<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934.
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934.
FOR THE TRANSITION PERIOD FROM ____________ TO _______________
COMMISSION FILE NUMBER: 000-28151
PNV INC.
(Exact name of registrant as specified in its charter)
DELAWARE 65-0612435
(State or other jurisdiction of (I.R.S. employer identification no.)
incorporation or organization)
11711 N.W. 39TH STREET,
CORAL SPRINGS, FLORIDA 33065
(Address of principal executive offices) (Zip code)
(954) 745-7800
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
(1) Yes [X] No [ ]
(2) Yes [X] No [ ]
The number of shares outstanding of the registrant's common stock, par
value $0.001 per share, as of May 9, 2000 was 15,943,054.
<PAGE> 2
PNV INC.
FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 2000
TABLE OF CONTENTS
PAGE
----
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements (Unaudited)............................ 3
Balance Sheets as of June 30, 1999 and March 31, 2000
(Unaudited)............................................... 3
Statements of Operations for the three and nine months
ended March 31, 1999 and 2000 (Unaudited)................. 4
Statements of Cash Flows for the nine months
ended March 31, 1999 and 2000 (Unaudited)................. 5
Notes to Condensed Financial Statements (Unaudited)......... 6
ITEM 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 8
ITEM 3. Quantitative and Qualitative Disclosure About Market Risk... 22
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings.......................................... 23
ITEM 2. Changes in Securities and Use of Proceeds.................. 23
ITEM 3. Defaults Upon Senior Securities............................ 23
ITEM 4. Submission of Matters to a Vote of Security Holders........ 23
ITEM 5. Other Information.......................................... 23
ITEM 6. Exhibits and Reports on Form 8-K........................... 24
SIGNATURES............................................................ 25
2
<PAGE> 3
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PNV INC.
BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
JUNE 30, 1999 MARCH 31, 2000
----------------- ------------------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents................................................. $ 4,100,848 $ 4,230,864
Short-term investments.................................................... 8,367,324 50,893,051
Restricted investments.................................................... 10,704,210 6,083,044
Accounts receivable, net of allowance for doubtful accounts of $25,083 and
$94,534 at June 30, 1999 and March 31, 2000, respectively............... 301,503 1,296,051
Inventory................................................................. 341,208 634,434
Prepaid expenses and other................................................ 181,788 524,658
----------------- ------------------
Total current assets................................................... 23,996,881 63,662,102
Property and equipment, Net (Note 2)......................................... 32,053,824 39,674,375
Deferred financing costs..................................................... 3,755,927 3,473,503
Other assets................................................................. 1,579,037 3,288,344
----------------- ------------------
Total.................................................................. $ 61,385,669 $ 110,098,324
================= ==================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable.......................................................... $ 1,256,994 $ 2,756,483
Accrued expenses.......................................................... 1,621,271 5,072,363
Accrued interest on senior notes.......................................... 1,245,831 3,683,331
Deferred revenue.......................................................... 724,850 1,198,169
Current portion of capital lease obligations.............................. 294,887 334,686
Current portion of long-term debt......................................... 25,365 1,331
----------------- ------------------
Total current liabilities.............................................. 5,169,198 13,046,363
----------------- ------------------
Obligations under capital leases............................................. 263,519 311,662
----------------- ------------------
Long-term debt............................................................... 70,846,069 71,190,907
----------------- ------------------
Series A Redeemable Preferred Stock--Par value $.01 per share; 627,630
shares authorized and 388,065 issued and outstanding as of June 30, 1999;
no shares authorized, issued or outstanding as of March 31, 2000.......... 4,609,809 --
----------------- ------------------
Series B Cumulative Convertible Preferred Stock--Par value $.01 per share;
1,372,370 authorized, issued and outstanding as of June 30, 1999; no
shares authorized, issued or outstanding as of March 31, 2000............. 17,403,860 --
----------------- ------------------
Series C Cumulative Convertible Preferred Stock--Par value $.01 per share;
3,750,000 shares authorized, 2,351,543 issued and outstanding as of
June 30, 1999; no shares authorized, issued or outstanding as of
March 31, 2000............................................................ 20,079,630 --
----------------- ------------------
Common Stockholders' (Deficiency) Equity:
Common stock--Par value $.001 per share; 12,000,000 and 50,000,000 shares
authorized at June 30, 1999 and March 31, 2000, respectively; 4,328,614
and 15,943,054 shares issued and outstanding at June 30, 1999 and
March 31 2000, respectively............................................. 4,328 15,758
Additional paid-in capital................................................ 13,011,612 140,863,112
Receivable from stockholder .............................................. (145,000) (92,000)
Deferred stock-based compensation......................................... (8,345,375) (4,459,501)
Deferred marketing expense related to warrants............................ -- (1,475,031)
Accumulated deficit....................................................... (61,511,981) (109,302,946)
----------------- ------------------
Total common stockholders' (deficiency) equity............................ (56,986,416) 25,549,392
----------------- ------------------
Total................................................................ $ 61,385,669 $ 110,098,324
================= ==================
</TABLE>
See notes to financial statements.
3
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PNV INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
MARCH 31, MARCH 31,
------------------------------ -------------------------------
1999 2000 1999 2000
----------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net Revenues .......................... $ 2,287,604 $ 4,722,296 $ 5,996,803 $ 11,932,282
----------- ------------ ------------ ------------
Cost of Revenues:
Service cost ...................... 2,713,624 5,744,524 6,527,381 14,143,463
Service depreciation .............. 1,259,697 1,831,755 3,130,303 4,954,963
Equipment cost .................... 434,064 697,506 1,380,776 1,714,258
Advertising ....................... 27,510 578,072 42,234 1,509,283
----------- ------------ ------------ ------------
Total cost of revenues .......... 4,434,895 8,851,857 11,080,694 22,321,967
----------- ------------ ------------ ------------
Gross margin .......................... (2,147,291) (4,129,561) (5,083,891) (10,389,685)
Selling, general and administrative
expenses (exclusive of non-cash
stock compensation expense shown
below) .............................. 4,587,833 10,367,518 13,529,231 24,728,670
Stock compensation expense ............ 250,000 1,708,018 250,000 6,352,140
----------- ------------ ------------ ------------
Loss from operations .................. (6,985,124) (16,205,097) (18,863,122) (41,470,495)
Interest expense ...................... 2,530,756 2,658,059 7,529,617 7,956,955
Interest income and other ............. (313,638) (784,567) (1,617,117) (1,636,488)
----------- ------------ ------------ ------------
Net loss ........................ (9,202,242) (18,078,589) (24,775,622) (47,790,962)
----------- ------------ ------------ ------------
Preferred stock dividends and
amortization of preferred
stock issuance costs .......... (728,513) -- (2,134,600) (5,826,352)
Accretion of preferred shares
to fair value ................. -- -- -- (13,439,913)
----------- ------------ ------------ ------------
Net loss attributable to common
stockholders .................. $(9,930,755) $(18,078,589) $(26,910,222) $(67,057,227)
=========== ============ ============ ============
Basic and diluted net loss per
share ......................... $ (2.30) $ (1.14) $ (6.23) $ (7.10)
=========== ============ ============ ============
Shares used to compute basic and
diluted net loss per share .......... 4,318,182 15,890,602 4,318,182 9,440,082
=========== ============ ============ ============
Pro forma basic and diluted net loss
per equivalent share ................ $ (1.05) $ (1.14) $ (2.85) $ (3.75)
=========== ============ ============ ============
Shares used to compute pro forma basic
and diluted net loss per equivalent
share ............................... 8,757,295 15,890,602 8,688,060 12,748,693
=========== ============ ============ ============
</TABLE>
See notes to financial statements.
4
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PNV INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
MARCH 31,
------------------------------
1999 2000
------------ ------------
<S> <C> <C>
Operating Activities:
Net loss .................................................................. $(24,775,622) $(47,790,962)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization ........................................... 3,941,543 6,361,801
Amortization of deferred stock-based compensation ....................... 250,000 6,352,140
Warrants issued for services ............................................ 35,892
Changes in assets and liabilities:
Accounts receivable ..................................................... (10,729) (994,549)
Inventory ............................................................... (32,169) (293,226)
Prepaid expenses and other .............................................. (90,255) (342,871)
Other assets ............................................................ (233,210) (2,020,441)
Accounts payable ........................................................ (566,865) 1,499,490
Accrued expenses ........................................................ 283,885 3,451,092
Accrued interest on senior notes ........................................ 2,762,500 2,437,500
Deferred revenue ........................................................ 72,691 473,318
------------ ------------
Net cash used in operating activities ................................. (18,398,231) (30,830,816)
------------ ------------
Investing Activities:
Purchase of short-term investments ........................................ -- (71,334,688)
Proceeds from sales of short-term investments ............................. 13,825,545 28,808,961
Decrease in restricted investments ....................................... 4,025,315 4,621,166
Purchases of property and equipment ....................................... (15,609,711) (12,410,964)
------------ ------------
Net cash provided by (used in) investing activities ................... 2,241,149 (50,315,525)
------------ ------------
Financing Activities:
Proceeds from issuance of preferred stock ................................ -- 31,500,000
Proceeds from issuance of common stock .................................... -- 63,750,000
Proceeds from exercise of warrants and stock options ..................... -- 82,360
Redemption of Series A preferred stock and accrued dividends .............. -- (4,859,432)
Payment of stock and debt issuance costs and other ........................ (361,976) (8,867,026)
Receivable from stockholder ............................................... -- 53,000
Payment of obligation under capital lease ................................. (323,606) (358,512)
Payment of notes payable .................................................. (25,050) (24,033)
------------ ------------
Net cash provided by (used in) financing activities ................... (710,632) 81,276,357
------------ ------------
Net Increase (decrease) in cash and cash equivalents .......................... (16,867,714) 130,016
Cash and cash equivalents, beginning of period ................................ 19,810,656 4,100,848
------------ ------------
Cash and cash equivalents, end of period ...................................... $ 2,942,942 $ 4,230,864
============ ============
Supplemental cash flow information:
Interest paid ............................................................. $ 4,617,601 $ 4,927,411
============ ============
Non-cash financing and investing activities:
Capital lease obligations relating to acquisition of property
and equipment ............................................................. $ 468,927 $ 446,447
============ ============
Conversion of Series B preferred stock and accrued dividends to
common stock .............................................................. $ 18,199,583
============
Conversion of Series C preferred stock and accrued dividends to
common stock .............................................................. $ 21,784,938
============
Conversion of Series D preferred stock and accrued dividends to
common stock .............................................................. $ 31,959,375
============
Cashless exercise of common stock warrants .................................... $ 573,660
============
Issuance of common stock warrants ............................................. $ 2,534,540
============
Issuance of Series C preferred stock .......................................... $ 184,000
============
Issuance of conversion feature attached to Series D preferred stock ........... $ 13,372,685
============
</TABLE>
See notes to financial statements.
5
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PNV INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
The interim balance sheet as of March 31, 2000, the interim statements of
operations for the three-month and nine-month periods ended March 31, 1999 and
2000 and the interim statement of cash flows for the nine-month periods ended
March 31, 1999 and 2000 are unaudited. In the opinion of management, all
adjustments necessary for a fair presentation of such financial statements have
been included. All adjustments made were of a normal recurring nature. Certain
information and footnote disclosure normally included in the financial
statements prepared in accordance with generally accepted accounting principles
for annual financial statements have been condensed or omitted. PNV Inc. (the
"Company") believes that the disclosures included are adequate and provide a
fair presentation of interim period results. Interim financial statements are
not necessarily indicative of financial position or operating results to be
expected for the entire year. These interim financial statements should be read
in conjunction with the audited financial statements of the Company and the
notes thereto for the fiscal year ended June 30, 1999.
2. PROPERTY AND EQUIPMENT
Property and equipment consists of the following:
JUNE 30, MARCH 31,
1999 2000
----------- -----------
Site equipment and improvements ....... $34,592,877 $44,778,628
Construction equipment ................ 120,611 --
Computer equipment .................... 760,719 1,971,506
Vehicles .............................. 985,014 1,679,975
Furniture, fixtures and other equipment 105,301 397,852
----------- -----------
Subtotal .......................... 36,564,522 48,827,961
Less accumulated depreciation ......... 7,332,654 12,471,210
----------- -----------
Subtotal .......................... 29,231,868 36,356,751
Component inventory ................... 2,821,956 3,317,624
----------- -----------
Property and equipment, net ........... $32,053,824 $39,674,375
=========== ===========
Component equipment represents equipment that is awaiting installation at a
site. Upon installation the cost of the related equipment is transferred to site
equipment and improvements and depreciation commences once the site is
operational. Component equipment is temporarily staged at the Company's
warehouse until all equipment for a site is received, certain assembly
operations are complete and the site is ready to accept the equipment for
installation. Component equipment is reclassified to site equipment upon
completion of the site on a FIFO basis for all components.
3. NET LOSS PER SHARE
Net loss per share is computed using the weighted average number of common
shares outstanding. Shares associated with stock options and certain warrants
are not included because they are antidilutive. The shares of Series B, C and D
Preferred Stock converted into common stock effective upon the closing of the
Company's initial public offering and are included in the calculation of
weighted average number of shares as of that date.
Pro forma net loss per share is computed using the weighted average number of
common shares outstanding, including the pro forma effects of the automatic
conversion of the Company's Series B, C and D Preferred Stock into shares of the
Company's Common Stock effective upon the closing of the Company's initial
public offering as if such conversion occurred as of the beginning of the period
presented or at the date of original issuance, if later.
6
<PAGE> 7
PNV INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS - CONTINUED
(UNAUDITED)
The following table sets forth the computation of the numerator and denominator
used in the basic and diluted and pro forma basic and diluted net loss per share
calculation:
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
MARCH 31, MARCH 31,
------------------------------ -------------------------------
1999 2000 1999 2000
----------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Numerator:
Net loss attributable to common
shareholders for basic and diluted net
loss per share ........................... $(9,930,755) $(18,078,589) $(26,910,222) $(67,057,227)
Dividend and amortization of preferred stock ... 728,513 -- 2,134,600 5,826,352
Accretion of preferred shares to fair value .... -- -- -- 13,439,913
----------- ------------ ------------ ------------
Proforma net loss attributable to common
shareholders for basic and diluted net loss
per share .................................. $(9,202,242) $(18,078,589) $(24,775,622) $(47,790,962)
=========== ============ ============ ============
Denominator:
Weighted average shares used in basic and
diluted net loss per share ............... 4,318,182 15,890,602 4,318,182 9,440,082
Weighted average effect of pro forma securities:
Series B cumulative convertible preferred
stock .................................... 1,875,000 -- 1,875,000 959,682
Series C cumulative convertible preferred
stock .................................... 2,328,543 -- 2,328,543 1,230,730
Series D cumulative convertible preferred
stock .................................... -- -- -- 806,193
Cumulative convertible preferred stock
dividends for Series B and C ............. 235,570 -- 166,335 305,057
Mandatorily convertible warrants ........... -- -- -- 6,949
----------- ------------ ------------ ------------
Denominator for pro forma basic and diluted net
loss per share ............................. 8,757,295 15,890,602 8,688,060 12,748,693
=========== ============ ============ ============
</TABLE>
7
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
The information in this discussion contains certain forward-looking statements
that are based upon our current expectations. When used in this Form 10-Q, the
words "intend," "anticipated," "believe," "estimate," "plan" and "expect" and
similar expressions are included to identify forward-looking statements. Our
actual results and the timing of certain events could differ materially from
those anticipated in these forward-looking statements as a result of certain
risks and uncertainties, many of which are beyond our control. These risks and
uncertainties include those described in "Risk Factors" and elsewhere in this
10-Q. In light of the significant risks and uncertainties inherent in these
forward-looking statements, you should not consider this information to be a
guarantee by us or any other person that our objectives and plans will be
achieved or our expectations will be met.
This discussion should be read in conjunction with our financial statements and
notes thereto as of June 30, 1998 and 1999 and for each of the years ended June
30, 1997, 1998 and 1999, included in our S-1 Registration Statement filed with
the Securities and Exchange Commission in connection with the initial public
offering of our common stock and our financial statements and the related notes
thereto included elsewhere in this report.
OVERVIEW
From November 1993 to November 1995, our predecessor, Park `N View, Ltd.
developed our network and installed and operated it at one truckstop as a field
test. There were no revenues or significant selling expenses generated by Park
`N View, Ltd. during this period. Following the formation of PNV in September
1995, and the transfer to PNV of the business and net liabilities of Park `N
View, Ltd., we began the buildout of our network utilizing principally proceeds
from sales of our securities and began offering services on our network in
December 1995 with the deployment of our network at our first truckstop site.
As of March 31, 2000, our network was available at 273 full-service truckstops.
The following table sets forth the number of monthly subscribers and daily
members to the telecommunications, cable television and Internet access services
offered through our network during the last month in each of our six most recent
quarters.
MONTHLY DAILY ISP
PERIOD SUBSCRIBERS MEMBERS SUBSCRIBERS ONLY TOTAL
- ------ ----------- ------- ---------------- -----
December 1998..... 21,997 11,203 -- 33,200
March 1999 ....... 21,632 14,136 -- 35,768
June 1999 ........ 21,317 13,829 -- 35,146
September 1999.... 24,803 10,456 -- 35,259
December 1999..... 27,317 7,688 729 35,734
March 2000 ....... 32,295 9,211 1,576 43,082
We began to offer Internet access service on our network in July 1999. We
initially offered this service free of charge on a promotional basis. In
November 1999, we began to charge separate fees for monthly subscriptions and
daily memberships to this service. We launched our portal website in October
1999 and through this portal website we are creating content for the trucking
community, including drivers and their families, industry suppliers and
manufacturers, truckstop operators and trucking fleets. During March 2000, we
had 4,708 monthly subscribers to our Internet access service, many of whom were
also subscribers to our telecommunications and cable television services. As of
March 31, 2000, we had approximately 16,000 users registered for our portal
website.
For the three months ended March 31, 2000, our revenues were generated
principally from sales to truck drivers of monthly subscriptions and daily
memberships to the telecommunications, cable television and Internet access
services offered through our network, as well as advertising sales, prepaid
phone card operations, resale of long distance telephone minutes and usage fees
from our public Internet kiosks. As of March 31, 2000 we had deployed 255
prepaid phone card machines and 180 public Internet kiosks.
During the three months ended March 31, 2000, we began to offer our subscribers
the option of being billed directly on a monthly basis for amounts owed for our
services.
In March 2000, we signed an agreement with America Online, Inc., or AOL, under
which our content and services for the trucking and logistics industry will be
available across several AOL brands for the 26-month term of the agreement.
Under this
8
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agreement, we have paid or will pay AOL $8,000,000. Of this amount, $2,000,000
was paid in April 2000. This $2,000,000 was recorded as other assets and accrued
expenses at March 31, 2000. Of the remaining $6,000,000 owed to AOL, $1,000,000
is due in each of June 2000, September 2000, December 2000, March 2001, June
2001 and September 2001. The entire $8,000,000 amount will be amortized on a
straight line basis over the 26-month term of the agreement and will be
recognized as selling, general and administrative expenses. Our agreement with
AOL also provides us with the use of AOL's sales and marketing resources to
generate advertising revenue for our portal website. We will pay AOL a
commission on any such revenue.
In April 2000, we also issued to AOL a warrant to purchase 287,590 shares of our
common stock at an exercise price of $6.6875 per share. This warrant became
exercisable in full in May 2000. We intend to recognize the value of this
warrant as selling, general and administrative expenses. The value of this
warrant was determined using the Black-Scholes option pricing model to be
$1,200,000. We have recorded this amount as deferred marketing expense which we
intend to amortize on a straight-line basis over the 26-month term of our
agreement with AOL.
We also intend to recognize the value of warrants issued to PACCAR Inc. in
November 1999 as selling, general and administrative expenses. We are
determining the value of these warrants using the Black-Scholes option pricing
model. The vesting of these warrants depends on PACCAR's purchase of $1.0
million of our advertising services in each of two years following the date we
issued the warrant. The unvested portion of the warrants will be remeasured each
quarter and if different from the fair value in determining the deferred
marketing expense that we recorded in the prior quarter will be reflected as an
additional charge or credit at that time. Accordingly, the higher our stock
price is at the time of remeasurement, the more significant will be the deferred
marketing expense that we will be required to record and the portion of this
amount to be recognized as selling, general and administrative expenses. At the
time the warrants vest, the fair value of the vested portion will be remeasured
for a final time and will not continue to be remeasured in subsequent periods.
The deferred marketing expense recorded for the PACCAR warrants at March 31,
2000 was $310,230, which we intend to amortize over the term of the PACCAR
commitment and recognize as selling, general and administrative expenses.
We have incurred significant net losses and experienced substantial negative
cash flow since inception. During the past nine months we have significantly
increased our operating expenses and expect these expenses to continue at least
at current levels for the forseeable future.
RESULTS OF OPERATIONS
Three months and nine months ended March 31, 2000 and 1999
Net Revenues. Our net revenues increased 106% to $4,722,000 for the three months
ended March 31, 2000 from $2,288,000 for the three months ended March 31, 1999
and increased 99% to $11,932,000 for the nine months ended March 31, 2000 from
$5,997,000 for the nine months ended March 31, 1999. The increase in revenues
for the three months and nine months ended March 31, 2000 was primarily
attributable to new revenues derived from advertising and prepaid phone card
operations, as well as, to a lesser extent, additional subscription revenues and
the resale of long distance telephone minutes. Our net revenues increased 23% to
$4,722,000 for the three months ended March 31, 2000 from $3,829,000 for the
three months ended December 31, 1999.
Cost of Revenues. Cost of revenues, excluding service depreciation, increased
121% to $7,020,000 for the three months ended March 31, 2000 from $3,175,000 for
the three months ended March 31, 1999 and 118% to $17,367,000 for the nine
months ended March 31, 2000 from $7,950,000 for the nine months ended March 31,
1999. The increase in cost of revenues, excluding service depreciation, for the
three months and nine months ended March 31, 2000 was principally due to costs
associated with the increases in the number of truckstops at which our network
was deployed and in sales volume and, in addition, with respect to the nine
months ended March 31, 2000, to costs of T-1 lines and routing equipment both of
which we added to our network beginning in the three months ended December 31,
1998. The number of truckstops at which our network is deployed increased 29% to
273 as of March 31, 2000 from 212 sites as of March 31, 1999.
Service costs (which includes commissions payable to truckstops, cable
programming, T-1 lines, local telephone lines, long distance minutes purchased
for resale, routing equipment leases, prepaid phone card operations and site
repairs) increased 112% to $5,745,000 for the three months ended March 31, 2000
from $2,714,000 for the three months ended March 31, 1999 and 117% to
$14,143,000 for the nine months ended March 31, 2000 from $6,527,000 for the
nine months ended March 31, 1999. In particular, the cost of T-1 lines and local
telephone lines and purchased long distance minutes increased 141% to $2,823,000
for the three months ended March 31, 2000 from $1,171,000 for the three months
ended March 31, 1999. For the nine months ended March 31, 2000 the cost of T-1
lines and local telephone lines and purchased long distance minutes increased
138% to $6,499,000 from $2,730,000 for the nine months ended
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<PAGE> 10
March 31, 1999. These increases were due to increases in the number of
truckstops at which our truckstop is deployed, long distance telephone minutes
included with subscriptions, long distance minutes included with prepaid phone
cards and the addition of T-1 lines which we added to our network in the three
months ended December 31, 1998. The increases in service costs were also due to
increases in sales volume, commissions due to a truckstop related to our prepaid
phone card operations which we began to offer in April 1999 and routing
equipment leases which we also added to our network in the three months ended
December 31, 1998. Included in service cost is approximately $400,000 associated
with the replacement connectors installed in our parking lot access points to
enhance connectivity quality and the distribution of replacement cables to
current subscribers. The distribution of replacement cables to prior subscribers
was recognized as selling, general and administrative expenses. Additional
service costs will be recognized under this program in three months ending June
30, 2000.
Service depreciation increased $572,000 to $1,832,000 for the three months ended
March 31, 2000 from $1,260,000 for the three months ended March 31, 1999.
Service depreciation increased $1,825,000 to $4,955,000 for the nine months
ended March 31, 2000 from $3,130,000 for the nine months ended March 31, 1999.
These increases in service depreciation reflect the additional buildout of our
network.
Advertising expense is principally associated with advertising revenue generated
from Connect!, our monthly cable television guide and lifestyle magazine. We had
no revenue from sales of advertising in Connect! during the nine months ended
March 31, 1999 and did not solicit advertising during this period because
Connect! was a cable television guide. Therefore, costs associated with Connect!
during this period were categorized as marketing expenses and included in
selling, general and administrative expenses. Advertising expense for the three
and nine months ended March 31, 2000 was $578,000 and $1,509,000, respectively.
Gross Margin. Gross margin was a negative amount of $4,130,000 for the three
months ended March 31, 2000 compared to a negative amount of $3,314,000 for the
previous quarter ended December 31, 1999 and to a negative amount of $2,147,000
for the three months ended March 31, 1999. For the nine months ended March 31,
2000 the gross margin was a negative amount of $10,390,000 compared to a
negative gross margin of $5,084,000 for the nine months ended March 31, 1999.
Selling Expense. Selling expense increased 108% to $4,653,000 for the three
months ended March 31, 2000 from $2,242,000 for the three months ended March 31,
1999. The increase was primarily attributable to an increase in salaries,
travel, including per diem, and marketing expenses. Salaries increased 57% to
$1,763,000 for the three months ended March 31, 2000 from $1,120,000 for the
three months ended March 31, 1999. Travel expenses increased 24% to $358,000
from $288,000 for the three months ended March 31, 1999. Marketing expenses
increased 206% to $2,340,000 for the three months ended March 31, 2000 from
$765,000 for the three months ended March 31, 1999. The increase in salary and
travel expenses reflects additional costs associated with personnel to expand
our sales and marketing programs. The cost of cables that were distributed to
prior subscribers during the three months ended March 31, 2000 were categorized
as marketing expenses. These new cables are required to connect to replacement
connectors installed in our parking lot access points to enhance connectivity
quality. This expense was approximately $900,000 in this period and will
continue into the next quarter. The cost of cables distributed to current
subscribers is included in cost of sales. Also categorized as marketing expense
was the proportional amortization of the warrants granted in prior periods and
the marketing fee in connection with AOL marketing agreement signed on March 15,
2000. During the three months ended March 31, 2000 we had deferred marketing
expense related to warrants granted to PACCAR Inc. which resulted in additional
marketing expenses of $62,000.
For the nine months ended March 31, 2000, selling expense increased 75% to
$10,927,000 from $6,261,000 for the nine months ended March 31, 1999. The
increase was primarily attributable to an increase in salaries, travel,
including per diem, and marketing expenses. Salaries increased 59% to $4,839,000
for the nine months ended March 31, 2000 from $3,046,000 for the nine months
ended March 31, 1999. Travel expenses increased 26% to $1,263,000 for the nine
months ended March 31, 2000 from $1,005,000 for the nine months ended March 31,
1999. Marketing expenses increased 85% to $3,851,000 for the nine months ended
March 31, 2000 from $2,087,000 for the nine months ended March 31, 1999. The
increase in salaries and travel reflected additional personnel to expand our
sales and marketing programs. The increase in marketing expenses reflected
additional marketing efforts to increase subscriptions to services offered on
our network. This increase would have been greater if certain costs associated
with Connect! magazine had not been reclassified to cost of sales.
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The cost of cables that were distributed to prior subscribers during the nine
months ended March 31, 2000 were categorized as marketing expenses. These new
cables are required to connect to replacement connectors installed in our
parking lot access points. The expense was approximately $900,000 in this period
and was a significant contributor to the increase in marketing expenses for the
period. These expenses will continue into the fourth quarter. The cost of cables
distributed to current subscribers is recorded in cost of sales. Also
categorized as marketing expenses is the amortization of the warrants granted to
AOL in connection with the marketing agreement signed on March 15, 2000.
General and Administrative Expenses. General and administrative expenses
increased 144% to $5,715,000 for the three months ended March 31, 2000 from
$2,345,000 for the three months ended March 31, 1999. The increase was primarily
attributable to an increase in salaries and travel. Salaries, increased 158% to
$2,977,000 for the three months ended March 31, 2000 from $1,152,000 for the
three months ended March 31, 1999. Salaries primarily increased due to
additional personnel related to the creation and maintenance of our portal
website and the development of additional service offerings and to a lesser
extent, salaries increased because of additional personnel in other departments
within the Company and a severance accrual to a former officer. Travel expense
increased 109% to $554,000 for the three months ended March 31, 2000 from
$265,000 for the three months ended March 31, 1999. Professional fees decreased
43% to $77,000 for the three months ended March 31, 2000 from $134,000 for the
three months ended March 31, 1999.
For the nine months ended March 31, 2000, total general and administrative
expenses increased 90% to $13,802,000 from $7,268,000 for the nine months ended
March 31, 1999. The increase was primarily attributable to an increase in
salaries, travel and professional fees. Salaries, including salaries of
additional personnel related to the creation and maintenance of our portal
website and the development of additional service offerings, increased 107% to
$7,372,000 for the nine months ended March 31, 2000 from $3,564,000 for the nine
months ended March 31, 1999. Travel expenses increased 99% to $1,444,000 for the
nine months ended March 31, 2000 from $726,000 for the nine months ended March
31, 1999. Professional fees increased 23% to $493,000 for the nine months ended
March 31, 2000 from $401,000 for the nine months ended March 31, 1999.
Stock Based Compensation Expense. During the nine months ended March 31, 2000
and the nine months ended March 31, 1999, we granted options to purchase our
common stock to employees and consultants at the exercise prices below the
deemed fair market value of our common stock on the grant dates for financial
reporting purposes. As a result, for the nine months ended March 31, 2000 and
the nine months ended March 31, 1999, we recorded additional deferred
stock-based compensation of $2,308,000 and $250,000, respectively. In addition,
we recognized stock-based compensation expense of $6,352,000 and $250,000 for
the nine months ended March 31, 2000 and the nine months ended March 31, 1999,
respectively, for these options and the options granted in the third and fourth
quarters of fiscal 1999 and first and second quarters of fiscal 2000.
Interest Expense (Income) and Other - Net. Interest expense (income) and other -
net decreased to $1,873,000, for the three months ended March 31, 2000 from
$2,217,000 of interest income and other - net for the three months ended March
31, 1999. For the nine months ended March 31, 2000 interest expense (income) and
other - net increased to $6,320,000 from $5,913,000 of interest income and other
- - net for the nine months ended March 31, 1999. The changes in net interest
expense for the three months and nine months ended March 31, 2000 compared to
the three months and nine months ended March 31, 1999 is primarily attributable
to the change in interest income over those periods that was earned on cash
proceeds from various equity offerings.
Net Loss. Net loss increased 96% to $18,079,000 for the three months ended March
31, 2000 from $9,202,000 for the three months ended March 31, 1999. The net loss
increased 93% to $47,791,000 for the nine months ended March 31, 2000 from
$24,776,000 for the nine months ended March 31, 1999. We expect to incur
significant net losses and experience substantial negative cash flows for the
foreseeable future.
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LIQUIDITY AND CAPITAL RESOURCES
In November 1999, we completed an initial public offering of our common stock
selling 3,750,000 shares for $17.00 per share. We received net proceeds of
approximately $57,450,000 after deducting underwriting discounts and commissions
and offering expenses. Since our incorporation in September 1995, we have
satisfied our cash requirements through the proceeds of sales of common stock,
preferred stock, certain debt securities and 13% notes, which we sold together
with warrants to purchase 505,375 shares of our common stock.
Net cash used in operating activities was $30,831,000 and $18,398,000 for the
nine months ended March 31, 2000 and 1999, respectively. The $12,433,000
increase in net cash used in operating activities for the nine months ended
March 31, 2000 compared to the nine months ended March 31, 1999 primarily
resulted from an increase in the net loss of $23,015,000 to $47,791,000 for the
nine months ended March 31, 2000 compared to a net loss of $24,776,000 for the
nine months ended March 31, 1999. The net loss for the nine months ended March
31, 2000 was partially offset by an increase in non-cash expenditures for
depreciation, amortization, warrants issued for services and stock option
compensation expense of $8,558,000 to $12,750,000 for the nine months ended
March 31, 2000 from $4,192,000 for the nine months ended March 31, 1999. For the
nine months ended March 31, 2000, the accounts receivable increase of $984,000
from the nine months ended March 31, 1999 reflects partially an increase in
revenue from sources having payment terms of 30-60 days. These revenue sources
include advertising and monthly subscription sales under our payroll deduction
program, fleet-funded subscription sales and home billing. In the past, a larger
portion of our revenue was generated from sales of subscriptions under our power
plan program and vending machine sales, both of which are cash sales.
Net cash (used in) provided by investing activities was $(50,316,000) and
$2,241,000 for the nine months ended March 31, 2000 and 1999, respectively. The
$52,557,000 increase in net cash used in investing activities for the nine
months ended March 31, 2000 compared to the nine months ended March 31, 1999
resulted from the increase in net purchases of short-term investments in the
amount of $56,351,000 for the nine months ended March 31, 2000 following our
receipt of proceeds from our Series D preferred stock offering in September 1999
and our initial public common stock offering in November 1999. This increase was
partially offset by a decrease in capital expenditures of $3,199,000 to
$12,411,000 for the nine months ended March 31, 2000 from $15,610,000 for the
nine months ended March 31, 1999. The decrease in capital expenditures was
principally the result of a decrease in the number of truckstops at which we
installed our network to approximately 53 truckstops during the nine months
ended March 31, 2000 compared to 94 installations during the nine months ended
March 31, 1999, offset by additional capital expenditures of approximately
$2,000,000 for kiosks and prepaid phone card machines.
Net cash provided by (used in) financing activities was $81,276,000 and
$(711,000) for the nine months ended March 31, 2000 and 1999, respectively. The
$81,987,000 increase in net cash provided by financing activities for the nine
months ended March 31, 2000 compared to the nine months ended March 31, 1999
resulted primarily from our Series D Preferred Stock offering and initial public
common stock offering during the nine months ended March 31, 2000.
In the nine months ended March 31, 2000, our working capital increased
$31,788,000 from June 30, 1999. The increase was primarily attributable to an
increase in short term investments of $42,526,000 which resulted from the
receipt of proceeds from our Series D preferred stock offering and our initial
public common stock offering.
Beginning with the November 2000 scheduled interest payment on our 13% notes, we
will be required to make these interest payments from our available cash. During
fiscal 2001, these payments will total $9,750,000.
If our net revenues do not increase substantially in the short-term, we will
need additional funds in fiscal 2001. We intend to develop funding strategies
and explore alternatives for raising additional capital for both our short-term
and long-term cash needs. If additional funds are raised through the issuance of
equity securities, our stockholders may experience significant dilution.
Furthermore, there can be no assurance that additional financing will be
available when needed or that if available, such financing will include terms
favorable to our stockholders or us. If such financing is not available when
required or is not available on acceptable terms, we expect that we may
experience insufficient liquidity. Any inability to fund our future capital
requirements could have a material adverse effect on our business, operating
results and financial condition.
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RISK FACTORS
WE HAVE BEEN IN BUSINESS FOR A SHORT PERIOD OF TIME AND WE HAVE NOT BEEN
PROFITABLE AND EXPECT FUTURE LOSSES AND NEGATIVE CASH FLOW.
From November 1993 to November 1995, our predecessor, Park `N View, Ltd.,
developed our network and installed and operated it at one truckstop as a field
test. We began offering services on our network in December 1995 with the
completion of our first site. We deployed our network at 14 truckstops in 1996,
59 truckstops in 1997, 113 truckstops in 1998, 71 truckstops in 1999 and 14 for
the period from January 2000 to March 2000. Consequently, we have a limited
operating history upon which you may evaluate us and we face all of the risks
and uncertainties of early-stage companies. To date, we have not been
profitable. We may never be profitable or, if we become profitable, we may be
unable to sustain profitability. We have recognized limited revenues since our
inception and have incurred substantial costs to build and deploy our network,
offer our services and operate our business. We have incurred net losses of
approximately $109.3 million from our inception through March 31, 2000. To date,
our cash flow from operations has been substantially insufficient to meet our
cash requirements. We expect to incur substantial net losses and experience
substantial negative cash flow for the foreseeable future.
MANY OF OUR COSTS ARE FIXED ON BOTH A LONG-TERM AND SHORT-TERM BASIS AND WE
MAY NOT BE ABLE TO REDUCE THEM IN A TIMELY MANNER; WE HAVE RECENTLY
INCREASED OUR COSTS SIGNIFICANTLY AND WE EXPECT OUR COSTS TO CONTINUE TO
INCREASE.
A high percentage of the costs of operating our network are fixed, including our
commitments under our contract with AT&T for T-1 lines and our equipment leases
with Cisco for routers. If our revenues do not increase, we may not be able to
reduce our costs in a timely manner to account for any shortfall in revenues. In
addition, many of our costs are based on our expectations of the future demand
for our services and are relatively fixed in the short-term. Recently, we
significantly increased our operating costs and our capital expenditures. We
plan to further increase our costs during the remainder of fiscal 2000 and,
beginning in November 2000, we will be required to make the scheduled semiannual
interest payments on our $75.0 million in aggregate principal amount of 13%
notes due 2008 from our available cash. If we are unable to increase our
revenues from our current sources and generate revenue from other sources in
order to fund our operating losses and capital expenditures, we may be required
to curtail or cease our operations. We may not be able to sustain our current
revenues or successfully generate additional revenue.
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IF OUR NET REVENUES DO NOT INCREASE SUBSTANTIALLY IN THE SHORT-TERM, WE WILL
NOT HAVE SUFFICIENT FUNDS FOR WORKING CAPITAL AND CAPITAL EXPENDITURES AND
WILL BE REQUIRED TO SEEK ADDITIONAL FINANCING IN THE FUTURE, WHICH MAY NOT
BE AVAILABLE ON ACCEPTABLE TERMS, IF AT ALL.
If our net revenues do not increase substantially in the short-term, we will
need to seek additional financing in fiscal 2001 to fund our capital
requirements. Additional funding may not be available on acceptable terms, if at
all. Any needed financing may not be available on terms acceptable to us, or at
all. If adequate funds are not available on acceptable terms, we may curtail or
cease our operations. Moreover, even if we are able to continue our operations,
if we are unable to obtain any needed financing, our business could suffer due
to our inability to continue the buildout of our network, provide our current
and planned services and products and expand our business.
OUR FAILURE TO INCREASE OUR REVENUES OR GENERATE REVENUE FROM NEW SOURCES
WOULD PREVENT US FROM ACHIEVING AND MAINTAINING PROFITABILITY.
Currently, our revenues are generated primarily from sales of subscriptions to
the telecommunications and cable television services offered on our network and
to a lesser extent from prepaid phone card operations and resales of long
distance telephone minutes and advertising sales. Our future success depends
upon, among other things, our ability to increase revenues from our current
sources and generate revenues from additional sources. If we are unable to
increase our revenues from our current sources and generate revenue from other
sources, we may be required to curtail or cease our operations. We may not be
able to sustain our current revenues or successfully generate additional
revenue.
IF WE DO NOT RETAIN OUR CURRENT SUBSCRIBERS OR INCREASE SALES OF
SUBSCRIPTIONS TO SERVICES OFFERED ON OUR NETWORK, OUR RECURRING REVENUES
WILL NOT INCREASE AND OUR INCREMENTAL COSTS OF ACQUIRING AND RETAINING
CUSTOMERS MAY INCREASE.
Our future success depends upon our ability to significantly increase the number
of subscribers to services currently offered on our network and to generate fees
for Internet access service. The number of our total active subscribers has not
increased significantly since September 1998. Even if truck drivers initially
subscribe to our network, they may not renew their subscriptions. There are many
factors that could cause a subscriber to cancel an ongoing monthly subscription
or fail to purchase a subscription, including dissatisfaction with our network
and the services offered, or with the number and location of the truckstops at
which our network is available, or truck driver turnover. Some drivers have
experienced problems in connecting to our network due to an accumulation of
moisture in the parking lot access points, or bollards. This operational problem
may cause drivers to cancel or decide not to purchase a subscription. In July
1999, we began offering Internet access service free of charge on a promotional
basis. In November 1999, we began charging separate subscription fees for this
service. Truck drivers may be unwilling to purchase a subscription to this
service. Many truck drivers may not own a computer for accessing the Internet.
Our power plan and payroll deduction programs, designed to increase ongoing
monthly subscriptions, may not be successful. If ongoing monthly subscriptions
do not increase, our recurring revenues will not increase, our incremental costs
of acquiring and retaining subscribers may increase and our business may suffer.
IF WE DO NOT INCREASE OUR RESALES OF LONG DISTANCE MINUTES, OUR REVENUES MAY
NOT INCREASE AS CONTEMPLATED BY OUR BUSINESS PLAN AND WE MAY NOT ACHIEVE OR
MAINTAIN PROFITABILITY.
Our future success also depends upon our ability to increase our resales of long
distance telephone minutes. We began marketing resold long distance telephone
minutes in February 1999. Since that time we have increased our sales of resold
long distance from $36,000 in February 1999 to $100,000 in March 2000. We
believe that increasing competition in the telecommunications industry will
result in significantly lower prices for long distance services. We may not be
able to reduce our prices sufficiently to compete effectively. Our failure to
increase our sales of resold long distance minutes on a profitable basis could
restrict the growth of our revenues and our ability to achieve or maintain
profitability.
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IF ELECTRONIC COMMERCE TRANSACTIONS ON OUR PORTAL WEBSITE DO NOT DEVELOP, WE
MAY NOT BE ABLE TO OPERATE OUR PORTAL OR OUR BUSINESS PROFITABLY.
Our success depends upon our ability to develop and generate revenue from
electronic commerce activities on our portal website. If we are unable to
develop electronic commerce activities on our portal or if business-to-business
electronic commerce within the trucking industry does not grow or grows more
slowly than expected, our portal website and our business may not achieve or
maintain profitability. Many truck drivers may not have a computer for accessing
the Internet from their trucks which may adversely affect the growth of
electronic commerce in the trucking industry and on our portal.
IF THE INTERNET IS NOT ADOPTED AS AN ADVERTISING MEDIUM OR IF WE CANNOT
ATTRACT ADVERTISERS, OUR ADVERTISING REVENUES WILL NOT INCREASE AS PLANNED.
Our business model contemplates that we will generate significant advertising
revenue from sales of advertising in Connect!, our monthly television
programming guide and lifestyle magazine for truck drivers, and on our portal
website. We began publishing Connect! in July 1999 and launched our portal in
October 1999. If we do not successfully develop content for Connect! and the
portal that attracts a significant number of truck drivers and other trucking
industry participants, it is unlikely that we will be able to attract
advertisers. The growth of Internet advertising requires validation of the
Internet as an effective advertising medium. This validation has yet to fully
occur. Acceptance of the Internet among advertisers will also depend on growth
in the commercial use of the Internet. If we do not generate advertising revenue
or if widespread commercial use of the Internet does not develop, or if the
Internet does not develop as an effective and measurable medium for advertising,
our revenues will not increase as planned and we may not be able to operate our
portal website or business profitably.
OUR HIGH DEBT LEVELS MAY ADVERSELY AFFECT OUR ABILITY TO OPERATE AND EXPAND
OUR BUSINESS.
We have a significant amount of debt outstanding. On March 31, 2000, we had
$71.2 million of outstanding indebtedness. We may not be able to meet our debt
service requirements. We will be in default under the terms of the indenture
governing our 13% notes if we are unable to make required interest payments or
we otherwise fail to comply with the various covenants in the indenture. We are
required to make semiannual interest payments on our 13% notes in May and
November of each year. The 13% notes mature in May 2008. We have made the first
three interest payments and intend to make the next interest payment from funds
and securities in an escrow account. Beginning with the November 2000 scheduled
interest payment, we will be required to make these interest payments from our
available cash. A default would permit the holders of our 13% notes to
accelerate the maturity of these notes, which we may be unable to pay. Even if
we are able to pay these notes from our funds or from borrowed funds, we could
be prevented from continuing the buildout of our network, providing our current
and planned services and products or expanding our business. Even if we are able
to meet our debt service obligations, the amount of debt we have could adversely
affect us in a number of ways. For example, we could be required to dedicate a
substantial portion of our cash flow from operations to the payment of principal
and interest on our debt, thereby reducing the funds available for the growth of
our business.
IF WE DO NOT MEET OUR OBLIGATIONS UNDER CONTRACTS WITH TRUCKSTOP OPERATORS,
THESE TRUCKSTOP OPERATORS MAY ENTER INTO CONTRACTS WITH OTHER PROVIDERS.
Most of our current revenues are generated from our operations at truckstops. We
expect that the provision of telecommunications, cable television and Internet
access services through our network will continue to be a primary source of
revenue for the foreseeable future. TravelCenters of America owns or operates
over 150 of the truckstops that we have under contract. We have contracted with
truckstop operators located throughout the United States. While most independent
truckstop owners who own a single truckstop execute a standard contract, the
contracts executed by truckstop chains that operate multiple truckstops vary
significantly. These contracts generally provide that the truckstop chains and
independent truckstop owners may terminate the contracts, and our exclusive
rights under the contracts, if we fail in any material respect to perform any of
our obligations under the contracts and fail to remedy the breach within 30 days
after we receive notice of the breach. Any failure by us to meet our contractual
obligations that results in the termination of our contracts could impair our
network and the sale of services over our network.
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OUR CONTRACTS WITH TRUCKING ASSOCIATIONS TO INSTALL OUR NETWORK AT
APPROXIMATELY 300 MEMBER TRUCKSTOPS ARE NOT LEGALLY BINDING ON THEIR MEMBERS
AND MAY NOT RESULT IN THE INSTALLATION OF OUR NETWORK AT THESE TRUCKSTOPS.
As of March 31, 2000, we had entered into contracts with the three largest
trucking associations representing more than 300 additional independent
truckstops pursuant to which these associations have agreed to permit us to
offer our services to their members. These associations do not have authority to
legally bind their members. Therefore, while each association has granted us the
right to offer cable television and telephone services to their members, this
contractual provision is not binding on any member. Prior to installation of our
network at an association member's truckstop, we must enter into a contract with
the association member granting us the right to install our network at the
member's truckstops. Accordingly, our contracts with truckstop associations may
not result in our network being installed at additional truckstop locations.
OUR TELECOMMUNICATIONS AND CABLE TELEVISION SERVICES COMPETE WITH THOSE
OFFERED BY MANY WELL-ESTABLISHED COMPETITIVE PROVIDERS.
The market for telecommunications services, particularly long distance
telecommunications services, is highly competitive. Carriers compete principally
on the basis of ease of access, functionality and cost. Our telecommunications
services currently compete with traditional long distance services, with public
phones, cellular and other wireless telephones, calling cards, prepaid phone
cards, as well as collect call and toll-free number services. We believe that
drivers currently use public phones located at truckstops for a significant
number of the calls they make and we may not successfully attract drivers who
predominantly use these public phones. Moreover, we face particular constraints
in our ability to keep our prices competitive for our prepaid phone cards.
Specifically, our contractual arrangements with third parties relating to the
prepaid phone cards that we offer may make it difficult or impossible for us to
reduce our prices for prepaid long distance minutes to compete effectively on a
profitable basis. Finally, competitive pressures on companies like ours in the
long distance telecommunications sector, in particular, also seems likely to
increase with the entry of one or more Regional Bell Operating Companies into
their own home long distance markets, which appears imminent. Competition in the
markets for cable and other video services is becoming increasingly more
competitive. While our competition today largely consists of alternatives
located outside the truck cab and primarily in the truckstop (e.g., community
television and game rooms inside the truckstop), we believe that a small number
of professional truck drivers have purchased direct broadcast satellite dishes
to receive television programming in their cabs. Cable, direct broadcast
satellite, and other video service providers to such users as residential
apartment buildings could seek to compete by offering cable television
programming to truckstops. We may not be able to compete successfully against
these providers, most of which will have access to greater resources and provide
more programming than our network. Some of our competitors, including those
arising from the consolidation of or strategic alliances between
telecommunications and/or cable television companies are well established
companies with significantly greater financial, marketing and programming
resources than we have. Our failure to compete successfully with these and
future competitors, including those arising from the emergence or increased
utilization of new and developing technologies, could have a material adverse
effect on our financial condition and results of operation.
COMPETITION FOR OUR CURRENT AND PLANNED INTERNET ACCESS SERVICES IS LIKELY
TO INCREASE IN THE FUTURE AND MAY PRECLUDE US FROM OFFERING THESE SERVICES
ON A PROFITABLE BASIS.
The market for providing Internet access is extremely competitive and highly
fragmented. There are no substantial barriers to entry, and we expect that
competition will continue to intensify. We may not be able to compete
successfully against current or future Internet service providers, many of whom
may have financial resources greater than ours. Increased competition could
cause us to increase the sales and marketing expenses related to our Internet
access services as well as cause our users to obtain Internet access from other
sources. We may not be able to offset the effects of these increased costs
through an increase in the number of subscribers to our Internet access service
and we may not have the resources to continue to compete successfully as an
Internet service provider. We believe that new competitors, including large
computer hardware and software, media, and telecommunications companies, will
continue to enter the Internet access market. As consumer awareness of the
Internet grows, existing competitors are likely to further increase their
emphasis on their Internet access services, resulting in even greater
competition. In addition, telecommunications companies may be able to offer
customers reduced communications costs in connection with these services,
reducing the overall cost of their Internet access solutions and significantly
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<PAGE> 17
increasing pricing pressures on our Internet access services. The ability of our
competitors to acquire other Internet service providers, to enter into strategic
alliances or joint ventures or to bundle other services and products with
Internet access could also put us at a significant competitive disadvantage. We
recently commenced the deployment of public Internet kiosks in the truckstops of
two major chains. There is at least one company that has installed
Internet/e-mail kiosks in a number of truckstops.
COMPETITION FOR OUR CURRENT AND PLANNED INTERNET PRODUCTS AND SERVICES IS
LIKELY TO INCREASE IN THE FUTURE AND MAY PREVENT US FROM ESTABLISHING
CUSTOMER AND ADVERTISING BASES FROM WHICH TO GENERATE REVENUES AS PLANNED.
Competition for Internet products and services and electronic commerce is
intense. We expect that competition will continue to intensify. Barriers to
entry are minimal, and competitors can launch new websites at a relatively low
cost. Various websites currently exist that provide content and commerce
solutions to the trucking community. Several of these websites have market
acceptance, established customer and advertising bases and offer a greater
variety of content and applications than our portal may initially offer. Our
competitors may develop new Internet products or services that are superior to,
or have greater market acceptance than, our products and services.
WE ARE DEPENDENT ON THIRD PARTIES FOR THE PUBLIC PHONE AND PREPAID PHONE
CARD OPERATIONS WE OFFER AND, IF THESE THIRD PARTIES DISCONTINUE DOING
BUSINESS WITH US, WE MAY NOT BE ABLE TO MAINTAIN THESE OPERATIONS IF WE ARE
UNABLE TO FIND ADEQUATE REPLACEMENTS.
We are currently dependent on third parties for the public phone and a portion
of the prepaid phone card operations that we offer truckstops. We are obligated
to provide public phone operations in the truckstops of one major chain. We have
contracted with a third party to provide these operations and do not intend to
provide this service directly. This third party's failure to provide public
phone operations would result in our breach of our contract with the truckstop
chain. Our system is currently unable to provide all of the components necessary
for prepaid phone card operations. Although we believe that other third parties
could provide these services for us or, over time, we could develop the systems
so that we could provide these services, any inability to rely on third party
systems without disruption prior to such development would eliminate our ability
to offer prepaid phone card operations to truckstops.
WE DEPEND ON THIRD PARTIES TO SUPPLY US WITH PROGRAMMING AND EQUIPMENT AND,
IF THESE THIRD PARTIES DISCONTINUE DOING BUSINESS WITH US, OUR ABILITY TO
PROVIDE COMPETITIVE TELECOMMUNICATIONS AND CABLE TELEVISION SERVICES MAY
SUFFER IF WE ARE UNABLE TO FIND ADEQUATE REPLACEMENTS.
We purchase our satellite equipment, headend equipment, telephone switching
equipment, computer hardware and cable programming from outside suppliers and do
not have purchase agreements with any supplier other than our cable programming
supplier, Echostar Communications Corporation. We presently purchase our
satellite equipment and computer hardware from a sole supplier and we believe
that limited alternative sources for these items exist. If we were required to
purchase alternative telephone switching equipment from another source, it would
require the reprogramming of some of our software or if we were required to
purchase any alternative equipment from another source, it could require that we
modify and redesign our network in certain respects which, in each case, could
result in service delays and expense to us. In addition, we purchase the cable
programming offered on our network from Echostar. Although we believe that
limited alternative sources for cable programming exist, utilizing an
alternative source could require retrofitting certain equipment at each
truckstop site and could result in an interruption in our ability to offer cable
television services through our network for a limited period of time. If we are
unable to obtain any of the foregoing equipment, particularly telephone
switching equipment, or cable programming, our ability to buildout and operate
our network and expand our business in a timely fashion could suffer. We depend
on a few third-party suppliers of hardware components. Currently, we acquire
routers used to provide our networking services from only one source. From time
to time, we have experienced delayed delivery from some suppliers. If we are
unable to develop alternative sources of supply, if required, we could
experience delays and increased costs in expanding our network infrastructure.
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SECURITY BREACHES OF OUR NETWORK AND INAPPROPRIATE USE BY INTERNET USERS
COULD DISRUPT OUR SERVICE AND PREVENT US FROM INCREASING OUR SUBSCRIBER BASE
AND DISRUPT TRANSACTIONS ON OUR NETWORK.
The future success of our business will depend on the security of our network
and, in part, on the security of the network infrastructures of our third-party
providers, over which we have no control. Despite the implementation of security
measures, our infrastructure is vulnerable to computer viruses or similar
disruptive problems. Computer viruses or problems caused by third parties,
including the sending of excessive volumes of unsolicited bulk e-mail or "spam,"
could lead to interruptions, delays, or cessation in service to our subscribers.
Third parties could also potentially jeopardize the security of confidential
information stored in our computer systems or our subscribers' computer systems
by their inappropriate use of the Internet, which could cause losses to us or
our subscribers or deter persons from subscribing to our services. Inappropriate
use of the Internet includes attempting to gain unauthorized access to
information or systems, commonly known as "cracking" or "hacking." Although we
intend to continue to implement security measures to prevent this, "hackers"
have circumvented security measures adopted by others in the past, and may be
able to circumvent our security measures in the future. To alleviate problems
caused by computer viruses or other inappropriate uses or security breaches, we
may have to interrupt, delay, or cease service to our subscribers, which could
result in cancellations of subscriptions, failures to renew subscriptions or
reduced sales of subscriptions. In addition, we expect that our subscribers will
increasingly use the Internet for commercial transactions in the future. Any
network malfunction or security breach could cause these transactions to be
delayed, not completed at all, or completed with compromised security.
Subscribers or others may assert claims of liability against us as a result of
any failure by us to prevent these network malfunctions and security breaches.
Until more comprehensive security technologies are developed, the security and
privacy concerns of existing and potential subscribers may inhibit the growth of
the Internet service industry in general and our subscriber base and revenues in
particular.
WE MAY INCUR SUBSTANTIAL EXPENSES OR DISCONTINUE CERTAIN SERVICES IF WE ARE
FOUND LIABLE FOR INFORMATION DISSEMINATED ON OUR NETWORK OR IF WE MUST
IMPLEMENT MEASURES TO REDUCE OUR EXPOSURE TO THESE LIABILITIES.
Since the law relating to liability of Internet service providers for
information carried on or disseminated through their networks is not settled,
even with the defenses available in Section 223 of the Communications Decency
Act of 1996 and the recent enactment of the Digital Millennium Copyright Acts,
we may be subject to such liability. A number of lawsuits have sought to impose
liability for defamatory speech, indecent materials and infringement of
copyrighted materials. The United States Supreme Court has let stand a lower
court ruling that an Internet service provider was protected from liability for
material posted on its system by a provision of the Communications Decency Act.
However, the findings in that case may not apply in other circumstances. Other
courts have held that online service providers and Internet service providers
may be subject to damages for copying or distributing copyrighted materials.
Provisions of the Communications Decency Act that imposed criminal penalties for
using an interactive computer service for transmitting obscene or indecent
communications have been found unconstitutional by the United States Supreme
Court. However, the Child Online Protection Act requires limits on access to
pornography and other material deemed "harmful to minors." This legislation
imposes criminal penalties and civil liability. Numerous states have adopted or
are adopting similar types of legislation. We may be subject to claims relating
to content that is published on or downloaded from our site. We also could be
subject to liability for content that is accessible from our website through
links to other websites or that is posted by users in chat rooms or bulletin
boards. Potential liability imposed on Internet service providers like us for
material carried on or disseminated through our network could require us to
implement measures to reduce our exposure to that liability. These measures may
require us to spend substantial resources or discontinue certain service
offerings. We do not have errors and omissions insurance that would cover claims
relating to these risks. The imposition of liability could expose us to
significant costs and cause our business to suffer.
WE MUST ADAPT TO TECHNOLOGY TRENDS AND EVOLVING CUSTOMER NEEDS OR WE WILL
NOT BE COMPETITIVE.
The services that we offer through our network are characterized by evolving
technology, changes in customer needs, rapidly growing competition and frequent
new product and service introductions. Our future success will depend, in part,
on our ability to:
o effectively use and offer leading technologies;
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o continue to develop our technical expertise;
o enhance our current networking services;
o develop new products and services that meet changing customer
needs;
o advertise and market our services; and
o influence and respond to emerging industry standards and other
technological changes.
We must accomplish these tasks in a timely and cost-effective manner. New
technologies, such as wireless data transmissions, or industry standards may
replace or provide lower cost alternatives to our existing products and services
or could render our existing products and services noncompetitive and adversely
affect their marketability. We also believe that our ability to compete
successfully depends on the continued compatibility and interoperability of our
services with products and architectures offered by other vendors. Although we
intend to support emerging standards in the market for the Internet and other
network connectivity, new industry standards could emerge, and we may not be
able to conform to these new standards in a timely fashion and maintain a
competitive position in the market. Our pursuit of necessary technological
advances and maintenance of technological compatibility may require substantial
time and expense.
BECAUSE WE DO NOT HAVE REMOTE BACK-UP FACILITIES, THE FAILURE OF OUR
COMPUTER AND COMMUNICATIONS HARDWARE SYSTEMS COULD RESULT IN CUSTOMER
DISSATISFACTION AND REDUCED USE OF OUR NETWORK.
We depend on the efficient and uninterrupted operation of our computer and
communications hardware systems in Coral Springs, Florida. However, we do not
have remote back-up facilities for our computer systems. Interruptions could
result from natural disasters, technical failures, including power loss, the
failure of telecommunications equipment and systems and similar events. Any
interruptions in the delivery of our services could result in customer
dissatisfaction and which in turn could adversely affect usage of our network
and our revenues.
OUR FAILURE TO COMPLY WITH THE BURDENSOME GOVERNMENT REGULATIONS OF THE
TELECOMMUNICATIONS INDUSTRY OR CHANGES IN THESE REGULATIONS COULD RESULT IN
OUR INABILITY TO PROVIDE CERTAIN SERVICES AND COULD DECREASE OUR REVENUES
AND INCREASE OUR COSTS.
Regulation of the telecommunications industry is changing rapidly. As a provider
of telecommunications services nationwide, we are subject to varying degrees of
regulation in each of the jurisdictions in which we provide our services. Laws
and regulations, and the interpretation of such laws and regulations, differ
significantly among the jurisdictions in which we operate. These laws and
regulations are, moreover, subject to changes as a result of ongoing regulatory
implementation proceedings, subject to review by courts and otherwise. This is
particularly true in regard to Internet services, which, while not heavily
regulated at this time, are the subject of intense debate over the degree that
they should be regulated in the future, if at all. There can be no assurance
that future regulatory, judicial and legislative changes will not have a
material adverse effect on the company, that regulators and/or third parties
will not raise material issues with regard to our compliance or non-compliance
with applicable regulations, and/or that we will be in compliance with all such
laws and regulations at any one point in time. Regulatory considerations that
affect and may limit our business include:
o certification, tariffing and other market entry requirements;
o requirements to obtain prior approval from or notify the FCC
and state public utility commissions of certain corporate
actions including transfers of control of certificated
carriers, transfers of carrier assets including customer
bases, carrier stock offerings, the incurrence by carriers of
significant indebtedness and name changes; and
o universal service and other ongoing filing and, in some cases,
contribution requirements.
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Delay or failure in complying with applicable regulations could result in
sanctions, including fines or other penalties, and our authorizations being
conditioned, modified, canceled, terminated or revoked, which would limit or
eliminate our ability to provide telecommunications services. Conditions,
modifications, cancellations, termination or revocation could result in a
significant loss of revenues and may cause our business to suffer. We may be
subject to sanctions, including fines, penalties, and/or revocation of our
existing authorizations for our provision of telecommunications services in
certain jurisdictions prior to our having obtained necessary regulatory
authorization. We may also be subject to fines or other sanctions for failure to
seek prior approval, where necessary, for certain corporate actions, and/or
failure to notify the FCC and/or state public utility commissions in a timely
enough fashion.
IF WE BECOME SUBJECT TO GOVERNMENTAL REGULATION OF CABLE TELEVISION
COMPANIES, WE COULD INCUR SIGNIFICANT COSTS AND THE CONTINUED BUILDOUT OF
OUR NETWORK COULD BE DELAYED.
Cable television companies are subject to extensive governmental regulation.
Because our cable system equipment is installed exclusively on private property,
we do not believe that we are subject to such regulations. Were we to be
required to comply with such regulations, however, our business may suffer due
to greatly increased expense, potential delay or prevention of the continued
buildout of our network and management distraction.
OUR INTERNET ACCESS SERVICE MAY BECOME REGULATED BY THE FEDERAL
COMMUNICATIONS COMMISSION OR OTHER GOVERNMENT AGENCIES WHICH COULD DECREASE
OUR REVENUES AND INCREASE OUR COSTS.
Internet service providers are not currently regulated like telecommunications
service providers by the Federal Communications Commission or any other United
States governmental agency. Nevertheless, Internet-related regulatory policies
are continuing to develop, primarily as determined by the industry itself, and
it is possible that we could be exposed to direct governmental regulation in the
future. For example, in its April 10, 1998 Report to Congress, while reaffirming
that Internet service providers should be classified as "information service
providers" rather than regulated "telecommunications providers" under the terms
of the Telecommunications Act of 1996, the FCC stated its intention to consider
whether to regulate voice and fax telephony services provided over the Internet
as "telecommunications" even though Internet access itself would not be
regulated. We cannot predict whether in the future the FCC will modify its
current policies against regulation of Internet service providers. Moreover, a
number of state commissions have initiated proceedings relating to the
regulation of, and adopted laws impacting, certain Internet-related services.
Others could do the same in the future. Due to the increasing popularity and use
of the Internet, it is possible that additional laws and regulations may be
adopted with respect to the Internet, covering issues such as content, privacy,
access to some types of content by minors, pricing, bulk e-mail or "spam,"
encryption standards, consumer protection, electronic commerce, taxation,
copyright infringement, and other intellectual property issues. Internet service
providers are, of course, subject to certain regulations applicable to
businesses generally. We cannot predict the impact, if any, that any future
regulatory changes or developments may have on our business, financial
condition, and results of operations. Changes in the regulatory environment
relating to the Internet services industry, including regulatory changes that
directly or indirectly affect telecommunications costs or increase the
likelihood or scope of competition from regional telephone companies or others,
could increase our costs and make it difficult for us to compete effectively.
LIMITATIONS IMPOSED BY RESTRICTIVE COVENANTS COULD LIMIT HOW WE CONDUCT
BUSINESS AND OUR ABILITY TO GENERATE REVENUES AND PROFITS.
The indenture governing our 13% notes contains covenants that restrict our
ability to, among other things:
o incur additional debt;
o pay dividends and make other distributions;
o prepay subordinated indebtedness;
o repurchase capital stock;
o make investments and other restricted payments;
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o engage in transactions with affiliates;
o engage in business other than the provision of
telecommunications, television, Internet and other related
services to the trucking industry;
o enter into sale and leaseback transactions;
o create liens;
o sell assets; and
o engage in mergers and consolidations and certain other events
which could cause an event of default.
As a result of these restrictions, we are limited in how we conduct our business
and we may be unable to raise additional debt or equity financing to operate
during general economic or business downturns, to compete effectively or to take
advantage of new business opportunities. This may affect our ability to generate
revenues and make profits.
THE PROVISIONS OF OUR CERTIFICATE OF INCORPORATION, BYLAWS AND DELAWARE LAW
THAT HINDER A CHANGE IN CONTROL COULD NEGATIVELY AFFECT OUR COMMON STOCK
PRICE, DISCOURAGE BIDS FOR OUR COMPANY OR REDUCE ANY PREMIUMS THAT COULD BE
PAID TO OUR STOCKHOLDERS.
Provisions of our certificate of incorporation and bylaws may discourage, delay
or make more difficult changes in control that are not approved by our board of
directors or prevent the removal of incumbent directors. The existence of these
provisions may have a negative impact on the price of the common stock and may
discourage third-party bidders from making a bid for our company or may reduce
any premiums paid to stockholders for their common stock. In addition, our 13%
notes are redeemable on changes in our control and the removal of directors
under certain circumstances, which may have a similar effect. In particular,
these provisions prohibit stockholder action by written consent, require advance
notice for nomination of directors and for stockholders proposals and allow only
the chairman of the board or a majority of the directors to all a special
stockholders' meeting. We have 8,750,000 shares of preferred stock authorized,
none of which is currently designated. As a result, our board of directors may
designate and issue preferred stock without stockholder approval. Furthermore,
as a Delaware corporation, we are subject to Section 203 of the Delaware General
Corporation Law. In general, this law prevents a person who becomes the owner of
15% or more of the corporation's outstanding voting stock from engaging in
specified business combinations for three years unless specified conditions are
satisfied.
OUR STOCK PRICE HAS BEEN AND WILL BE VOLATILE.
The stock market has experienced extreme price and volume fluctuations. The
market prices of the securities of Internet-related and technology companies
have been especially volatile. The trading prices of many Internet-related and
technology companies' stocks have reached historical highs within the last 52
weeks and have reflected relative valuations substantially above historical
levels. During the same period, these companies' market prices have also been
highly volatile and have recorded lows well below their historical highs. Until
recently, there has been no public market for our common stock. We cannot
predict the extent to which investor interest in PNV will lead to the
development of an active trading market or how liquid that market might become.
We have suffered significant declines in the market price of our common stock.
The trading price of our common stock may fluctuate in the future. In the past,
companies that have experienced volatility in the market price of their stock
have been the object of securities class action litigation. If we were the
object of securities class action litigation, it could result in substantial
costs and a diversion of our management's attention and resources.
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FUTURE SALES OF OUR COMMON STOCK MAY NEGATIVELY AFFECT OUR STOCK PRICE.
We have a large number of shares of common stock outstanding and available for
resale beginning at various points in time in the future. The market price of
our common stock could decline as a result of sales of a large number of shares
of our common stock in the market, or the perception that such sales could
occur. These sales also might make it more difficult for us to sell equity
securities in the future at a price that we think is appropriate, or at all.
WE MAY NOT HAVE IDENTIFIED ALL THE RISKS AND UNCERTAINTIES THAT WE MAY FACE.
The risks described in this section or elsewhere in this report are not the only
ones that we may face. Although this report includes the material risks that we
are aware of at this time, additional risks that are not yet identified or that
we currently think are immaterial may materially adversely affect our business,
results of operations and financial condition in the future.
ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
The following discusses our exposure to market risk related to changes in
interest rates, equity prices and foreign currency exchange rates. This
discussion contains forward-looking statements that are subject to risk and
uncertainties. Actual results could vary materially as a result of a number of
factors including those set forth entitled "Risk Factors." We do not use any
derivative financial instruments for hedging, speculative or trading purposes.
As of March 31, 2000, we had short-term investments and restricted investments
of approximately $50.9 million and $6.1 million, respectively. Substantially all
of the short-term investments consisted of highly liquid investments with
remaining maturities at the date of purchase of less than 180 days. The
restricted investments consisted of US Treasury securities with remaining
maturities of less than one year. These investments are subject to interest rate
risk and will decrease in value if market interest rates increases. A
hypothetical increase or decrease in market interest rates by 10% from the March
31, 2000 rates would cause the fair value of these investments to decline by an
insignificant amount. We have the ability to hold these investments until
maturity and, therefore, we do not expect our operating results, cash flows or
the value of these investments to be affected to any significant degree by the
effect of a sudden change in market interest rates. Declines in interest rates
over time will, however, reduce our interest income.
We do not own any equity investments. Therefore, we do not currently have any
direct equity price risk.
At March 31, 2000, we had fixed interest rate debt of $75 million. A
hypothetical increase or decrease in market interest rates by 10% from the March
31, 2000 rates would not have a material impact on the fair market value of this
debt. We do not hedge any interest rate exposure.
All of our revenues are realized currently in U.S. dollars. In addition, we do
not maintain any asset or cash account balances in currencies other than the
United States dollar. Therefore, we do not believe that we currently have any
significant direct foreign currency exchange rate risk.
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
None.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
(c) Sales of Unregistered Securities.
During the three months ended March 31, 2000, we issued to America Online, Inc.
a warrant to purchase 287,599 shares of common stock at $6.6875 per share. We
issued this warrant in connection with an interactive services agreement that we
entered into with AOL in reliance on the exemption from registration under the
Securities Act of 1933 provided by section 4(2) thereof.
(d) Use of Proceeds from Sales of Registered Securities.
On November 30, 1999, we completed an initial public offering of our common
stock. The managing underwriters in this offering were CIBC World Markets, Allen
& Company Incorporated, Volpe Brown Whelan & Company and William Blair &
Company. The shares of common stock sold in the offering were registered under
the Securities Act of 1933, as amended, under a registration statement on Form
S-1 (Reg. No. 333-87343) that was declared effective by the SEC on November 23,
1999. Pursuant to the Registration Statement, 3,750,000 shares of common stock
were sold at a price to the public of $17.00 per share. The aggregate offering
price of the initial public offering to the public was $63,750,000. In
connection with this offering, we paid an aggregate of $4,462,050 in
underwriting discounts to the underwriters. Additional related expenses incurred
by us through March 31, 2000 were approximately $1,800,000. The net proceeds to
us from the initial public offering, after deducting underwriting discounts and
commissions and other offering expenses, were approximately $57,450,000.
Of the net proceeds, we used approximately $4,859,000 to redeem our Series A
preferred stock. As of March 31, 1999 we had not used any additional net
proceeds. Pending use of the net proceeds we have invested these funds in
short-term, investment grade, interest-bearing securities.
Other than amounts paid in connection with the redemption of the Series A
preferred stock held by entities affiliated with Patricof & Co. Ventures, Inc.,
with which two of our directors are affiliated and which, as of December 31,
1999 beneficially owns approximately 15% of PNV's outstanding common stock, none
of the net proceeds of our initial public offering were paid directly or
indirectly to any director or officer or their associates, any person owning 10%
or more of any class of our equity securities of PNV, or any affiliate.
ITEM 3. Defaults Upon Senior Securities.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
ITEM 5. OTHER INFORMATION.
None.
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits.
EXHIBIT NUMBER DESCRIPTION OF EXHIBIT
-------------- ----------------------
10.1 Interactive Services Agreement dated March 15, 2000 by
and between PNV, Inc. and America Online, Inc.
10.2 Warrant to purchase 287,599 shares of common stock
dated as of March 15, 2000, issued to America Online,
Inc.
27.1 Financial Data Schedule
(b) Reports on Form 8-K (for SEC use only).
No reports on Form 8-K were filed on behalf of PNV during the three months ended
March 31, 2000.
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PNV INC.
/s/ Robert P. May
-------------------------------------------
Robert P. May, Chief Executive Officer
Date: May 14, 2000 /s/ R. Michael Brewer
-------------------------------------------
R. Michael Brewer, Vice President - Finance
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<PAGE> 1
EXHIBIT 10.1
CONFIDENTIAL
INTERACTIVE SERVICES AGREEMENT
This Anchor Tenant Interactive Services Agreement (this "Agreement"),
effective as of March 15, 2000 (the "Effective Date"), is made and entered into
by and between America Online, Inc. ("AOL"), a Delaware corporation, with its
principal offices at 22000 AOL Way, Dulles, Virginia 20166, and PNV, Inc.
("Interactive Content Provider" or "ICP"), a Delaware corporation, with its
principal offices at 11711 NW 39th Street, Coral Springs, Florida 33065 (each a
"Party" and collectively the "Parties").
INTRODUCTION
AOL and ICP each desires that AOL provide access to the ICP Programming
through the AOL Network, subject to the terms and conditions set forth in this
Agreement. Capitalized terms used but not otherwise defined in this Agreement
shall be as defined on Exhibit B attached hereto.
TERMS
1. DISTRIBUTION; PROGRAMMING
1.1 PROMOTION AND DISTRIBUTION. Beginning on a mutually agreed
upon date(s) after the Effective Date, but not later than
sixty (60) days after the Effective Date, AOL shall provide
ICP with the promotions set forth on Exhibit A-1 provided that
ICP has achieved Site and Content Preparation pursuant to
Section 1.9. The promotions described on Exhibit A-1 and any
other promotions provided by AOL to ICP shall be referred to
as the "Promotions." Except to the extent expressly described
herein, the exact form, placement and nature of the Promotions
shall be as provided for in this Agreement or as otherwise
determined by AOL in its reasonable editorial discretion.
1.2 CONTENT. The ICP Programming shall consist of the Content
described on the programming plan attached as Exhibit A-2 (the
"Programming Plan"). ICP has informed AOL of relevant search
terms and terminology associated with popular areas and
functionality within the ICP Internet Site and ICP Programming
for AOL's promotional and Content integration purposes. AOL
will provide links to the ICP Programming within the AOL
Network (as described below) when the following search terms
are used: Trucker, Truckers, Trucking, Truckin, PNV,
ParkNView, Truck, Trucks, Rig, Peterbilt, Mack, Kenworth,
Freightliner, Longhaul, Long Haul, Truck Stop, or Truckstop,
to the extent that those search terms are used in a manner
intended solely to elicit trucking industry related content.
The inclusion of any additional Content within the ICP
Programming (including, without limitation, any features,
functionality or technology) not expressly described on
Exhibit A shall be subject to AOL's prior written approval.
AOL will develop a Trucker/Trucking related area within its
Workplace channel for users of the AOL Service to access the
Licensed Content.
1.3 LICENSE. ICP hereby grants AOL a nontransferable,
non-exclusive worldwide license to use, market, license (to
AOL Affiliates or AOL Properties), store, distribute,
reproduce, display, adapt, communicate, perform, translate,
transmit, and promote the ICP Programming and the Licensed
Content (or any portion thereof) through the AOL Network as
set forth in this Agreement or as AOL may determine in its
reasonable discretion, including without limitation the right
to integrate Content from the ICP Programming by linking to
specific areas thereon, provided that the link to any such
Content on the AOL Network shall conform to the specifications
of an ICP Presence. If AOL's integration or use of Content
from the ICP Programming results in ICP being in violation of
a third party agreement with respect to the Content in
question, ICP shall promptly give written notice to AOL
regarding ICP's restrictions with respect to such Content. AOL
shall remove such Content in a timely manner. Any Linked
<PAGE> 2
ICP Interactive Sites shall be subject to the foregoing
license. Subject to the terms and conditions herein, ICP shall
retain all right, title and interest to the Licensed Content.
1.4 MANAGEMENT. ICP shall design, create, edit, manage, review,
update (on a daily basis or as otherwise specified herein),
and maintain the ICP Programming and the Licensed Content in a
timely and professional manner and in accordance with the
terms of this Agreement and shall keep the Licensed Content
current, accurate and well-organized at all times. ICP shall
ensure that the Licensed Content within the ICP Programming is
equal to or better than the Content distributed by ICP through
any other ICP Interactive Site in all material respects,
including without limitation, quality, breadth, depth,
timeliness, functionality, features, prices of products and
services and terms and conditions, provided that any material
changes to the ICP Programming or the Licensed Content
necessary to comply with this sentence shall be subject to
AOL's review and approval and the terms of this Agreement.
Except as specifically provided for herein, AOL shall have no
obligations of any kind with respect to the ICP Programming.
ICP shall be responsible for any hosting or communication
costs associated with the Secondary Page and ICP Programming
(including any Linked Interactive Sites), including, without
limitation, the costs associated with (i) any agreed-upon
direct connections between the AOL Network and the ICP
Programming. AOL Members shall not be subject to a
registration process (or any similar process) in order to gain
access and use the ICP Programming (including any Linked ICP
Interactive Site) or the Licensed Content. AOL acknowledges
that ICP has certain limited areas on the Primary Site that
requires all users to register limited information. ICP shall
ensure that such registration requirements are not unduly
burdensome on AOL Members or otherwise hinder AOL Member's use
of the Primary Site . During the Term and for the two (2) year
period after the expiration or termination thereof, ICP shall
allow AOL Members to access and use any ICP Interactive Site
on terms and conditions no less favorable than the terms and
conditions available to other users of such ICP Interactive
Site. In the event ICP fails to comply with any material term
of this Agreement, including without limitation ICP's
obligations under this Section 1.4 or its promotional
obligations under Section 2, AOL will have the right (in
addition to any other remedies available to AOL hereunder) to
decrease the promotion it provides to ICP hereunder and/or to
decrease or cease any other contractual obligation of AOL
hereunder until such time as ICP corrects its non-compliance,
in which event AOL will be relieved of the proportionate
amount of any promotional commitment made to ICP by AOL
hereunder corresponding to such decrease in promotion.
1.5 CARRIAGE FEE. ICP shall pay AOL $ 8,000,000.00 as follows:
1.5.1 CASH PAYMENT. ICP shall pay AOL $8,000,000.00 as
follows: $2,000,00000 on the Effective Date and
$1,000,000.00 on or before each of the dates that are
three (3) months, six (6) months, nine (9) months,
twelve (12) months, fifteen (15) months and eighteen
(18) months respectively, after the Effective Date.
1.6 WARRANTS. In connection with the obligations of the Parties
hereunder, and subject to the provisions hereof, ICP shall
enter into a Common Stock Subscription Warrant Agreement
substantially in the form of Exhibit I attached hereto (the
"Warrant Agreement"). In the event ICP has not entered into
the Warrant Agreement within thirty (30) days of the Effective
Date, AOL shall have the right to delay performance of its
obligations hereunder until such time as ICP shall have
entered into the Warrant Agreement or AOL may terminate this
Agreement, at its discretion.
1.7 IMPRESSIONS TARGET. AOL shall provide ICP, pursuant to the
terms and conditions of the Agreement, with at least
277,259,888 Impressions from placement of ICP Presences on the
AOL Network (the "Impressions Target"), provided that only
screens that contain a Banner Placement or a link to the ICP
Programming or Secondary Page will count against the
Impressions Target.
CONFIDENTIAL
2
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Any shortfall in Impressions from a particular AOL Property or
area within an AOL Property may be made up by over-delivery of
Impressions in another AOL Property or area after AOL consults
with ICP regarding where the Impressions shortfall will be
made up. In the event AOL provides an excess of any annual
Impressions target in any year, the Impressions target for the
subsequent year shall be reduced by the amount of such excess.
Any shortfall in Impressions at the end of a year will not be
deemed a breach of this Agreement by AOL; instead such
shortfall will be added to the Impressions target for the
subsequent year. In the event that the Impressions Target is
not met (or will not, in AOL's reasonable judgment, be met)
during the Term, then as ICP's sole remedy, at AOL's option
either (a) the Term shall be extended for up to six (6) months
without additional carriage fees payable by ICP, (b) AOL
shall, from time to time, provide ICP with the remaining
Impressions in the form of advertising space within the AOL
Network of comparable value to the undelivered Impressions (as
reasonably determined by AOL), or (c) some combination
thereof.
1.8 MEMBER BENEFITS. ICP will generally promote through the ICP
Programming any special or promotional offers made available
by or on behalf of ICP through any ICP Interactive Site or any
other distribution channel. In addition, ICP shall promote
through the ICP Programming on a regular and consistent basis
special offers exclusively available to AOL Members ("AOL
Exclusive Offers"). ICP shall feature at least one AOL
Exclusive Offer for AOL Members (except as otherwise mutually
agreed upon by the Parties) at least once per quarter. The AOL
Exclusive Offer made available by ICP shall provide a
substantial member benefit to AOL Members, either by virtue of
a meaningful price discount, product enhancement, unique
service benefit or other special feature. ICP will provide AOL
with reasonable prior notice of AOL Exclusive Offers and other
special offers so that AOL can, in its editorial discretion,
market the availability of such offers.
1.9 SITE AND CONTENT PREPARATION. ICP shall achieve Site and
Content Preparation within sixty (60) days after the Effective
Date. "Site and Content Preparation" shall mean that ICP shall
have completed all necessary production work (including
completion of all necessary training for AOL's proprietary
"Rainman" publishing tool) for the Secondary Page, ICP
Programming and any other related areas or screens (including
programming all Content thereon); customized and configured
the Secondary Page and ICP Programming in accordance with this
Agreement; and completed all other necessary work (including,
without limitation, undergone all AOL site testing set forth
on Exhibit E) to prepare the Secondary Page,all ICP
Programming and any other related areas or screens to launch
on the AOL Network as contemplated hereunder. In the event ICP
has not achieved Site and Content Preparation within sixty
(60) days after the Effective Date, then in addition to any
other remedies available, the Impressions Target set forth in
Section 1.7 shall be reduced on a pro rata basis based on the
number of days after such sixty (60) day period that ICP
achieves Site and Content Preparation divided by 365. In the
event ICP has not achieved Site and Content Preparation within
ninety (90) days after the Effective Date, then in addition to
any other remedies available, AOL shall have the right to
terminate this Agreement by giving ICP written notice thereof.
If ICP is delayed in achieving Site and Content Preparation
solely due to a failure by AOL to perform its obligations
under this Agreement and ICP notifies AOL in writing of such
failure and the resulting delay, then the sixty (60) day and
ninety (90) day periods referenced in this Section shall each
be extended by the amount of time of ICP's delay solely
attributable to such failure by AOL.
1.10 KEYWORD. ICP shall receive AOL Keywords "ParkNView" and"PNV"
subject to the AOL Keyword Guidelines attached in Exhibit F.
The Keyword will link to the the ICP Programming within the
Workplace Channel of the AOL Service on the AOL Network.
1.11 PREMIER STATUS. ICP shall receive Premier Status on the AOL
Service. "Premier Status" shall mean that if AOL executes an
agreement with another Long Haul Trucker-related Internet
Portal
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Company for permanent placement within the Trucking area of
the AOL Service, AOL will offer ICP the same or a similar
opportunity. After receiving written notice from AOL, ICP
shall have fifteen (15) days to provide AOL with written
notice of its intent with respect to such opportunity. If ICP
elects to enter into an agreement with AOL for such
opportunity, then ICP shall execute a definitive agreement
with AOL regarding such opportunity within thirty (30) days of
AOL presenting ICP with such written agreement. AOL shall have
no further obligations under this Section 1.11.
2. CROSS-PROMOTION
2.1 COOPERATION. Each Party shall cooperate with and reasonably
assist the other Party in supplying material for marketing and
promotional activities.
2.2 INTERACTIVE SITE. Within each ICP Interactive Site, ICP shall
include a prominent actionable promotional button (at least 90
x 30 pixels or 70 x 70 pixels in size) appearing on the first
screen of the ICP Interactive Site (the "AOL Promo"), to
promote the America Online brand service. AOL will provide the
creative content to be used in the AOL Promo. At ICP's option,
ICP may promote AOL's "Bring Your Own Access" pricing plan
through a textual description next to the AOL Promo. ICP shall
post (or update, as the case may be) the creative content
supplied by AOL within the spaces for the AOL Promo within
five days of its receipt of such content from AOL. Without
limiting any other reporting obligations of the Parties
contained herein, ICP shall provide AOL with monthly written
reports specifying the number of impressions to the pages
containing the AOL Promo during the prior month. In the event
that AOL elects to serve the AOL Promo to the ICP Interactive
Site from an ad server controlled by AOL or its agent, ICP
shall take all reasonable operational steps necessary to
facilitate such ad serving arrangement, including, without
limitation, inserting HTML code designated by AOL on the pages
of the ICP Interactive Site on which the AOL Promo will
appear. In addition, within each ICP Interactive Site, ICP
shall provide prominent promotion for the keywords associated
with the ICP Internet Site and links from the ICP Interactive
Site to the relevant topic areas on AOL's AOL.com site. To the
extent ICP offers or promotes any products or services similar
to AOL's component products and services (including the AOL
Tools listed in Section 5.2(c)), ICP shall provide equal or
greater promotions for such AOL-designated products. The
preceding sentence does not apply to products or services that
are central to ICP's core Long Haul Trucker Internet access
and related services business (e.g.,truck stop ISP service,
trucks, parts, fuel etc.). ICP shall receive a bounty for
customers joining AOL from ICP Internet Site according to the
then-standard AOL Bounty plan. ICP shall also have the right
to display the AOL Instant Messenger service on any ICP
Interactive Site.
2.3 OTHER MEDIA. In ICP's television, radio, print and "out of
home" (e.g., buses and billboards, point of purchase and other
"place-based" promotions) advertisements and in any
publications, programs, features or other forms of media over
which ICP exercises at least partial editorial control, ICP
will include specific references or mentions (orally where
possible) of the availability of the ICP Internet Site through
the AOL Network. Such references or mentions shall be
prominent on the live area of any print or "out of home"
promotions, (b) at least three seconds in any thirty second
television or radio spot and five seconds in any sixty second
television or radio spot, and (c) at least 75 scan lines in
any television advertisement. In any event, such references or
mentions shall be at least as prominent as any references that
ICP makes to any ICP Interactive Site (by way of site name,
related company name, URL or otherwise). Without limiting the
generality of the foregoing, ICP's listing of the "URL" for
any ICP Interactive Site will be accompanied by an equally
prominent listing of the "keyword" term on AOL for the ICP
Internet Site, which listing shall conform to the keyword
guidelines attached hereto as Exhibit F. All such references
or mentions of AOL, and the use of AOL's trademarks, trade
names and service marks in connection therewith, shall be in
accordance with Section II of
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Exhibit C. If ICP determines in a particular case that it is
not possible or commercially reasonable to include an AOL
promotional reference, ICP shall provide AOL with prior
written notice of such instance and obtain AOL's prior written
consent (not to be unreasonably withheld) before running such
promotion.
2.4 Preferred Browser. ICP shall promote the Netscape browser as
the preferred browser for users to access ICP Interactive Site
and ICP Programming.
3. REPORTING; PAYMENT.
3.1 AOL USAGE REPORTING. AOL shall make available to ICP a monthly
report specifying for the prior month aggregate usage and
Impressions with respect to ICP's presence on the AOL Network,
which are similar in substance and form to the reports
provided by AOL to other content partners similar to ICP.
3.2 ICP INTERNET SITE REPORTING. ICP will supply AOL with monthly
reports which reflect total impressions by AOL Members to the
ICPProgramming, the aggregate dollar value associated with
transactions involving AOL Members, including sales by
categories of products, and the screen names of AOL Members,
to the extent ICP obtains such screen name(s), involved in any
such transactions during the prior month. ICP represents that
all URLs related to the ICP Primary Site are listed on Exhibit
A-2 and ICP shall provide AOL with an update of such list
promptly upon any change thereto. ICP shall also supply AOL
with reports prepared in compliance with the AOL.com and
Netscape reporting requirements attached hereto as Exhibit H.
3.3 PROMOTIONAL COMMITMENTS. ICP shall provide to AOL a monthly
report documenting its compliance with any promotional
commitments it has undertaken pursuant to this Agreement in
the form attached as Exhibit D hereto, and ICP shall provide
AOL with impressions data with respect to the promotions
specified in Section 2.
3.4 PAYMENT SCHEDULE. Except as otherwise specified herein, each
Party agrees to pay the other Party all amounts received and
owed to such other Party as described herein on a quarterly
basis within sixty (60) days of the end of the quarter in
which such amounts were collected by such Party. The first
quarter for which payment is to be made shall (i) begin on the
first day of the month following the month of execution of
this Agreement and (ii) include the portion of the month of
execution following the Effective Date (unless this Agreement
was executed on the first day of a month, in which case the
quarter shall be deemed to begin on the first day of such
month).
3.5 WIRED PAYMENTS. All payments by ICP hereunder shall be paid in
immediately available, non-refundable U.S. funds wired to the
"America Online" account, Account Number 323070752 at the
Chase Manhattan Bank, 1 Chase Manhattan Plaza, New York, New
York 10081 (ABA: 021000021), or such other account of which
AOL shall give ICP written notice.
4. ADVERTISING AND MERCHANDISING
4.1 AOL NETWORK ADVERTISING INVENTORY. AOL owns all right, title
and interest in and to the advertising and promotional spaces
within the AOL Network including, without limitation, the ICP
Internet Site, ICP Programming, ICP Interactive Site and AOL
Frames and shall have the right to all revenues therefrom. The
specific advertising inventory within any AOL forms or pages,
including such AOL Frames, shall be as reasonably determined
by AOL.
4.2 ICP SALE OF ADVERTISEMENTS. ICP hereby grants AOL the
exclusive right to sell or license advertisements for one
hundred percent (100%) of the total advertising or promotional
inventory of the Primary Site or any other ICP Interactive
Site ("AOL Advertisements"). With respect to any unsold
inventory, as mutually agreed upon between AOL and ICP, AOL
and ICP will divide
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such unsold inventory equally (i.e., 50% to AOL and 50% to
ICP) for the purpose of running house advertisements. ICP
shall receive Sixty percent (60%) of the Advertising Revenues
generated from AOL sale of advertisements on or through the
Primary Site. AOL agrees to use commercially reasonable
efforts to sell or license the available advertising and
promotional inventory referenced herein.
4.3 TERMS OF ADVERTISING SALES. Within thirty (30) days after the
Effective Date, ICP shall provide AOL with a written report
containing the following information with respect to the
Advertising Site (the "Site Audit"): a site map of the
Advertising Site; a categorization of all advertising
inventory within the Advertising Site; a current list of ICP's
advertisers together with contact information; a current
summary of all commitments with respect to the advertising
inventory on the Advertising Site; training materials for
AOL's advertising sales force; and the most recent reports
provided to the advertisers on the Advertising Site. ICP
acknowledges that AOL will require at least ninety (90) days
after receiving the Site Audit to review the Advertising Site,
educate its sales force regarding the Advertising Site and
prepare its ad server to serve Advertisements into the
Advertising Site. ICP represents and warrants that (i) except
as expressly set forth in the Site Audit, there are no
agreements, arrangements, encumbrances or third party rights
(including without limitation exclusivities) that affect
advertising inventory within the Advertising Site and (ii) ICP
shall not enter into any such agreements or arrangements or
grant any such encumbrances or third party rights, in each
case without AOL's prior written consent. AOL shall have the
right during the term of this Agreement to represent to the
public that it is an authorized independent sales
representative of ICP for any and all Advertisements within
the Advertising Site. In connection therewith, AOL may take
any actions which AOL deems helpful or advisable to conducting
its activities pursuant to this Agreement and AOL shall have
the sole right to determine (i) the applicable quotations or
terms of sale for any Advertisement, and (ii) the offering of
any allowances or adjustments in accounts for any
Advertisement. AOL shall have the right to sublicense its
rights under this Agreement to third parties. The Parties
shall work together to determine the amount and location of
the advertising inventory on the Advertising Site and to
create additional advertising inventory taking into account
user experience. ICP shall not change the advertising
inventory on the Advertising Site without AOL's prior written
consent. ICP shall notify AOL in writing if ICP objects to any
particular advertisement sold by AOL. AOL shall remove such
advertisement in a timely manner.
4.4 ADVERTISING PAYMENTS. Advertisers shall be directed to pay to
AOL all amounts generated from the sale of Advertisements by
AOL or its agents during the term of this Agreement. In the
event any Advertiser remits any payment for Advertisements
sold by AOL directly to ICP rather than to AOL, ICP agrees to
make prompt payment to AOL of all such payments. AOL will
remit ICP's share of Advertising Revenues to ICP, after
deducting the Commission and the Revenue Split, on a quarterly
basis within sixty (60) days after the end of the quarter in
which such Advertising Revenues arise. AOL is not liable to
ICP for any amounts not paid by Advertisers.
4.5 ADVERTISEMENTS SERVING. AOL will serve Advertisements on the
Advertiser Site at any time, either directly on its own server
or by contracting with a third party server. If AOL elects to
serve, or have a third party serve, the Advertisements, ICP
agrees to take all reasonable steps necessary to facilitate
AOL's serving of the Advertisements, including, without
limitation, by maintaining the computer code on the
Advertising Site at all times in order to display the
Advertisements as required under this Agreement.
4.6 INTERACTIVE COMMERCE. Any merchandising permitted hereunder
through the Secondary Pageand/or ICP Programming shall be
subject to (i) the then-current requirements of AOL's merchant
certification program, (ii) AOL's standard terms and
conditions applicable to its interactive marketing partners,
and (iii) prior approval by AOL of all products, goods and
services to be offered through the Secondary Page or the ICP
Programming. AOL hereby
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approves the of ICP's promotion and sale of internet service
to truckers through the ICP Programming and Secondary Page ,
provided that such service is promoted as only being available
at truckstops and not competitive to AOL's internet access
services. ICP will take all reasonable steps necessary to
conform its promotion and sale of Products through the
Secondary Page and ICP Programming to the then-existing
technologies identified by AOL which are optimized for the AOL
Service including, without limitation, any "quick checkout"
tool where commercially reasonable which AOL may implement to
facilitate purchase of Products by AOL Members through the ICP
Programming. Prior to entering into negotiations with any
third party regarding merchandising or commerce arrangements
through the Secondary Page and/or ICP Programming, ICP shall
give AOL written notice of such desire and, upon request by
AOL, negotiate in good faith with AOL or its commerce or
marketing partner in the applicable product/service category
regarding a merchandising or commerce arrangement.
5. CUSTOMIZED ICP PROGRAMMING AND SECONDARY PAGE
5.1 PRODUCTION; PERFORMANCE. ICP shall optimize all ICP
Programming and the Secondary Page for distribution hereunder
according to AOL specifications and guidelines (including,
without limitation, any HTML publishing guidelines) and the
Operating Standards set forth on Exhibit E attached hereto.
5.2 CUSTOMIZATION. ICP shall customize all ICP Programming and the
Secondary Page for AOL Members as follows:
(a) ICP shall customize and co-brand the Secondary
Page and ICP Programming for distribution over the
AOL Properties listed in Exhibit A-1 using AOL's
design guideline templates and co-branding
requirements, including by (x) displaying on the
Secondary Page framing (e.g., C-frame, side
navigation/menu bars, headers and footers) of size
and type determined by AOL and which contain branding
for the applicable AOL Property and ICP as determined
by AOL and, as determined by AOL, links to the
applicable AOL Property, a search box and/or
promotional spaces to be programmed by AOL, and (y)
matching the look and feel of the applicable AOL
Property on the ICP Programming. In addition, ICP
shall comply with any customization and co-branding
requirements set forth on Exhibit A. ICP shall make
any changes to the customization and/or co-branding
of the Secondary Page and ICP Programming to conform
to the standard requirements of any AOL Property or
otherwise reasonably requested by AOL during the
Term.
(b) ICP shall ensure that AOL Members accessing the
ICP Programming or linking to the Secondary Page or
Primary Site do not receive advertisements,
promotions or links (i) for any entity reasonably
construed to be in competition with AOL or the
applicable AOL Property, (ii) in a category in which
AOL or the applicable AOL Property has an exclusive
or other preferential relationship, or (iii)
otherwise in violation of the applicable AOL
Property's then-standard advertising policies. AOL
hereby approves of ICP'spromotion of internet service
to truckers through the Secondary Page ICP
Programming, provided that such service is promoted
as only being available at truckstops and not
competitive to AOL's internet access services. ICP
shall ensure that all Advertisements sold by ICP or
its agents comply with all applicable federal, state
and local laws and regulations.
(c) Run of Service Banner Placements, as set forth in
Exhibit A, for ICP within the AOL Network shall
linked directly to the Primary Site which may contain
ICP's own community and communications utilities and
functionality (e.g., chat, message boards), but must
otherwise comply with all other restrictions on ICP
Programming described herein. Links to from the ICP
Programming in the Workplace Channel Trucker's area
on the AOL Service shall be programmed to click
through to a Secondary Page (e.g., an "article of the
day")
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within the ICP Programming which shall not contain
ICP's own community and communications utilities and
functionality mentioned above. ICP may include a link
on the Secondary Page that directs AOL Members to the
home page of the Primary Site where ICP's own
communications and community functionality tools may
exist.
(d) ICP shall host all pages of the ICP Programming
and Secondary Page under a domain name co-branded
with the applicable AOL Property (i.e., pnv.aol.com)
and traffic to pages hosted on any such domain name
shall be deemed to be AOL and ICP traffic. ICP agrees
that for the purpose of third party industry
measurement metrics (such as Media Metrix and
Relevant Knowledge), the traffic (i.e., page views)
within such pages and sites shall be exclusively
attributable to AOL.
5.3 LINKS ON ICP PROGRAMMING. The Parties will work together on
mutually acceptable links (including links back to AOL) within
the ICP Programming in order to create a robust and engaging
AOL member experience and the ICP Programming shall not
contain any pointers or links to any other area on or outside
the AOL Network without AOL's prior written consent, other
than standard advertising that otherwise complies with this
Agreement. ICP shall take reasonable efforts to ensure that
AOL traffic is generally either kept within the ICP
Programming or channeled back into the AOL Network and ICP
shall ensure that the ICP Programming contain no permanent or
semi-permanent links for third party Content, nor any
rotational links for aggregated Content within the same
Content category or channel as ICP, except as specifically set
forth in the Programming Plan. To the extent that AOL notifies
ICP in writing that, in AOL's reasonable judgment, links from
the ICP Programming cause an excessive amount of AOL traffic
to be diverted outside of such site and the AOL Network in a
manner that has a detrimental effect on the traffic flow of
the AOL audience, then ICP shall immediately reduce the number
of links out of such site(s). In the event that ICP cannot or
does not so limit diverted traffic from such site, AOL
reserves the right to terminate such links from the AOL
Network to such site.
5.4 REVIEW. ICP shall allow appropriate AOL personnel to have
reasonable access to all ICP Programming and Secondary Page
from time to time for the purpose of reviewing such sites to
determine compliance with the provisions of this Section 5.
6. TERM, TERMINATION, PRESS RELEASES.
6.1. TERM. Unless earlier terminated as set forth herein, the
initial term of this Agreement shall commence on the Effective
Date and expire twenty six months (26) months from the
Effective Date. Upon the expiration or earlier termination of
this Agreement, AOL may, at its discretion, continue to
promote one or more "pointers" or links from the AOL Network
to an ICP Interactive Site and continue to use ICP's trade
names, trade marks and service marks in connection therewith
(collectively, a "Continued Link").
6.2 TERMINATION FOR BREACH. Either Party may terminate this
Agreement at any time in the event of a material breach by the
other Party which remains uncured after thirty (30) days
written notice thereof; provided, however, that AOL will not
be required to provide notice to ICP in connection with ICP's
failure to make any payment required under Section 1.5, and
the cure period with respect to any scheduled payment shall be
fifteen (15) days from the date such payment is due.
6.3 TERMINATION FOR BANKRUPTCY/INSOLVENCY OR CHANGES IN BUSINESS.
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
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involuntary) which is not dismissed within ninety (90)
calendar days or (iv) makes an assignment for the benefit of
creditors.
6.4 PRESS RELEASES. Each Party will submit to the other Party, for
its prior written approval, which will 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 elect either to (a) terminate this Agreement
immediately upon notice to the other Party, or (b) elect to
modify the Impressions commitment hereunder by fifteen percent
(15%) (i.e., either an increase in the Impressions commitment
if AOL has violated this provision or a decrease in the
Impressions commitment if ICP has violated this provision).
The Parties agree that the liquidated damages set forth in the
preceding sentence are a reasonable approximation of the
injury that would be suffered by the non-breaching Party.
7. TERMS AND CONDITIONS. The terms and conditions set forth on the
Exhibits attached hereto are hereby made a part of this Agreement.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as
of the Effective Date.
AMERICA ONLINE, INC. PNV, INC.
By: /s/ David M. Colburn By: /s/ Steven Yevoli
--------------------------------- ---------------------------
Print Name: David M. Colburn Print Name: Steven Yevoli
------------------------ -------------------
Title: President, Business Affairs Title: President, PNV.COM
------------------------------ -----------------------
Date: March 21, 2000 Date: March 17, 2000
------------------------------- ------------------------
Tax ID/EIN#:
-----------------
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EXHIBIT A
EXHIBIT A-1: BANNER PLACEMENTS BROKEN OUT BY AOL PROPERTY
CLIENT: PNV
TARGETS ARE SUBJECT TO SECTION 1.7
<TABLE>
<CAPTION>
AOL SERVICE YEAR 1 YEAR 2 TOTALS
COPY SIZE IMPS/Y1 IMPS/Y2 IMPS
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sports ROS 234X60
2,640,000 2,956,800 5,596,800
News ROS 234X60
2,640,000 2,956,800 5,596,800
Entertainment ROS 234X60
900,000 1,008,000 1,908,000
Personal Finance ROS 234X60
1,800,000 2,016,000 3,816,000
Workplace ROS 234X60
1,320,000 1,478,400 2,798,400
Slingo Daughter Ad 234X60
8,400,000 9,408,000 17,808,000
The Game Parlor 234X60
2,113,596 2,367,228 4,480,824
Grandstand - Wrestling Sponsor 88X31
733,098 821,070 1,554,168
Grandstand - Wrestling Banners 234X60
427,641 821,070 1,248,710
Auto Enthusiast 120X60
650,844 728,945 1,379,789
Auto Racing News - Feature Articles 234X60
146,160 163,699 309,859
Auto Racing News - More Stories (All) 234X60
99,624 111,579 211,203
</TABLE>
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<TABLE>
<S> <C> <C> <C> <C>
Auto Racing Top Sites Index 234X60
58,788 65,843 124,631
Daytona 500 Gold Sponsor 234X60 &
88X31 90,000 100,800 190,800
Brickyard 400 Premiere Sponsor 234X60 &
88X31 135,000 151,200 286,200
Travel - Destination Search 234X60
1,807,200 2,024,064 3,831,264
Demo Targeted Email (TBD) 175X45
8,520,000 9,542,400 18,062,400
Love@AOL 468X60
- -------- 15,018,000 16,820,160 31,838,160
Chat ROS 175X45
19,800,000 22,176,000 41,976,000
AOL Search Directory - Directory - Business - Trucking 468X60
(To be created) - - -
Keyword: PNV & Park N View keyword - - -
Trucker's Industry Page in Workplace Sponsor Position 234X60 - - -
Find a Chat In Special Interests for Truckers and Chatroom
their Families - - -
Email 175X45
8,400,000 9,408,000 17,808,000
=======================================================================================================================
75,699,951 85,126,057 160,826,007
SEARCH 2000 YEAR 1 YEAR 2 TOTALS
COPY SIZE IMPS/Y1 IMPS/Y2 IMPS
- -----------------------------------------------------------------------------------------------------------------------
Trucker 468X60
36,000 40,320 76,320
Truckers 468X60
96,000 107,520 203,520
PNV 468X60
- - -
Trucking 468X60
408,000 456,960 864,960
Truckin 468X60
24,000 26,880 50,880
Truck 468X60
900,000 1,008,000 1,908,000
Trucks 468X60
660,000 739,200 1,399,200
Rig 468X60
12,000 13,440 25,440
Peterbilt 468X60
48,000 53,760 101,760
Mack 468X60
84,000 94,080 178,080
Kenworth 468X60
48,000 53,760 101,760
Long Haul 468X60
- - -
Freightliner 468X60
48,000 53,760 101,760
Truckstop 468X60
24,000 26,880 50,880
Truck Stop 468X60 - - -
Longhaul 468X60 - - -
=======================================================================================================================
2,388,000 2,674,560 5,062,560
DCI YEAR 1 YEAR 2 TOTALS
COPY SIZE IMPS/Y1 IMPS/Y2 IMPS
- -----------------------------------------------------------------------------------------------------------------------
DCI News & Weather ROS 234X60
1,200,000 1,344,000 2,544,000
DCI Sports Graphical Promo 42X42
</TABLE>
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<TABLE>
<S> <C> <C> <C> <C>
2,400,000 2,688,000 5,088,000
DCI Chat 234X60
2,400,000 2,688,000 5,088,000
DCI ROS 234X60
759,600 850,752 1,610,352
========================================================================================================================
6,759,600 7,570,752 14,330,352
NETSCAPE YEAR 1 YEAR 2 TOTALS
COPY SIZE IMPS/Y1 IMPS/Y2 IMPS
- -----------------------------------------------------------------------------------------------------------------------
Autos- Car Fans Banner - - -
Autos- Used Cars Banner - - -
Open Directory - Directory - Business - Trucking/Freight
(To be created) - - -
- -----------------------------------------------------------------------------------------------------------------------
TOTAL NETSCAPE BANNERS, B2B, AND PARTNER B2B 13,020,000 14,421,733 27,441,733
-
=======================================================================================================================
13,020,000 14,421,733 27,441,733
CROSS BRAND PRODUCTS YEAR 1 YEAR 2 TOTALS
COPY SIZE IMPS/Y1 IMPS/Y2 IMPS
- -----------------------------------------------------------------------------------------------------------------------
Yellow Pages - Total Cities Listing (Trucking, Truck 468X60 - - -
Transport, Terms TBD)
Yellow Pages - Automotive Main 468X60
154,356 172,879 327,235
Yellow Pages - Automotive Parts and Repair 468X60
85,860 96,163 182,023
Yellow Pages - Automotive Services 468X60
1,059,612 1,186,765 2,246,377
=======================================================================================================================
1,299,828 1,455,807 2,755,635
PARTNER YEAR 1 YEAR 2 TOTALS
COPY SIZE IMPS/Y1 IMPS/Y2 IMPS
- -----------------------------------------------------------------------------------------------------------------------
American Greetings ROS 468X60
15,000,000 16,800,000 31,800,000
Ebay ROS 468X60
15,000,000 16,800,000 31,800,000
Realtor.com ROS 468X60
1,200,000 1,344,000 2,544,000
Net Noir ROS 234X60
330,000 369,600 699,600
=======================================================================================================================
31,530,000 35,313,600 66,843,600
- -----------------------------------------------------------------------------------------------------------------------
TOTALS 130,697,379 146,562,510 277,259,888
CPM
</TABLE>
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EXHIBIT A-2: PROGRAMMING PLAN:
SECTION 1: CONTENT
GENERAL REQUIREMENTS
1. Programming ICP is required to provide:
- Daily news for the trucking professional
- Articles and features, including PNV Truckstops, Freeway,
content from Connect Magazine, Your Rig, Sound Off, Trucking
Life, Truckers Finance
- Trucking Services, including Transportation Agencies, Traffic
& Roads, Trucking Associations
- Various Trucking "essentials," to be determined by WorkPlace
and PNV.com
Integration
TRUCKING PROFESSIONS PAGE: This HTML page will have a "presented by PNV.com"
logo. AOL will create promo text links that connect to a co-branded page,
created by PNV.com (see co-branded image below). AOL and PNV.com will together
decide which articles, resources, guides, etc. are to be promoted on the
Trucking Professions page.
2. Programming ICP is required to provide on an exclusive basis: None
3. ICP-provided live events: None
4. Content requiring daily or other regular updates: News
5. Publishing format(s): HTML
6. Anticipated CS or Technology production requirements and launch
contingencies: None
7. ICP's current content, or any possible future content, to be explicitly
excluded from the ICP's area on AOL: PNV.com's email, Chat, Calendar,
and Classifieds areas
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EXHIBIT B -- DEFINITIONS
DEFINITIONS. The following definitions shall apply to this Agreement:
ADVERTISEMENTS. Promotions, advertisements, links, pointers and similar services
or rights.
ADVERTISING REVENUES. Aggregate amounts collected plus the fair market value of
any other compensation received (such as barter advertising) by ICP or ICP's
agents, as the case may be, arising from the license or sale of AOL
Advertisements, less applicable Advertising Sales Commissions.
ADVERTISING SALES COMMISSION. In the case of an AOL Advertisement, actual
amounts paid as commission to third party agencies or AOL, as the case may be,
in connection with sale of the AOL Advertisement.
ADVERTISING SITE. The Generally Available Site or any ICP Interactive Site in
which AOL has the right to sell advertisements.
AFFILIATE. Any agent, distributor or franchisee of AOL, or an entity that,
directly or indirectly, controls, is controlled by, or is under common control
with AOL, including any entity in which AOL holds, directly or indirectly, at
least a nineteen percent (19%) equity interest.
AOL SERVICE. The standard narrow-band U.S. version of the America Online(R)
brand service, specifically excluding (a) AOL.comSM and any other AOL
Interactive Site, (b) the international versions of an America Online service
(e.g., AOL Japan), (c) the CompuServe(R) brand service and any other CompuServe
products or services, (d) Netscape Netcenter(TM) and any other Netscape(R)
products or services, (e) "ICQsm," "AOL NetFiNDsm," "AOL Instant MessengERsm,"
"Digital CiTYsm," "AOL NetMailSM," "Real FansSM", "Love@AOLSM", "Entertainment
AsylumSM," "AOL HometownSM" or any similar independent product, service or
property which may be offered by, through or with the U.S. version of the
America Online(R) brand service, (f) any programming or content area offered by
or through the U.S. version of the America Online(R) brand service over which
AOL does not exercise complete operational control (including, without
limitation, Content areas controlled by other parties and member-created Content
areas), (g) 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 America Online(R) brand service, (h) any property, feature, product or
service which AOL or its affiliates may acquire subsequent to the Effective Date
and (i) any other version of an America Online service which is materially
different from the standard narrow-band U.S. version of the America Online 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.
AOL.COM. AOL's primary Internet-based Interactive Site marketed under the
"AOL.COM(SM)" brand, specifically excluding (a) the AOL Service, (b) any
international versions of such site, (c) CompuServe.com, Netscape Netcenter, any
other CompuServe or Netscape products or services or interactive sites, (d)
"ICQ{SM)," "AOL NetFind(SM)," "AOL Instant Messenger(SM)," "AOL NetMail(SM)" or
any similar independent product or service offered by or through such site or
any other AOL Interactive Site, (e) any programming or Content area offered by
or through such site over which AOL does not exercise complete operational
control (including, without limitation, Content areas controlled by other
parties and member-created Content areas), (f) any programming or Content area
offered by or through the U.S. version of the America Online brand service which
was operated, maintained or controlled by the former AOL Studios division, (g)
any yellow pages, white pages, classifieds or other search, directory or review
services or Content offered by or through such site or any other AOL Interactive
Site, (h) any property, feature, product or service which AOL or its affiliates
may acquire subsequent to the Effective Date and (i) any other version of an
America Online Interactive Site which is materially different from AOL's primary
Internet-based Interactive Site marketed under the "AOL.COM" brand, by virtue of
its branding, distribution, functionality, Content or services, including,
without limitation, any co-branded versions and any version distributed through
any broadband distribution platform or through any platform or device other than
a desktop personal computer.
AOL PROPERTY. Any product, service or property owned, operated, marketed,
distributed, or authorized to be distributed by or through AOL or its
Affiliates, including, without limitation, the AOL Service, AOL.com, and AOL
Hometown.
AOL LOOK AND FEEL. The elements of graphics, design, organization, presentation,
layout, user interface, navigation, trade dress and stylistic convention
(including the digital implementations thereof) within the AOL Network and the
total appearance and impression substantially formed by the combination,
coordination and interaction of these elements.
AOL MEMBER(S). Any user of the AOL Network, including authorized users
(including any sub-accounts under an authorized master account) of the AOL
Service and/or the CompuServe Service.
AOL NETWORK. (i) The AOL Service, AOL.com, and (ii) any other product, service
or property owned, operated, distributed or authorized to be distributed by or
through AOL or its Affiliates worldwide (and including those products, services
and properties that are excluded from the definitions of the AOL Service,
AOL.com or any other AOL Property). It is understood and agreed that the rights
of ICP relate solely to particular AOL Properties as expressly set forth in this
Agreement and not generally to the AOL Network.
BANNER PLACEMENTS. Non-continuos or non-permanent placements of banners within
the AOL Network that link to from the ICP Internet Site.
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 1934,
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.
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 AOL Members,
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, (b)
disclosed in published materials, (c) generally known to the public, or (d)
lawfully obtained from any third party.
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, URLs, keywords and other navigational
elements, links, pointers, technology and software.
KEYWORD(TM) SEARCH TERMS. (a) The Keyword online search terms made available on
the AOL Service, combining AOL's Keyword online search modifier with a term or
phrase specifically related to ICP (and determined in accordance with the terms
of this Agreement) and (b) the Go Word online search terms made available on the
CompuServe Service, combining CompuServe's Go Word online search modifier with a
term or phrase specifically related to ICP (and determined in accordance with
the terms of this Agreement).
ICP INTERACTIVE SITE. Any interactive site or area (other than ICP Programming),
including any mirrored site or area, which is managed, maintained or owned by
ICP or its agents or to which ICP provides and/or licenses information, content
or other materials, including, by way of example and without limitation, (i) an
ICP 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 or interactive
television service such as WebTV.
ICP PRESENCE. Any (a) ICP trademark or logo, Banner Placements (b) headline or
picture from ICP Content, (c) teaser, icon, or link to the ICP Internet Site or
ICP Programming and/or (d) other Content which originates from, describes or
promotes ICP or ICP's Content.
ICP PROGRAMMING. Any (a) area within the AOL Network or outside the AOL Network
but exclusively available to AOL Members, which area is developed, programmed,
and/or managed by ICP, in whole or in part, pursuant to this Agreement and all
Content thereon (including, without limitation, message boards, chat and other
AOL Member-supplied content areas contained therein) including, without
limitation, any co-branded site or page, but excluding the ICP Internet Site and
(b) Content provided to AOL by ICP pursuant to this Agreement for distribution
on or through the AOL Network other than on the ICP Internet Site.
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IMPRESSION. User exposure to an ICP Presence, as such exposure may be reasonably
determined and measured by AOL in accordance with its standard methodologies and
protocols.
INTERACTIVE SERVICE. An entity offering one or more of the following: (i) online
or Internet connectivity services (e.g., an Internet service provider); (ii) an
interactive site or service featuring a broad selection of aggregated third
party interactive content (or navigation thereto) (e.g., an online service or
search and directory service) and/or marketing a broad selection of products
and/or services across multiple interactive commerce categories; (iii) a
persistent desktop client; or (iv) communications software capable of serving as
the principal means through which a user creates, sends or receives electronic
mail or real time or "instant" online messages (whether by telephone, computer
or other means).
LINKED INTERACTIVE SITE. Any site or area outside of the AOL Network which is
linked to ICP Programming (through a "pointer" or similar link) subject to
approval by AOL in accordance with the terms and conditions of this Agreement.
LINKED ICP INTERACTIVE SITE. Any ICP Interactive Site which is also a Linked
Interactive Site.
LICENSED CONTENT. All Content offered through the ICP Internet Site pursuant to
this Agreement or otherwise provided by or on behalf of ICP or its agents in
connection herewith (e.g., offline promotional content or online Content for
distribution through the AOL Network), including without limitation all ICP
Programming.
LONG HAUL TRUCKER. Transportation companies, entities or persons operating for
the purpose of hauling freight for commercial purposes.
PRIMARY SITE. The Internet site and Content, currently located at
URL:http://www.pnv.com and all related URLs, which are managed, maintained or
owned by ICP or its agents or to which ICP licenses information, content or
other materials.
PRODUCT. Any product, good or service which ICP (or others acting on its behalf
or as distributors) offers, sells, provides, distributes or licenses to AOL
Members directly or indirectly through (i) the ICP Internet Site (including
through any Interactive Site linked thereto) or ICP Programming (including any
Linked Interactive Site), (ii) any other electronic means directed at AOL
Members (e.g., e-mail offers), or (iii) an "offline" means (e.g., toll-free
number) for receiving orders related to specific offers within the ICP Internet
Site or ICP Programming requiring purchasers to reference a specific promotional
identifier or tracking code, including, without limitation, products sold
through surcharged downloads (to the extent expressly permitted hereunder).
SECONDARY PAGE. A page, that complies with all restrictions on the ICP
Programming (e.g., does not contain chat, E-mail, message boards or other
community functionality tools) that serves as the navigational page to reach the
Primary Site from the ICP Programming residing within the AOL Service Workplace
Channel Trucker's area.
TERM. The period beginning on the Effective Date and ending upon the expiration
or earlier termination of this Agreement.
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EXHIBIT C -- STANDARD LEGAL TERMS AND CONDITIONS
I. AOL NETWORK
CONTENT. ICP represents and warrants that all Content contained within the ICP
Internet Site and ICP Programming and all Licensed Content (i) does and will
conform to AOL's applicable Terms of Service, the terms of this Agreement and
any other standard, written policy of AOL and any applicable AOL Property
(including without limitation AOL's kids policies to the extent applicable),
(ii) does not and will not infringe on or violate any U.S.copyright, U.S.
trademark, U.S. patent, rights of publicity, moral rights or any other third
party right, including without limitation, any music performance or other music
related rights, and (iii) does not and will not contain any Content which
violates any applicable law or regulation ((i), (ii) and (iii) collectively, the
"Rules"). In the event that AOL notifies ICP in writing that any such Content,
as reasonably determined by AOL, does not comply or adhere to the Rules, then
ICP shall use its best efforts to block access by AOL Members to such Content.
In the event that ICP cannot, through its best efforts, block access by AOL
Members to such Content in question, then ICP shall provide AOL prompt written
notice of such fact. AOL may then, at its option, either (i) restrict access
from the AOL Network to the Content in question using technology available to
AOL or (ii) in the event access cannot be restricted, direct ICP to remove any
such Content. ICP will cooperate with AOL's reasonable requests to the extent
AOL elects to implement any such access restrictions.
AOL NETWORK DISTRIBUTION. ICP shall not authorize or permit any third party to
distribute any Content of ICP through the AOL Network absent AOL's prior written
approval. The distribution, placements and/or promotions described in this
Agreement or otherwise provided to ICP by AOL shall be used by ICP solely for
its own benefit, will link to and promote solely the Licensed Content within the
ICP Internet Site or ICP Programming expressly described on Exhibit A and will
not be resold, traded, exchanged, bartered, brokered or otherwise offered or
transferred to any third party or contain any branding other than ICP's
branding. Further, the Content of all such distribution, placements and
promotions shall be subject to AOL's policies relating to advertising and
promotion, including those relating to AOL's exclusivity commitments and other
contractual preferences to third parties.
CHANGES TO AOL PROPERTIES. AOL reserves the right to redesign or modify the
organization, structure, "look and feel," navigation and other elements of the
AOLNetwork at any time, including without limitation, by adding or deleting
channels, subchannels and/or screens and/or by outsourcing to a third party the
programming responsibility for any channel, subchannel, screen or portion
thereof. If such redesign or modification substantially modifies the nature of
the distribution provided under this Agreement in a material adverse fashion, or
if AOL is otherwise unable to deliver any particular Promotion, AOL will provide
ICP , as its sole remedy, with comparable distribution which is reasonably
satisfactory to ICP.
CONTESTS. ICP shall ensure that any contest, sweepstakes or similar promotion
conducted or promoted through the ICP Internet Site and/or ICP Programming (a
"Contest") complies with all applicable laws and regulations. ICP shall provide
AOL with (i) at least thirty (30) days prior written notice of any Contest and
(ii) upon AOL's request, an opinion from ICP's counsel confirming that the
Contest complies with all applicable federal, state and local laws and
regulations.
DISCLAIMERS. ICP agrees to include within the ICP Internet and ICP Programming 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 ICP and not AOL, and any transactions are solely between ICP
and AOL Members using or purchasing such Content and AOL is not responsible for
any loss, expense or damage arising out of the Licensed Content or services
provided through the ICP Internet Site or ICP Programming (e.g., "In no event
shall AOL nor any of its agents, employees, representatives or affiliates be in
any respect legally liable to you or any third party in connection with any
information or services contained herein and AOL makes no warranty or guaranty
as to the accuracy, completeness, correctness, timeliness, or usefulness of any
of the information contained herein"). ICP shall not in any manner state or
imply that AOL recommends or endorses ICP or its Content.
INSURANCE. At all times during the Term, ICP shall maintain an insurance policy
or policies reasonably satisfactory to AOL and adequate in amount to insure ICP
against all liability associated with the Licensed Content. ICP shall include
AOL as a named insured party on such policy or policies. ICP shall provide AOL
with a copy of such policy or policies within thirty (30) days after the
Effective Date, failing which, in addition to all other available remedies, AOL
shall be entitled to delay the launch of the Licensed Content on the AOL Network
(and reduce AOL's promotional and Impressions obligations proportionately). ICP
shall promptly notify AOL of any material change in such policy or policies.
NAVIGATION. In cases where an AOL Member performs a search for ICP through any
search or navigational tool or mechanism that is accessible or available through
the AOL Network (e.g., promotions, Keyword Search Terms, navigation bars or any
other promotions or navigational tools), AOL shall have the right to direct such
AOL Member to the ICP Internet Site, or any other ICP Interactive Site
determined by AOL in its reasonable discretion. ICP shall ensure that navigation
back to the AOL Network from the ICP Internet Site (and from any other ICP
Interactive Site linked to from the AOL Network), whether through a particular
pointer or link, the "back" button on an Internet browser, the closing of an
active window, or any other return mechanism, shall not be interrupted by ICP
through the use of any intermediate screen or other device not specifically
requested by the user, including without limitation through the use of any html
pop-up window or any other similar device.
AOL LOOK AND FEEL. ICP acknowledges and agrees that AOL shall own all right,
title and interest in and to the AOL Look and Feel. In addition, AOL shall
retain editorial control over the portions of the AOL pages and forms which
frame the ICP Internet Site or ICP Programming (the "AOL Frames"). AOL may, at
its discretion, incorporate navigational icons, links and pointers or other
Content into such AOL Frames.
OPERATIONS. AOL shall be entitled to require reasonable changes to the ICP
Internet Site and ICP Programming to the extent such site will, in AOL's good
faith judgment, adversely affect operations of the AOL Network.
CLASSIFIEDS, AUCTIONS AND CLUBS. ICP shall not implement or promote any
classifieds listing features through Secondary Page or ICP Programming without
AOL's prior written approval. Such approval may be conditioned upon, among other
things, ICP's conformance with any then-applicable service-wide technical or
other standards related to online classifieds. ICP shall not conduct any
merchandising through the Secondary Page ICP Programming through auctions, clubs
or any method other than a direct sales format without AOL's prior written
consent.
MESSAGE BOARDS; CHAT ROOMS AND COMPARABLE VEHICLES. Any Content submitted by ICP
or its agents within message boards, chat rooms or any comparable vehicles will
be subject to the license grant relating to submissions to "public areas" set
forth in the AOL Terms of Service. ICP acknowledges that it has no rights or
interest in AOL Member submissions to message boards, chat rooms or any other
vehicles through which AOL Members may make submissions within the AOL Network.
ICP will refrain from editing, deleting or altering, without AOL's prior
approval, any opinion expressed or submission made by an AOL Member within ICP
Programming except in cases where ICP has a good faith belief that the Content
in question violates an applicable law, regulation, third party right or the
applicable AOL Property's Terms of Service.
DUTY TO INFORM. ICP shall promptly inform AOL of any information related to the
ICP Internet Site, ICP Programming or the Licensed Content which could
reasonably lead to a claim, demand or liability of or against AOL and/or its
Affiliates by any third party.
RESPONSE TO QUESTIONS/COMMENTS; CUSTOMER SERVICE. ICP shall respond promptly and
professionally to questions, comments, complaints and other reasonable requests
regarding the ICP Internet Site, ICP Programming or the Licensed Content by AOL
Members or on request by AOL, and shall cooperate and assist AOL in promptly
answering the same. ICP shall have sole responsibility for customer service
(including, without limitation, order processing, billing, shipping, etc.) and
AOL shall have no responsibility with respect thereto. ICP shall comply with all
applicable requirements of any federal, state or local consumer protection or
disclosure law.
STATEMENTS THROUGH AOL NETWORK. ICP shall not make, publish, or otherwise
communicate through the AOL Network any deleterious remarks concerning AOL or
its Affiliates, directors, officers, employees, or agents (including, without
limitation, AOL's business projects, business capabilities, performance of
duties and services, or financial position) which remarks are based on the
relationship established by this Agreement or information exchanged hereunder.
This section is not intended to limit good faith editorial statements made by
ICP based upon publicly available information, or information developed by ICP
independent of its relationship with AOL and its employees and agents.
PRODUCTION WORK. In the event that ICP requests any AOL production assistance,
ICP shall work with AOL to develop detailed production plans for the requested
production assistance (the "Production Plan"). Following receipt of the final
Production Plan, AOL shall notify ICP of (i) AOL's availability to perform the
requested production work, (ii) the proposed fee or fee structure for the
requested production 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. All fees to be paid to AOL for any such
production work shall be paid in advance. To the extent ICP elects to retain a
third party provider to perform any such
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production work, work produced by such third party provider must generally
conform to AOL's production standards available at Keyword "Styleguide." The
specific production resources which AOL allocates to any production work to be
performed on behalf of ICP shall be as determined by AOL in its sole discretion.
With respect to any routine production, maintenance or related services which
AOL reasonably determines are necessary for AOL to perform in order to support
the proper functioning and integration of the Promotions, ICP Programming and
the ICP Internet Site ("Routine Services"), ICP will pay the then-standard fees
charged by AOL for such Routine Services.
PRODUCTION TOOLS. AOL shall determine in its sole discretion, which of its
proprietary publishing tools (each a "Tool") shall be made available to ICP in
order to develop and implement the Licensed Content during the Term. ICP shall
be granted a nonexclusive license during the Term to use any such Tool, which
license shall be subject to: (i) ICP's compliance with all rules and regulations
relating to use of the Tools, as published from time to time by AOL, (ii) AOL's
right to withdraw or modify such license at any time, and (iii) ICP's express
recognition that AOL provides all Tools on an "as is" basis, without warranties
of any kind.
TRAINING AND SUPPORT. AOL shall make available to ICP standard AOL training and
support programs necessary to produce any AOL areas hereunder. ICP can select
its training and support program from the options then offered by AOL. ICP shall
be responsible to pay the fees associated with its chosen training and support
package. In addition, ICP will pay travel and lodging costs associated with its
participation in any AOL training programs (including AOL's travel and lodging
costs when training is conducted at ICP's offices).
LAUNCH DATE. In the event that any terms contained herein relate to or depend on
the launch date of the ICP Internet Site 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 AOL based on the information available to AOL.
KEYWORDS. Any Keyword Search Terms to be directed to the ICP Internet Site shall
be (i) subject to availability for use by ICP and (ii) limited to the
combination of the Keyword(TM) search modifier combined with a registered
trademark of ICP. AOL reserves the right to revoke at any time ICP's use of any
Keyword Search Terms which do not incorporate registered trademarks of ICP. ICP
acknowledges that its utilization of a Keyword Search Term will not create in
it, nor will it represent it has, any right, title or interest in or to such
Keyword Search Term, other than the right, title and interest ICP holds in ICP's
registered trademark independent of the Keyword Search Term. Without limiting
the generality of the foregoing, ICP will not: (a) attempt to register or
otherwise obtain trademark or copyright protection in the Keyword Search Term;
or (b) use the Keyword Search Term, except for the purposes expressly required
or permitted under this Agreement. This Section shall survive the completion,
expiration, termination or cancellation of this Agreement.
ACCOUNTS. To the extent AOL has granted ICP any accounts on the AOL Service, ICP
will be responsible for the actions taken under or through its accounts, which
actions are subject to AOL's applicable Terms of Service and for any surcharges,
including, without limitation, all premium charges, transaction charges, and any
applicable communication surcharges incurred by any account issued to ICP, but
ICP will not be liable for charges incurred by any account relating to AOL's
standard monthly usage fees and standard hourly charges, which charges AOL will
bear. Upon the termination of this Agreement, all accounts, related screen names
and any associated usage credits or similar rights, will automatically
terminate. AOL will have no liability for loss of any data or content related to
the proper termination of any such account.
II. TRADEMARKS
TRADEMARK LICENSE. In designing and implementing any marketing, advertising, or
other promotional materials (expressly excluding Press Releases) 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, ICP shall be entitled to use the following trade
names, trademarks and service marks of AOL: the "America Online(R)" brand
service, "AOL(TM)" service/software and AOL's triangle logo and, in connection
therewith, ICP shall comply with the AOL styleguide available at keyword: "style
guide"; and AOL and its Affiliates shall be entitled to use the trade names,
trademarks and service marks of ICP (collectively, together with the AOL marks
listed above, the "Marks"); provided that each Party: (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.
This Section shall survive the completion, expiration, termination or
cancellation of this Agreement.
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. Each Party will submit to the other Party, for its prior
written approval, which shall not be unreasonably withheld or delayed, any
Promotional Materials; provided, however, that after initial public announcement
of the business relationship between the Parties in accordance with the approval
and other requirements contained herein, either Party's subsequent factual
reference in Promotional Materials to the existence of a business relationship
between AOL and ICP, including, without limitation, the availability of the
Licensed Content through the AOL Network, or use of screen shots relating to the
distribution under this Agreement (so long as the AOL Network is clearly
identified as the source of such screen shots) for promotional purposes shall
not require the approval of the other Party. Once approved, the Promotional
Materials may be used by a Party and its affiliates for the purpose of promoting
the distribution of the Licensed Content through the AOL Network and reused for
such purpose until such approval is withdrawn with reasonable prior notice. In
the event such approval is withdrawn, existing inventories of Promotional
Materials may be depleted.
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.
III. 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 U.S. 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.
IV. 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 disclosure of Confidential Information of the other
Party, other than to its employees, or to its other agents who must have access
to such Confidential Information for such Party to perform its 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 or as reasonably advised by legal counsel. In such event, the disclosing
Party will provide at least five (5) business days 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.
V. RELATIONSHIP WITH AOL MEMBERS
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SOLICITATION OF SUBSCRIBERS. (a) During the term of this Agreement and for a two
year period thereafter, ICP will not use the AOL Network (including, without
limitation, the e-mail network contained therein) to solicit AOL Members on
behalf of another Interactive Service. More generally, ICP will not send
unsolicited, commercial e-mail (i.e., "spam") or other online communications
through or into AOL's products or services, absent a Prior Business
Relationship. For purposes of this Agreement, a "Prior Business Relationship"
will mean that the AOL Member to whom commercial e-mail or other online
communication is being sent has voluntarily either (i) engaged in a transaction
with ICP or (ii) provided information to ICP through a contest, registration, or
other communication, which included clear notice to the AOL Member that the
information provided could result in commercial e-mail or other online
communications being sent to that AOL Member by ICP or its agents. Any
commercial e-mail or other online communications to AOL Members which are
otherwise permitted hereunder will (x) include a prominent and easy means to
"opt-out" of receiving any future commercial e-mail communications from ICP and
(y) shall also be subject to AOL's then-standard restrictions on distribution of
bulk e-mail (e.g., related to the time and manner in which such e-mail can be
distributed through or into the AOL product or service in question).
(b) ICP shall ensure that its collection, use and disclosure of information
obtained from AOL Members under this Agreement ("Member Information") complies
with (i) all applicable laws and regulations and (ii) AOL's standard privacy
policies, available on the AOL Service at the keyword term "Privacy" (or, in the
case of the ICP Internet Site, ICP's standard privacy policies so long as such
policies are prominently published on the site and provide adequate notice,
disclosure and choice to users regarding ICP's collection, use and disclosure of
user information). ICP will not disclose Member Information collected hereunder
to any third party in a manner that identifies AOL Members as end users of an
AOL product or service or use Member Information collected under this Agreement
to market another Interactive Service.
EMAIL NEWSLETTERS. Any email newsletters sent to AOL Members by ICP or its
agents shall (i) be subject to AOL's policies on use of the email functionality,
including but not limited to AOL's policy on unsolicited bulk email, (ii) be
sent only to AOL Members requesting to receive such newsletters, (iii) not
contain Content which violates AOL's Terms of Service, and (iv) not contain any
advertisements, marketing or promotion for any other Interactive Service.
AOL MEMBER COMMUNICATIONS. To the extent ICP is otherwise permitted to send
communications to AOL Members (in accordance with the other requirements
contained herein): in any such communications to AOL Members on or off the ICP
Internet Site (including, without limitation, e-mail solicitations), ICP will
limit the subject matter of such communications to those categories of products,
services and/or content that are specifically contemplated by this Agreement and
will not encourage AOL Members to take any action inconsistent with the scope
and purpose of this Agreement, including without limitation, the following
actions: (i) using an Interactive Site other than the ICP Internet Site for the
purchase of Products, (ii) using Content other than the Licensed Content; (iii)
bookmarking of Interactive Sites; or (iv) changing the default home page on the
AOL browser. Additionally, with respect to such AOL Member communications, in
the event that ICP encourages an AOL Member to purchase products through such
communications, ICP shall ensure that (a) the AOL Network is expressly promoted
as the primary means through which the AOL Member can access the ICP Internet
Site (including without limitation by stating the applicable Keyword Search Term
and including direct links to specific offers within the ICP Internet Site) and
(b) any link to the ICP Internet Site will link to a page which indicates to the
AOL Member that such user is in a site which is affiliated with the AOL Network.
VI. TREATMENT OF CLAIMS
LIABILITY. UNDER NO CIRCUMSTANCES SHALL EITHER PARTY BE LIABLE TO THE OTHER
PARTY FOR INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL OR EXEMPLARY 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 AOL
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 THE EVENT GIVING RISE
TO SUCH LIABILITY OCCURRED; 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 AOL NETWORK,
THE AOL TOOLS, OR ANY AOL PUBLISHING TOOLS, 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, AOL SPECIFICALLY DISCLAIMS ANY WARRANTY REGARDING
THE PROFITABILITY OF AOL NETWORK OR THE ICP INTERNET SITE.
INDEMNITY. Each 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 material breach or
alleged breach of any duty, representation, or warranty of this Agreement. In
addition, ICP will defend, indemnify, save and hold harmless AOL and AOL's
officers, directors, agents, affiliates, distributors, franchisees and employees
from any and all Liabilities arising out of or in any way related to the
Licensed Content.
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 ten (10) days
after delivery of such notice to respond. If the Indemnifying Party elects to
defend the Action or does not respond within the requisite ten (10) 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
ten (10) 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. AOL AND ICP 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
CONTEMPLATED 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.
VII. 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 or related to this Agreement or any
document executed pursuant to this Agreement or any of the transactions
contemplated hereby. If the Parties cannot resolve the Dispute within such
timeframe, 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 this
Agreement which expressly or implicitly provides for the Parties to reach mutual
agreement as to certain terms. If the Management Committee is unable to amicably
resolve the Dispute during the ten (10) day period, then the Management
Committee will consider in good faith the possibility of retaining a third party
mediator to facilitate resolution of the Dispute. In the event the Management
Committee elects not to retain a mediator, the Dispute will be subject to the
resolution mechanisms described below. "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
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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 this 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, shall 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
in the State of New York. Each Party irrevocably consents to the exclusive
jurisdiction of the courts of the State of New York and the federal courts
situated in the State of New York, 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 or to enforce a judgment rendered in an
arbitration proceeding.
VIII. MISCELLANEOUS
AUDITING RIGHTS. Each Party shall maintain complete, clear and accurate records
of all expenses, revenues, fees, transactions and related documentation
(including agreements) in connection with the performance of this Agreement
("Records"). All such Records shall be maintained for a minimum of five (5)
years following termination of this Agreement. For the sole purpose of ensuring
compliance with this Agreement, AOL shall have the right, at its expense, to
conduct a reasonable and necessary copying and inspection of portions of the
Records of ICP that are directly related to amounts payable to AOL pursuant to
this Agreement, which right may, at AOL's option, be exercised by directing an
independent certified public accounting firm to conduct such inspection. For the
sole purpose of ensuring compliance with this Agreement, ICP shall have the
right, at its expense, to direct an independent certified public accounting firm
subject to strict confidentiality restrictions to conduct a reasonable and
necessary copying and inspection of portions of the Records of AOL that are
directly related to amounts payable to ICP pursuant to this Agreement. Any such
audit may be conducted after twenty (20) business days prior written notice,
subject to the following. Such audits shall not be made more frequently than
once every twelve months. No such audit of AOL shall occur during the period
beginning on June 1 and ending October 1. In lieu of providing access to its
Records as described above, AOL shall be entitled to provide ICP with a report
from an independent certified public accounting firm confirming the information
to be derived from such Records.
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 AOL Network (to screenname
"[email protected]" in the case of AOL) 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 AOL, such notice will
be provided to both the Senior Vice President for Business Affairs (fax no.
703-265-1206) and the Deputy General Counsel (fax no. 703-265-1105), each at the
address of AOL set forth in the first paragraph of this Agreement. In the case
of ICP, except as otherwise specified herein, the notice address shall be the
address for ICP 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 AOL e-mail address, to be as
reasonably identified by AOL.
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 by the other Party.
SURVIVAL. Sections IV, V, VI, VII and VIII of this Exhibit C, shall survive the
completion, expiration, termination or cancellation of this Agreement. In
addition, all payment terms of this Agreement and any provision that expressly
states that it shall survive or which, by its nature, must survive the
completion, expiration, termination or cancellation of this Agreement, 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 the other Party for the implementation or continuing
performance of this Agreement.
ASSIGNMENT. ICP shall not assign this Agreement or any right, interest or
benefit under this Agreement without the prior written consent of AOL.
Assumption of this
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Agreement by any successor to ICP (including, without limitation, by way of
merger, consolidation or sale of all or substantially all of ICP's stock or
assets) shall be subject to AOL's prior written approval. Further, in the event
of (i) any Change of Control of ICP resulting in control of ICP by an
Interactive Service or an entity that controls, is controlled by or is under
common control with an Interactive Service, or (ii) any Change of Control of
AOL, AOL shall have the right to terminate this Agreement upon written notice to
ICP. Subject to the foregoing, this Agreement shall be fully binding upon, inure
to the benefit of and be enforceable by the Parties hereto and their respective
successors and assigns. If AOL elects to terminate this Agreement under this
provision, AOL shall make a pro rata refund of the cash payments made by ICP.
SUBCONTRACTORS. To the extent ICP desires to utilize consultants or
subcontractors to perform a material portion of its obligations under this
Agreement, utilization of such consultants and/or subcontractors shall be
subject to AOL's prior written approval and ICP shall provide AOL with direct
contact information for the employees of such consultants and/or subcontractors
who are responsible for performing such obligations, which employees shall be
available during business hours for consultation with AOL. ICP shall be
responsible for ensuring that all consultants and subcontractors comply with
this Agreement and ICP shall be liable for any breaches of this Agreement caused
by any consultant or subcontractor.
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. This Agreement shall be interpreted, construed and enforced in
all respects in accordance with the laws of the Commonwealth of Virginia except
for its conflicts of laws principles.
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. Signatures sent by facsimile shall be deemed original
signatures.
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EXHIBIT D
CERTIFICATION OF COMPLIANCE WITH COMMITMENTS
REGARDING PROMOTIONS
Pursuant to Section 3.3 of the Interactive Services Agreement between
______________ ("ICP") and America Online, Inc. ("AOL"), dated as of
_________________, 1999 (the "Agreement"), the following report is delivered to
AOL for the period beginning _____________ and ending __________ (the "Period"):
I. PROMOTIONAL COMMITMENTS
ICP hereby certifies to AOL that ICP completed the following promotional
commitments during the Period:
TYPE OF PROMOTION DATE(S) OF DURATION/CIRCULATION OF RELEVANT CONTRACT
PROMOTION PROMOTION SECTION
- --------------------------------------------------------------------------------
1.
- --------------------------------------------------------------------------------
2.
- --------------------------------------------------------------------------------
3.
IN WITNESS WHEREOF, this Certificate has been executed this ___ day of
___________, 199_.
______________________________________
By: __________________________________
Print Name: _________________________
Title: _______________________________
Date: ________________________________
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EXHIBIT E
TECHNICAL OPERATING STANDARDS
1. ICP Internet Site Infrastructure. ICP will be responsible for all
communications, hosting and connectivity costs and expenses associated with
the ICP Internet Site. ICP will provide all hardware, software,
telecommunications lines and other infrastructure necessary to meet traffic
demands on the ICP Internet Site from the AOL Network. ICP will design and
implement the network between the AOL Service and ICP Internet Site such
that (i) no single component failure will have a materially adverse impact
on AOL Members seeking to reach the ICP Internet Site from the AOL Network
and (ii) no single line under material control by ICP will run at more than
70% average utilization for a 5-minute peak in a daily period. In this
regard, ICP will provide AOL, upon request, with a detailed network diagram
regarding the architecture and network infrastructure supporting the ICP
Internet Site. In the event that ICP elects to create a custom version of
the ICP Internet Site in order to comply with the terms of this Agreement,
ICP will bear responsibility for all aspects of the implementation,
management and cost of such customized site.
2. Optimization; Speed. ICP will use commercially reasonable efforts to ensure
that: (a) the functionality and features within the ICP Internet Site are
optimized for the client software then in use by AOL Members; and (b) the
ICP Internet Site is designed and populated in a manner that minimizes
delays when AOL Members attempt to access such site. At a minimum, ICP will
ensure that the ICP Internet Site's data transfers initiate within fewer
than fifteen (15) seconds on average. Prior to commercial launch of any
material promotions described herein, ICP will permit AOL to conduct
performance and load testing of the ICP Internet Site (in person or through
remote communications), with such commercial launch not to commence until
such time as AOL is reasonably satisfied with the results of any such
testing.
3. User Interface. ICP will maintain a graphical user interface within the ICP
Internet Site that is competitive in all material respects with interfaces
of other similar sites based on similar form technology. AOL reserves the
right to review and approve the user interface and site design prior to
launch of the Promotions and to conduct focus group testing to assess
compliance with respect to such consultation and with respect to ICP's
compliance with the preceding sentence.
4. Technical Problems. ICP agrees to use commercially reasonable efforts to
address material technical problems (over which ICP exercises control)
affecting use by AOL Members of the ICP Internet Site (an "ICP Technical
Problem") promptly following notice thereof. In the event that ICP is unable
to promptly resolve an ICP Technical Problem following notice thereof from
AOL (including, without limitation, infrastructure deficiencies producing
user delays), AOL will have the right to regulate the promotions it provides
to ICP hereunder until such time as ICP corrects the ICP Technical Problem
at issue.
5. Monitoring. ICP will ensure that the performance and availability of the ICP
Internet Site is monitored on a continuous (24 X 7) basis. ICP will provide
AOL with contact information (including e-mail, phone, pager and fax
information, as applicable, for both during and after business hours) for
ICP's principal business and technical representatives, for use in cases
when issues or problems arise with respect to the ICP Internet Site.
6. Telecommunications. Where applicable the ICP will utilize encryption
methodology to secure data communications between the Parties' data centers.
The network between the Parties will be configured such that no single
component failure will significantly impact AOL Users. The network will be
sized such that no single line over which the ICP has material control runs
at more than 70% average utilization for a 5-minute peak in a daily period.
7. Security. ICP 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 ICP Internet Site. ICP will facilitate periodic reviews of
the ICP Internet Site by AOL in order to evaluate the security risks of such
site. ICP will promptly remedy any security risks or breaches of security as
may be identified by AOL's Operations Security team.
8. Technical Performance.
i. ICP will design the ICP Internet Site to support the AOL-Client embedded
versions of the Microsoft Internet Explorer 3.XX and 4.XX browsers
(Windows and Macintosh), the Netscape Browser 4.XX and make commercially
reasonable efforts to support all other AOL browsers listed at:
"http://webmaster.info.aol.com."
ii. To the extent ICP creates customized pages on the ICP Internet Site for
AOL Members, ICP develop and employ a methodology to detect AOL Members
(e.g., examine the HTTP User-Agent field in order to identify the "AOL
Member-Agents" listed at: http://webmaster. info.aol.com and referenced
under the heading "Browser Detection."
iii. ICP will periodically review the technical information made available
by AOL at http://webmaster.info.aol.com.
iv. ICP will design its site to support HTTP 1.0 or later protocol as
defined in RFC 1945 and to adhere to AOL's parameters for refreshing or
preventing the caching of information in AOL's proxy system as outlined
in the document provided at the following URL:
http://webmaster.info.aol.com. ICP is responsible for the manipulation
of these parameters in web based objects so as allow them to be cached
or not cached as outlined in RFC 1945.
v. Prior to releasing material, new functionality or features through the
ICP Internet Site ("New Functionality"), ICP will use commercially
reasonable efforts to either (i) test the New Functionality to confirm
its compatibility with AOL Service client software and (ii) provide AOL
with written notice of the New Functionality so that AOL can perform
tests of the New Functionality to confirm its compatibility with the AOL
Service client software. Should any new material, new functionality or
features through the ICP Internet Site be released without notification
to AOL, AOL will not be responsible for any adverse member experience
until such time that compatibility tests can be performed and the new
material, functionality or features qualified for the AOL Service.
9. AOL Internet Services Partner Support. AOL will provide ICP with access to
the standard online resources, standards and guidelines documentation,
technical phone support, monitoring and after-hours assistance that AOL
makes generally available to similarly situated web-
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<PAGE> 23
based partners. AOL support will not, in any case, be involved with content
creation on behalf of ICP or support for any technologies, databases,
software or other applications which are not supported by AOL or are related
to any ICP area other than the ICP Internet Site. Support to be provided by
AOL is contingent on ICP providing to AOL demo account information (where
applicable), a detailed description of the ICP Internet Site's software,
hardware and network architecture and access to the ICP Internet Site for
purposes of such performance and the coordination load testing as AOL elects
to conduct.
10. ICP Programming. The terms and conditions of this Exhibit applicable to the
ICP Internet Site shall apply equally to any ICP Programming that is (a)
programmed in HTML or (b) web-based.
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EXHIBIT F
KEYWORD GUIDELINES
PRINT/GRAPHIC
o Preferred listing: (AOL Logo appears) America Online Keyword:
Park N View or PNV America Online Keyword:
Park N View or PNV
o If necessary, due to space constraints, listing may (pending approval)
appear as follows:
AOL KEYWORD: PARK N VIEW OR PNV
o Every effort should be made to have 'America Online' spelled out
o Capitalization - listing should appear in initial caps only
Note: When America Online is abbreviated to AOL - AOL must appear in
all caps. K of Keyword must always be capitalized
o Font, Font style and Size must all be consistent
o Listing size must be of equal prominence to that of any/all other URLs
featured
BROADCAST/RADIO
o America Online Keyword must be orally announced in its entirety (even
if an accompanying graphic is set with AOL versus America Online)
Example voiceover would read:
"For more information, please visit America Online Keyword: Park N View
or PNV"
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EXHIBIT G
OTHER MEDIA PROMOTIONS
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<PAGE> 26
EXHIBIT H
AOL.COM AND NETSCAPE NETCENTER USAGE REPORTING REQUIREMENTS
AOL may, from time to time, modify (e.g., replace, add or delete): (a) the
format of the reports required, (b) the frequency of the reports, or (c) the
data required therein, upon reasonable advance notice to ICP.
All of the foregoing usage reports shall be delivered separately for each
Territory.
DEFINITIONS
For purposes of this Exhibit C, definitions are as follows:
Page Views
Page Views are units of measurement that represent the number of requests for a
page of content. A page of content is, but is not limited to, a static page such
as an HTML document or a dynamically generated page such as from a CGI script.
Exception: Pages containing framesets should not be counted and only the pages
within the frameset containing principle content should be counted.
Total Page Views
The sum of all Page Views for all co-branded content hosted by the ICP.
Unique Visitors
The number of different Visitors who access a site within a specific time period
as determined by AOL. To identify unique users, Web sites need a unique
identifier, which may be obtained through some form of user registration or
identification system. AOL may change the definition of "unique visitors" from
time to time upon notice to ICP.
Visitor
An individual who interacts with a Website.
Visits
A series of page requests by a Visitor without a specified period of inactivity
(usually 30 consecutive minutes). If a Visitor leaves the site and comes back
within that specified period of inactivity, it is counted as part of the same
Visit.
1. REPORT FREQUENCY
The report frequency is weekly. The weekly report period is Thursday to
Wednesday, with weekly reports due the following day, Thursday by noon PST.
2. REPORT DELIVERY
The report shall be emailed to <[email protected]> and any other
email address designated by AOL in the Weekly Report Format.
3. REPORT SPECIFICATIONS: THE REPORT MUST COVER THE FOLLOWING INFORMATION:
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<PAGE> 27
3.1. Breakdown of Total Page Views by day for the entire co-branded site; daily
Total Page Views for each area within the site and, if applicable and if daily
Page Views exceed 200,000 per day, then the break down of individual Page Views
shall be provided daily in each area.
3.2. Breakdown of registration numbers.
3.3. Breakdown of Visits by day, if online reporting is required.
3.4. Optional: Unique Visitors by day, week and month, if applicable.
4. ICP INFORMATION
ICP provides to AOL Report Team the following information upon
execution/signature of contract:
- ICP Name
- ICP Contact Name
- ICP phone number and e-mail
- ICP technical contact phone, pager and e-mail
- location of online ICP traffic reports (if applicable)
-> URL location
-> Login/password
-> Does AOL need a Static IP address for access
- Channel/directory names
- subchannel/subdirectory names
5. WEEKLY REPORT FORMAT
The following example is received weekly by NOON Thursdays via e-mail to:
[email protected] (and/or other email address designated by AOL):
Subject: Partner Traffic Report for <ICPname> from <mm-dd-yyyy> through
<mm-dd-yyyy>
date,mm-dd-yyyy,mm-dd-yyyy,mm-dd-yyyy,mm-dd-yyyy,mm-dd-yyyy,mm-dd-yyyy,
mm-dd-yyyy
Total Page Views, x1,x2,x3,x4,x5,x6,x7
channelname1, y1,y2,y3,y4,y5,y6,y7
channelname2,y1,y2,y3,y4,y5,y6,y7
channelname1:sub-channelname1,z1,z2,z3,z4,z5,z6,z7
channelname1:sub-channelname2,z1,z2,z3,z4,z5,z6,z7
etc....
Definitions
date = mm-dd-yyyy
channelname = an alphanumeric string excluding colons (:), or commas (,).
Spaces are allowed.
subchannelname = an alphanumeric string excluding embedded colons
(:), or commas (,), separated from a channel by a colon. Spaces are
allowed.
x1,x2,x3... = the actual number of Page Views for each date.
y1,y2,y3... = the actual number of channelname Page Views for each
date.
z1,z2,z3... = the actual number of sub-channelname Page Views for
each date.
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Example
Subject: Partner Traffic Report for Classified2000 from 09-03-1998
through 09-09-1998
date,09-03-1998,09-04-1998,09-05-1998,09-06-1998,09-07-1998,
08-03-1998,09-09-1998
Total Page Views,271652,254771,140885,153994,289143,301992,278666
home page,78948,75321,43999,52917,79434,85019,67554 computers,34958,37988,22908,
24958,40984,43959,32093
autos,747,857,343,565,867,949,767 computers:apples,2938,5954,4349,3876,7433,
8578,7657
computers:pcs,32020,32034,18559,21082,33551,35381,24436 etc...
6. ACCESS LOGS
Access logs will be subject to review or audit by I/Pro at AOL's request on a
quarterly basis in addition to the au
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EXHIBIT I
FORM OF WARRANT AGREEMENT
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<PAGE> 1
EXHIBIT 10.2
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. NO SALE
OR DISPOSITION MAY BE EFFECTED WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMPANY
OR WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF
COUNSEL FOR THE HOLDER, REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH
REGISTRATION IS NOT REQUIRED UNDER THE ACT.
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
287,599 SHARES OF COMMON STOCK
OF
PNV INC.
A DELAWARE CORPORATION
ISSUED
MARCH, 15, 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, Two Hundred Eighty-seven Thousand Five Hundred Ninety-nine
(287,599) shares (subject to adjustment as set forth herein, "WARRANT STOCK"),
of common stock, par value $.001 per share ("COMMON STOCK") of PNV, 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 an Interactive
Services Agreement, dated as of the date hereof (as same may be
amended, the "ISA"), between the Company and AOL. All terms used but
not defined herein shall have the meanings set forth in the ISA. 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 May 30,
2000, provided that if the ISA is terminated by AOL for any reason
prior to May 30, 2000, this Warrant shall terminate and shall be void
and of no further force or effect
(b) Notwithstanding the foregoing, this Warrant may not be
exercised under any circumstances after 5:00 p.m., New York, New York
time on May 30, 2008 (the "TERMINATION DATE"), after which time this
Warrant shall terminate and shall be void and of no further force or
effect.
<PAGE> 2
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1.2. Exercise Price. The purchase price for the shares of Common Stock
to be issued upon exercise of this Warrant shall be $6.6875 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 20
consecutive trading days ending the trading day prior to such date (if, during
such 30-day period, there is a day in which no trades are reported, such date
shall be discarded and the 20-day period extended). 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. NO SALE OR OTHER DISPOSITION MAY BE EFFECTED WITHOUT THE PRIOR
WRITTEN CONSENT OF THE COMPANY AND WITHOUT AN EFFECTIVE REGISTRATION
STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL FOR THE HOLDER,
SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED
UNDER THE ACT."
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
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Confidential
"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
(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
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Confidential
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. 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:
(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
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Confidential
(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.
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.
<PAGE> 6
Confidential
7. TRANSFERS, EXCHANGES AND REGISTRATION RIGHTS.
(a) This Warrant may be transferred or assigned in whole or in part at
any time or from time to time on or after March 17, 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 on Exhibit A attached hereto, the provisions of
which are incorporated herein by reference and made a part hereof as if set
forth herein in their entirety.
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.
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
<PAGE> 7
Confidential
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.
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)
<PAGE> 8
Confidential
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.
PNV Inc.
By: /s/ Robert P. May
------------------------------
Chief Executive Officer
Dated: March 17, 2000
Address for Notice:
PNV Inc.
11711 N.W. 39th Street
Coral Springs, FL 33065
Attention: ________, President & CEO
Fax: (__) ________
Acknowledged and Accepted:
America Online, Inc.
By: /s/
-------------------------------
Name:
Title:
Address for Notice:
22000 AOL Way
Dulles, VA 20166
Attention: General Counsel
<PAGE> 9
Confidential
ELECTION TO PURCHASE
PNV Inc.
11711 N.W. 39th Street
Coral Springs, FL 33065
Ladies and Gentlemen:
The undersigned hereby elects to purchase, pursuant to the provisions
of the Warrant dated March 17, 2000 held by the undersigned, _________ shares of
the Common Stock of PNV 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:
---------------------------------------
---------------------------------------
---------------------------------------
<PAGE> 10
EXHIBIT A
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AT MARCH 31, 2000 AND THE STATEMENTS OF OPERATIONS FOR THE NINE MONTHS
ENDED MARCH 31, 2000 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-START> JUL-01-1999
<PERIOD-END> MAR-31-2000
<CASH> 4,230,864
<SECURITIES> 56,976,095
<RECEIVABLES> 1,296,051
<ALLOWANCES> 94,534
<INVENTORY> 634,434
<CURRENT-ASSETS> 63,662,102
<PP&E> 52,145,585
<DEPRECIATION> 12,471,210
<TOTAL-ASSETS> 119,537,842
<CURRENT-LIABILITIES> 13,046,363
<BONDS> 71,190,907
0
0
<COMMON> 15,758
<OTHER-SE> 25,533,634
<TOTAL-LIABILITY-AND-EQUITY> 110,098,324
<SALES> 11,932,282
<TOTAL-REVENUES> 11,932,282
<CGS> 22,321,967
<TOTAL-COSTS> 22,321,967
<OTHER-EXPENSES> 31,080,810
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,956,955
<INCOME-PRETAX> (47,790,962)
<INCOME-TAX> 0
<INCOME-CONTINUING> (47,790,962)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (47,790,962)
<EPS-BASIC> (7.10)
<EPS-DILUTED> (7.10)
</TABLE>
