possession of the Premises in the event of any Event of Default hereunder, Tenant hereby authorizes and empowers, sixty (60) days after the expiration of the notice and cure period given to Tenant for Tenant's default, any attorney or the Prothonotary or clerk of any court of record in the Commonwealth of Pennsylvania or elsewhere, as attorney for Tenant, to sign an agreement for entering in any competent court an amicable action or actions in ejectment for possession of the Premises and to appear for and confess judgment against Tenant, and against all persons claiming under or through Tenant, in favor of Landlord, for recover of possession thereof, for which this Lease, or a copy thereof verified by affidavit, shall be a sufficient warrant; and thereupon a writ of possession may immediately issue for possession of the Premises, without any prior writ of proceeding whatsoever and without any stay of execution. If for any reason after such action has been commenced it shall be discontinued, or possession of the Premises shall remain in or be restored to Tenant, Landlord shall have the right for the same default or any subsequent default to bring one or more further amicable actions as above provided to recover possession. (f) Tenant hereby irrevocably authorizes and empowers, sixty (60) days the expiration of the notice and cure period given to Tenant for Tenant's default, any attorney or the Prothonotary or clerk of any court of the Commonwealth of Pennsylvania, or elsewhere, to appear as attorney for Tenant in any action brought against Tenant on this Lease at the suit of Landlord to confess or enter judgment against Tenant for all rent, additional rent and other amounts due from Tenant to Landlord pursuant to the terms - 16 - of this Lease, together with costs of suit and attorneys' commission of five percent (5%) for collection (provided the amount collected shall not be in excess of actual attorneys fees incurred), and for so doing this Lease or a copy hereof verified by affidavit shall be of sufficient warrant. The authority granted herein to confess judgment shall not be exhausted by any exercise thereof and shall continue from time to time and at all times until payment in full of all amounts due to Landlord hereunder, including but not limited to all rent and additional rent hereunder. (g) At any time or from time to time after the reentry or repossession of the Premises, whether or not the term of this Lease shall have been terminated, Landlord may (but shall be under no obligation to) relet the Premises for the account of Tenant, in the name of Tenant or Landlord or otherwise, without notice to Tenant, for such term or terms and on such conditions and for such uses as Landlord, in its reasonable discretion may determine. Landlord may collect and receive any rents payable by reason of such reletting. Landlord shall not be liable for any failure to relet the Premises or for any failure to collect any rent due upon any such reletting. (h) No expiration or termination of the term of this Lease by reason of the occurrence of an Event of Default and no reentry or repossession of the Premises by reason of an Event of Default shall relieve Tenant of its obligations and liabilities hereunder, all of which shall survive such expiration, termination, reentry or reletting. 18.3 Waiver: No waiver by Landlord of any breach of any covenant, condition or agreement herein contained shall operate as a wavier of any subsequent breach thereof No payment by Tenant or receipt by Landlord of a lesser amount than the monthly installment of rent herein stipulated shall be deemed to be other than on account of rent, nor shall any endorsement or statement on any check or letter accompanying a check for payment of rent be deemed an accord and satisfaction, and Landlord may accept such check or payment without prejudice to landlord's right to recover the balance of such rent or to pursue any other remedy provided in this Lease. Payment received by Landlord when Tenant is in arrears shall be applied to amounts owed by Tenant as Landlord determines. No re-entry by Landlord, and no acceptance by landlord of keys from Tenant, shall be considered an acceptance of a surrender of the Lease. 18.4 Right of Each Party to Cure the Other Party's Default: (a) If Tenant defaults in the making of any payment or in the doing of any act herein required to be made or done by Tenant beyond any applicable notice and cure period, then Landlord may, but shall not be required to, make such payment or do such act, and charge the amount of the expense thereof, if made or done by Landlord, with interest thereon at the rate defined in Section 20 from the date paid by Landlord to the date of payment thereof by Tenant and such charge or expense and interest thereon shall be Additional Rent hereunder; provided, however, that nothing herein contained shall be construed or implemented in such a manner to allow Landlord to charge or receive interest in excess of the maximum legal rate then allowed by law. Such payment and interest shall - 17 - constitute additional rent hereunder due and payable with the next monthly installment of rent, but the making of such payment or the taking of such action by Landlord shall operate to cure such default unless Tenant is otherwise in default of the Lease. (b) If Landlord defaults in the doing of any act herein required to be done by Landlord pursuant to the terms of Sections 5.1, 5.2, 5.3 or 5.4 of this Part II for more than ten (10) days beyond delivery of written notice of such default to Landlord by Tenant, and Landlord's default is of such a nature that (i) it materially interferes with Tenant's ability to conduct its business in the Premises, or (ii) failure to immediately correct such default or take such curative action would lead to material interference with Tenant's ability to conduct its business in the Premises, Tenant shall have the right, but not the obligation to do such act at Tenant's expense, whereby any reasonable expenses so incurred by Tenant and not repaid to Tenant by Landlord within thirty (30) days of Tenant's delivery to Landlord of reasonable substantiation therefor, shall be credited as an offset against the rent otherwise due by Tenant. Notwithstanding the foregoing, Tenant shall have no such limited cure and offset right if within such ten (10) day period, Landlord commences and diligently performs to completion the requested act as required by the terms of this Lease. For purposes of this Section, "reasonable expenses" shall be defined as set forth in Section 2.1(a) of Part II and any disagreement between Landlord and Tenant as to whether the expenses so incurred are "reasonable expenses" shall be handled pursuant to the procedure set forth in Section 2.1(a) of Part II. 18.5 Late Payments: If Tenant fails to pay any installment of rent (in accordance with Section 4) by the tenth (10th) day of the calendar month, or ten (10) days after such installment has become due and payable, Tenant shall pay to Landlord a late charge of five percent (5%) of the amount of such installment, and, in addition, such unpaid installment shall bear interest at the rate defined in Section 20, from the date such installment becomes due and payable to the date of payment thereof by Tenant; provided, however, that nothing herein contained shall be construed or implemented in such a manner as to allow Landlord to charge or receive interest in excess of the maximum legal rate then allowed by law. Such late charge and interest shall constitute additional rent hereunder due and payable with the next monthly installment of rent. 19. HOLDING OVER. In the event that Tenant shall not immediately surrender the Premises on the date of expiration of the term hereof, Tenant shall, by virtue of the provisions hereof, become a tenant by the month at 125% of the monthly rent for the immediately preceding month, including all additional rent in effect during the last month of the term of this Lease, which said monthly tenancy shall commence with the first day next after the expiration of the term of this Lease. Tenant, as a monthly tenant, shall be subject to all of the terms, conditions, covenants and agreements of this Lease. Tenant shall give to Landlord at least thirty (30) days written notice of any intention to quit the Premises, and Tenant shall be entitled to thirty (30) days written notice to quit the Premises, unless Tenant is in default hereunder, in which event, Tenant shall not be entitled to any notice to quit, the usual thirty (30) days notice to quit being hereby expressly waived. In the event that Tenant shall hold over after the - 18 - expiration of the possession of the Premises promptly at the expiration of the term of this Lease, then at any time prior to Landlord's acceptance of rent from Tenant as a monthly tenant hereunder, Landlord, at its option, may forthwith re-enter and take possession of the Premises without process, or by any legal process in force in the State of Pennsylvania. 20. INTEREST AND COLLECTION EXPENSES. Interest shall accrue on any monies due from Tenant to Landlord from the date the same are due (including rent and money advanced by Landlord to others on account of the failure of Tenant to perform hereunder) at the rate of one percent (1%) per month until the same is paid and Tenant shall pay the interest upon demand. If Landlord consults any attorney for the collection of any sums due from Tenant or otherwise in connection with Tenant's performance hereunder, Tenant shall, whether or not proceedings are instituted, reimburse Landlord the reasonable attorney fees and court costs, if any. 21. NON-DISTURBANCE. 21.1 Estoppel Certificate. Within ten (10) days after request therefore by Landlord, or in the event that upon any sale, assignment, mortgage or encumbrance of the Premises and/or the land thereunder by Landlord, an estoppel certificate shall be required from Tenant; Tenant agrees to deliver in recordable form a certificate to any proposed mortgagee or purchaser, or to Landlord, certifying (if such be the case) that this Lease is in full force and effect and that there are no defenses or offsets thereto, or stating those claimed by Tenant. 21.2 Attornment. Tenant shall, at the request of any first mortgagee or purchaser of the Premises attorn to such mortgagee or purchaser, provided Tenant has been granted a non-disturbance agreement by the mortgagee. 21.3 Subordination. Tenant's rights, including without limitation any option to purchase the Premises hereunder are subordinate to the lien of any mortgage or mortgages, or the lien resulting from any other method of financing or refinancing, now or hereafter in force against the land and/or buildings of the Premises or any part thereof, and to all advances made or hereunder to be made upon the security thereof, provided, however, and on the condition that Tenant is granted in all such cases a non-disturbance agreement from any such mortgagee or lienholder which recognizes Tenant and its rights under this Lease. Regardless of the self operating provision of this Paragraph, if a prospective mortgagee requests the Tenant to sign a subordination agreement, the Tenant shall do so promptly subject to the terms set forth herein. 21.4 Limited Attorney-in-Fact. In the event Tenant fails to execute such instruments or certificates to carry out the intent of Paragraphs 21.1, 21.2 and 21.3 referenced above within (a) fifteen (15) days of Landlord's first written request to execute such instruments or certificates and (b) five (5) days after Landlord's second written request to execute such instruments or certificates, then Tenant hereby irrevocably appoints - 19 - Landlord as Attorney-in-Fact for Tenant with full power and authority to execute and deliver in the name of the Tenant any such instruments or certificates. 21.5 Submissions Requested by Landlord's Mortgagee. Tenant agrees to promptly provide periodic financial statements, and such other financial information as may be reasonably requested by any mortgagee of the Premises, no more frequently than annually. 22. ADDITIONAL INSTRUMENTS. Tenant shall, at the request of Landlord, execute such additional instruments Landlord's mortgagee may request from time to time or as may be required or convenient hereunder not inconsistent herewith. To the extent Tenant signs a Memorandum of Lease, the recording of such Memorandum shall be at the sole cost and expense of Landlord. 23. LANDLORD'S COVENANT OF TITLE AND QUIET ENJOYMENT. Landlord covenants and warrants that upon the term of the Lease commencing, it shall have full right and lawful authority to enter into this Lease for the full Term hereof, and that Landlord will be lawfully seized of the entire Premises and will have good title thereto and that at all times when Tenant is not in default under the Terms and during the Term of this Lease, Tenant's quiet and peaceable enjoyment of the Premises shall not be disturbed or interfered with by anyone. Landlord, in person or by agent, shall be permitted to enter upon the Premises at reasonable times to examine the same or to make such repairs as are required hereunder with 24 hour telephonic notice and accompanied by an employee of Tenant, unless in the case of an emergency. 24. WAIVER OF TRIAL BY JURY. It is mutually agreed by and between Landlord and Tenant that the respective parties hereto shall and they hereby do waive trial by jury in any action, proceeding or counterclaim brought by either of the parties hereto against the other on any matter whatsoever arising out of or in any way connected with this Lease, the relationship of Landlord and Tenant, Tenant's use of or occupancy of the Premises and/or any claim of injury or damage and any emergency or any other statutory remedy. It is further mutually agreed that in the event Landlord commences any summary proceeding for non-payment of rent, Tenant will not interpose any counterclaim of whatever nature or description in any such proceeding. - 20 - 25. LANDLORD RIGHT OF ENTRY. Landlord shall have the right, during the last twelve (12) months of the term herein provided, to place on any portion of the Premises signs or bill-boards indicating that the Premises are "For Sale" or "For Rent," but such signs shall be of such size and so placed as not to materially interfere with Tenant's occupancy. During said period, interested persons shall be admitted at reasonable business hours of the day to view the Premises. 26. CHANGE IN OWNERSHIP. Tenant agrees that in the event that the Premises or any part thereof is sold, or in the event of any change of legal title or equitable ownership, that all obligations herein undertaken by Landlord, including but not limited to, the obligation for the return of any advance rent payment paid hereunder, shall be transferred to such purchaser or assignee, and in such event all of Landlord's obligations shall terminate and Landlord shall be released and relieved from all liability and responsibility to Tenant hereunder and Tenant shall look solely to such purchaser or assignee for the performance of said obligations or for the enforcement thereof Each purchaser or assignee shall in turn have like privileges of sale, assignment and release. 27. SUCCESSORS AND ASSIGNS. This Lease shall inure to the benefit of and shall bind the heirs, successors and assigns of the parties to the extent that the parties' rights hereunder may succeed and be assigned according to the terms hereof 28. DESCRIPTIVE HEADINGS. The descriptive headings of the several paragraphs hereof are inserted for convenience only and shall not control or affect the meaning or construction of any of its provisions. 29. SERVICE OF NOTICE. If at any time after the execution of this Lease it shall become necessary or convenient for one of the parties hereto to serve any notice, demand or communication upon the other party, such notice, demand or communication shall be in writing signed by the parties serving the same, sent by United States mail, or private carrier, to the respective addresses set forth in the preamble of Part I, or at such other address as either party may have furnished to the other in writing as a place for the service of notice. Any notice so mailed shall be deemed to have been given as of the time it is deposited in the United States mail, or if a private carrier is used, when the notice is accepted or rejected by the addressee upon attempted delivery. - 21 - 30. CONSOLIDATION. This Part II and the accompanying Part I constitute one agreement and may be signed in any number of counter parts and shall be construed under the laws of the Commonwealth of Pennsylvania. Unless specifically set forth to the contrary in this Part II, all section cross references shall be deemed to refer to sections within this Part II. 31. RADON ABATEMENT. Landlord acknowledges and agrees that as a result of radon testing conducted at the Premises by U.S. Toxic Substance Testing Bureau, radon in concentrations greater than the EPA 4.0 pCi/L guidelines was detected within the Buildings. Landlord hereby agrees at its sole cost and expense, to take all actions necessary to bring the Buildings within compliance with EPA radon guidelines on or before April 1, 1997. - 22 - IN WITNESS WHEREOF, intending to be legally bound, the Landlord and Tenant have caused this Part II presents to be signed by their duly authorized officers or agents and their appropriate seals to be hereunto affixed, the day and year first above written. WITNESS: DONNERVILLE ASSOCIATES, "Landlord" By: /s/ [ILLEGIBLE] ------------------------------- Name: /s/ [ILLEGIBLE] ------------------------------- Title: General Partner /s/ [ILLEGIBLE] ____________________ By: ------------------------------ Name: ------------------------------ Title: General Partner ____________________ By: ------------------------------- Name: ------------------------------- Title: General Partner WITNESS/ATTEST: GEOSYSTEMS GLOBAL CORPORATION "Tenant" /s/ [ILLEGIBLE] ____________________ By: /s/ BARRY J. GLICK ------------------------------- Name: Barry J. Glick ------------------------------- Title: PRESIDENT & CEO RIDER PURCHASE OPTION Option to Purchase Tenant shall have the option to purchase the Premises, located at 3700-3750 Electronics Way, Lancaster, Pennsylvania, so long as Tenant is not in default of this Lease, on terms as follows: A. This purchase option may be exercised during the 7th, 8th, 9th or 10th year of the Lease term by Tenant giving not less than four (4) months prior written notice to Landlord provided, however, if the exercise is made in the 10th year of the Lease term it shall be made prior to July 1, 2006. The notice of exercise shall specify a proposed settlement date accompanied by a down payment of $100,000. The down payment will be placed in an interest bearing escrow account and at the Closing the interest shall be payable to Buyer. At the settlement, upon payment of the balance of the purchase price, Landlord shall execute, acknowledge and deliver to Tenant a special warranty deed with good and insurable title. The cost of the preparation of the deed shall be borne by Tenant. Special assessments not otherwise payable by Tenant pursuant to the terms of the Lease shall be apportioned to the date of closing and thereafter paid by Tenant. Transfer taxes and documentary stamps, if any, to be borne by Tenant. Pending settlement, the rent shall continue without abatement. A-l Tenant's notice to Landlord that it intends to exercise this option may include, at Tenant's option, the proposed purchase price, which Landlord shall either accept or reject, by issuance of written notice to Tenant within fifteen (15) days of receipt of Tenant's notice. If Landlord rejects the purchase price, the appraisal provisions of Paragraph B below shall apply, however, if the appraisal process outlined in Paragraph B results in a purchase price which is equal to or less than the purchase price initially offered by Tenant, the cost of the appraisal(s) shall be paid by Landlord. B. If Landlord rejects Tenant's proposed purchase price or if Tenant's notice of exercise does not include a proposed purchase price, the purchase price shall be the greater of $4,000,000 or Fair Market Value determined as follows: The Tenant and Landlord shall each select a Pennsylvania State Certified appraiser, experienced in the valuation of real estate in the vicinity of the Premises within ten (10) days of the exercise of the Option to Purchase. The Appraisers shall appraise the Premises within thirty (30) days of their appointment. If the two appraisals are within ten percent (10%) of one another, fair market value shall be the average of the two. If the two appraisals are not within ten percent (10%) of one another, then the two Appraisers shall select a third Appraiser to appraise the Option Property within thirty (30) days of its appointment. If the valuation of the third Appraiser is between the value of the first two Appraisers, then the determination of the third Appraiser shall be the Fair Market Value. If the third Appraiser's valuation is higher than the higher of the original two or lower than the lowest of the original two appraisals, then the valuation of the original two which is closest to the third appraisal shall be Fair Market Value. Subject to the terms of Paragraph A-1, the Tenant shall be responsible for the costs associated with obtaining all appraisals. Landlord agrees to reasonably cooperate with Tenant to obtain said appraisals as quickly as possible. C. Settlement of Purchase of Premises Under Option (a) Once the purchase price is determined, Landlord shall either accept Tenant's proposed settlement date set forth in its original notice or the parties will mutually agree upon a date for settlement, or absent agreement, settlement will take place on the later to occur of one hundred eighty (180) days following the determination of the purchase price or the anniversary date of the Lease commencement; settlement will be held in York, Pennsylvania, unless the parties mutually agree in writing upon another place. (b) Pending the settlement, the Lease will continue in full force and effect. (c) In the event that Tenant obtains or procures a report of title or title insurance binder and such report of title or title insurance binder discloses any defects in title (other than such usual exceptions contained in owner's policies and the matter to which the sale hereunder is to be subject by the terms hereof), Landlord shall have a period of ninety (90) days from the date of written notice by Tenant of such defects and receipt of a copy of such title insurance binder within which to cure such defects without being in default hereunder. If Landlord is unable to cure such defects within such time period, Tenant may, by issuance of written notice to Landlord, (i) terminate its exercise of the option or (ii) waive the defect and proceed to closing. (d) Immediately upon the exercise of the option, endorsements shall be placed upon all policies of insurance which then insure Landlord's interest, so as to cover the interest of Tenant as a contract purchaser. Any expense in connection therewith shall be paid by Tenant. Risk of loss pending settlement shall be on the Landlord. (e) Prior to or simultaneously with the payment of the purchase price, Landlord agrees to pay in full and discharge any mortgage indebtedness or other monetary Liens encumbering the property. Once the purchase price is agreed upon following Tenant's exercise of the Option, Landlord will not encumber the Premises without first obtaining the written consent of Tenant. (f) Possession shall be delivered to Tenant at settlement. At the settlement, Tenant shall pay in full to Landlord all amounts due to landlord under the Lease as of the date of settlement, the Rent prorated to the date of settlement and the Lease shall be terminated. - 2 - Lease as of the date of settlement, the Rent prorated to the date of settlement and the Lease shall be terminated. (g) The last month's rent, prepared by Tenant shall be credited against rental otherwise due in the last month (or months) preceding the settlement. WITNESS: DONNERVILLE ASSOCIATES, "Landlord" By: /s/ [ILLEGIBLE] ------------------------------- Name: /s/ [ILLEGIBLE] ------------------------------- Title: General Partner /s/ [ILLEGIBLE] ____________________ By: ------------------------------ Name: ------------------------------ Title: General Partner ____________________ By: ------------------------------- Name: ------------------------------- Title: PRESIDENT & CEO WITNESS/ATTEST: GEOSYSTEMS GLOBAL CORPORATION "Tenant" /s/ [ILLEGIBLE] ____________________ By: /s/ BARRY J. GLICK ------------------------------- Name: Barry J. Glick ------------------------------- Title: General Partner EXHIBIT A All property commonly known as 3 700-3750 Electronics Way, Township of West Hempfield, County of Lancaster, Pennsylvania, 17601 [MAP DESCRIBING LEASE AREA] EXHIBIT B Items to be Completed at Landlord's Expense ("Landlord Work") 1. Landlord will paint all corridors in those areas where Tenant Improvements are not being made. Otherwise, Landlord will only patch the walls and touch up the paint on walls that exhibit mold, stains or need repair. Landlord will replace stained or damaged ceiling tiles in all areas. All this work will be completed prior to April 1, 1997 ("Occupancy"). 2. Landlord will hire a contractor to clean the HVAC duct work and replace the filters once prior to Occupancy. Certification of the cleaning will be provided to Tenant upon completion of the work. 3. Landlord will hire a contractor to exterminate and fumigate the entire building once prior to Occupancy. Certification of the extermination and fumigation will be provided to the Tenant upon completion of the work. 4. Landlord will change the hardware on all four main entrance/exit doors to be special light weight (12# or so) ball bearing hinges that make opening the doors easier for physically-challenged persons. This is the only ADA requested change the Landlord will complete prior to Occupancy: any other changes will be made either through the agreed upon Tenant allowance as outlined below, or at Tenant's cost. 5. Landlord agrees to make repairs and maintenance/service items that are mutually determined to be reasonably required as a result of the electrical, plumbing, HVAC, appliances, fire extinguisher, halon, and sprinkler system inspections performed in October and November, 1996, prior to Occupancy so that all such systems are in working order and condition as of Occupancy. Landlord agrees to replace the existing roof 6. Landlord agrees to clean the building once, including dry-cleaning drapes prior to Tenant occupying 50% of the building; Tenant must assume responsibility from then on. 7. Landlord agrees to repair and seal the macadam parking lots, repaint lines and repair and/or erect existing exterior light poles. Landlord also agrees to add handicapped parking space stencils on the macadam when re-striping the lines. There is no need to re-stencil numbers on the parking spaces. Tenant agrees to provide handicapped signage at appropriate parking spaces. This work will be done once prior to Occupancy, weather permitting, and in no event later than June 15, 1997. 8. Landlord agrees to complete weeding, mulching, or landscaping work (including removal of existing plant material) as much as possible before Tenant Occupancy, EX-21.1 12 SUBSIDIARIES OF MAPQUEST Exibit 21.1 Subsidiaries of MapQuest.com, Inc. None EX-23.1 13 CONSENT OF INDEPENDENT AUDITORS EXHIBIT 23.1 Consent of Independent Auditors We consent to the reference to our firm under the captions "Selected Financial Data" and "Experts" and to the use of our report dated February 18, 1999 except for Note 15, as to which the date is April , 1999, in Amendment No. 1 to the Registration Statement (Form S-1 No. 33-72667) and related Prospectus of MapQuest.com, Inc. Ernst & Young LLP Harrisburg, Pennsylvania April , 1999 The foregoing consent is in the form that will be signed upon the completion of the restatement of the capital accounts described in Note 15 to the financial statements. /s/ Ernst & Young LLP Harrisburg, Pennsylvania April 9, 1999 -----END PRIVACY-ENHANCED MESSAGE-----