SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) FEBRUARY 2, 2000
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DME INTERACTIVE HOLDINGS, INC.
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(Exact Name of Registrant as Specified in Charter)
DELAWARE 0-27944 98-015786
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(State of Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification Number)
39 BROADWAY, NEW YORK, NY 10006
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(Address of Principal Executive Offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (212) 422-6600
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(Former Name of Former Address, if Changed Since Last Report)
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Item 5. Other Events.
On February 2, 2000, the registrant, and its subsidiary, Places of
Color, Inc., entered into a Strategic Agreement with CompuServe Interactive
Services, Inc., a subsidiary of America Online, Inc., whereby the parties have
agreed to develop and market an urban-oriented online service. The service shall
be marketed under the name "Places of Color, Powered by CompuServe" (the
"Service"). CompuServe shall charge subscribers a monthly fee. The registrant
shall receive a monthly fee from CompuServe for all subscribers to the Service,
as well as all revenue generated by advertising and e-commerce opportunities on
the Places of Color web site. The initial term of the Strategic Agreement is
eighteen months. The Service is described in the attached press release.
In connection with the Strategic Agreement, the registrant agreed to
issue to America Online, Inc., 1,250,000 shares of its common stock for an
aggregate purchase price of $1,250. Additionally, America Online was issued a
warrant to purchase up to 4,000,000 shares at a purchase price of $8.563 per
share. However, the warrant only becomes exercisable if, at the end of the
eighteen month term, the parties negotiate an extension of the Strategic
Agreement or enter into a substantially similar agreement. The parties also
entered into an Investor Rights Agreement granting America Online registration
rights with respect to the common stock it has acquired as well as the common
stock it may acquire through exercise of the warrant.
The following is the text of the press release:
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AOL, INC. AND DME INTERACTIVE PARTNER TO LAUNCH
CO-BRANDED ONLINE SERVICE FOR URBAN MARKET
PLACES OF COLOR, POWERED BY COMPUSERVE 2000,
WILL TARGET UNDERSERVED COMMUNITIES
AOL TO TAKE STAKE IN DME INTERACTIVE
DULLES, VA and NEW YORK, NY -- FEBRUARY 14, 2000 -- AMERICA ONLINE, INC. (NYSE:
AOL), the world's leading interactive services company, and DME INTERACTIVE
HOLDINGS, INC. (OTC: BB: DGMF) today announced that they will partner to launch
a new, co-branded urban-oriented online service. The Places of Color, Powered by
CompuServe 2000 online service will provide Internet access and customized
content to minority communities.
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The Places of Color online service will provide urban consumers with a
customized version of the CompuServe 2000 service, the value leader in Internet
access, featuring 7 e-mail addresses per subscription, instant messaging, chat
rooms, 30 channels of content, and complete access to the Internet. DME
Interactive will distribute customized content through close to 150 affiliate
relationships with content providers who will contribute stories, interviews,
news and issues that are meaningful and pertinent to the urban marketplace. DME
will also be responsible for all marketing and advertising for the co-branded
ISP. CompuServe will provide connectivity, customer service, billing, and other
services.
The Places of Color online service, set to launch in the next several months at
a price of $19.95 per month for unlimited access, will target the 50 million
members of the underserved urban community, representing a $700 billion market.
As part of the partnership agreement, AOL will take a minority stake in DME
Interactive Holdings, Inc. DME Interactive Holdings will also market AOL 5.0
through its various marketing channels.
Places of Color is the brainchild of DME Interactive CEO DARIEN DASH, who
founded DME five years ago, and made it the first publicly traded
African-American-owned Internet company in 1999. Throughout his career, Mr.
Dash's professional and personal mission has been to close the digital divide by
"expanding the hardware and software infrastructure within minority
communities." As part of this partnership, DME Interactive will also provide
hardware and train urban youth on technology.
Mr. Dash said: "The Places of Color online service will be the urban-focused ISP
that minority communities have needed to inspire them to get involved in the
digital revolution. AOL has been a tremendous proponent of our program from the
start, and we are very excited that they have embraced DME's mission of
providing relevant content and services to urban communities."
AUDREY WEIL, CompuServe's General Manager, said: "We're excited about this
partnership with DME Interactive and Darien Dash. Minority communities make up a
growing and important market that will respond to the convenience and community
this new service will offer. The Places of Color online service is an important
part of our overall strategy to reach new and growing audiences, particularly
those that have been underserved."
ABOUT AMERICA ONLINE, INC.
Founded in 1985, AMERICA ONLINE, INC., based in Dulles, Virginia, is the world's
leader in interactive services, Web brands, Internet technologies, and
e-commerce services. America Online, Inc. operates: two worldwide Internet
services, America Online, with more than 21 million members, and CompuServe,
with more than 2.5 million members; several leading Internet brands including
ICQ, AOL Instant Messenger and Digital City, Inc.; the Netscape Netcenter and
AOL.COM portals; the Netscape Navigator and Communicator browsers; AOL
MovieFone, the nation's #1 movie listing guide and ticketing service; and
Spinner.com and NullSoft's Winamp, leaders in Internet music. Through its
strategic alliance with Sun Microsystems, the company develops and offers
easy-to-deploy, end-to-end e-commerce and enterprise solutions for companies
operating in the Net Economy.
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ABOUT DME INTERACTIVE HOLDINGS, INC.
Founded in August 1994, DME INTERACTIVE HOLDINGS, INC. (OTC: BB: DGMF), is the
parent company of Digital Mafia Entertainment and the Places of Color online
service, a wholly-owned subsidiary, powered by America Online, Inc.'s CompuServe
2000. DME is a full-service interactive agency that specializes in advanced
technology solutions through the creation of digital products and services
including Internet and Website development, maintenance, turnkey e-commerce
solutions, on-line advertising and software creation. DME Interactive Holdings,
Inc., is the first African-American-owned Internet company to be publicly
traded. More information on DME Interactive is available on the Internet at
WWW.DMEINTERACTIVE.COM.
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# # #
Anne Bentley
America Online, Inc.
703/265-2825
[email protected]
Mark Hazlin and/or Rachel Carr
Dan Klores Associates for DME Interactive Holdings, Inc.
212/685-4300
[email protected] [email protected]
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Item 7.(c) EXHIBITS
10.01 Strategic Agreement dated as of February 2, 2000 between DME
Interactive Holdings, Inc., Places of Color, Inc., America Online,
Inc., CompuServe Interactive Services, Inc. [Portions of this
agreement, as noted therein, have been omitted pursuant to a request
for confidential treatment pursuant to Rule 24b-2 of the Securities and
Exchange Act of 1934.]
10.02 Subscription Agreement dated as of February 2, 2000 between DME
Interactive Holdings, Inc. and America Online, Inc.
10.03 Warrant to Purchase 4,000,000 Shares of Common Stock of DME Interactive
Holdings, Inc., Issued February 2, 2000 to America Online, Inc.
10.04 Investor Rights Agreement dated as of February 2, 2000 between DME
Interactive Holdings, Inc., America Online, Inc. and Darien Dash.
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Item 8. Change in Fiscal Year
On February 16, 2000, the registrant's Board of Directors approved a
change in its fiscal year end from November 30 to December 31. This change will
be effective as of the year ending December 31, 1999. The transition report will
be filed on the Form 10-K for the end of the 1999 fiscal year. That Form 10-K
will contain audited financial information for the period ended November 30,
1999 as well as the year and one month ended December 31, 1999. The change in
year end is intended to make the registrant's fiscal year consistent with that
of its accounting predecessor, Digital Mafia, LLC, which the registrant acquired
in June of 1999 and whose most recent audited financial statements are for the
year ended December 31, 1998.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
DME INTERACTIVE HOLDINGS, INC.
By: /S/ ANDRE MCKOY
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Andre McKoy, Executive Vice-President
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Portions of the following agreement have been redacted. Those words or phrases
that have been redacted have been replaced with the following: **********. This
information has been omitted pursuant to a request to the Securities and
Exchange Commission for confidential treatment of this information pursuant to
Rule 24b-2 of the Exchange Act of 1934.
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STRATEGIC AGREEMENT
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This Marketing Agreement (the "AGREEMENT"), dated as of February 2,
2000 (the "EFFECTIVE DATE"), is between and among America Online, Inc. ("AOL")
and its wholly owned subsidiary CompuServe Interactive Services, Inc.
("COMPUSERVE"), a Delaware corporation, with offices at 5000 Arlington Centre
Blvd, Columbus, Ohio 43220, and DME Interactive Holdings Inc. ("DME"), a
Delaware Corporation and its wholly owned subsidiary, Places of Color, Inc. a
Delaware corporation, (collectively "POC"), with offices at 519 E. Palisade,
Englewood Cliffs, New Jersey 07632. AOL, CompuServe, DME and POC may be referred
to individually as a "PARTY" and collectively as "PARTIES."
INTRODUCTION
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The Partiesdesire to enter into a strategic marketing relationship
whereby (i) POC will distribute and promote certain services that are owned,
operated, distributed or authorized to be distributed by or through AOL or any
of its Affiliates, including a special edition version of the CompuServe Service
and (ii) AOL will obtain an equity interest in DME. Capitalized terms used but
not defined in the body of this Agreement or in the other Exhibits hereto, as
the case may be, shall have the respective meanings given to such terms in
EXHIBIT A attached hereto.
TERMS
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1. DEVELOPMENT OF THE CUSTOMIZED SERVICE
1.1 CUSTOMIZED SERVICE. CompuServe will develop and host a
customized version of the CompuServe Service, which shall be
programmed as described in EXHIBIT B ("Customized Service").
The Customized Service shall operate on the CompuServe
Software. CompuServe shall provide Subscribers access to the
Customized Service through the dial-up communication networks
utilized by CompuServe. POC will have the ability to publish
POC-provided Content on the Customized Service as described in
EXHIBIT B.
1.2 BRANDING. The Customized Service shall be branded "POC Online
(or such other branding determined by POC), powered by
CompuServe." All online branding of POC and CompuServe will be
prominently featured above the fold, and each page shall
contain the following notice near the bottom "Content
Distributed by CompuServe." All marketing collateral shall be
similarly branded.
1.3 OTHER MODIFICATIONS. Except as specifically provided in this
Agreement, POC shall not be entitled to swap out, add, or
publish any content or links to the Customized Service.
CompuServe may entertain the future integration of specific
POC programming on the Customized Service; provided that if
integrating any such services as agreed to by CompuServe
creates additional development costs, POC agrees to fund such
costs.
1.4 COMPUSERVE LOOK AND FEEL. CompuServe reserves the right to
redesign and/or modify the features, functions, organization,
structure, "look and feel", navigation and other elements of
the Customized Service. If CompuServe implements any such
redesigns and/or modifications in a manner that materially
adversely affects the nature of the placements for POC
described in this Section 1, CompuServe will work with POC in
good faith to provide POC with comparable package of
placements reasonably satisfactory to POC.
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1.5 E-MAIL CUSTOMIZATION. CompuServe shall make available and host
email service for all Subscribers utilizing the CompuServe
email client already integrated into the CompuServe Service.
2. POC WEBSITE
2.1 CREATION AND OPERATION OF POC WEBSITE. In conjunction with the
development of the Customized Service set forth in Section 1,
POC shall maintain the POC Website as set forth in this
Section 2.
2.2 USER TRAFFIC. POC will use reasonable commercial efforts to
ensure that end user traffic linked from the Customized
Service to the POC Website is either kept within the POC
Website or channeled back to the Customized Service and/or the
POC Website. CompuServe and POC shall cooperate in the
implementation of mutually acceptable links from the POC
Website to the Customized Service.
2.3 CONTENT AND MARKETING RESTRICTIONS. POC agrees that the
POC-hosted Start Page accessed through the CompuServe Network
will not promote at an item/price level any of the following:
(i) telecommunications services (including long distance,
wireless, prepaid calling cards, post-paid calling cards,
on-line sign-up, online billing information, IP Telephony,
click-to-call and universal massaging), (ii) brokerage
service, (iii) Credit Cards/Charge Cards, (iv) photo
processing/developing, (v) such other products or services
that CompuServe may from time to time communicate to POC upon
thirty (30) days' notice or otherwise violate the CompuServe
TOS (defined in Section 3.2 below). In addition to the
foregoing, all Linked Pages will be subject to the
restrictions set forth in this Section 2.3. In addition, POC
agrees that the POC Website will not promote, sell, offer or
otherwise distribute any products or services through a
consumer to consumer auction format without the prior written
consent of CompuServe.
2.4 HOSTING AND ACCESS. POC shall be responsible for any hosting
and communication costs associated with maintaining the POC
Website and any Content published by POC for use on the
Customized Service. Further, during the term of this
Agreement, POC will permit all AOL and CompuServe Members to
access and use the POC Website free of charge.
2.5 OPERATING STANDARDS. POC shall ensure that the POC Website
complies at all times with the operating standards set forth
in EXHIBIT C and shall be subject to CompuServe's then-current
Advertising Policies, as amended from time to time by
CompuServe.
3. OPERATION OF THE CUSTOMIZED SERVICE
3.1 GENERAL. The Parties will use commercially reasonable efforts
to ensure the Launch Date occurs on or before March 31, 2000.
The "Launch Date" shall be the first to occur of March 31,
2000 or the first day that the Customized Service is
commercially available to Subscribers.
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3.2 PRICING. CompuServe shall determine, in its sole discretion,
the amount of the subscription fee charged to Subscribers and
any hourly limitations per month for usage of the Customized
Service. The Parties agree and acknowledge that they will
offer the Customized Service initially at a subscription fee
of $19.95 per month for not less than 150 hours of usage per
month; however, CompuServe shall have the right to adjust the
subscription fee at any time during the Term of this
Agreement. CompuSeve shall determine in its sole discretion
any and all of the terms and conditions for the use of the
Customized Service (including, but not limited
termination/cancellation provisions).
3.3 TERMS OF SERVICE. POC agrees and acknowledges that each
prospective Subscriber shall, as a condition to the use of
such service, be required to agree to CompuServe's
then-standard end-user terms of service ("CompuServe TOS")
that it has developed for such service. CompuServe shall
determine in its sole discretion any and all of the terms and
conditions for the use of the Customized Service (including,
but not limited to termination/cancellation provisions), which
CompuServe may modify at any time in its sole discretion.
3.4 SUBSCRIPTION FEES. CompuServe shall be responsible for the
billing and collection of all amounts due from members of the
Customized Service for accessing and using such services.
CompuServe shall be entitled to retain all subscription,
advertising, transaction, communication, premium surcharge and
other revenues generated by the Customized Service. POC shall
be entitled to retain all revenue generated by the POC Website
and the Linked Pages. With respect to an initial subscription
fee offering of $19.95 for the Customized Service, CompuServe
shall remit to POC as a marketing commission either (a)
********** of the Subscription Fee collected by CompuServe per
month from each Subscriber if the total number of Subscribers
is ********** or less, or (b) ********** of the Subscription
Fee collected by CompuServe per month from each Subscriber if
the total number of Subscribers is greater than **********.
CompuServe shall pay such commissions to POC within sixty (60)
days after the end of each month. In the event that CompuServe
exercises its right under Section 3.2 to adjust the
subscription fee for the Customized Service, CompuServe shall
notify POC in writing of its intent to adjust the pricing for
the Customized Service (the "CompuServe Notice") and advise
POC of the new price point for the subscription fee ("Adjusted
Price Point"). In the event CompuServe proposes an Adjusted
Price Point below $19.95 per month, CompuServe also shall
propose a new formula for a marketing commission to POC. The
Parties shall negotiate in good faith and agree to a new
marketing commission formula within thirty (30) days of the
CompuServe Notice. Either Party may terminate this Agreement
in the event the Parties are unable to agree to a new
marketing commission under the terms set forth in this Section
3.4.
3.5 ORDERS, INSTALLATION AND REGISTRATION. POC acknowledges and
agrees that when the CompuServe Software is installed on a
prospective Subscriber's system, such installation shall occur
pursuant to the installation procedures for such client
provided by CompuServe (which shall not be modified without
CompuServe's approval). To use the CompuServe Software to
access the respective service, a prospective subscriber must
first register with such service, which registration shall
occur pursuant to the then-standard registration procedures
for such service, as determined by CompuServe in its sole
discretion.
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3.6 SUPPORT OF SUBSCRIBERS. CompuServe shall, at its own expense,
provide or offer to Subscribers customer service for the
Customized Service as is generally provided or offered to
CompuServe Members, including without limitation customer
service, technical support, billing services, and special
promotions or offerings. Once the Customized Service has
achieved at least One Hundred Thousand Subscribers (100,000),
the parties may mutually agree on a manner in which the
customer service will be POC branded. In addition, the Parties
will cooperate to develop efficient methods of handling
customer service inquiries regarding the other Party's
products and/or services (E.G., exchanging 800 numbers or warm
transfer of calls).
4. ONLINE MARKETING OVERVIEW
4.1 SUBSCRIBER COMMUNICATIONS. All communications by POC to
Subscribers shall be (i) subject to approval by CompuServe,
(ii) performed by CompuServe, and (iii) subject to the
CompuServe TOS (including, without limitation, its Privacy
Policy and marketing preferences) and applicable laws and
regulations. The Parties shall use commercially reasonable
efforts to explore the development of a procedure in which a
pop up screen or similar device can be used to enable
Subscribers to opt in to disclosing certain personal and
demographical data for use by POC; provided however, that such
procedure (i) must be, as determined by CompuServe in its sole
discretion, technically and economically feasible to
implement, (ii) must comply with the terms of the CompuServe
TOS and all laws and regulations related to the use of
personal data and (iii) must enable Subscribers to change
their marketing preference at any time and in their sole
discretion.
4.2 OUTBOUND EMAIL. POC agrees that all outbound email Subscribers
shall be subject to the CompuServe TOS, which includes, among
other things, the right of Subscribers to opt out of direct
marketing. POC shall submit such e-mails for approval by
CompuServe no later than one week prior to the proposed date
of distribution thereof.
4.3 OWNERSHIP OF ADVERTISING AND PROMOTIONAL SPACE. Except as
otherwise provided herein, CompuServe owns all right, title
and interest in and to the advertising and promotional spaces
within the Customized Service, including, without limitation,
advertising and promotional spaces on any CompuServe forms or
pages preceding or framing (i) the forums, (ii) any
POC-provided content, (iii) the POC Website and (iv) the
Linked Pages.
5. POC MARKETING OBLIGATIONS.
5.1 POC'S MARKETING PLAN. POC, at its expense, will market the
Customized Service to its customers and prospective customers.
5.2 CUSTOMIZED SERVICE DISTRIBUTION. CompuServe will provide a
Gold Master of the CompuServe Software and any documentation,
brochures and similar materials related to use of such
software and the Customized Service (the "Collateral")
pursuant to a distribution plan to be mutually agreed to by
POC and CompuServe. POC shall be responsible for ordering
sufficient quantities of the Collateral, and CompuServe will
ship the ordered quantities thereof within thirty (30)
calendar days after receiving an order from POC. POC will be
responsible for ordering the discs, disc replication costs, as
well as the costs of packaging and distributing the CompuServe
Software in disc form. POC agrees not to obfuscate, remove or
alter any of the patent, copyright or other proprietary rights
notices included in the CompuServe Software provided by
CompuServe to POC.
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5.3 ADDITIONAL PROMOTIONAL ACTIVITIES. POC will use all
commercially reasonable efforts to market the Customized
Service through additional marketing channels including, but
not limited to, bill inserts, radio, television, partner
channels, and prominent promotion on its existing POC Website.
Both Parties shall mutually agree upon the specific marketing
channels and messaging of any promotional campaign.
5.4 MARKETING RESTRICTIONS. POC shall not market the Customized
Service to any current or prospective partner that derives
more than twenty percent (20%) of its gross revenues from the
sale or licensing of computer hardware, software or computing
products.
5.5 SUPPRESSION. POC agrees to use reasonable efforts to suppress
from all marketing solicitations conducted by or on behalf of
it or any of its affiliates that market the Customized Service
(i) subscribers to AOL who joined within ********** months
of the date that any suppression merge/purge is conducted
hereunder, (ii) CompuServe Members who joined within *********
months of the date of any such merge/purge and (iii)
former subscribers to AOL who cancelled their AOL service
within six (6) months of the date of any such merge/purge. CSC
DirecTech shall conduct all merge/purge name suppression in
accordance with AOL house file suppression criteria (a copy of
which is attached as EXHIBIT D).
5.6 EXCLUSIVITY. During the Term and except as may be permitted in
Section 5.7 and Section 10.1, or as may otherwise be mutually
agreed to by the Parties, POC shall not market, promote,
offer, sell or distribute any products or service integral to
an Interactive Service (other than the Customized Service as
contemplated hereunder) through any of its online or offline
marketing channels, including, without limitation, any
broadband solution that would be made available by CompuServe
to POC pursuant to Section 10.1 below.
5.7 AOL MARKETING. At the request of AOL, POC shall use
commercially reasonable efforts to market and distribute the
AOL Service through POC's marketing channels as described
herein and as currently anticipated under the terms of this
Agreement. The specific marketing channels and messaging of
any promotional campaign shall be mutually agreed upon by both
Parties. AOL shall pay POC a fee of ********** for each
Qualified New Member acquired through the distribution of the
AOL Software by means of direct mailings and ********** for
each Qualified New Member acquired through the distribution of
the AOL Software by means of other distribution channels. AOL
shall pay such amounts to POC on a quarterly basis, within
thirty (30) days of the end of each calendar quarter. For the
purposes hereof, a "Qualified New Member" shall mean any
person or entity who registers for the AOL Service during the
Term using POC's special promotion identifier and who pays the
then-standard fees required for membership to the AOL Service
through at least two consecutive billing cycles.
6. COSTS; REPORTING.
6.1 COMPUSERVE COSTS. Except as otherwise provided in this
Agreement, CompuServe shall pay for the development of the
CompuServe Software, and any customization of the Customized
Service that will be developed and hosted by CompuServe, and
such other costs as are specifically allocated to CompuServe
under this Agreement.
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6.2 POC COSTS. POC shall bear the cost of duplicating the
CompuServe Software and marketing the Customized Service, all
Collateral with respect thereto and such other costs as are
specifically allocated to POC under this Agreement.
Notwithstanding the above, POC agrees to reimburse CompuServe
up to ********************* for any development
costs incurred by CompuServe in creating the CompuServe Tools
or any other tools, features or functionality requested by POC
hereunder, if there are not at least ********** Subscribers of
the Customized Service at the end of the initial 18-month
term.
6.3 REPORTING. POC will provide CompuServe with monthly reports of
the total number of collateral units and other marketing
materials distributed to POC's customer base and a rolling
30/60/90 forecasts of intended future distributions to its
customer base. Subject to receiving POC's reports, CompuServe
will provide monthly reports detailing the number of new
Subscribers from POC's marketing program.
7. PROMOTIONS.
7.1 COOPERATION. Each Party shall cooperate with and reasonably
assist the other Party in supplying Content for marketing and
promotional activities that relate to the Customized Service.
7.2 MATERIALS/PRESS RELEASES. Each Party will submit to the other
Party, for its prior written approval, which shall not be
unreasonably withheld or delayed, any press release or any
other public statement ("Press Release") regarding the
transactions contemplated hereunder. Notwithstanding the
foregoing, either Party may issue Press Releases and other
disclosures as required by law, rule, regulation or court
order or as reasonably advised by legal counsel without the
consent of the other Party and in such event, the disclosing
Party will provide at least five (5) business days prior
written notice of such disclosure. The failure to obtain the
prior written approval of the other Party shall be deemed a
material breach of this Agreement. Because it would be
difficult to precisely ascertain the extent of the injury
caused to the non-breaching Party, in the event of such
material breach, the non-breaching Party may terminate this
Agreement immediately upon notice to the other Party.
8. EQUITY INTEREST.
8.1 PRIVATE PLACEMENT OF DME COMMON STOCK. In addition to any
other payments set forth in this Agreement, POC's parent, DME,
hereby agrees to execute and deliver to America Online, Inc.
("AOL") on or before February __, 2000, a Subscription
Agreement in substantially the same form attached hereto as
EXHIBIT E, pursuant to which AOL may subscribe to purchase
from DME up to one million two hundred fifty thousand
(1,250,000) shares of DME common stock, par value $.001 per
share ("DME Common Stock"), at a per share purchase price
equal to the stated par value thereof as of the date hereof.
8.2 WARRANT FOR DME COMMON STOCK. In addition to the foregoing,
DME shall grant AOL a warrant (the "Warrant"), to purchase up
to an additional four million (4,000,000) shares of DME Common
Stock, at a per share purchase price equal to the closing
price per share of the DME Common Stock on the day immediately
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preceding the Effective Date. The Warrant may be exercised, in
whole or in part, at any time and from time to time on or
after the date which is 18 months from the Effective Date of
this Agreement, as specifically described in the Warrant
attached hereto as EXHIBIT F.
8.3 INVESTOR RIGHTS AGREEMENT. The DME securities held by AOL and
its permitted assigns shall be subject to an Investor Rights
Agreement, in substantially the same form attached hereto as
EXHIBIT G, which shall provide for, among other things,
certain registration rights. All fees and expenses in
connection with the foregoing shall be borne by DME (except
for sales commissions and discounts attributable to sales of
shares by the selling shareholder, which shall be borne by
such seller).
8.4 AMENDMENT TO CERTIFICATE OF INCORPORATION. DME shall use its
best efforts to take all actions necessary to amend its
Certificate of Incorporation within ninety (90) days of the
Effective Date to increase the Company's authorized but
unissued shares of Common Stock to such number of shares as
shall permit AOL to exercise the entire Warrant. Following
such approval, DME shall at all times reserve and keep
available out of its authorized but unissued shares of Common
Stock, solely for the purpose of effecting the exercise of the
Warrant, a sufficient number of shares of Common Stock to
effect the exercise of the entire Warrant. DME's failure to
comply with this Section 8.4 shall constitute a material
breach of this Agreement.
9. TERM AND TERMINATION
9.1 TERM. The initial term of the agreement will be a period of
Eighteen (18) months from the Launch Date. On a date ninety
(90) days prior to the expiration date, the Parties shall meet
to determine whether to extend the Agreement. The initial
18-month term, together with any extension hereto, shall be
referred to herein as the "TERM." If the parties elect not to
extend the term, then, following expiration of the Agreement
(i) the then remaining subscriber base of the Customized
Service shall continue to receive the Customized Service (with
the applicable POC branding) until the subscriber base for the
Customized Service falls below **********. At such time,
CompuServe, at its option, may convert the remaining
subscriber base upon expiration of the Agreement to a standard
(non co-branded) CompuServe or AOL service offering, (ii)
CompuServe will control all retail pricing with respect to the
then remaining subscriber base, (iii) POC will not market,
through any online or offline marketing channel for a period
of one hundred eighty (180) days from the date of expiration,
an Interactive Service that is targeted to the then remaining
subscriber base.
9.2 TERMINATION FOR BREACH. Except as expressly provided elsewhere
in this Agreement, either party may terminate this Agreement
at any time in the event of a material breach of the Agreement
by the other party which remains uncured after forty-five (45)
days written notice thereof to the other party (or such
shorter period as may be specified elsewhere in this
Agreement).
9.3 TERMINATION FOR BANKRUPTCY/INSOLVENCY. Either party may
terminate this Agreement immediately following written notice
to the other party if the other party (i) ceases to do
business in the normal course, (ii) becomes or is declared
insolvent or bankrupt, (iii) is the subject of any proceeding
related to its liquidation or insolvency (whether voluntary or
involuntary) which is not dismissed within ninety (90)
calendar days or (iv) makes an assignment for the benefit of
creditors.
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9.4 TERMINATION BY MUTUAL AGREEMENT. This Agreement may be
terminated upon mutual agreement of the Parties.
9.5 TERMINATION DUE TO A CHANGE IN MANAGEMENT. The Parties
acknowledge that AOL and CompuServe are entering into this
Agreement based upon DME's commitment to retain the services
of Darien Dash as a key executive of DME and POC. At the sole
election of AOL or CompuServe, this Agreement may be
terminated immediately upon written notice by AOL or
CompuServe at anytime if Darien Dash holds neither the
position of the Chariman or President of DME or POC.
10. OTHER PRODUCTS
10.1 BROADBAND. During the term of this Agreement, POC grants
CompuServe a first right of refusal to provide POC with a
broadband Internet access solution for the Customized Service.
CompuServe shall have thirty (30) days to respond to a written
broadband proposal from POC, which shall outline the material
terms of a proposed broadband access solution. If CompuServe
can deliver a similar product/service with business terms that
is substantially equivalent in all material respects to any
competitive offer, POC will agree to use the CompuServe device
solution.
11. STANDARD LEGAL TERMS
The Standard Legal Terms & Conditions set forth on EXHIBIT C attached
hereto are each hereby made a part of this Agreement.
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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the
Effective Date.
COMPUSERVE INTERACTIVE SERVICES, INC. DME INTERACTIVE HOLDINGS, INC.
By: /s/ ALAN ALFORD By: /S/ DARIEN DASH
--------------------------------- -------------------------
Print Name: Alan Alford Print Name: Darien Dash
------------------------- ------------------
Title: Vice President--Business Affairs Title: President
--------------------------------- -----------------------
AMERICA ONLINE, INC. PLACES OF COLOR, INC.
By: /s/ DAVID COLBURN By: /S/ DARIEN DASH
--------------------------------- -------------------------
Print Name: David Colburn Print Name: Darien Dash
------------------------- ------------------
Title: President--Business Affairs Title: President
------------------------------ -----------------------
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EXHIBIT A
---------
DEFINITIONS
AFFILIATE. Any agent, distributor, parent company or franchisee of CompuServe,
or an entity in which CompuServe holds at least a nineteen percent (19%) equity
interest.
AOL MEMBER shall mean any authorized user of the CompuServe Service, including
any sub-accounts using the CompuServe Service under an authorized master
account.
AOL SERVICE shall mean the proprietary software used to connect to and use the
U.S. version of the America Online(R) brand service.
AOL SOFTWARE shall mean the U.S. version of the America Online(R)brand
commercial online service.
CHANGE OF CONTROL. (a) The consummation of a reorganization, merger or
consolidation or sale or other disposition of substantially all of the assets of
a party; or (b) the acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1933,
as amended) of beneficial ownership (within the meaning of Rule 13d-3
promulgated under such Act) of more than 50% of either (i) the then outstanding
shares of common stock of such party; or (ii) the combined voting power of the
then outstanding voting securities of such party entitled to vote generally in
the election of directors.
CHANNEL shall mean the Content areas organized into topical categories and
linked directly from navigational buttons from the POC-hosted Start Page or the
CompuServe Software on the Customized Service, as the same may exist from time
to time, but which currently includes the following: Communications, Personal
Finance, News, Weather, Home & Interests, Health & Fitness, Lifestyles,
Shopping, Sight & Sound, Chat, Member Center, Internet, Computing, Business,
Travel, Arts & Entertainment, Local, Car Club, Games, Forum Center, Research and
Sports.
COMPUSERVE LOOK AND FEEL. The distinctive and particular elements of graphics,
design, organization, presentation, layout, user interface, navigation, trade
dress and stylistic convention (including the digital implementations thereof)
within the CompuServe Network and the total appearance and impression
substantially formed by the combination, coordination and interaction of these
elements.
COMPUSERVE MEMBER shall mean any authorized user of the CompuServe Service,
including any sub-accounts using the CompuServe Service under an authorized
master account.
COMPUSERVE NETWORK shall mean (i) the CompuServe Service and (ii) any other
product or service owned, operated, distributed or authorized to be operated or
distributed by or through CompuServe or any of its affiliates worldwide
(including, without limitation, CompuServe.com, privately labeled or co-branded
portal sites or services developed and maintained by CompuServe for third
parties, and the other properties excluded from the definitions of the
CompuServe Service or CompuServe.com, as provided herein).
COMPUSERVE.COM shall mean the Internet "portal" site operated by CompuServe
under the "CompuServe.com" located at the URL __________.
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COMPUSERVE SERVICE shall mean the standard personal computer-based, narrow-band
U.S. versions of the CompuServe(R) brand online service. The definition
specifically excludes (a) the international versions of CompuServe (E.G.,
CompuServe UK), (b) CompuServe.com, (c) "CompuServe Instant Messenger(TM),"
"Digital Cities" or any similar independent product, service or property which
may be offered by, through or with the U.S. versions of the CompuServe(R) brand
service, (d) any programming or content area offered by or through the U.S.
version of the CompuServe(R) brand service over which CompuServe does not
exercise complete operational control (including, without limitation, content
areas controlled by other parties and member-created content areas), (e) any
yellow pages, white pages, classifieds or other search, directory or review
services or content offered by or through the U.S. version of the CompuServe(R)
brand service, (f) any property, feature, product or service which CompuServe or
any of its affiliates may acquire subsequent to the Effective Date, any
privately labeled service in which CompuServe's agreement with a third party
prohibits or limits interactive marketing, placements, advertising or any other
form of promotion by CompuServe and (g) any other version of a CompuServe
service which is materially different from the standard narrow-band U.S.
versions of the CompuServe brand service, by virtue of its branding,
distribution, functionality, content or services, including, without limitation,
any co-branded version of the service and any version distributed through any
broadband distribution platform or through any platform or device other than a
desktop personal computer.
COMPUSERVE SOFTWARE shall mean CompuServe's standard proprietary software
marketed under the name "CompuServe 2000" that enables CompuServe Members to
access the CompuServe Service and the Internet.
COMPUSERVE TOOLS shall mean the proprietary management software, methods and
procedures that CompuServe determines in its sole discretion are reasonably
necessary for POC to program the POC-hosted Start Page and such other Content
that POC will post on the Customized Service in accordance with this Agreement.
CONFIDENTIAL INFORMATION. Any information relating to or disclosed in the course
of this Agreement, which is, or should be reasonably understood to be,
confidential or proprietary to the disclosing Party, including, but not limited
to, the material terms of this Agreement, information about CompuServe Members,
CompuServe Users, technical processes and formulas, source codes, product
designs, sales, cost and other unpublished financial information, product and
business plans, projections and marketing data. "Confidential Information" shall
not include information (a) already lawfully known to or independently developed
by the receiving Party without the use of any Confidential Information, (b)
disclosed in published materials, (c) generally known to the public through no
fault or breach by the receiving party, (d) lawfully obtained from any third
party who has a right to disclose such information and who provides it without
any obligation of confidentiality, or (e) required or reasonably advised to be
disclosed by law.
CONTENT. Text, images, video, audio (including, without limitation, music used
in time relation with text, images, or video), and other data, products,
services, advertisements, promotions, links, pointers, technology and software.
CUSTOMIZED SERVICE. The customized version of the CompuServe Service described
in Section 1 of this Agreement.
EFFECTIVE DATE means the date so defined in the Preamble.
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INTERACTIVE SITE shall mean any interactive site and/or sites that are managed,
maintained or owned by or on behalf of POC and its respective agents that
provides and/or licenses information, Content or other materials.
INTERACTIVE SERVICE shall mean any entity offering one or more of the following:
(i) online or Internet connectivity services (e.g., an Internet service
provider); (ii) a broad selection of aggregated third party interactive content
(or navigation thereto) (e.g., an online service or search and directory
service); or (iii) communications software capable of serving as the principal
means through which a user creates, sends and receives electronic mail or real
time online messages.
INTERNET ACCESS shall mean online or Internet connectivity services.
LAUNCH DATE shall mean the date in which the operation of a Customized Service
becomes "live" and available for online access by a Subscriber, as described in
Section 3.1.
LINKED PAGES shall mean those pages of the POC Website that are linked directly
from the Customized Service.
MARKS shall mean the trade names, trademarks and service marks of POC or
CompuServe.
POC-HOSTED START PAGE shall mean the web page developed, published, maintained
and hosted by POC as its start page for the Customized Service as described in
Section 1 and EXHIBIT B of this Agreement.
POC WEBSITE shall mean any interactive site or area which is managed, maintained
or owned by POC or its agents or to which POC provides and/or licenses
information, Content or other materials, including, by way of example and
without limitation, (i) a POC site on the World Wide Web portion of the Internet
or (ii) a channel or area delivered through a "push" product such as the
Pointcast Network or interactive environment such as Microsoft's proposed
"Active Desktop."
SUBSCRIBERS shall mean any user who registers and becomes authorized to use any
version of the Customized Service, including any sub-accounts using any version
of the Customized Service under an authorized master account.
VIRTUAL LOCK SOFTWARE shall mean CompuServe's proprietary host-based software
that uses remote pass phrase authentication to authenticate CompuServe Members.
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EXHIBIT B
---------
PROGRAMMING OF CUSTOMIZED SERVICE
(a) POC MAIN MENU PAGE. POC shall use a web page developed, published,
maintained and hosted by it as the start page for the Customized Service (a
"POC-hosted Start Page"); provided that the POC-hosted Start Page must contain
CompuServe co-branding that is substantially similar to that provided on the
Main Menu of the standard CompuServe Service, and must contain prominent,
above-the-fold return navigational links to the Customized Service as shown in
Illustration No. 1 attached to this EXHIBIT B.
(b) POC-HOSTED START PAGE. POC shall be solely responsible for developing,
publishing, maintaining and hosting the POC-hosted Start Page, and CompuServe
shall have no operational responsibility with respect thereto.
(c) POC WEBSITE. Any web sites controlled or operated by POC (the "POC Website")
and all pages linked from the Customized Service ("Linked Pages") shall be
subject to CompuServe's standard terms and conditions, as set forth in the
definitive agreement (including, without limitation, CompuServe's Terms of
Service ("TOS"), advertising, marketing and content restrictions, navigational
requirements, hosting and access terms, technology compatibility, operating
standards and online commerce terms). CompuServe must pre-approve all content
partners of POC whose content will appear on or will be directly accessible from
the POC-hosted Start Page. The parties will mutually agree on the manner in
which CompuServe's approval will be given.
(c) CHANNEL TOP CUSTOMIZATION. POC may add content to the top page of two (2)
Channels on the CompuServe Service that are most contextually relevant to POC's
business, as determined in POC's reasonable discretion, by providing additive
links on such top page. Once POC has acquired 100,000 subscribers for the
Customized Service, the Parties may mutually agree on up to but not exceeding
two (2) additional channels in which POC can add content. The additional content
provided by POC must not exceed fifty percent (50%) of the above the fold
non-navigational area of such page (as viewable on an 800 x 600 pixel screen
without scrolling). Channels that cannot support this functionality include
news, weather, sports, international, local, movies and shopping. All POC
content will be subject to the column formatting requirements, vertical and
horizontal spacing requirements and publishing templates established by
CompuServe from time to time for any page of the CompuServe Service.
(d) PORTAL CUSTOMIZATION. CompuServe shall redirect the Internet Channel
navigation button on the Internet button on the CompuServe Software tool bar to
a customized version of CompuServe's standard CompuServe.com Internet gateway
top page ("Co-Branded Internet Gateway") as shown in Illustration No. 2 attached
to this EXHIBIT B. The domain for the Co-Branding Internet Gateway Partner will
be a URL hosted by CompuServe (e.g., compuserve.com/partner_nameonline). Such
URL will also be accessible from the World Wide Web.
(e) SEARCH CUSTOMIZATION. CompuServe shall incorporate "Try These First" or
"Best Picks" functionality within the CompuServe search engine, for up to 10
keyword search terms to be provided by POC prior to the launch of the
Customizable Service. POC shall supply CompuServe with the applicable search
terms, descriptions and URL's in order to implement this functionality.
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(f) STALE CONTENT. CompuServe can convert POC's Customized Service to a static
template if, within any six month period, there are at least three instances in
which POC publishes content to AOL that 1) contains broken links, 2) is not
formatted properly or 3) causes the page not to render properly on the
Customizable Service. The foregoing right will not apply if in CompuServe's
reasonable opinion, POC is taking reasonable steps to remedy the aforementioned
deficiencies.
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Illustration No. 1
[GRAPHIC OMITTED]
16
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[OBJECT OMITTED]
Illustration No. 2
17
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EXHIBIT C
---------
STANDARD LEGAL AND OPERATING TERMS AND CONDITIONS
I. INTELLECTUAL PROPERTY
LICENSE. CompuServe hereby grants POC a non-exclusive license to distribute and
promote the CompuServe Software and Documentation during the Term, solely to the
limited extent and for the express purposes contemplated hereunder.
LICENSE TO POC. Solely in connection with the marketing, promotion and
distribution obligations specified in this Agreement, and subject to the other
provisions of this Agreement, POC shall be entitled to use the Marks, provided
that POC (a) does not create a unitary composite mark involving a Mark without
the prior written approval of CompuServe; and (b) displays symbols and notices
clearly and sufficiently indicating the trademark status and ownership of the
Marks in accordance with applicable trademark law and practice. In using the
Marks, POC acknowledges and agrees that: (i) the Marks are and shall remain the
sole property of CompuServe; (ii) POC shall not now or in the future contest the
validity of the Marks; (iii) nothing in this Agreement shall confer in POC any
right of ownership in the Marks; and (iv) POC acknowledges that its utilization
of the Marks will not create in it, nor will it represent it has, any right,
title or interest in or to such Marks other than the licenses expressly granted
herein.
LICENSE TO COMPUSERVE. In designing and implementing the Customized Service and
any marketing, advertising, press releases or other promotional materials
related to this Agreement and/or referencing the other Party and/or its trade
names, trademarks and service marks (the "Promotional Materials") and subject to
the other provisions contained herein, CompuServe and its Affiliates shall be
entitled to use the trade names, trademarks and service marks of POC
(collectively, together with the CompuServe marks listed above, the "Marks");
provided that it (i) does not create a unitary composite mark involving a Mark
of the other Party without the prior written approval of such other Party and
(ii) displays symbols and notices clearly and sufficiently indicating the
trademark status and ownership of the other Party's Marks in accordance with
applicable trademark law and practice.
RIGHTS. Each Party acknowledges that its utilization of the other Party's Marks
will not create in it, nor will it represent it has, any right, title or
interest in or to such Marks other than the licenses expressly granted herein.
Each Party agrees not to do anything contesting or impairing the trademark
rights of the other Party.
QUALITY STANDARDS. Each Party agrees that the nature and quality of its products
and services supplied in connection with the other Party's Marks shall conform
to quality standards communicated in writing by the other Party for use of its
trademarks. Each Party agrees to supply the other Party, upon request, with a
reasonable number of samples of any Materials publicly disseminated by such
Party, which utilize the other Party's Marks. Each Party shall comply with all
applicable laws, regulations and customs and obtain any required government
approvals pertaining to use of the other Party's Marks.
PROMOTIONAL MATERIALS/PRESS RELEASES. Each Party will not use the other Party's
name in any advertising, publications, promotional material or publicity release
concerning the subject matter of this Agreement without the other Party's prior
written approval, which shall not be unreasonably withheld or delayed.
INFRINGEMENT PROCEEDINGS. Each Party agrees to promptly notify the other Party
of any unauthorized use of the other Party's Marks of which it has actual
knowledge. Each Party shall have the sole right and discretion to bring
proceedings alleging infringement of its Marks or unfair competition related
thereto; provided, however, that each Party agrees to provide the other Party,
at such other Party's expense, with its reasonable cooperation and assistance
with respect to any such infringement proceedings.
II. POC WEBSITE.
CONTENT. POC represents and warrants that all Content contained within the
Linked Pages, the POC-hosted Start Page, and such other Content published by POC
on the Customized Service (i) will conform to, the terms of this Agreement, (ii)
do not and will not knowingly infringe on or violate any copyright, trademark,
U.S. patent or any other third party right, including without limitation, any
music performance or other music related rights, and (iii) do not and will not
knowingly contain any Content which violates any applicable law or regulation
(collectively, the "Rules"). In the event that CompuServe notifies POC in
writing that any such Content, as reasonable determined by CompuServe, does not
comply or adhere to the Rules, then POC shall use its best efforts to block
access by CompuServe Members to such Content. In the event that POC cannot,
through its best efforts, block access by CompuServe Members to such Content in
question, and then POC shall provide CompuServe prompt written notice of such
fact. CompuServe may then, at its option, either (i) restrict access from the
CompuServe Network to the Content in question using technology available to
CompuServe or (ii) in the event access cannot be restricted, direct POC to
remove any such Content until such time as the Content in question is no longer
displayed. POC will cooperate with CompuServe's reasonable requests to the
extent CompuServe elects to implement any such access restrictions.
MANAGEMENT. POC shall design, create, edit, manage, update and maintain the
POC-hosted Start Page and the POC Website. CompuServe shall have no obligation
of any kind with respect to the POC Website.
CONTESTS. POC shall ensure that any contest, sweepstakes or similar promotion
conducted or promoted through the POC Website on a POC-hosted Start Page or
Linked Page (a "Contest") complies with all applicable laws and regulations.
DISCLAIMERS. Upon CompuServe's request, POCagrees to include within the POC
Website a disclaimer (the specific form and substance to be mutually agreed upon
by the Parties) indicating that all Content (including any products and
services) is provided solely by POC and not CompuServe and any transactions are
solely between POC and CompuServe Members using or purchasing such Content.
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III. OPERATING STANDARDS
INTERACTIVE SITE INFRASTRUCTURE. POC will be responsible for all communications,
hosting and connectivity costs and expenses associated with the POC-hosted Start
Page and POC Website. POC will provide all hardware, software,
telecommunications lines and other infrastructure necessary to meet traffic
demands on the POC-hosted Start Page and POC Website from the CompuServe
Network.
OPTIMIZATION; SPEED. POC will use commercially reasonable efforts to ensure
that: (a) the functionality and features within the POC Website and POC-hosted
Start Page are optimized for the client software then in use by CompuServe
Members; and (b) the POC Website is designed and populated in a manner that
minimizes delays when CompuServe Members attempt to access such site.
TECHNICAL PROBLEMS. POC agrees to use commercially reasonable efforts to address
material technical problems (over which POC exercises control) affecting use by
Subscribers of the POC-hosted Start Page and the POC Website (an "POC Technical
Problem") promptly following notice thereof. In the event that POC is unable to
promptly resolve an POC Technical Problem following notice thereof from
CompuServe (including, without limitation, infrastructure deficiencies producing
user delays), CompuServe will have the right to regulate the promotions it
provides to POC hereunder until such time as POC corrects the POC Technical
Problem at issue.
MONITORING. POC will ensure that the performance and availability of the
POC-hosted Start Page and POC Website are monitored on a continuous (24 X 7)
basis. The following POC contact persons shall be available on a continuous
(24x7) basis to CompuServe in case CompuServe is notified of a problem involving
the POC-hosted Start Page or the POC Website: Kathleen McQuaid. POC will provide
CompuServe no later than ten (10) days' prior to the Launch Date with contact
information (including e-mail, phone, pager and fax information, as applicable,
for both during and after business hours) for POC 's principal business and
technical representatives, for use in cases when issues or problems arise with
respect to the POC-hosted Start Page, Content published by POC on the Customized
Service, the Linked Pages and the POC Website.
SECURITY. POC will utilize Internet standard encryption technologies (e.g.,
Secure Socket Layer - SSL) to provide a secure environment for conducting
transactions and/or transferring private member information (e.g. credit card
numbers, banking/financial information, and member address information) to and
from the POC-hosted Start Page and the POC Website. POC will facilitate periodic
reviews of the POC-hosted Start Page and the POC Website by CompuServe in order
to evaluate the security risks of such site. POC will promptly remedy any
security risks or breaches of security as may be identified by CompuServe's
Operations Security team.
TECHNICAL PERFORMANCE.
i. POC will design the POC-hosted Start Page and POC Website to support the
CompuServe-Client embedded versions of the Microsoft Internet Explorer 3.0,
4.0 and 5.0 browsers (Windows and Macintosh).
ii. Prior to releasing material, new functionality or features through the
POC-hosted Start Page and POC Website ("New Functionality"), POC will use
commercially reasonable efforts to either (i) test the New Functionality to
confirm its compatibility with CompuServe Service client software or (ii)
provide CompuServe with written notice of the New Functionality so that
CompuServe can perform tests of the New Functionality to confirm its
compatibility with the CompuServe Service client software.
COMPUSERVE INTERNET SERVICES PARTNER SUPPORT. CompuServe will provide POC with
access to the standard online resources, standards and guidelines documentation,
technical phone support, monitoring and after-hours assistance that CompuServe
makes generally available to similarly situated web-based partners. CompuServe
support will not, in any case, be involved with content creation on behalf of
POC or support for any technologies, databases, software or other applications
which are not supported by CompuServe or are related to any POC area other than
the POC Website. Support to be provided by CompuServe is contingent on POC
providing to CompuServe demo account information (where applicable), a detailed
description of the POC Website's software, hardware and network architecture and
access to the POC Interactive Site for purposes of such performance and the
coordination load testing as CompuServe elects to conduct.
IV. ADVERTISING
ADVERTISING SPACE. CompuServe owns all right, title and interest in and to the
advertising and promotional spaces within the CompuServe Network (including,
without limitation, advertising and promotional spaces on any Welcome Mat,
CompuServe forms or pages preceding or framing the POC-hosted Start Page and POC
Website and any CompuServe pages on which POC-hosted Start Page resides). The
specific advertising inventory within any such CompuServe forms or pages shall
be as reasonably determined by CompuServe. POC owns all right, title and
interest in and to the advertising and promotional spaces within the POC
Website. The Party that owns the right, title and interest in and to the
advertising and promotional space within any form, page or area shall have the
exclusive right (as between the Parties) to sell promotions, advertisements,
sponsorships, links, pointers or similar services or rights (collectively,
"Advertisements") in and through such form, page or area, except to the extent
such Party has herein expressly granted the other Party a right to sell
Advertisements in and through such form, page or area.
V. COMPUSERVE SERVICE.
COMPUSERVE LOOK AND FEEL. POC acknowledges and agrees that CompuServe shall own
all right, title and interest in and to the CompuServe Look and Feel. In
addition, CompuServe shall retain editorial control over the portions of the
CompuServe pages and forms that frame the POC-hosted Start Page and any Linked
Pages (the "CompuServe Frames"). CompuServe may, at its discretion, incorporate
navigational icons, links and pointers or other Content into such CompuServe
Frames.
OPERATIONS. CompuServe shall be entitled to require reasonable changes to the
POC-hosted Start Page to the extent such site will, in CompuServe's good faith
judgment, adversely affect operations of the CompuServe Network.
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VI. MUTUAL OBLIGATIONS.
DUTY TO INFORM. Each Party shall promptly inform the other of any information
related to the Customized Service that could reasonably lead to a claim, demand
or liability of or against the other Party and/or its Affiliates by any third
party.
RESPONSE TO QUESTIONS/COMMENTS; CUSTOMER SERVICE. POC shall respond promptly and
professionally to questions, comments, complaints and other reasonable requests
regarding the POC Website and the POC-hosted Start Page by Subscribers or on
request by CompuServe, and shall cooperate and assist CompuServe in promptly
answering the same. CompuServe shall respond promptly and professionally to
questions, comments, complaints and other reasonable requests regarding access
to the Customized Service by Subscribers or on request by POC, and shall
cooperate and assist POC in promptly answering the same.
PRODUCTION WORK. In the event that POC requests any CompuServe production
assistance, POC shall work with CompuServe to develop detailed production plans
for the requested production assistance (the "Production Plan"). Following
receipt of the final Production Plan, CompuServe shall notify POC of (i)
CompuServe's availability to perform the requested production work, (ii) the
proposed fee or fee structure for the requested production and maintenance work
and (iii) the estimated development schedule for such work. To the extent the
Parties reach agreement regarding implementation of agreed-upon Production Plan,
such agreement shall be reflected in a separate work order signed by the
Parties. To the extent POC elects to retain a third party provider to perform
any such production work, work produced by such third party provider must
generally conform to CompuServe's production Standards & Practices (a copy of
which will be supplied by CompuServe to POC upon request). The specific
production resources which CompuServe allocates to any production work to be
performed on behalf of POC shall be as determined by CompuServe in its sole
discretion.
TRAINING AND SUPPORT. At the request of POC, CompuServe shall make available to
POC standard CompuServe training and support programs necessary to produce any
CompuServe areas hereunder. POC can select its training and support program from
the options then offered by CompuServe. POC shall be responsible to pay the fees
associated with its chosen training and support package as mutually agreed to by
the Parties. In addition, POC will pay travel and lodging costs associated with
its participation in any CompuServe training programs (including CompuServe's
travel and lodging costs when training is conducted at POC 's offices).
LAUNCH DATE. In the event that any terms contained herein relate to or depend on
the launch date of the online area or other property contemplated by this
Agreement, which launch date is later than the Effective Date, then it is the
intention of the Parties to record such launch date in a written instrument
signed by both Parties promptly following such launch date; provided that, in
the absence of such a written instrument, the launch date shall be as reasonably
determined by CompuServe based on the information available to CompuServe.
VII. REPRESENTATIONS AND WARRANTIES
Each Party represents and warrants to the other Party that: (i) such Party has
the full corporate right, power and authority to enter into this Agreement, to
grant the licenses granted hereunder and to perform the acts required of it
hereunder; (ii) the execution of this Agreement by such Party, and the
performance by such Party of its obligations and duties hereunder, do not and
will not violate any agreement to which such Party is a party or by which it is
otherwise bound; (iii) when executed and delivered by such Party, this Agreement
will constitute the legal, valid and binding obligation of such Party,
enforceable against such Party in accordance with its terms; (iv) such Party's
Promotional Materials will neither infringe on any copyright, U.S. patent or any
other third party right nor violate any applicable law or regulation and (v)
such Party acknowledges that the other Party makes no representations,
warranties or agreements related to the subject matter hereof which are not
expressly provided for in this Agreement.
VIII. CONFIDENTIALITY
Each Party acknowledges that Confidential Information may be disclosed to the
other Party during the course of this Agreement. Each Party agrees that it will
take reasonable steps, at least substantially equivalent to the steps it takes
to protect its own proprietary information, during the term of this Agreement,
and for a period of three years following expiration or termination of this
Agreement, to prevent the duplication or disclosure of Confidential Information
of the other Party, other than by or to its employees or agents who must have
access to such Confidential Information to perform such Party's obligations
hereunder, who will each agree to comply with this section. Notwithstanding the
foregoing, either Party may issue a press release or other disclosure containing
Confidential Information without the consent of the other Party, to the extent
such disclosure is required by law, rule, regulation or government or court
order. In such event, the disclosing Party will provide at least five- (5)
business day's prior written notice of such proposed disclosure to the other
Party. Further, in the event such disclosure is required of either Party under
the laws, rules or regulations of the Securities and Exchange Commission or any
other applicable governing body, such Party will (i) redact mutually agreed-upon
portions of this Agreement to the fullest extent permitted under applicable
laws, rules and regulations and (ii) submit a request to such governing body
that such portions and other provisions of this Agreement receive confidential
treatment under the laws, rules and regulations of the Securities and Exchange
Commission or otherwise be held in the strictest confidence to the fullest
extent permitted under the laws, rules or regulations of any other applicable
governing body.
IX. RELATIONSHIP WITH COMPUSERVE MEMBERS
SOLICITATION OF SUBSCRIBERS. During the Term and for the one-year period
following the expiration or termination of this Agreement, neither POC nor its
agents will use the CompuServe Network to (i) solicit or participate in the
solicitation of CompuServe Members when that solicitation is for the benefit of
any entity (including POC ) which could reasonably be construed to be or become
in competition with CompuServe or (ii) promote any services which could
reasonably be construed to be in competition with services available through
CompuServe including, but not limited to, services available through the
Internet. POC may not send any CompuServe Member unsolicited e-mail
communications on or through the CompuServe Network without a "Prior Business
Relationship." For purposes of this Agreement, a "Prior Business Relationship"
shall mean that the CompuServe Member has either (i) purchased Products from POC
through the CompuServe Network or (ii) voluntarily provided information to POC
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through a contest, registration, or other communication, which included clear
and conspicuous notice to the CompuServe Member that the information provided by
the CompuServe Member could result in an e-mail being sent to that CompuServe
Member by POC or its agents. In any commercial e-mail communications to
CompuServe Members, which are otherwise permitted hereunder, POC shall provide
the recipient with a prominent and easy means to "opt-out" of receiving any
future commercial e-mail communications from POC .
COLLECTION OF MEMBER INFORMATION. POC is prohibited from collecting CompuServe
Member screennames from public or private areas of the CompuServe Network,
except as specifically provided below. POC shall ensure that any survey,
questionnaire or other means of collecting Member Information including, without
limitation, requests directed to specific CompuServe Member screennames and
automated methods of collecting screennames (an "Information Request") complies
with (i) all applicable laws and regulations, (ii) CompuServe's applicable
Member Agreement, and (iii) any privacy policies which have been issued by
CompuServe in writing during the Term (or, in the case of the POC Website, POC
's standard privacy policies, to the extent such policies are prominently
published on the site and provide adequate notice and disclosure to users
regarding POC 's collection, use and disclosure of any user information)
(collectively, the "Applicable Privacy Policies"). Each Information Request
shall clearly and conspicuously specify to the CompuServe Members at issue the
purpose for which Member Information collected through the Information Request
shall be used (the "Specified Purpose"). POC represents and warrants that the
privacy policy contained on the POC Website meet the criteria created by the
Online Privacy Coalition.
USE OF MEMBER INFORMATION. POC shall restrict use of the Member Information
collected through an Information Request to the Specified Purpose. In no event
shall POC (i) provide CompuServe Member names, screennames, addresses or other
identifying information ("Member Information") to any third party (except to the
extent specifically (a) permitted under the Applicable Privacy Policies or (b)
authorized by the CompuServe Members in question) or (ii) otherwise use any
Member Information in contravention of the above section regarding "Solicitation
of Members."
EMAIL NEWSLETTERS. Any email newsletters sent to CompuServe Members by POC or
its agents shall (i) be subject to CompuServe's policies on use of the email
functionality, including but not limited to CompuServe's policy on unsolicited
bulk email, (ii) be sent only to CompuServe Members requesting to receive such
newsletters, (iii) not contain Content which violates CompuServe's Member
Agreement, and (iv) not contain any advertisements, marketing or promotion for
any entity reasonably construed by CompuServe to be in competition with
CompuServe.
X. TREATMENT OF CLAIMS
LIABILITY. UNDER NO CIRCUMSTANCES SHALL EITHER PARTY BE LIABLE TO THE OTHER
PARTY FOR INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL OR EXEMLARY DAMAGES (EVEN
IF THAT PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES), ARISING FROM
BREACH OF THIS AGREEMENT, THE USE OF OR INABILITY TO USE THE COMPUSERVE NETWORK
OR ANY OTHER PROVISION OF THIS AGREEMENT, SUCH AS, BUT NOT LIMITED TO, LOSS OF
REVENUE OR ANTICIPATED PROFITS OR LOST BUSINESS (COLLECTIVELY, "DISCLAIMED
DAMAGES"); PROVIDED THAT EACH PARTY SHALL REMAIN LIABLE TO THE OTHER PARTY TO
THE EXTENT ANY DISCLAIMED DAMAGES ARE CLAIMED BY A THIRD PARTY AND ARE SUBJECT
TO INDEMNIFICATION BELOW. EXCEPT AS PROVIDED BELOW IN THE "INDEMNITY" SECTION,
NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY FOR MORE THAN THE AGGREGATE
AMOUNTS PAYABLE HEREUNDER IN THE YEAR IN WHICH LIABILITY ACCRUED; PROVIDED THAT
EACH PARTY SHALL REMAIN LIABLE FOR THE AGGREGATE AMOUNT OF ANY PAYMENT
OBLIGATIONS OWED TO THE OTHER PARTY UNDER THE PROVISIONS OF THIS AGREEMENT.
NO ADDITIONAL WARRANTIES. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT,
NEITHER PARTY MAKES, AND EACH PARTY HEREBY SPECIFICALLY DISCLAIMS, ANY
REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, REGARDING THE PRODUCTS, THE
COMPUSERVE NETWORK, THE COMPUSERVE SOFTWARE OR DOCUMENTATION, INCLUDING ANY
IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE AND
IMPLIED WARRANTIES ARISING FROM COURSE OF DEALING OR COURSE OF PERFORMANCE.
WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, COMPUSERVE SPECIFICALLY
DISCLAIMS ANY WARRANTY REGARDING THE PROFITABILITY OF COMPUSERVE NETWORK OR THE
NATIONAL ISP SERVICE.
INDEMNITY. Either Party will defend, indemnify, save and hold harmless the other
Party and the officers, directors, agents, affiliates, distributors, franchisees
and employees of the other Party from any and all third party claims, demands,
liabilities, costs or expenses, including reasonable attorneys' fees
("Liabilities"), resulting from the indemnifying Party's breach of any duty,
representation, or warranty of this Agreement.
If a Party entitled to indemnification hereunder (the "Indemnified Party")
becomes aware of any matter it believes is indemnifiable hereunder involving any
claim, action, suit, investigation, arbitration or other proceeding against the
Indemnified Party by any third party (each an "Action"), the Indemnified Party
shall give the other Party (the "Indemnifying Party") prompt written notice of
such Action. Such notice shall (i) provide the basis on which indemnification is
being asserted and (ii) be accompanied by copies of all relevant pleadings,
demands, and other papers related to the Action and in the possession of the
Indemnified Party. The Indemnifying Party shall have a period of twenty (20)
days after delivery of such notice to respond. If the Indemnifying Party elects
to defend the Action or does not respond within the requisite twenty (20) day
period, the Indemnifying Party shall be obligated to defend the Action, at its
own expense, and by counsel reasonably satisfactory to the Indemnified Party.
The Indemnified Party shall cooperate, at the expense of the Indemnifying Party,
with the Indemnifying Party and its counsel in the defense and the Indemnified
Party shall have the right to participate fully, at its own expense, in the
defense of such Action. If the Indemnifying Party responds within the required
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<PAGE>
twenty (20) day period and elects not to defend such Action, the Indemnified
Party shall be free, without prejudice to any of the Indemnified Party's rights
hereunder, to compromise or defend (and control the defense of) such Action. In
such case, the Indemnifying Party shall cooperate, at its own expense, with the
Indemnified Party and its counsel in the defense against such Action and the
Indemnifying Party shall have the right to participate fully, at its own
expense, in the defense of such Action. Any compromise or settlement of an
Action shall require the prior written consent of both Parties hereunder, such
consent not to be unreasonably withheld or delayed.
ACKNOWLEDGMENT. COMPUSERVE AND POC EACH ACKNOWLEDGES THAT THE PROVISIONS OF THIS
AGREEMENT WERE NEGOTIATED TO REFLECT AN INFORMED, VOLUNTARY ALLOCATION BETWEEN
THEM OF ALL RISKS (BOTH KNOWN AND UNKNOWN) ASSOCIATED WITH THE TRANSACTIONS
CONTEPOC LATED HEREUNDER. THE LIMITATIONS AND DISCLAIMERS RELATED TO WARRANTIES
AND LIABILITY CONTAINED IN THIS AGREEMENT ARE INTENDED TO LIMIT THE
CIRCUMSTANCES AND EXTENT OF LIABILITY. THE PROVISIONS OF THIS SECTION VI SHALL
BE ENFORCEABLE INDEPENDENT OF AND SEVERABLE FROM ANY OTHER ENFORCEABLE OR
UNENFORCEABLE PROVISION OF THIS AGREEMENT.
XI. ARBITRATION
(a) The Parties shall act in good faith and use commercially reasonable efforts
to promptly resolve any claim, dispute, claim, controversy or disagreement (each
a "Dispute") between the Parties or any of their respective subsidiaries,
affiliates, successors and assigns under this Agreement or any document executed
pursuant to this Agreement. If the Parties cannot resolve the Dispute promptly,
the Dispute shall be submitted to the Management Committee for resolution. For
ten (10) days after the Dispute was submitted to the Management Committee, the
Management Committee shall have the exclusive right to resolve such Dispute;
provided further that the Management Committee shall have the final and
exclusive right to resolve Disputes arising from any provision of the Agreement
which expressly or implicitly provides for the Parties to reach mutual agreement
as to certain terms. "Management Committee" shall mean a committee made up of a
senior executive from each of the Parties for the purpose of resolving Disputes
under this Section and generally overseeing the relationship between the Parties
contemplated by this Agreement. Neither Party shall seek, nor shall be entitled
to seek, binding outside resolution of the Dispute unless and until the Parties
have been unable to amicably resolve the dispute as set forth in this paragraph
(a) and then, only in compliance with the procedures set forth in this Section.
(b) Except for Disputes relating to issues of (i) proprietary rights, including
but not limited to intellectual property and confidentiality, and (ii) any
provision of the Agreement which expressly or implicitly provides for the
Parties to reach mutual agreement as to certain terms (which shall be resolved
by the Parties solely and exclusively through amicable resolution as set forth
in paragraph (a), any Dispute not resolved by amicable resolution as set forth
in paragraph (a) shall be governed exclusively and finally by arbitration. Such
arbitration shall be conducted by the American Arbitration Association ("AAA")
in Washington, D.C. and shall be initiated and conducted in accordance with the
Commercial Arbitration Rules ("Commercial Rules") of the AAA, including the AAA
Supplementary Procedures for Large Complex Commercial Disputes ("Complex
Procedures"), as such rules shall be in effect on the date of delivery of a
demand for arbitration ("Demand"), except to the extent that such rules are
inconsistent with the provisions set forth herein. Notwithstanding the
foregoing, the Parties may agree in good faith that the Complex Procedures shall
not apply in order to promote the efficient arbitration of Disputes where the
nature of the Dispute, including without limitation the amount in controversy,
does not justify the application of such procedures.
(c) The arbitration panel shall consist of three arbitrators. Each Party shall
name an arbitrator within ten (10) days after the delivery of the Demand. The
two arbitrators named by the Parties may have prior relationships with the
naming Party, which in a judicial setting would be considered a conflict of
interest. The third arbitrator, selected by the first two, should be a neutral
participant, with no prior working relationship with either Party. If the two
arbitrators are unable to select a third arbitrator within ten (10) days, a
third neutral arbitrator will be appointed by the AAA from the panel of
commercial arbitrators of any of the AAA Large and Complex Resolution Programs.
If a vacancy in the arbitration panel occurs after the hearings have commenced
the remaining arbitrator or arbitrators may not continue with the hearing and
determination of the controversy, unless the Parties agree otherwise.
(d) The Federal Arbitration Act, 9 U.S.C. Secs. 1-16, and not state law, shall
govern the arbitrability of all Disputes. The arbitrators shall allow such
discovery as is appropriate to the purposes of arbitration in accomplishing a
fair, speedy and cost-effective resolution of the Disputes. The arbitrators
shall reference the Federal Rules of Civil Procedure then in effect in setting
the scope and timing of discovery. The Federal Rules of Evidence shall apply IN
TOTO. The arbitrators may enter a default decision against any Party who fails
to participate in the arbitration proceedings.
(e) The arbitrators shall have the authority to award compensatory damages only.
Any award by the arbitrators shall be accompanied by a written opinion setting
forth the findings of fact and conclusions of law relied upon in reaching the
decision. The award rendered by the arbitrators shall be final, binding and
non-appealable, and judgment upon such award may be entered by any court of
competent jurisdiction. The Parties agree that the existence, conduct and
content of any arbitration shall be kept confidential and no Party shall
disclose to any person any information about such arbitration, except as may be
required by law or by any governmental authority or for financial reporting
purposes in each Party's financial statements.
(f) Each Party shall pay the fees of its own attorneys, expenses of witnesses
and all other expenses and costs in connection with the presentation of such
Party's case (collectively, "Attorneys' Fees"). The remaining costs of the
arbitration, including without limitation, fees of the arbitrators, costs of
records or transcripts and administrative fees (collectively, "Arbitration
Costs") shall be born equally by the parties. Notwithstanding the foregoing, the
arbitrators may modify the allocation of Arbitration Costs and award Attorneys'
Fees in those cases where fairness dictates a different allocation of
Arbitration Costs between the Parties and an award of Attorneys' Fees to the
prevailing Party as determined by the arbitrators.
(g) Any Dispute that is not subject to final resolution by the Management
Committee or to arbitration under this Section or law (collectively,
"Non-Arbitration Claims") shall be brought in a court of competent jurisdiction.
Each Party irrevocably consents to the non-exclusive jurisdiction of the courts
of the State of Ohio and the federal courts situated in the State of Ohio, over
any and all Non-Arbitration Claims and any and all actions to enforce such
claims or to recover damages or other relief in connection with such claims.
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XII. MISCELLANEOUS
EXCUSE. Neither Party shall be liable for, or be considered in breach of or
default under this Agreement on account of, any delay or failure to perform as
required by this Agreement as a result of any causes or conditions which are
beyond such Party's reasonable control and which such Party is unable to
overcome by the exercise of reasonable diligence.
INDEPENDENT CONTRACTORS. The Parties to this Agreement are independent
contractors. Neither Party is an agent, representative or partner of the other
Party. Neither Party shall have any right, power or authority to enter into any
agreement for or on behalf of, or incur any obligation or liability of, or to
otherwise bind, the other Party. This Agreement shall not be interpreted or
construed to create an association, agency, joint venture or partnership between
the Parties or to impose any liability attributable to such a relationship upon
either Party.
NOTICE. Any notice, approval, request, authorization, direction or other
communication under this Agreement will be given in writing and will be deemed
to have been delivered and given for all purposes (i) on the delivery date if
delivered by electronic mail on the CompuServe Network in the case of
CompuServe) or by confirmed facsimile; (ii) on the delivery date if delivered
personally to the Party to whom the same is directed; (iii) one business day
after deposit with a commercial overnight carrier, with written verification of
receipt; or (iv) five business days after the mailing date, whether or not
actually received, if sent by U.S. mail, return receipt requested, postage and
charges prepaid, or any other means of rapid mail delivery for which a receipt
is available. In the case of CompuServe, such notice will be provided to the
Associate General Counsel (fax no. 614-457-9665), at the address of CompuServe
set forth in the first paragraph of this Agreement. In the case of POC, except
as otherwise specified herein, the notice address shall be the address for POC
set forth in the first paragraph of this Agreement, with the other relevant
notice information, including the recipient for notice and, as applicable, such
recipient's fax number or CompuServe e-mail address, to be as reasonably
identified by CompuServe.
CONTACT PERSONS. Upon execution of this Agreement, the following persons shall
be deemed the primary contact persons for purposes of completing and executing
the terms of this Agreement: CompuServe--Kevin Dwinnell (614-538-4131) and
DME/POC--Darien Dash (201-816-1285).
NO WAIVER. The failure of either Party to insist upon or enforce strict
performance by the other Party of any provision of this Agreement or to exercise
any right under this Agreement shall not be construed as a waiver or
relinquishment to any extent of such Party's right to assert or rely upon any
such provision or right in that or any other instance; rather, the same shall be
and remain in full force and effect.
RETURN OF INFORMATION. Upon the expiration or termination of this Agreement,
each Party shall, upon the written request of the other Party, return or destroy
(at the option of the Party receiving the request) all confidential information,
documents, manuals and other materials specified the other Party.
SURVIVAL. Sections VI, VII, VIII IX, X, XI and XII of this Exhibit shall survive
the completion, expiration, termination or cancellation of this Agreement.
ENTIRE AGREEMENT. This Agreement sets forth the entire agreement and supersedes
any and all prior agreements of the Parties with respect to the transactions set
forth herein. Neither Party shall be bound by, and each Party specifically
objects to, any term, condition or other provision which is different from or in
addition to the provisions of this Agreement (whether or not it would materially
alter this Agreement) and which is proffered by the other Party in any
correspondence or other document, unless the Party to be bound thereby
specifically agrees to such provision in writing.
AMENDMENT. No change, amendment or modification of any provision of this
Agreement shall be valid unless set forth in a written instrument signed by the
Party subject to enforcement of such amendment.
FURTHER ASSURANCES. Each Party shall take such action (including, but not
limited to, the execution, acknowledgment and delivery of documents) as may
reasonably be requested by any other Party for the implementation or continuing
performance of this Agreement.
ASSIGNMENT. Neither Party shall assign this Agreement or any right, interest or
benefit under this Agreement without the prior written consent of the other
Party. Assumption of the Agreement by any successor to POC (including, without
limitation, by way of merger or consolidation) shall be subject to CompuServe's
prior written approval. Subject to the foregoing, this Agreement shall be fully
binding upon, inure to the benefit of and be enforceable by the Parties hereto
and there respective successors and assigns. Notwithstanding the above, either
Party may assign this Agreement in the event of a merger, a sale of
substantially all of the Party's business, assets or stock provided, however,
that the successor in interest shall be liable to the other Party of all
obligations under this Agreement.
CONSTRUCTION; SEVERABILITY. In the event that any provision of this Agreement
conflicts with the law under which this Agreement is to be construed or if any
such provision is held invalid by a court with jurisdiction over the Parties to
this Agreement, (i) such provision shall be deemed to be restated to reflect as
nearly as possible the original intentions of the Parties in accordance with
applicable law, and (ii) the remaining terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect.
REMEDIES. Except where otherwise specified, the rights and remedies granted to a
Party under this Agreement are cumulative and in addition to, and not in lieu
of, any other rights or remedies which the Party may possess at law or in
equity.
APPLICABLE LAW; JURISDICTION. This Agreement shall be interpreted, construed and
enforced in all respects in accordance with the laws of the State of Ohio except
for its conflicts of laws principles. Each Party irrevocably consents to the
non-exclusive jurisdiction of the courts of the State of Ohio and the federal
courts situated in the State of Ohio, in connection with any action to enforce
the provisions of this Agreement, to recover damages or other relief for breach
or default under this Agreement, or otherwise arising under or by reason of this
Agreement.
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EXPORT CONTROLS. Both parties shall adhere to all applicable laws, regulations
and rules relating to the export of technical data and shall not export or
re-export any technical data, any products received from the other Party or the
direct product of such technical data to any proscribed country listed in such
applicable laws, regulations and rules unless properly authorized.
HEADINGS. The captions and headings used in this Agreement are inserted for
convenience only and shall not affect the meaning or interpretation of this
Agreement.
COUNTERPARTS. This Agreement may be executed in counterparts, each of which
shall be deemed an original and all of which together shall constitute one and
the same document.
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EXHIBIT D
---------
HOUSE ADVERTISING SUPPRESSION CRITERIA
--------------------------------------
ACTIVES
- -------
Single Family Dwelling Unit (SFDU): address only
Multiple Family Dwelling Unite (MFDU): last name and address
Business Address (BA) : last name and address
CANCELS
SFDU: last name and address
MFDU: last name and address
BA: last name and address
GENERAL
- -------
Names will be suppressed in the following order: (i) AOL actives (with the most
recent joins within this group suppressed first); (ii) AOL cancels (with the
most recent cancels within this group suppressed first); (iii) CompuServe
actives (with the most recent joins within this group suppressed first); and
(iv) CompuServe cancels (with the most recent cancels within this group
suppressed first).
EXHIBIT E
---------
INVESTOR RIGHTS AGREEMENT (To be provided)
EXECUTION VERSION
SUBSCRIPTION AGREEMENT
BETWEEN
DME INTERACTIVE HOLDINGS, INC.
AND
AMERICA ONLINE, INC.
DATED AS OF FEBRUARY 2, 2000
<PAGE>
SUBSCRIPTION AGREEMENT
This SUBSCRIPTION AGREEMENT, dated as of February 2, 2000, among DME
INTERACTIVE HOLDINGS, INC., a Delaware corporation (the "COMPANY") and AMERICA
ONLINE, INC., a Delaware corporation (the "INVESTOR").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the parties hereto are, contemporaneously with entering into
this Agreement, entering into a Strategic Agreement (the "STRATEGIC AGREEMENT").
WHEREAS, on the terms and conditions set forth herein and as partial
consideration for Investor and its wholly-owned subsidiary, CompuServe
Interactive Services, Inc. ("CompuServe"), having executed and delivered the
Strategic Agreement to the Company and its wholly-owned subsidiary, Places of
Color, Inc., the Company wishes to issue and sell to the Investor, and the
Investor wishes to subscribe for and purchase from the Company, one million two
hundred fifty thousand (1,250,000) shares of Company common stock, par value
$0.001 per share ("Common Stock");
WHEREAS, the parties hereto believe it is in their mutual best interest
to enter into certain other agreements, as set forth herein; and
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements hereinafter set forth, the parties hereby agree as
follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. CERTAIN DEFINED TERMS. As used in this Agreement, the
following terms shall have the following meanings:
"AFFILIATE" means, with respect to any specified Person, any other
Person that directly, or indirectly through one or more intermediaries,
Controls, is Controlled by, or is under common Control with, such specified
Person.
"AGREEMENT" means this Subscription Agreement, dated as of February 2,
2000.
"BUSINESS DAY" means any day except a Saturday, Sunday or other day on
which commercial banks in the State of New York are authorized or required by
law or executive order to close.
<PAGE>
"CAPITAL STOCK" means, with respect to any Person at any time, any and
all shares, interests, participations or other equivalents (however designated,
whether voting or non-voting) of capital stock, partnership interests (whether
general or limited) or equivalent ownership interests in such Person.
"CLOSING" has the meaning specified in Section 2.02.
"CLOSING REPRESENTATIONS" means the representations and warranties of
the Company contained in Article III of this Agreement.
"COMMISSION" means the Securities and Exchange Commission.
"COMMON STOCK" has the meaning specified in the Preamble.
"COMPANY" has the meaning specified in the Preamble.
"CONTROL" (including the terms "CONTROLLED BY" and "UNDER COMMON
CONTROL WITH") means the possession, directly or indirectly or as trustee or
executor, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities, as
trustee or executor, by contract or credit arrangement or otherwise.
"EXCHANGE ACT" means the United States Securities Exchange Act of 1934,
as amended, and the rules and regulations promulgated thereunder.
"HSR ACT" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
"INDEMNIFIABLE LOSSES" has the meaning specified in Section 7.02(d)(i).
"INVESTOR" has the meaning specified in the Preamble.
"LOSSES" has the meaning specified in Section 7.02(d)(ii).
"MATERIAL ADVERSE EFFECT" has the meaning specified in Section 3.01.
"PERMITS" has the meaning specified in Section 3.05(b)(i).
"PERSON" means any individual, partnership, firm, corporation,
association, trust, unincorporated organization or other entity, as well as any
syndicate or group that would be deemed to be a Person under Section 13(d)(3) of
the Securities Exchange Act of 1934, as amended.
"SEC REPORTS" has the meaning specified in Section 3.06(a).
2
<PAGE>
"SECURITIES ACT" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"STRATEGIC AGREEMENT" has the meaning specified in the Recitals.
"SUBSIDIARY" means any and all corporations, partnerships, joint
ventures, associations and other entities Controlled by the Company directly or
indirectly through one or more intermediaries.
"TERMINATION DATE" has the meaning specified in Section 8.01(a)(ii).
ARTICLE II
PURCHASE AND SALE
SECTION 2.01. SALE OF COMMON STOCK; OPTION TO PURCHASE COMMON STOCK.
Upon the terms and subject to the conditions set forth in this Agreement, the
Company shall issue and deliver to the Investor, and the Investor shall accept
from the Company, 1,250,000 shares of Common Stock (the "Subscription Shares"),
in consideration for (i) Investor's execution and delivery of the Strategic
Agreement, and (ii) Investor's payment to the Company of a nominal aggregate
purchase price of one thousand two hundred fifty Dollars ($1,250.00).
SECTION 2.02. CLOSING. Upon the terms and subject to the conditions set
forth in this Agreement, the transactions provided for in Section 2.01 shall
take place at a closing (the "CLOSING") to be held at 10:00 a.m. Virginia time
on the later of February 2, 2000 or the Business Day following the satisfaction
or waiver of all conditions to the obligations of the parties set forth in
Article V, or at such other time or on such other date as the parties may
mutually agree upon.
SECTION 2.03. CLOSING DELIVERIES BY THE COMPANY. (a) At the Closing,
the Company shall deliver to the Investor:
(a) a certificate evidencing 1,250,000 shares of Common Stock in
definitive form and registered in the name of the Investor;
(b) a certificate from the Company, signed by a duly authorized
officer, to the effect that the Company's Closing Representations are true and
correct as of the Closing, with the same force and effect as if made on the date
of the Closing, and that all covenants and agreements of the Company contained
in this Agreement to be complied with on or prior to the Closing have been
complied with; and
(c) true and complete copies, certified by the Secretary of the
Company, of the Certificate of Incorporation and By-laws of the Company and of
the resolutions duly and validly adopted by its Board of Directors, evidencing
their authorization of the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby.
3
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SECTION 2.04. CLOSING DELIVERIES BY THE INVESTOR. At the Closing:
(a) the Investor shall pay $1,250 in immediately available funds to an
account designated in writing by the Company on or before the date of the
Closing; and
(b) the Investor shall deliver a certificate, signed by a duly
authorized officer, to the effect that the representations and warranties of
such party contained in Article IV of this Agreement are true and correct as of
the Closing, with the same force and effect as if made on the date of the
Closing, and that all covenants and agreements of such party contained in this
Agreement to be complied with on or prior to the Closing have been complied with
and confirming, with respect to the shares of Common Stock to be purchased at
the Closing, the understandings and statements contained in Section 6.01.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Investor as follows:
SECTION 3.01. DUE ORGANIZATION AND AUTHORITY. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has all necessary legal power and authority to
enter into this Agreement, to carry out its obligations hereunder, and to
consummate the transactions contemplated hereby. The Company is duly licensed or
qualified to do business and is in good standing in each jurisdiction in which
the properties owned or leased by it or the operation of its business makes such
licensing or qualification necessary, except to the extent that the failure to
be so licensed or qualified would not have a material adverse effect on the
financial condition, business or operations of the Company and its Subsidiaries
taken as a whole (a "MATERIAL ADVERSE EFFECT") or prevent or materially delay
the consummation of the transactions contemplated by this Agreement. The
execution and delivery of this Agreement by the Company, the performance by the
Company of its obligations hereunder, and the consummation by the Company of the
transactions contemplated hereby have been duly authorized by all requisite
action on the part of the Company. This Agreement has been duly executed and
delivered by the Company, and (assuming due authorization, execution and
delivery by the other parties hereto and thereto) this Agreement constitutes a
legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms.
SECTION 3.02. CAPITAL STOCK OF COMPANY. The Common Stock to be issued
by the Company pursuant to this Agreement has been duly authorized and, when
issued and delivered in accordance with the terms of this Agreement, will have
been validly issued and will be fully paid and nonassessable. No Person has any
preemptive or similar rights with respect to the Subscribed Shares, and neither
the parties hereto nor subsequent holders in due course of such Subscribed
Shares will be entitled to any such preemptive or similar rights. The authorized
capital stock of the Company consists of: (a) 30,000,000 shares of Common Stock,
of which 24,723,666 shares were issued and outstanding on January 15, 2000; and
(b) no shares of preferred stock.
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SECTION 3.03. NO CONFLICT. Assuming that all consents, approvals,
authorizations and other actions described in Section 3.04 have been obtained,
the execution, delivery and performance of this Agreement by the Company do not
and will not (a) violate, conflict with or result in the breach of any provision
of its Certificate of Incorporation or By-laws, (b) conflict with or violate any
law, governmental regulation or governmental order applicable to it or any of
its assets, properties or businesses or (c) conflict with, result in any breach
of, constitute a default (or event which with the giving of notice or lapse of
time, or both, would become a default) under, require any consent under, or give
to others any rights of termination, amendment, acceleration, suspension,
revocation or cancellation of, or result in the creation of any encumbrance on
any of the Company's assets or properties pursuant to, any note, bond, mortgage
or indenture, contract, agreement, lease, sublease, license, permit, franchise
or other instrument or arrangement to which the Company is a party or by which
any of its assets or properties is bound or affected; except to the extent that
any conflict under (b) or (c) above would not have a Material Adverse Effect or
prevent or materially delay the consummation of the transactions contemplated by
this Agreement.
SECTION 3.04. GOVERNMENTAL CONSENTS AND APPROVALS. The execution,
delivery and performance of this Agreement by the Company do not and will not
require any consent, approval, authorization or other order of, action by,
filing with or notification to, any governmental authority.
SECTION 3.05. COMPLIANCE WITH LAWS; LITIGATION. (a) The Company is in
compliance with all requirements of applicable law, all applicable requirements
of the principal trading market where the Company's securities are traded and
all orders issued by any court or governmental authority against the Company,
except to the extent that any such failure to so comply would not have a
Material Adverse Effect or prevent or materially delay the consummation of the
transactions contemplated by this Agreement.
(b) (i) The Company has all material licenses, permits and approvals of
any governmental authority (collectively, "PERMITS") that are necessary for the
conduct of the business of the Company; (ii) such Permits are in full force and
effect; and (iii) to the Company's best knowledge no material violations are or
have been recorded in respect of any Permit.
(c) Except as set forth in the SEC Reports filed prior to the date of
this Agreement, there is no pending or, to the knowledge of the Company,
threatened action, suit or proceeding to which the Company or any of its
subsidiaries is a party, before or by any court or governmental agency or body,
that could reasonably be expected to result in a Material Adverse Effect or to
prevent or materially delay the consummation of the transactions contemplated by
this Agreement.
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SECTION 3.06. SEC FILINGS; FINANCIAL STATEMENTS; ABSENCE OF UNDISCLOSED
LIABILITIES. (a) The Company has filed all forms, reports and documents required
to be filed by it with the Commission ("SEC REPORTS") since its initial public
offering, including (but not limited to) its registration statement on Form
SB-2. Except as set forth in the SEC Reports filed prior to the date of this
Agreement, as of the respective dates they were filed (or if amended or
superseded by a filing prior to the date of this Agreement, on the date of such
amending or superseding filing), (i) the SEC Reports were prepared in all
material respects in accordance with the requirements of the Securities Act or
the Exchange Act, as the case may be, and (ii) none of the SEC Reports contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading. No Subsidiary of the Company is required to file any form, report or
other document with the Commission.
(b) Each of the consolidated financial statements (including, in each
case, any notes and schedules thereto) contained in the SEC Reports complied as
to form with the applicable accounting requirements and rules and regulations of
the Commission and was prepared in accordance with United States generally
accepted accounting principles applied on a consistent basis throughout the
periods indicated (except as may be indicated in the notes thereto or, in the
case of unaudited financial statements, as permitted by the rules and
regulations of the Commission), and each presented fairly, in all material
respects, the consolidated financial position of the Company and its
consolidated subsidiaries at the respective dates thereof and their results of
operations and cash flows for the respective periods indicated therein, all in
accordance with United States generally accepted accounting principles (subject,
in the case of unaudited statements, to normal and recurring year-end
adjustments which were not and are not expected, individually or in the
aggregate, to be material in amount).
(c) Except for liabilities and obligations reflected on the June 17,
1999 consolidated balance sheet of Digital Mafia Entertainment, LLC (including
the notes thereto) included in the Company's amended Form 8-K filed June 26,
1999, reflected on the August 31, 1999 consolidated balance sheet of the Company
(including the notes thereto) included in the Company's Form 10-QSB filed
October 15, 1999, liabilities and obligations disclosed in SEC Reports filed
prior to the date of this Agreement and other liabilities and obligations
incurred in the ordinary course of business since June 17, 1999 or that would
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect, neither the Company nor any of its subsidiaries has any material
liabilities or obligations of any nature (whether accrued, absolute, contingent
or otherwise).
SECTION 3.07. NO MATERIAL ADVERSE CHANGE. Except as otherwise disclosed
in the SEC Reports filed prior to the date hereof, since June 17, 1999, there
has not been a material adverse change in the financial condition, business or
operations of the Company and its subsidiaries taken as a whole.
SECTION 3.08. BROKERS. No broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of the Company or any of its Affiliates.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
THE INVESTOR
The Investor represents and warrants to the Company as follows:
SECTION 4.01. ORGANIZATION AND AUTHORITY. Such party is a corporation
duly organized, validly existing and in good standing under the laws of the
state of its incorporation and has all necessary legal power and authority to
enter into this Agreement, to carry out its obligations hereunder, and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement by such party, the performance by it of its obligations
hereunder, and the consummation by it of the transactions contemplated hereby
have been duly authorized by all requisite action on its part. This Agreement
has been duly executed and delivered by such party, and (assuming due
authorization, execution and delivery by the other parties hereto) this
Agreement constitutes a legal, valid and binding obligation of such party,
enforceable against it in accordance with its terms.
SECTION 4.02. NO CONFLICT. Assuming that all consents, approvals,
authorizations and other actions described in Section 4.03 have been obtained,
the execution, delivery and performance of this Agreement by such party do not
and will not (a) violate, conflict with or result in the breach of any provision
of its Charter or By-laws (or similar organizational documents), (b) conflict
with or violate any law, governmental regulation or governmental order
applicable to such party or any of its assets, properties or businesses or (c)
conflict with, result in any breach of, constitute a default (or event which
with the giving of notice or lapse of time, or both, would become a default)
under, require any consent under, or give to others any rights pursuant to, any
contract, agreement or arrangement by which such party is bound; except to the
extent that any conflict under (b) or (c) above would not prevent or materially
delay the consummation of the transactions contemplated by this Agreement.
SECTION 4.03. GOVERNMENTAL CONSENTS AND APPROVALS. The execution,
delivery and performance of this Agreement by the Investor do not and will not
require any consent, approval, authorization or other order of, action by,
filing with or notification to, any governmental authority.
SECTION 4.04. BROKERS. No broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of the Investor or any of its Affiliates.
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ARTICLE V
CONDITIONS TO THE CLOSING
SECTION 5.01. CONDITIONS TO THE CLOSING. The obligations of each party
to this Agreement to consummate the transactions contemplated by Section 2.01
shall be subject to the fulfillment, at or prior to the Closing, of each of the
following conditions:
(a) REPRESENTATIONS, WARRANTIES AND COVENANTS. (i) In the case of the
Investor, the Company's Closing Representations shall have been true and correct
when made and shall be true and correct as of the Closing, with the same force
and effect as if made on the date of the Closing, and all covenants and
agreements of the Company contained in this Agreement to be complied with on or
prior to the Closing shall have been complied with in all material respects.
(ii) In the case of the Company, the representations and warranties of
the Investor contained in Article IV and Section 6.01 of this Agreement
shall have been true and correct when made and shall be true and correct as
of the Closing, with the same force and effect as if made on the date of
the Closing, and all covenants and agreements of the Investor contained in
this Agreement to be complied with on or prior to the Closing shall have
been complied with in all material respects.
(b) NO PROHIBITION. None of the transactions contemplated hereby shall
have been prohibited by any applicable law, court order or governmental
regulation.
ARTICLE VI
TRANSFER OF SHARES
SECTION 6.01. PRIVATE PLACEMENT. (a) The Investor understands that: (i)
the purchase of the Subscribed Shares involves a high degree of risk, an
investment in the Company is highly speculative and the Investor could sustain
the loss of its entire investment; (ii) the offering and sale of the Common
Stock hereunder are intended to be exempt from registration under the Securities
Act pursuant to Section 4(2) of the Securities Act; (iii) the Subscribed Shares
have not been registered under the Securities Act or any state or foreign
securities laws, and may not be offered, sold or transferred by the Investor
unless registered under the Securities Act and applicable state and foreign
securities laws, or an exemption from such registration is available; and (iv)
there can be no assurance that such Investor will be able to sell or dispose of
the Common Stock.
(b) The Investor hereby confirms to the Company that: (i) the
Subscribed Shares are being acquired for the Investor's own account, for
investment and without a view to the distribution or resale thereof or any
interest therein to others; (ii) the Investor is an "accredited investor" as
such term is defined in Regulation D, as amended, under the Securities Act;
(iii) the Investor has sufficient knowledge and experience in financial and
business matters so as to be capable of evaluating the merits and risks of its
investment in Subscribed Shares, and is capable of bearing the economic risks of
such investment, including a complete loss of its investment in the Subscribed
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Shares; (iv) the Investor has been furnished by the Company with all information
regarding the Company which it had requested or desired to know; that all
documents which could be reasonably provided have been made available for its
inspection and review; that it has been afforded the opportunity to ask
questions of and receive answers from duly authorized officers or other
representatives of the Company concerning the terms and conditions of the
offering, the use of proceeds from this offering and any additional information
which it had requested; and (v) except as set forth in this Agreement, the SEC
Reports and the Company Disclosure Schedule, no representations or warranties
have been made to the Investor by the Company or any agent, employee or
affiliate of the Company and in entering into this transaction, the Investor is
not relying on any information, other than that contained in this Agreement, the
SEC Reports and the Company Disclosure Schedule and the results of independent
investigation by the Investor.
SECTION 6.02. LEGENDS. (a) The Company shall affix to each certificate
evidencing shares of Subscribed Shares a legend in substantially the following
form:
"THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE
SECURITIES LAW AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED
UNLESS EITHER (1) SUCH SHARES ARE REGISTERED UNDER THE SECURITIES ACT
AND APPLICABLE STATE SECURITIES LAWS OR (2) AN EXEMPTION FROM SUCH
REGISTRATION IS AVAILABLE AND LEGAL COUNSEL OF THE HOLDER OF SUCH
SHARES (WHICH COUNSEL IS REASONABLY SATISFACTORY TO THE COMPANY)
PROVIDES AN OPINION TO SUCH EFFECT TO THE COMPANY."
ARTICLE VII
ADDITIONAL AGREEMENTS
SECTION 7.01. HSR. Each of the parties hereto shall use reasonable
efforts to cause any waiting period (and any extension thereof) under the HSR
Act, applicable to the acquisition of the Subscribed Shares to expire or be
terminated prior to the time of such conversion or exercise and shall cooperate
in making any filings with the appropriate governmental entities in connection
therewith.
SECTION 7.02. SURVIVAL; INDEMNIFICATION. (a) The Closing
Representations shall survive for a period of eighteen (18) months from the date
hereof.
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(b) The Company shall indemnify and hold harmless the Investor from and
against any and all Indemnifiable Losses (as defined below); provided, however,
that no claim with respect to Indemnifiable Losses may be asserted unless
written notice of such claim describing in detail the facts and circumstances
with respect to the subject matter of such claim is received by the Company on
or prior to the date which is eighteen (18) months from the date hereof. The
Company is not making any representations and warranties other than the Closing
Representations in connection with the Closing.
(c) For purposes of this Section 7.02: (i) "INDEMNIFIABLE LOSSES" means
with respect to the shares of Subscribed Shares purchased by the Investor at the
Closing, Losses arising out of the failure of the Closing Representations to be
true and correct as of the date of the Closing, provided, however, that in no
event shall the amount of such Indemnifiable Losses exceed the purchase price of
such shares of Subscribed Shares; and (ii) "LOSSES" means any and all losses,
liabilities, damages, costs and expenses actually suffered or incurred by the
Investor (including without limitation reasonable attorneys' fees and expenses),
but shall not include any consequential damages or any Losses that could have
been avoided if the Investor had taken reasonable steps to mitigate its Losses.
SECTION 7.03. OTHER ACTION. Each of the parties hereto shall use
reasonable efforts to take, or cause to be taken, all appropriate action, and to
do, or cause to be done, all things necessary, proper or advisable under
applicable laws to consummate and make effective the transactions contemplated
hereunder, including, without limitation, using reasonable efforts to obtain all
licenses, permits, consents, approvals, authorizations, qualifications and
orders of the competent governmental entities.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. TERMINATION. (a) This Agreement may be terminated and the
transactions contemplated by this Agreement may be abandoned at any time prior
to the Closing, as follows:
(i) by mutual written consent of each of the Investor and the Company;
(ii) by either the Investor or the Company if the Closing shall not
have occurred on or before March 31, 2000 (the "TERMINATION DATE");
PROVIDED, HOWEVER, that the right to terminate this Agreement under this
Section 8.01(a)(ii) shall not be available to any party whose failure to
fulfill any obligation under this Agreement has been the cause of, or
resulted in, the failure of the Closing to occur on or before the
Termination Date; or
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(iii) by either the Investor or the Company, if any governmental entity
(A) shall have issued an order or taken any other action permanently
restraining, enjoining or otherwise prohibiting the transactions
contemplated by this Agreement, and such order or other action shall have
become final and nonappealable, or (B) shall have failed to issue an order
or to take any other action necessary to fulfill the conditions to the
Closing and such denial of a request to issue such order or take such other
action shall have become final and nonappealable.
(b) In the event of termination of this Agreement pursuant to Section
8.01, this Agreement shall forthwith become void and there shall be no liability
under this Agreement on the part of the Investor or the Company or any of their
respective officers or directors and all rights and obligations of each party
hereto shall cease, except (a) the provisions of Sections 8.02 and 8.04 shall
survive such termination and (b) nothing herein shall relieve any party from
liability for any willful breach of any representation, warranty, covenant or
other agreement in this Agreement occurring prior to termination.
SECTION 8.02. EXPENSES. Except as otherwise specified in this
Agreement, all costs and expenses, including, without limitation, fees and
disbursements of counsel, financial advisors and accountants, incurred in
connection with this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such costs and expenses, whether or not the Closing
shall have occurred.
SECTION 8.03. NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given or made (and
shall be deemed to have been duly given or made upon receipt) by delivery in
person, by courier service, by telecopy (confirmed by courier service or by
mail) or by registered or certified mail (postage prepaid, return receipt
requested) to the respective parties at the following addresses (or at such
other address for a party as shall be specified in a notice given in accordance
with this Section 8.03):
(a) if to the Company:
DME Interactive Holdings, Inc.
519 East Palisade
Englewood Cliffs, New Jersey 07632
Telecopy No. (201) 816-1564
Attention: Darien Dash
with a copy to:
Bryan Cave LLP
245 Park Avenue
New York, New York 10167
Telecopy No. (212) 692-1900
Attention: Paul Williams, Jr.
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(b) if to the Investor:
America Online, Inc.
22000 AOL Way
Dulles, VA 20166
Telecopy No.: (703) 265-2208
Attention: General Counsel
SECTION 8.04. PUBLIC ANNOUNCEMENTS. Except as required by law,
governmental regulation or by the requirements of any securities exchange on
which the securities of a party hereto are listed, no party to this Agreement
shall make, or cause to be made, any press release or public announcement in
respect of this Agreement or the transactions contemplated hereby, or disclosure
of this Agreement or the Strategic Agreement or any of their terms to any third
party (including any potential investor) or otherwise communicate with any news
media without the prior written consent of the other party, and the parties
shall cooperate as to the timing and contents of any such press release or
public announcement.
SECTION 8.05. HEADINGS; INTERPRETATION. (a) The descriptive headings
contained in this Agreement are for convenience of reference only and shall not
affect in any way the meaning or interpretation of this Agreement.
(b) Whenever used in this Agreement, any noun or pronoun shall be
deemed to include both the singular and plural and to cover all genders; and the
words "herein," "hereof" and "hereunder" and words of similar import shall refer
to this Agreement as a whole.
SECTION 8.06. SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any law,
governmental regulation or public policy, all other terms and provisions of this
Agreement shall nevertheless remain in full force and effect so long as the
economic or legal substance of the transactions contemplated hereby is not
affected in any manner materially adverse to any party. Upon such determination
that any term or other provision is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner in order that the transactions contemplated
hereby be consummated as originally contemplated to the greatest possible
extent.
SECTION 8.07. ENTIRE AGREEMENT. This Agreement, together with Strategic
Agreement and the Investor Rights Agreement between the Company and the
Investor, constitutes the entire agreement of the parties hereto with respect to
the subject matter hereof and thereof and supersedes all prior agreements and
undertakings, both written and oral, with respect to the subject matter hereof.
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SECTION 8.08. ASSIGNMENT. This Agreement shall not be assigned by
either party without the express written consent of the other party hereto
(which consent may be granted or withheld in the sole discretion of any party);
provided, however, that the Investor may, without the consent of the Company,
assign all or a portion of its rights hereunder to any Person to whom the
Investor would be permitted to transfer shares of Subscribed Shares without the
consent of the Company.
SECTION 8.09. AMENDMENT. This Agreement may not be amended or modified
except by an instrument in writing signed by, or on behalf of, each of the
parties.
SECTION 8.10. GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware.
SECTION 8.11. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, and by the different parties hereto in separate counterparts,
each of which when executed shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement. Delivery of an
executed counterpart of this Agreement by telecopier shall be effective as
delivery of a manually executed counterpart of this Agreement.
SECTION 8.12. NON-WAIVER; CUMULATIVE REMEDIES. No course of dealing or
any delay or failure to exercise any right hereunder on the part of the Investor
or the Company shall operate as a waiver of such right or otherwise prejudice
the rights, powers or remedies of the Investor or the Company. No single or
partial waiver by the Investor or the Company of any provision of this Agreement
or of any breach or default hereunder or of any right or remedy shall operate as
a waiver of any other provision, breach, default right or remedy or of the same
provision, breach, default right or remedy on a future occasion. The rights and
remedies provided in this Agreement are cumulative and are in addition to all
rights and remedies which the Investor or the Company may have in law or in
equity or by statute or otherwise.
SECTION 8.13. WAIVER OF JURY TRIAL. Each of the parties hereto
irrevocably and unconditionally waives trial by jury in any legal action or
proceeding relating to this Agreement or the transactions contemplated hereby
and for any counterclaim therein.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized signatories hereunto duly
authorized as of the date first above written.
DME INTERACTIVE HOLDINGS, INC.
By /s/ DARIEN DASH
------------------------
Name: Darien Dash
Title: President
AMERICA ONLINE, INC.
By /s/ DAVID COLBURN
-------------------------
Name: David Colburn
Title: President-Business Affairs
14
CONFIDENTIAL
EXECUTION VERSION
CONFIDENTIAL
THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE BEEN ACQUIRED FOR INVESTMENT
AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR APPLICABLE
STATE LAWS. SUCH SECURITIES MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR
HYPOTHECATED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID
ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR AN APPLICABLE EXEMPTION FROM
SUCH REGISTRATION REQUIREMENTS.
THIS WARRANT MAY NOT BE EXERCISED EXCEPT IN COMPLIANCE WITH ALL APPLICABLE
FEDERAL AND STATE SECURITIES LAWS TO THE REASONABLE SATISFACTION OF THE COMPANY
AND LEGAL COUNSEL FOR THE COMPANY.
WARRANT TO PURCHASE
4,000,000 SHARES OF COMMON STOCK
OF
DME INTERACTIVE HOLDINGS, INC.
A DELAWARE CORPORATION
ISSUED
FEBRUARY 2, 2000
THIS CERTIFIES THAT, for value received, America Online, Inc. (as the
context requires, "AOL" or the "WARRANTHOLDER") is entitled to purchase, on the
terms hereof, four million (4,000,000) shares (subject to adjustment as set
forth herein, "WARRANT STOCK"), of common stock, par value $.001 per share
("COMMON STOCK") of DME Interactive Holdings, Inc., a Delaware corporation (the
"COMPANY"), at a purchase price and upon the terms and conditions as set forth
herein.
1. EXERCISE OF WARRANT.
The terms and conditions upon which this Warrant may be exercised and
the shares of Common Stock covered hereby that may be purchased, are as follows:
1.1. EXERCISE.
(a) This Warrant is being issued pursuant to the Strategic
Agreement, dated as of the date hereof (as same may be amended, the
"STRATEGIC AGREEMENT"), between AOL, CompuServe Interactive Services,
Inc. ("COMPUSERVE"), the Company and Places of Color, Inc
(collectively, the "PARTIES"). All terms used but not defined herein
shall have the meanings set forth in the Strategic Agreement. This
Warrant may be exercised, in whole or in part, with respect to all of
the Warrant Stock, at any time or from time to time on or after that
date which is eighteen (18) months from the Launch Date (as such term
is defined in the Strategic Agreement if (i) the Parties agree to
extend the initial eighteen (18) month term of the Strategic Agreement
pursuant to Section 9.1 of the Strategic Agreement or (ii) AOL or
CompuServe enters into an agreement substantially similar to the
Strategic Agreement with the Company or any of its Affiliates (as such
term is defined in the rules and regulations promulgated under the
Securities Act of 1933, as amended).
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(b) Notwithstanding the foregoing, this Warrant may not be
exercised under any circumstances after 5:00 p.m., New York, New York
time on that date which is three (3) years from the date this Warrant
may be exercised pursuant to Section .1(a) above (the "TERMINATION
DATE"), after which time this Warrant shall terminate and shall be void
and of no further force of effect.
1.2. EXERCISE PRICE. The purchase price for the shares of Common Stock
to be issued upon exercise of this Warrant shall be $8.563 per share, subject to
adjustment as set forth herein (the "EXERCISE PRICE").
1.3. METHOD OF EXERCISE. The exercise of the purchase rights evidenced
by this Warrant shall be effected by (a) the surrender of this Warrant, together
with a duly executed copy of the form of Election to Purchase attached hereto,
to the Company at its principal office and (b) the delivery of the Exercise
Price multiplied by the number of shares for which the purchase rights hereunder
are being exercised, payable (x) by certified check, corporate check, or wire
transfer of immediately available funds payable to the Company's order or (y) on
a net basis, such that, without the exchange of any funds, the Warrantholder
receives that number of shares otherwise issuable (or other consideration
payable) upon exercise of this Warrant less that number of shares of Warrant
Stock having an aggregate fair market value (as defined below) at the time of
exercise (I.E., the date a duly executed Election to Purchase is delivered to
the Company) equal to the aggregate Exercise Price that would otherwise have
been paid by the Warrantholder for the shares of the Warrant Stock issuable. In
connection with such exercise the holder shall, if requested by the Company,
include confirmation of the accuracy of the representations set forth in Section
12 and otherwise as reasonably requested by the Company to evidence compliance
with any applicable securities laws as of the date of exercise. For purposes of
the foregoing, "FAIR MARKET VALUE" of the Warrant Stock on any date shall be the
average of the Quoted Prices of the Common Stock of the Company for 5
consecutive trading days ending the trading day prior to such date. The "QUOTED
PRICE" of the Common Stock as reported by Nasdaq or, if the principal trading
market for the Common Stock is then a securities exchange, the last reported
sales price of the Common Stock on such exchange which shall be consolidated
trading if applicable to such exchange, or if neither so reported or listed, the
last reported bid price of the Common Stock. In the absence of quotation or
listing, such determination as to "Quoted Price" shall be made in good faith by
the Board of Directors of the Company after taking into consideration all
factors it deems appropriate, including, without limitation, recent sale and
offer prices of the capital stock of the Company in private transactions
negotiated at arm's length.
1.4. ISSUANCE OF SHARES. In the event that the purchase rights
evidenced by this Warrant are exercised in whole or in part in accordance with
the terms of this Warrant, a certificate or certificates for the purchased
shares shall be issued to the Warrantholder as soon as practicable. The Warrant
Stock shall be stamped or imprinted with a legend in substantially the following
form:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
OR APPLICABLE STATE LAWS. THIS SECURITY MAY NOT BE SOLD, TRANSFERRED,
PLEDGED OR HYPOTHECATED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR AN
APPLICABLE EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS."
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In the event the purchase rights evidenced by this Warrant are
exercised in part, the Company will also issue to the Warrantholder a new
warrant within a reasonable time representing the unexercised purchase rights.
1.5 EXERCISE OF WARRANTS ON TERMINATION DATE. If as of the Termination
Date the Warrants are in the money based on the cash or other property to be
received, such exercise shall take place automatically with respect to all then
outstanding and exercisable (but not exercised) Warrants (the "TERMINATION DATE
EXERCISE"), on a net exercise basis, immediately prior to the Termination Date;
PROVIDED, HOWEVER, that the Company may condition such exercise on the delivery
by the Warrantholder of a duly completed Election to Purchase and the reasonable
satisfaction of the Company that all applicable securities laws have been
complied with, which the Company shall give notice to the Warrantholder of
within ten (10) days prior to the Termination Date. No such Termination Date
Exercise shall take place if such issuance would not comply with applicable
securities laws, whereupon the Termination Date shall occur as scheduled.
2. CERTAIN ADJUSTMENTS.
2.1. STOCK DIVIDENDS. If at any time while this Warrant remains
outstanding and unexpired, the Company pays a dividend or makes a distribution
with respect to the Common Stock payable in shares of Common Stock, then the
Exercise Price shall be adjusted, as of the record date of stockholders
established for such purpose (or if no such record is taken, as at the date of
such payment or distribution), to that price determined by multiplying the
Exercise Price in effect immediately prior to such payment or distribution by a
fraction (A) the numerator of which shall be the total number of shares of
Common Stock outstanding immediately prior to such dividend or distribution, and
(B) the denominator of which shall be the total number of shares of Common Stock
outstanding immediately after such dividend or distribution. The Warrantholder
shall thereafter be entitled to purchase, at the Exercise Price resulting from
such adjustment, the number of shares of Common Stock (calculated to the nearest
whole share) obtained by multiplying the Exercise Price in effect immediately
prior to such adjustment by the number of shares of Common Stock issuable upon
the exercise hereof immediately prior to such adjustment and dividing the
product thereof by the Exercise Price resulting from such adjustment. The
provisions of this Section 2.1 shall not apply under any of the circumstances
for which an adjustment is provided under Sections 2.2, 2.3 or 2.4.
2.2. MERGERS, CONSOLIDATIONS OR SALE OF ASSETS. If at any time while
this Warrant remains outstanding and unexpired, there shall be a capital
reorganization of the shares of the Company's capital stock (other than a
combination, reclassification, exchange or subdivision otherwise provided for
herein), or a merger or consolidation of the Company with or into another
corporation in which the Company is not the surviving corporation (collectively,
a "CORPORATE TRANSACTION"), then lawful provision shall be made so that such
successor corporation or entity shall assume this Warrant such that the
Warrantholder shall thereafter be entitled to receive, upon exercise of this
Warrant, during the period specified in this Warrant and upon payment of the
Exercise Price then in effect, the number of shares of stock or other securities
or property of the successor corporation resulting from such Corporate
Transaction to which a holder of the securities deliverable upon exercise of
this Warrant would have been entitled under the provisions of the agreement in
such Corporate Transaction if this Warrant had been exercised immediately prior
to such Corporate Transaction. Appropriate adjustment (as determined in good
faith by the Company's Board of Directors after taking into consideration all
factors it deems appropriate, including, without limitation, recent sale and
offer prices of the capital stock of the Company in private transactions
negotiated at arm's length) shall be made in the application of the provisions
of this Warrant with respect to the rights and interests of the Warrantholder
after the Corporate Transaction to the end that the provisions of this Warrant
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(including adjustment of the Exercise Price then in effect and the number of
shares of Common Stock issuable under this Warrant) shall be applicable after
the Corporate Transaction, as near as reasonably may be, in relation to any
shares or other property deliverable after the Corporate Transaction upon
exercise of this Warrant. The provisions of this Section 2.2 shall similarly
apply to successive reorganizations, consolidations or mergers.
2.3. RECLASSIFICATION. If the Company at any time shall, by
subdivision, combination or reclassification or securities or otherwise, change
any of the securities issuable under this Warrant into the same or a different
number of securities of any other class or classes, this Warrant shall
thereafter represent the right to acquire such number and kind of securities as
would have been issuable as a result of such change with respect to the
securities issuable under this Warrant immediately prior to such subdivision,
combination, reclassification or other change.
2.4. SUBDIVISION OR COMBINATION OF SHARES. If at any time while this
Warrant remains outstanding and unexpired, the number of shares of Common Stock
outstanding is decreased by a combination of the outstanding shares of Common
Stock, then the Exercise Price shall be proportionately increased in the case of
a combination of such shares, or shall be proportionately decreased in the case
of a subdivision of such shares, and the number of shares of Common Stock
issuable upon exercise of the Warrant shall thereafter be adjusted to equal the
product obtained by multiplying the number of shares of Common Stock issuable
under this Warrant immediately prior to such Exercise Price adjustment by a
fraction (A) the numerator of which shall be the Exercise Price immediately
prior to such adjustment, and (B) the denominator of which shall be the Exercise
Price immediately after such adjustment.
2.5. LIQUIDATING DIVIDENDS, ETC. To the extent permitted under
applicable law, if the Company at any time while the Warrant remains outstanding
and unexpired makes a distribution of its assets to the holders of its Common
Stock as a dividend in liquidation or by way of return of capital or other than
as a dividend payable out of earnings or surplus legally available for dividends
under applicable law or any distribution to such holders made in respect of the
sale of all or substantially all of the Company's assets (other than under the
circumstances provided for in the foregoing Sections 2.1 through 2.4), the
holder of this Warrant shall be entitled to receive upon the exercise hereof, in
addition to the shares of Common Stock receivable upon such exercise, and
without payment of any consideration other than the Exercise Price, an amount in
cash equal to the value of such distribution per share of Common Stock
multiplied by the number of shares of Common Stock which, on the record date for
such distribution, are issuable upon exercise of this Warrant (with no further
adjustment being made following any event which causes a subsequent adjustment
in the number of shares of Common Stock issuable upon the exercise hereof), and
an appropriate provision therefor should be made a part of any such
distribution. The value of a distribution which is paid in other than cash shall
be determined in good faith by the Board of Directors.
2.6. NOTICE OF ADJUSTMENTS. Whenever any of the Exercise Price or the
number of securities purchasable under the terms of this Warrant at that
Exercise Price shall be adjusted pursuant to Section 2 hereof, the Company shall
promptly notify the Warrantholder in writing of such adjustment, setting forth
in reasonable detail the event requiring the adjustment, the amount of the
adjustment, the method by which such adjustment was calculated, and the Exercise
Price and number of shares of Common Stock or other securities issuable at that
Exercise Price after giving effect to such adjustment. Such notice shall be
mailed (by first class and postage prepaid) to the registered Warrantholder. In
the event of:
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(a) The taking by the Company of a record of the holders of any class
of securities of the Company for the purpose of determining the holders thereof
who are entitled to receive any dividend or other distribution, or 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 for which no
adjustment is required by the operation of this Section 2,
(b) Any capital reorganization of the Company, any reclassification or
recapitalization of the capital stock of the Company or any transfer of all or
substantially all of the assets of the Company to any other person or any
consolidation or merger involving the Company for which no adjustment is
required by the operation of this Section 2, or
(c) Any voluntary or involuntary dissolution, liquidation, or
winding-up of the Company, the Company will mail (by first class and postage
prepaid) to the Warrantholder, at its last address at least ten (10) days prior
to the earliest date specified therein as described below, a notice specifying:
(i) 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; and
(ii) The date on which any such reorganization,
reclassification, transfer, consolidation, merger, dissolution,
liquidation or winding-up is expected to become effective and the
record date for determining shareholders entitled to vote thereon.
Failure to give any notice required under this Section 2.6, or any
defect in such notice, shall not affect the legality or validity of the
underlying corporate action taken or transaction entered into by the Company.
3. FRACTIONAL SHARES.
No fractional shares shall be issued in connection with any exercise of
this Warrant. In lieu of the issuance of such fractional share, the Company
shall make a cash payment equal to the then fair market value of such fractional
share as determined under Section 1.3.
4. RESERVATION OF COMMON STOCK.
The Company shall at all times reserve and keep available out of its
authorized but unissued shares of Common Stock, solely for the purpose of
effecting the exercise of this Warrant, a sufficient number of shares of Common
Stock to effect the exercise of the entire Warrant and if at any time the number
of authorized but unissued shares of Common Stock shall not be sufficient to
effect the exercise of the entire Warrant, in addition to such other remedies as
shall be available to the holder of this Warrant, the Company will use its
reasonable efforts to take such corporate action as may, in the opinion of its
counsel, be necessary to increase its authorized but unissued shares of Common
Stock to such number of shares as shall be sufficient for such purposes.
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<PAGE>
5. PRIVILEGE OF STOCK OWNERSHIP.
Other than as set forth herein, prior to the exercise of this Warrant
and the issuance to the Warrantholder of certificates representing the resulting
shares of Common Stock, and except as otherwise provided herein, the
Warrantholder shall not be entitled, by virtue of holding this Warrant, to any
rights of a Stockholder of the Company, including (without limitation) the right
to vote, receive dividends or other distributions or be notified of Stockholder
meetings, and such holder shall not be entitled to any notice or other
communication concerning the business or affairs of the Company, except as
required by law.
6. LIMITATION OF LIABILITY.
No provision hereof, in the absence of affirmative action by the holder
hereof to purchase the securities issuable under this Warrant, and no mere
enumeration herein of the rights of privileges of the holder hereof, shall give
rise to any liability of such holder for the purchase price or as a Stockholder
of the Company, whether such liability is asserted by the Company or by
creditors of the Company.
7. TRANSFERS, EXCHANGES AND REGISTRATION RIGHTS.
(a) This Warrant may be transferred or assigned to any Affiliate (as
such term is defined in the rules and regulations promulgated under the
Securities Act of 1933, as amended) of AOL in whole or in part at any time or
from time to time on or after February 2, 2000, PROVIDED such transfer complies
with all applicable federal and state securities laws and the requirements of
any legend on this Warrant.
(b) The Warrant Stock issuable hereunder shall be entitled to those
registration rights as set forth in that certain Investor Rights Agreement
between the Company and AOL dated as of the date hereof.
8. PAYMENT OF TAXES.
The Company shall pay all stamp or similar issue or transfer taxes
payable in respect of the issue or delivery of the securities issuable under
this Warrant. The Company shall not be required, however, to pay any tax or
other charge imposed in connection with any transfer involved in the issue of
any certificate for shares of the securities issuable under this Warrant in any
name other than that of the Warrantholder, and in such case, the Company shall
not be required to issue or deliver any stock certificate until such tax or
other charge has been paid or it has been established to the Company's
satisfaction that no such tax or other charge is due.
9. NO IMPAIRMENT OF RIGHTS.
The Company hereby agrees that it will not, through the amendment of
its Certificate of Incorporation or otherwise, avoid or seek to avoid the
observance or performance of any of the terms of this Warrant, but will at all
times in good faith assist in the carrying out of all such terms and in the
taking of all such actions as may be necessary or appropriate in order to
protect the rights of the Warrantholder against impairment.
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<PAGE>
10. SUCCESSORS AND ASSIGNS.
The terms and provisions of this Warrant shall be binding upon the
Company and the Warrantholder and their respective successors and assigns.
11. LOSS, THEFT, DESTRUCTION OR MUTILATION OF WARRANT
Upon receipt by the Company of evidence reasonably satisfactory to it
of the loss, theft, destruction or mutilation of this Warrant, and in case of
loss, theft or destruction, upon receipt of an indemnity or security reasonably
satisfactory to the Company, and upon reimbursement to the Company of all
reasonable expenses incidental thereto, and upon surrender and cancellation of
this Warrant, if mutilated, the Company will make and deliver a new warrant of
like tenor and dated as of such cancellation, in lieu of this Warrant.
12. SECURITIES LAW MATTERS.
Warrantholder represents to the Company as follows:
(a) the Warrants and Common Stock to be acquired by Warrantholder
pursuant hereto will be acquired for its own account and not with a view to, or
intention of, distribution thereof in violation of the Securities Act of 1933
(the "SECURITIES ACT") or any applicable state securities laws, and such
securities will not be disposed of in contravention of the Securities Act or any
applicable state securities laws;
(b) the Warrantholder understands that (a) the Warrants and Common
Stock issuable on exercise have not been registered under the Securities Act,
nor qualified under the securities laws of any other jurisdiction, (b) such
securities cannot be resold unless they subsequently are registered under the
Securities Act and qualified under applicable state securities laws, unless the
Company determines that exemptions from such registration and qualification
requirements are available, and (c) this Warrant does not grant the
Warrantholder any right to require such registration or qualification;
(c) Warrantholder is familiar with the term "accredited investor" as
defined in Rule 501 under the Securities Act and investor is an "accredited
investor" within the meaning of such term in Rule 501 under the Securities Act;
(d) Warrantholder is sophisticated in financial matters and the market
for Internet companies and is able to evaluate the risks and benefits of the
investment in the Warrants and Common Stock issuable on exercise;
(e) Warrantholder is able to bear the economic risk of its investment
in the Warrants and the Common Stock issuable on exercise for an indefinite
period of time; and
(f) Warrantholder has had an opportunity to ask questions and receive
answers concerning the terms and conditions of the offering of securities and
has had full access to such other information concerning the Company as investor
has requested.
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13. SATURDAYS, SUNDAYS, HOLIDAYS.
If the last or appointed day for the taking of any action or the
expiration of any right required or granted herein shall be a Saturday or Sunday
or shall be a legal holiday, then such action may be taken or such right may be
exercised on the next succeeding day not a legal holiday.
14. GOVERNING LAW.
This Warrant shall be construed, interpreted, and the rights of the
Company and the Warrantholder determined in accordance with the internal laws of
the State of Delaware, without regard to the conflict of laws provision thereof.
15. BENEFITS OF THIS WARRANT.
Nothing in this Warrant shall be construed to give any person other
than the Company and the registered Warrantholder any legal or equitable right,
remedy or claim.
16. COUNTERPARTS.
This Warrant may be exercised in counterpart with each constitution; an
original and together constituting but one and the same Warrant.
(signature page follows)
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<PAGE>
IT WITNESS WHEREOF, PNV Inc. has caused this Warrant to be duly
executed and delivered to the Warrantholder identified below on the date first
set forth above.
DME Interactive Holdings, Inc.
By: /s/ DARIEN DASH
-----------------------
Chief Executive Officer
Dated: February 2, 2000
Address for Notice:
DME Interactive Holdings, Inc..
519 East Palisade
Englewood Cliffs, New Jersey 07632
Attention: Darien Dash, President & CEO
Fax: (201) 816-1564
ACKNOWLEDGED AND ACCEPTED:
America Online, Inc.
By: /S/ DAVID COLBURN
-------------------
Name: David Colburn
Title: President-Business Affairs
Address for Notice:
22000 AOL Way
Dulles, VA 20166
Attention: General Counsel
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ELECTION TO PURCHASE
--------------------
DME Interactive Holdings, Inc..
519 East Palisade
Englewood Cliffs, New Jersey 07632
Ladies and Gentlemen:
The undersigned hereby elects to purchase, pursuant to the provisions
of the Warrant dated February 2, 2000 held by the undersigned, _________ shares
of the Common Stock of DME Interactive Holdings, Inc., a Delaware corporation.
Payment of the per share purchase price required under such Warrant
[accompanies this Election to Purchase.][shall be made pursuant to the net
exercise provision contained in Section 1.3 of the Warrant.]
The undersigned hereby confirms the representations made in Section 12
of the Warrant are true and correct as of the date of this Election to Purchase.
Dated: ___________________, 200_
____________________________________
Print Name of Warrantholder
By__________________________________
Address: ___________________________________
___________________________________
___________________________________
10
EXECUTION VERSION
CONFIDENTIAL
INVESTOR RIGHTS AGREEMENT
This Investor Rights Agreement (this "Agreement"), dated as of February
2, 2000, by and among DME Interactive Holdings, Inc. (the "Company"), America
Online, Inc. (the "Investor") and Darien Dash ("Dash"). Capitalized terms
defined in the Subscription Agreement and used herein without definition have
the same meanings herein as in the Subscription Agreement.
In consideration of the agreements of the Investor contained in the
Subscription Agreement, the Company hereby grants to the Investor the rights set
forth herein:
1. DEFINITIONS. For purposes of this Agreement:
(a) "Affiliate" has the meaning specified in Commission Rule
144(a)(i).
(b) "Commission" means the Securities and Exchange Commission or
any successor.
(c) "Customized Service" has the meaning given such term in
Section 1.1 of the Strategic Agreement.
(d) "Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any successor statute.
(e) "Fair Market Value" means the closing price per share of the
Common Stock as set forth on NASDAQ, or if NASDAQ is not the principal trading
market for such security, the closing price for such security on the principal
securities exchange or trading market where such security is listed or traded,
or if the foregoing do not apply, the closing price of such security in the
over-the-counter market on the electronic bulletin board for such security.
(f) "Investors" means (i) the Investor, (ii) any Affiliate of the
Investor or its successor and (iii) any person or entity to whom the Investor or
any person or entity identified in clause (ii) of this Section 1(g) is permitted
to sell, transfer or assign any of its Registrable Securities, other than in a
sale pursuant to Rule 144 under the Securities Act or a registration effected
pursuant to this Agreement.
(g) "Register," "registered," and "registration" refer to a
registration effected by preparing and filing with the Commission a registration
statement or similar document in compliance with the Securities Act, and the
declaration or ordering by the Commission of effectiveness of such registration
statement or document.
(h) "Registration Expenses" means all expenses in connection with
the Company's performance of or compliance with its obligations under this
Agreement, including, without limitation, all (i) registration, qualification
and filing fees; (ii) fees, costs and expenses of compliance with securities or
<PAGE>
blue sky laws; (iii) printing expenses; (iv) messenger, telephone and delivery
expenses incurred by the Company; (v) fees, expenses and disbursements of
counsel for the Company and of all independent certified public accountants
retained by the Company (including the expenses of any special audit and "cold
comfort" letters required by or incident to such performance); (vi) Securities
Act liability insurance if the Company so desires; (vii) fees, expenses and
disbursements of any other individuals or entities retained by the Company in
connection with the registration of the Registrable Securities; (viii) fees,
costs and expenses incurred in connection with the listing of the Registrable
Securities on each national securities exchange or automated quotation system on
which the Company has made application for the listing of its Common Stock; and
(ix) internal expenses of the Company (including, without limitation, all
salaries and expenses of its officers and employees performing legal or
accounting duties and expenses of any annual audit). Registration Expenses shall
not include selling commissions, discounts or other compensation paid to
underwriters or other agents or brokers to effect the sale of Registrable
Securities, or counsel fees and any other expenses incurred by Investors in
connection with any registration that are not specified in the immediately
preceding sentence.
(i) "Registrable Securities" means (i) the Subscribed Shares
issued pursuant to the Subscription Agreement, (ii) the shares of the Company's
Common Stock issued pursuant to the Warrant (the "Warrant Stock") or (iii)
shares of Common Stock or other securities of the Company issued as a dividend
or other distribution on or in exchange for any of the Subscribed Shares or
Warrant Stock specified in clause (i) and clause (ii).
(j) "Securities Act" means the Securities Act of 1933, as
amended, or any successor statute.
(k) "Strategic Agreement" means the Strategic Agreement between
the Company, Places of Color, Inc., CompuServe Interactive Services, Inc. and
the Investor, dated February 2, 2000.
(l) "Subscribed Shares" has the meaning given such term in
Section 2.01 of the Subscription Agreement.
(m) "Subscriber" has the meaning given such term in Exhibit A of
the Strategic Agreement.
(n) "Subscription Agreement" means the Subscription Agreement
between the Company and the Investor, dated February 2, 2000.
(o) "Warrant" means that Warrant issued by the Company to AOL as
of the date hereof.
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2. COMPANY REGISTRATION.
(a) NOTICE OF REGISTRATION. If at any time or from time to time,
the Company shall determine to register any of its Common Stock, whether or not
for its own account, other than a registration relating to employee benefit
plans or a registration effected on Form S-4 (or its successor) ("Company
Registration"), the Company shall:
(i) provide to each Investor written notice thereof at least
twenty (20) days prior to the filing of the registration statement by the
Company in connection with such registration; and
(ii) include in such registration, and in any underwriting
involved therein, all those Registrable Securities specified in a written
request by each Investor received by the Company within ten (10) days after the
Company mails the written notice referred to above, subject to the provisions of
Section 2(b) below.
(b) UNDERWRITING. The right of any Investor to registration
pursuant to this Section 2 shall be conditioned upon the participation by such
Investor in the underwriting arrangements specified by the Company in connection
with such registration and the inclusion of the Registrable Securities of such
Investor in such underwriting to the extent provided herein. All Investors
proposing to distribute their Registrable Securities through such underwriting
shall (together with the Company) enter into an underwriting agreement in
customary form with the managing underwriter selected for such underwriting by
the Company and take all other actions, and deliver such opinions and
certifications, as may be reasonably requested by such managing underwriter.
Notwithstanding any other provision of this Section 2, if the managing
underwriter determines that marketing factors require a limitation of the number
of shares to be underwritten, the managing underwriter may limit the number of
Registrable Securities to be included in such registration. The Company shall so
advise all Investors distributing Registrable Securities through such
underwriting, and there shall be excluded from such registration and
underwriting, to the extent necessary to satisfy such limitation, shares held by
the Investors. As among the Investors as a group, the number of Registrable
Securities that may be included in the registration and underwriting shall be
allocated in proportion, as nearly as practicable, to the respective amounts of
Registrable Securities required to be included (determined without regard to any
requirement of a request to be included in such registration) in such
registration held by all Investors at the time of filing the registration
statement. To facilitate the allocation of shares in accordance with the above
provisions, the Company may round the number of shares allocated to any Investor
to the nearest one hundred (100) shares.
(c) RIGHT TO TERMINATE REGISTRATION. The Company shall have the
right to terminate or withdraw any registration initiated by it under this
Section 2 prior to the effectiveness of such registration whether or not any
Investor has elected to include Registrable Securities in such registration.
3. EXPENSE OF REGISTRATION. All Registration Expenses incurred in
connection with the registration and other obligations of the Company pursuant
to Sections 2 and 4 shall be borne by Company.
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<PAGE>
4. REGISTRATION PROCEDURES. If and whenever the Company is required by
the provisions of this Agreement to effect the registration of Registrable
Securities, the Company shall:
(a) as promptly as practicable prepare and file with the
Commission a registration statement with respect to such Registrable Securities,
and use its reasonable diligent efforts to cause such registration statement to
become effective as promptly as practicable and remain effective thereafter as
provided herein;
(b) prepare and file with the Commission such amendments
(including post-effective amendments) and supplements to such registration
statement and the prospectus used in connection therewith as may be necessary to
keep such registration statement effective and current and to comply with the
provisions of the Securities Act with respect to the sale or other disposition
of all Registrable Securities covered by such registration statement, including
such amendments (including post-effective amendments) and supplements as may be
necessary to reflect the intended method of disposition by the prospective
seller or sellers of such Registrable Securities;
(c) continue the effectiveness of such registration for a period
of 180 days from the effective date of such registration statement, or, if
earlier, until the completion of the sale of Registrable Securities included in
said registration statement;
(d) subject to receiving reasonable assurances of
confidentiality, for a reasonable period after the filing of such registration
statement, and throughout each period during which the Company is required to
keep a registration effective, make available for inspection by the selling
holders of Registrable Securities being offered, and any underwriters, and their
respective counsel, such financial and other information and books and records
of the Company, and cause the officers, directors, employees, counsel and
independent certified public accountants of the Company to respond to such
inquiries as shall be reasonably necessary, in the judgment of such counsel, to
conduct a reasonable investigation within the meaning of Section 11 of the
Securities Act;
(e) promptly notify the selling holders of Registrable Securities
and any underwriters and confirm such advice in writing, (i) when such
registration statement or the prospectus included therein or any prospectus
amendment or supplement or post-effective amendment has been filed, and, with
respect to such registration statement or any post-effective amendment, when the
same has become effective, (ii) of any comments by the Commission, by the
National Association of Securities Dealers Inc. ("NASD"), and by the blue sky or
securities commissioner or regulator of any state with respect thereto or any
request by any such entity for amendments or supplements to such registration
statement or prospectus or for additional information, (iii) of the issuance by
the Commission of any stop order suspending the effectiveness of such
registration statement or the initiation or threatening of any proceedings for
that purpose, (iv) if at any time the representations and warranties of the
Company cease to be true and correct in all material respects, (v) of the
receipt by the Company of any notification with respect to the suspension of the
qualification of the Registrable Securities for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose, or (vi) at any
time when a prospectus is required to be delivered under the Securities Act,
4
<PAGE>
that such registration statement, prospectus, prospectus amendment or supplement
or post-effective amendment, or any document incorporated by reference in any of
the foregoing, contains an untrue statement of a material fact or omits to state
any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they are made, not
misleading;
(f) furnish to each selling holder of Registrable Securities
being offered, and any underwriters, prospectuses or amendments or supplements
thereto, in such quantities as they may reasonably request and as soon as
practicable, that update previous prospectuses or amendments or supplements
thereto;
(g) use reasonable diligent efforts to (i) register or qualify
the Registrable Securities to be included in a registration statement hereunder
under such other securities laws or blue sky laws of such jurisdictions within
the United States of America as any selling holder of such Registrable
Securities or any underwriter of the securities being sold shall reasonably
request, (ii) keep such registrations or qualifications in effect for so long as
the registration statement remains in effect and (iii) take any and all such
actions as may be reasonably necessary or advisable to enable such holder or
underwriter to consummate the disposition in such jurisdictions of such
Registrable Securities owned by such holder; provided however, that the Company
shall not be required for any such purpose to (x) qualify generally to do
business as a foreign corporation in any jurisdiction wherein it would not
otherwise be required to qualify but for the requirements of this Section 4(g),
(y) subject itself to taxation in any such jurisdiction or (z) consent to
general service of process in any such jurisdiction;
(h) cause all such Registrable Securities to be listed or
accepted for quotation on each securities exchange or automated quotation system
on which the Company's Common Stock then trades; and
(i) otherwise use reasonable diligent efforts to comply with all
applicable provisions of the Securities Act, and rules and regulations of the
Commission, and make available to its security holders, as soon as reasonably
practicable, an earnings statement covering a period of at least twelve months
which shall satisfy the provisions of Section 11(a) of the Securities Act and
Rule 158 thereunder.
5. INDEMNIFICATION. In the event any of the Registrable Securities are
included in a registration statement under this Agreement:
(a) the Company will indemnify each Investor who participates in
such registration, each of its officers, directors, partners and agents, and
each person controlling such Investor within the meaning of Section 15 of the
Securities Act, and each underwriter, if any, and each person who controls any
underwriter within the meaning of Section 15 of the Securities Act, against all
expenses, claims, losses, damages or liabilities (or actions in respect
thereof), including any of the foregoing incurred in settlement of any
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litigation, commenced or threatened, arising out of or based on (i) any untrue
statement (or alleged untrue statement) of a material fact contained in any
registration statement, prospectus, offering circular or other document, or any
amendment or supplement thereto, incident to any such registration,
qualification or compliance, or based on any omission (or alleged omission) to
state therein a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances in which they were made,
not misleading, or (ii) any violation by the Company of any rule or regulation
promulgated under the Securities Act applicable to the Company in connection
with any such registration, qualification or compliance, and the Company will
reimburse each such Investor, each of its officers, directors, partners and
agents and each person controlling such Investor, each such underwriter and each
person who controls any such underwriter, for reasonable legal fees actually
incurred and other expenses incurred by them in connection with investigating,
preparing or defending any such claim, loss, damage, liability or action,
provided that the Company will not be liable in any such case to the extent that
any such claim, loss, damage, liability or expense arises out of or is based on
any untrue statement or omission or alleged untrue statement or omission, made
in reliance upon and in conformity with written information furnished to the
Company by an instrument duly executed by such Investor or underwriter.
(b) Each Investor will, if Registrable Securities held by such
Investor are included in the securities as to which such registration,
qualification or compliance is being effected, indemnify the Company, each of
its officers, directors, partners and agents, each underwriter, if any, of the
Company's securities covered by such a registration statement, each person who
controls the Company or such underwriter within the meaning of Section 15 of the
Securities Act, and each other such Investor, each of its officers, directors,
partners and agents and each person controlling such Investor within the meaning
of Section 15 of the Securities Act, against all expenses, claims, losses,
damages and liabilities (or actions in respect thereof) arising out of or based
on any untrue statement (or alleged untrue statement) of a material fact
contained in any such registration statement, prospectus, offering circular or
other document, or any omission (or alleged omission) to state therein a
material fact required to be stated therein or necessary to make the statement
therein not misleading, and will reimburse the Company, such Investors, such
directors, officers, persons, underwriters or control persons for any legal or
any other expenses reasonably incurred in connection with investigating or
defending any such claim, loss, damage, liability or action, in each case to the
extent, but only to the extent, that such untrue statement (or alleged untrue
statement) or omission (or alleged omission) is made in such registration
statement, prospectus, offering circular or other document in reliance upon and
in conformity with written information furnished to the Company by an instrument
duly executed by such Investor.
(c) Each party entitled to indemnification under this Section 6
(the "Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought provided
that failure to give such prompt notice shall not relieve the Indemnifying Party
of its obligations hereunder unless it is materially prejudiced thereby, and
shall permit the Indemnifying Party to assume the defense of any such claim or
any litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not unreasonably be
withheld). Such Indemnified Party shall have the right to employ separate
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counsel in any such action and to participate in the defense thereof, but the
reasonable and actual fees and expenses of such counsel shall be that of such
Indemnified Party unless (i) the Indemnifying Party has agreed to pay such fees
and expenses or (ii) the Indemnifying Party shall have failed to assume the
defense of such action or proceeding and employ counsel reasonably satisfactory
to such Indemnified Party in any such action or proceeding or (iii) the named
parties to any such action or proceeding (including any impleaded parties)
include both such Indemnified Party and the Indemnifying Party and such
Indemnified Party shall have been advised by counsel that there may be one or
more legal defenses available to such Indemnified Party which are different from
or additional to those available to the Indemnifying Party (in which case, if
such Indemnified Party notifies the Indemnifying Party in writing of an election
to employ separate counsel at the expense of the Indemnifying Party, the
Indemnifying Party shall not have the right to assume the defense of such action
or proceeding on behalf of such Indemnified Party, it being understood, however,
that the Indemnifying Party then shall have the right to employ separate counsel
at its own expense and to participate in the defense thereof, and shall not, in
connection with any one such action or proceeding or separate but substantially
similar or related actions or proceedings in the same jurisdiction arising out
of the same general allegations or circumstances, be liable for the reasonable
fees and expenses of more than one separate firm of attorneys at any time for
all Indemnified Parties, which firm shall be designated in writing by a majority
of the Indemnified Parties who are eligible to select such counsel). No
Indemnifying Party, in the defense of any such claim or litigation, shall,
except with the consent of each Indemnified Party, consent to entry of any
judgment or enter into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such Indemnified Party
of a release from all liability in respect to such claim or litigation. No
Indemnified Party may consent to entry of any judgment or enter into any
settlement without the prior written consent of the Indemnifying Party.
(d) If the indemnification provided for in this Section 6 is held
by a court of competent jurisdiction to be unavailable to an Indemnified Party
with respect to any loss, liability, claim, damage or expense referred to
herein, then the Indemnifying Party, in lieu of indemnifying the Indemnified
Party, shall contribute to the amount paid or payable by such Indemnified Party
with respect to such loss, liability, claim, damage or expenses in the
proportion that is appropriate to reflect the relative fault of the Indemnifying
Party and the Indemnified Party in connection with the statements or omissions
that resulted in such loss, liability, claim, damage, or expense, as well as any
other relevant equitable considerations. The relative fault of the Indemnifying
Party and the Indemnified Party shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of material fact or the
omission to state a material fact relates to information supplied by the
Indemnifying Party or by the Indemnified Party, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
6. RULE 144 REPORTING. With a view to making available the benefits of
certain rules and regulations of the Commission which may at any time permit the
sale of the Registrable Securities to the public without registration, for as
long as Registrable Securities are held by any Investor, the Company shall use
best efforts to:
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(a) Make and keep public information available, as those terms
are understood and defined in Rule 144 under the Securities Act;
(b) File with the Commission in a timely manner all reports and
other documents required of the Company under the Securities Act and the
Exchange Act (at any time after it has become subject to such reporting
requirements); and
(c) Furnish to any Investor promptly upon request a written
statement as to its compliance with the reporting requirements of Rule 144, and
of the Securities Act and the Exchange Act, a copy of the most recent annual or
quarterly report of the Company, and such other reports and documents of the
Company and other information in the possession of or reasonably obtainable by
the Company as an Investor may reasonably request in availing itself of any rule
or regulation of the Commission allowing an Investor to sell Registrable
Securities without registration.
7. TERMINATION OF REGISTRATION RIGHTS. No Investor shall be entitled to
exercise any right provided for in this Agreement after the earlier of five (5)
years from the date hereof and such time as all Registrable Securities held by
such Investor may be sold under Rule 144 (or any successor rule) under the
Securities Act within a single three-month period.
8. INFORMATION TO BE PROVIDED BY THE INVESTORS. Each Investor whose
Registrable Securities are included in any registration pursuant to this
Agreement shall furnish the Company such information regarding such Investor and
the distribution proposed by such Investor as may be reasonably requested in
writing by the Company and as shall be required in connection with such
registration or the registration or qualification of such securities under any
applicable state securities law.
9. CO-SALE RIGHTS
(a) NOTICE. In the event that, during the initial eighteen (18)
month term of the Strategic Agreement, Dash desires to accept a bona fide offer
from a financially capable acquiror for the sale, transfer or other disposition
of any or all of the shares of capital stock of the Company owned of record or
beneficially by Dash or any securities ultimately convertible into or
exercisable for any such shares of capital stock (collectively, the "Sale
Shares"), Dash shall promptly deliver to the Investors a written notice of such
intended disposition (a "Sale Notice") setting forth the terms and conditions
thereof, including the number and type of securities to be disposed of, any
conditions to such disposition, the proposed timing of such disposition, the
consideration to be paid for such securities and the identity of the proposed
acquiror. Except as otherwise provided herein, Dash may not sell, transfer or
otherwise dispose of any shares of capital stock of the Company or any
securities ultimately convertible into or exercisable for such shares of capital
stock unless it delivers to the Investors a Disposition Notice and complies with
the provisions of this Section 9.
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(b) GRANT OF CO-SALE RIGHTS. Each Investor shall have the right,
exercisable upon written notice to Dash within fifteen (15) Business Days after
receipt of a Sale Notice, to participate in such sale of the Sale Shares on the
same terms and conditions as those set forth in the Sale Notice. To the extent
any Investor exercises such right of participation (a "Participating Investor"),
Dash shall use his best efforts to cause the proposed acquiror to agree to
purchase all of the Sale Shares specified in the Sales Notice plus the number of
shares of Common Stock that each Participating Investor desires to sell in such
transaction. In the event that such proposed acquiror is unwilling to acquire
all such shares of Common Stock, the following provisions shall apply:
(i) Each Investor and Dash shall be deemed to own the number
of shares of Common Stock that it actually owns plus the number of shares of
Common Stock that are issuable upon conversion of any convertible securities of
the Company or upon the exercise of any warrants, options or similar rights then
owned by it at an exercise price less than the purchase price specified in the
Sale Notice.
(ii) Each Participating Investor may sell all or any part of
a number of Sale Shares equal to the product obtained by multiplying (i) the
aggregate number of shares of Common Stock the acquiror is willing to purchase
by (ii) a fraction, the numerator of which is the number of shares of Common
Stock of the Company deemed to be owned by such Participating Investor and the
denominator of which is the total number of outstanding shares of Common Stock
of the Company deemed to be owned by Dash and the Investors.
Each Participating Investor may effect its participation in the sale by
delivering to the Dash for transfer to the acquiror one or more certificates,
properly endorsed for transfer, which represent the number of shares that it is
entitled to sell pursuant to this Section 9.
(c) PAYMENT OF PROCEEDS. The stock certificates that the
Participating Investors deliver to Dash pursuant to Section 9(b)(ii) shall be
transferred by Dash to the acquiror in consummation of the sale of the Sale
Shares pursuant to the terms and conditions specified in the Sale Notice,
conditioned upon Dash's receipt of the sales proceeds, and Dash shall promptly
thereafter remit to each Participating Investor that portion of the sale
proceeds to which such Participating Investor is entitled by reason of its
participation in such sale.
(d) NON-EXERCISE. The exercise or non-exercise of the rights of
the Participating Investors hereunder to participate in one or more sales of
Sale Shares made by Dash shall not adversely affect its right to participate in
subsequent sales by Dash. In the event none of the Investors elects to exercise
its co-sale rights hereunder with respect to a disposition, Dash may consummate
such disposition in accordance with the terms specified in the Sale Notice but
only within 90 days after the expiration of the Investors' co-sale rights.
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(e) EXCEPTIONS. Notwithstanding the foregoing, the co-sale rights
of the Investors set forth in this Section 9 shall not apply to any transfer by
Dash to his spouse or descendants or to any trust for the benefit of any of such
persons; provided that the transferee shall furnish the Investors and the
Company with a written agreement to be bound by and comply with all provisions
of this Agreement. Such transferred stock shall remain subject to the provisions
of this Agreement, and such transferee shall execute a counterpart of this
Agreement and be treated as if it were "Dash" for the purposes of this
Agreement. In addition to the foregoing, Dash shall be permitted to transfer for
cash, shares of Common Stock of the Company then held by Dash up to an aggregate
amount received for such transfer of (i) $50,000 during each successive three
(3) month period beginning on the date hereof, (ii) $250,000 during each
successive three (3) month period beginning on the date the Customized Service
obtains 50,000 Subscribers, or (iii) $500,000 during each successive three (3)
month period beginning on the date the Customized Service obtains 100,000
Subscribers.
10. MISCELLANEOUS.
(a) AMENDMENTS AND WAIVERS. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to depart from the provisions hereof may
not be given unless the Company and Dash have obtained the written consent of
holders of a majority of the Registrable Securities then subject to this
Agreement. Notwithstanding the foregoing, a waiver or consent to departure from
the provisions hereof with respect to a matter which relates exclusively to the
rights of Investors whose Registrable Securities are being sold pursuant to a
registration statement and which does not directly or indirectly affect the
rights of other Investors may be given by the holders of a majority of the
Registrable Securities being sold by such holders.
(b) NOTICES. All communications provided for hereunder shall be
sent by registered or certified mail, reputable overnight delivery service or
facsimile transmission. Communications to the Investor shall be sent to the
Investor at its address set forth in the Subscription Agreement and
communications sent to any Investor other than the Investor shall be sent to
such Investor at its address in the security register or other records of the
Company. Communications to the Company and to Dash shall be sent to the Company
as provided in the Subscription Agreement.
(c) DESCRIPTIVE HEADINGS. The descriptive headings of the several
Sections of this Agreement are inserted for convenience only and do not
constitute a part of this Agreement.
(d) GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware.
(e) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement. Delivery of an executed
counterpart of this Agreement by telecopier shall be effective as delivery of a
manually executed counterpart of this Agreement.
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(f) NON-WAIVER; CUMULATIVE REMEDIES. No course of dealing or any
delay or failure to exercise any right hereunder on the part of the Investor or
the Company shall operate as a waiver of such right or otherwise prejudice the
rights, powers or remedies of the Investor, Dash or the Company. No single or
partial waiver by the Investor, Dash or the Company of any provision of this
Agreement or of any breach or default hereunder or of any right or remedy shall
operate as a waiver of any other provision, breach, default right or remedy or
of the same provision, breach, default right or remedy on a future occasion. The
rights and remedies provided in this Agreement are cumulative and are in
addition to all rights and remedies which the Investor, Dash or the Company may
have in law or in equity or by statute or otherwise.
(g) WAIVER OF JURY TRIAL. Each of the parties hereto irrevocably
and unconditionally waives trial by jury in any legal action or proceeding
relating to this Agreement or the transactions contemplated hereby and for any
counterclaim therein.
(h) SEVERABILITY. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized signatories
hereunto duly authorized as of the date first above written.
DME INTERACTIVE HOLDINGS, INC.
By /s/ DARIEN DASH
------------------------------
Name: Darien Dash
Title: Chief Executive Officer
AMERICA ONLINE, INC.
By /s/ DAVID COLBURN
------------------------------
Name: David Colburn
Title: President-Business Affairs
/s/ DARIEN DASH
----------------------------------
Darien Dash
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