<PAGE>
As filed with the Securities and Exchange Commission on May 15, 2000
Registration No. 333-32250
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
------------
AMENDMENT NO. 1
TO
FORM S-1
REGISTRATION STATEMENT
Under
The Securities Act of 1933
------------
SMARTAGE.COM CORP.
(Exact name of registrant as specified in its charter)
Delaware 7389 88-038-6603
(State or other (Primary Standard (I.R.S. Employer
jurisdiction of Industrial Classification Identification No.)
incorporation or Code Number)
organization)
303 Second Street, 5th Floor
San Francisco, CA 94107
(415) 343-4700
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
------------
WILLIAM LOHSE
Chief Executive Officer
SMARTAGE.COM CORP.
303 Second Street, 5th Floor
San Francisco, CA 94107
(415) 343-4700
(Name, address, including zip code, and telephone number, including area code,
of agent for service of process)
------------
Copies to:
<TABLE>
<S> <C> <C>
Jorge del Calvo, Esq. Brian V. Caid, Esq. Gavin B. Grover, Esq.
Allison Leopold Tilley, Esq. Morrison & Foerster LLP Matthew Burns, Esq.
Davina K. Kaile, Esq. 5200 Republic Plaza Donald C. Hunt, Esq.
Pillsbury Madison & Sutro Morrison & Foerster
LLP 370 Seventeenth LLP
2550 Hanover Street Denver, CO 80202-5638 425 Market Street
San Francisco, CA
Palo Alto, CA 94304 94105
</TABLE>
------------
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the Registration Statement becomes effective.
------------
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement numbers of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
------------
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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<PAGE>
EXPLANATORY NOTE
This Amendment No. 1 is being filed solely for the purpose of filing
exhibits.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution
The following table sets forth the various expenses expected to be incurred
by the Registrant in connection with the sale and distribution of the
securities being registered hereby, other than underwriting discounts and
commissions. All amounts are estimated except the Securities and Exchange
Commission registration fee, National Association of Securities Dealers, Inc.
filing fee and Nasdaq National Market Listing fee.
<TABLE>
<CAPTION>
Payable by
Registrant
<S> <C>
SEC registration fee............................................. $23,760
National Association of Securities Dealers, Inc. filing fee...... 9,500
Nasdaq National Market Listing Fee............................... 95,000
Accounting fees and expenses..................................... *
Legal fees and expenses.......................................... *
Printing and engraving expenses.................................. *
Blue Sky fees and expenses....................................... 10,000
Registrar and Transfer Agent's fees.............................. *
Miscellaneous fees and expenses.................................. *
Total.......................................................... *
=======
</TABLE>
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* To be filed by amendment.
Item 14. Indemnification of Directors and Officers
Section 145 of the Delaware General Corporation Law provides for the
indemnification of officers, directors, and other corporate agents in terms
sufficiently broad to indemnify such persons under certain circumstances for
liabilities (including reimbursement for expenses incurred) arising under the
Securities Act of 1933, as amended (the "Act"). Article XI of the Registrant's
Amended and Restated Certificate of Incorporation to be effective upon
completion of the offering (Exhibit 3.3 hereto) and Article XII of the
Registrant's Amended and Restated Bylaws to be effective upon completion of the
offering (Exhibit 3.4 hereto) provide for indemnification of the Registrant's
directors, officers, employees and other agents to the extent and under the
circumstances permitted by the Delaware General Corporation Law. The Registrant
has also entered into agreements with its directors and officers that will
require the Registrant, among other things, to indemnify them against certain
liabilities that may arise by reason of their status or service as directors or
officers to the fullest extent not prohibited by law. The Underwriting
Agreement (Exhibit 1.1) provides for indemnification by the Underwriters of the
Registrant, its directors and officers, and by the Registrant of the
Underwriters, for certain liabilities, including liabilities arising under the
Act, and affords certain rights of contribution with respect thereto.
II-1
<PAGE>
The Underwriting Agreement (Exhibit 1.1) provides for indemnification by
ourselves, our underwriters and our directors and officers of the underwriters,
for certain liabilities, including liabilities arising under the Act, and
affords certain rights of contribution with respect thereto.
Item 15. Recent Sales of Unregistered Securities
1. From January 1998 to March 31, 2000, the Registrant issued and sold
17,455,430 shares of common stock to employees, directors and
consultants at prices ranging from $0.0001 to $3.396 per share.
2. From July 30, 1998 to October 29, 1998, the Registrant issued and sold
2,657,051 shares of Series A preferred stock to a total of 33
investors for an aggregate purchase price of $2,490,985.
3. From March 26, 1999 to July 23, 1999, the Registrant issued and sold
6,502,863 shares of Series B preferred stock to a total of 32
investors for an aggregate purchase price of $7,153,149.
4. From October 1999 to March 2000, the Registrant issued and sold
11,562,577 shares of Series C preferred stock to a total of 44
investors for an aggregate purchase price of $39,266,511.
The sales of the above securities were deemed to be exempt from
registration under the Securities Act in reliance on Section 4(2) of the
Securities Act, or Regulation D promulgated thereunder, or Rule 701 promulgated
under Section 3(b) of the Securities Act, as transactions by an issuer not
involving a public offering or transactions pursuant to compensatory benefit
plans and contracts relating to compensation as provided under Rule 701. The
recipients of securities in each of these transactions represented their
intention to acquire the securities for investment only and not with view to or
for sale in connection with any distribution thereof and appropriate legends
were affixed to the share certificates and instruments issued in such
transactions. All recipients had adequate access, through their relationship
with the Registrant, to information about the Registrant.
Item 16. Exhibits and Financial Statement Schedule
(a) Exhibits
See exhibits listed on the Exhibit Index following the signature page of
the Form S-1, which is incorporated herein by reference.
(b) Financial Statement Schedule
Schedule II--Valuation and Qualifying Accounts (included on pages S-1 and
S-2 of this Registration Statement).
Schedules other than those referred to above have been omitted because they
are not applicable or not required or because the information is included
elsewhere in the financial statements or the related notes.
II-2
<PAGE>
Item 17. Undertakings
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended (the "Act"), may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer
or controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of
1933, as amended, the information omitted from the form of prospectus
filed as part of this registration statement in reliance upon Rule
430A and contained in a form of prospectus filed by the Registrant
pursuant to Rule 424(b)(1) or (4) or 497(h) under the Act shall be
deemed to be part of this registration statement as of the time it was
declared effective.
(2) For the purpose of determining any liability under the Securities Act
of 1933, as amended, each post-effective amendment that contains a
form of prospectus shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.
(3) The Registrant will provide to the underwriters at the closing(s)
specified in the underwriting agreement certificates in such
denominations and registered in such names as required by the
underwriters to permit prompt delivery to each purchaser.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of San
Francisco, State of California, on the 15th day of May 2000.
Smartage.com Corp.
/s/ William Lohse
By __________________________________
William Lohse
President, Chief Executive
Officer and Director
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Name Title Date
<S> <C> <C>
/s/ William Lohse President, Chief Executive May 15, 2000
______________________________________ Officer and Director
William Lohse (Principal Executive
Officer)
/s/ Allen M. Barr Chief Financial Officer May 15, 2000
______________________________________ (Principal Financial
Allen M. Barr Officer and Principal
Accounting Officer)
* Director May 15, 2000
______________________________________
John T. Thomsen
* Director May 15, 2000
______________________________________
William L. Burnham
* Director May 15, 2000
______________________________________
John C. Colligan
</TABLE>
*By: /s/ Allen M. Barr
----------------------------
Allen M. Barr
Attorney-in-fact
II-4
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description of Document
<C> <S>
1.1* Form of Underwriting Agreement.
3.1** Amended and Restated Certificate of Incorporation, as amended on
January 18, 2000, February 15, 2000 and February 24, 2000.
3.2** Bylaws, as amended on March 16, 1999.
3.3** Amended and Restated Certificate of Incorporation, to be effective
upon completion of this offering.
3.4** Amended and Restated Bylaws, to be effective upon completion of this
offering.
4.1* Form of Common Stock Certificate.
4.2 Seconded Amended and Restated Investors' Rights Agreement, dated
October 5, 1999, by and among the registrant and the parties who are
signatories thereto, as amended on March 24, 2000.
4.3+** Warrant to Purchase Shares of Series A Preferred Stock dated July 20,
1998, by and between the registrant and Lycos, Inc., as amended by
the Amendment No. 1 to Agreement dated March 13, 1999, by and between
the registrant, Lycos, Inc., Tripod, Inc. and Angelfire, Inc.
4.4+** Warrant to Purchase Shares of Series B Preferred Stock dated April
30, 1999, by and among registrant and Excite, Inc.
4.5+** Warrant to Purchase Shares of Series B Preferred Stock dated April
30, 1999, by and among registrant and Excite, Inc.
5.1* Opinion of Pillsbury Madison & Sutro LLP.
10.1** Registrant's 1998 Equity Incentive Plan, as amended.
10.2 Registrant's 2000 Omnibus Equity Incentive Plan.
10.3 Registrant's 2000 Employee Stock Purchase Plan.
10.4** Form of Directors and Officers' Indemnification Agreement.
10.5** Employment Agreement, dated March 9, 2000, by and between the
registrant and William Lohse.
10.6** Lease Agreement between the registrant and The Equitable Life
Assurance Society of the United States dated August 10, 1999.
10.7** Lease Agreement between the registrant and Western Investment Real
Estate Trust dated August 6, 1998.
10.8** Lease Agreement between the registrant and Rotunda Building, LLC
dated December 1999.
10.9+** Agreement among the registrant, Lycos, Inc., Tripod, Inc. and
Angelfire, Inc. dated July 20, 1998, as amended on March 13, 1999.
10.10+** Marketing and Services Agreement between the registrant and Excite,
Inc. dated April 30, 1999, as amended on April 30, 1999.
10.11+** Banner Exchange and Services Agreement between the registrant and
theglobe.com, Inc. dated March 30, 1999.
10.12+ Interactive Marketing Agreement between the registrant and America
Online, Inc. dated March 15, 2000.
23.1** Consent of KPMG LLP, Independent Accountants.
23.3* Consent of Pillsbury Madison & Sutro LLP (contained in their opinion
filed as Exhibit 5.1).
24.1** Power of Attorney.
27.1** Financial Data Schedule for SmartAge.com Corp. (in EDGAR format
only).
</TABLE>
- ---------------------
* To be filed by amendment.
** Previously filed.
+ Confidential Treatment Requested. Confidential portions of the exhibit have
been omitted and filed separately with the Commission.
II-5
<PAGE>
EXHIBIT 4.2
SMARTAGE CORP.
--------------
SECOND AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
-------------------------------------------------------
This SmartAge Corp. Second Amended and Restated Investors' Rights Agreement
(this "Agreement") is made and entered into as of October 5, 1999 by and among
---------
SmartAge Corp., a Delaware corporation (formerly known as Netweb Corporation)
(the "Company"), the persons and entities listed on Exhibit A attached hereto
------- ---------
(consisting of the Prior Investors (defined below) and the Series C Investors
(defined below), collectively referred to herein as the "Investors"), and the
---------
persons listed on Exhibit B attached hereto (the "Founders").
--------- --------
RECITALS
--------
A. Certain of the Investors (the "Prior Investors") are holders of
---------------
outstanding shares of the Company's Series A Preferred Stock ("Series A Stock")
--------------
and Series B Preferred Stock ("Series B Stock") issued by the Company to such
--------------
Prior Investors pursuant to that certain Series A Preferred Stock Purchase
Agreement (the "Series A Agreement") and Series B Preferred Stock Purchase
------------------
Agreement (the "Series B Agreement"), dated respectively as of July 30, 1998 and
------------------
March 26, 1999 by and among the Company and the Prior Investors, and have also
been granted certain information and registration rights and rights of first
offer under that certain First Amended and Restated Investors' Rights Agreement
dated as of March 26, 1999 by and among the Company and the Prior Investors (the
"Prior Rights Agreement").
----------------------
B. Certain Investors (the "Series C Investors") have agreed to purchase
------------------
shares of the Company's Series C Preferred Stock ("Series C Stock") pursuant to
--------------
that certain Series C Preferred Stock Purchase Agreement by and among the
Company and such Series C Investors dated as of the date hereof (the "Series C
--------
Agreement"). The Series C Agreement provides that, as a condition to the Series
- ---------
C Investors' obligation to purchase Series C Stock thereunder, the Company will
enter into this Agreement and the Series C Investors will be granted the rights
set forth herein.
C. The Company, the Investors and the Founders desire to enter into this
Agreement in order to amend, restate and replace the rights and obligations set
forth in the Prior Rights Agreement with the rights and obligations set forth in
this Agreement, and Section 5.2 of the Prior Rights Agreement provides that the
Prior Rights Agreement may be amended by the written consent of the Company and
a majority of the Registrable Securities (as defined in section 2.1(b) of the
Prior Rights Agreement) then outstanding.
AGREEMENT
---------
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
promises hereinafter set forth, the parties hereto agree as follows:
1. INFORMATION AND INSPECTION RIGHTS.
---------------------------------
1.1 Financial Information. The Company covenants and agrees that,
---------------------
commencing on the date of this Agreement, for so long as an Investor holds at
least 53,333
-1-
<PAGE>
shares of Series A Stock issued under the Series A Agreement or 90,909 shares of
Series B Stock issued under the Series B Agreement (with the shares of Series B
Stock held by Accel VI L.P., Accel Internet Fund II L.P., Accel Keiretsu VI
Associates L.L.C. and Accel Investors `98 L.P. (collectively, the "Accel
-----
Entities") treated as held by a single Investor for purposes of this Section
- --------
1.1) or 147,232 shares of Series C Stock (as adjusted for stock splits, reverse
splits and recapitalizations) issued under the Series C Agreement (with the
shares of Series C Stock held by SOFTBANK Capital Partners LP and SOFTBANK
Capital Advisors Fund LP (collectively, the "SOFTBANK Entities") treated as held
by a single Investor for purposes of this Section 1.1) and/or the equivalent
number (on an as-converted basis) of shares of Common Stock of the Company
("Common Stock") issued upon the conversion of such shares of Series A Stock,
------------
Series B Stock or Series C Stock ("Conversion Stock"), the Company will:
----------------
(a) Annual Reports. Furnish to such Investor, as soon as
--------------
practicable and in any event within 90 days after the end of each fiscal year of
the Company, an audited consolidated Balance Sheet as of the end of such fiscal
year, an audited consolidated Statement of Income and an audited consolidated
Statement of Cash Flows of the Company and its subsidiaries for such year,
setting forth in each case in comparative form the figures from the Company's
previous fiscal year (if any), all prepared in accordance with generally
accepted accounting principles and practices and accompanied by a report of an
independent public accounting firm;
(b) Quarterly Reports. Furnish to such Investor as soon as
-----------------
practicable, and in any case within 45 days of the end of each fiscal quarter of
the Company (except the last quarter of the Company's fiscal year), quarterly
unaudited financial statements, including an unaudited Balance Sheet and an
unaudited Statement of Income, including a comparison of actual results for the
period to those contained in the business plan described in paragraph (c) below;
(c) Annual Budget and Business Plan. Furnish to such Investors
-------------------------------
as soon as practicable and in any event no later 30 days after the close of each
fiscal year of the Company, an annual operating plan and budget, prepared on
such basis as the Company deems reasonable (but including quarterly forecasts),
for the next immediate fiscal year.
1.2 Inspection Rights. The Company shall permit each Investor
-----------------
holding at least 227,272 shares of Series B Stock issued under the Series B
Agreement, or 147,232 shares of Series C Stock (as adjusted for stock splits,
reverse splits and recapitalizations) issued under the Series C Agreement and/or
the equivalent number (on an as-converted basis) of shares of Conversion Stock,
or any combination thereof, at such Investor's expense, to visit and inspect the
Company's properties, to examine its books of account and records and to discuss
the Company's affairs, finances and accounts with its officers, all at such
reasonable times as may be requested by such Investor, provided that such
Investor gives the Company advance written notice of such request 15 days prior
to such inspection; provided further that any inspection permitted under this
Section 1.2 shall be conducted on normal business days (excludes weekends and
bank holidays) and between the hours of 9:30 a.m. and 5:00 p.m.
-2-
<PAGE>
1.3 Confidentiality. Each Investor acknowledges that the financial
---------------
and other information received pursuant to Sections 1.1 and 1.2 is confidential
information of the Company, and hereby agrees to use and hold all such
information in strict confidence and not to use or disclose any such information
to any third party, except on the prior written consent of the Company or to the
extent such information has previously been made publicly available by the
Company; provided that foregoing shall not apply to the Accel Entities each of
--------
which acknowledges that they are subject to an obligation to maintain and
protect the confidentiality of the information, documents and materials obtained
or received by them by virtue of their information and inspection rights under
this Section 1, among other information, as is set forth in that certain letter
agreement dated as of March 1, 1999 from Accel Partners to the Company. The
obligations of each Investor under this Section 1.3 shall survive the
termination of its information rights under Section 1.1, of its inspection
rights under Section 1.2 or of this Agreement.
1.4 Termination of Information and Inspection Rights. The Company's
------------------------------------------------
obligations under Section 1.1 and 1.2 will terminate (i) immediately prior to
the closing of a firm commitment underwritten public offering pursuant to an
effective registration statement filed under the Securities Act of 1933 as
amended (the "Securities Act"), covering the offer and sale of Common Stock for
--------------
the account of the Company in which the aggregate public offering proceeds to
the Company (before deduction of underwriters' discounts and commissions) equals
or exceeds $20,000,000 and the public offering price per share of which equals
or exceeds $5.50 per share before deduction of underwriters' discounts and
commissions (such price per share of Common Stock to be appropriately adjusted
to reflect Common Stock Events (as defined in subsection 6.5 of the Company's
Restated Certificate of Incorporation)) (an "IPO"); (ii) upon a merger, sale,
---
liquidation or consolidation of the Company in which the stockholders
immediately prior to such event do not retain a majority of the voting power in
the surviving corporation or company; or (iii) on the sale of all or
substantially all of the Company's assets. The obligations of each Investor
under Section 1.3 shall survive the termination of its rights under Section 1.1
or 1.2 of this Agreement.
2. REGISTRATION RIGHTS.
-------------------
2.1 Definitions. For purposes of this Section 2:
-----------
(a) Registration. The terms "register," "registered,"
------------ -------- ----------
and "registration" refer to a registration effected by preparing and filing a
------------
registration statement in compliance with the Securities Act, and the
declaration or ordering of effectiveness of such registration statement by the
Securities and Exchange Commission.
(b) Registrable Securities. The term "Registrable
---------------------- -----------
Securities" means: (1) all the shares of Common Stock of the Company issued or
- ----------
issuable upon the conversion of any shares of Series A Stock issued under the
Series A Agreement or any shares of Series B Stock issued under the Series B
Agreement or any shares of Series C Stock issued under the Series C Agreement,
as such agreement may hereafter be amended from time to time that are now owned
or may hereafter be acquired by any Investor or any Investor's successors and
-3-
<PAGE>
permitted assigns; (2) all the shares of Common Stock of the Company issued or
issuable upon the conversion of any shares of Series C Stock issued upon
exercise of any warrants, that are now owned or may be hereafter acquired by an
Investor or any Investor's successors or permitted assigns; (3) the shares of
Common Stock now held by the Founders and set forth in Exhibit B attached hereto
---------
(the "Founders' Shares"); and (4) any shares of Common Stock of the Company
----------------
issued (or issuable upon the conversion or exercise of any warrant, right or
other security which is issued) as a dividend or other distribution with respect
to, or in exchange for or in replacement of, all such shares of Common Stock
described in clause (1), (2) or (3) of this subsection (b); provided that
Registrable Securities shall not, however, include any shares that formerly were
Registrable Securities and that (a) have been sold or transferred by a person or
entity in a transaction in which rights under this Section 2 are not assigned in
accordance with this Agreement, (b) have been sold or transferred to the public
pursuant to Rule 144 promulgated under the Securities Act of 1933, as amended
("Rule 144") or (c) may, within a 90-day period, be sold to the public without
--------
volume restrictions pursuant to Rule 144 unless the Holder of such shares holds
more than 5% of the outstanding shares of Common Stock of the Company.
(c) Registrable Securities Then Outstanding. The number of
---------------------------------------
shares of "Registrable Securities Then Outstanding" shall mean the number of
---------------------------------------
shares of Common Stock which are Registrable Securities and (1) are then issued
and outstanding or (2) are then issuable pursuant to the exercise or conversion
of then outstanding and then exercisable options, warrants or convertible
securities for Registrable Securities.
(d) Holder. The term "Holder" means any person owning of
------ ------
record Registrable Securities or any assignee of record of such Registrable
Securities to whom rights under such sections have been duly assigned in
accordance with this Agreement; provided, however, that for purposes of this
-------- -------
Agreement, a record holder of shares of Series A Stock, Series B Stock or Series
C Stock convertible into such Registrable Securities shall be deemed to be the
Holder of such Registrable Securities; and provided, further, that Holders of
-------- -------
Registrable Securities will not be required to convert their shares of Series A
Stock, Series B Stock or Series C Stock into Common Stock in order to exercise
the registration rights granted hereunder until immediately before the closing
of the offering to which the registration relates.
(e) Form S-3. The term "Form S-3" means such form under the
-------- --------
Securities Act as is in effect on the date hereof or any successor registration
form under the Securities Act subsequently adopted by the SEC which permits
inclusion or incorporation of substantial information by reference to other
documents filed by the Company with the SEC.
(f) SEC. The term "SEC" or "Commission" means the U.S.
--- --- ----------
Securities and Exchange Commission.
(g) Registrable Series A Stock. The term "Registrable Series A
--------------------------
Stock" means (1) any shares of Common Stock of the Company issued or issuable
upon conversion of any shares of Series A Stock issued under the Series A
Agreement, (2) with respect to Sections 2.4, 2.8, 2.9 and 2.11 only, any shares
of Common Stock of the Company issued or issuable upon conversion of any shares
of Series A Stock issued upon exercise of those warrants
-4-
<PAGE>
issued pursuant to that certain Warrant Agreement to Purchase Shares of Series A
Preferred Stock (as amended, the "Warrant Agreement") by and among Lycos Inc.,
Tripod, Inc. and the Company dated as of July 20, 1998, and (3) any shares of
Common Stock of the Company issued (or issuable upon conversion or exercise of
any warrant, right or other security which is issued) as a dividend or other
distribution with respect to, or in exchange for or in replacement of, all such
shares of Common Stock described in clause (1) of this subsection (g); provided
--------
that Registrable Series A Stock shall not, however, include any shares that
formerly were Registrable Series A Stock and that (x) have been sold or
transferred by a person or entity in a transaction in which rights under this
Section 2 are not assigned in accordance with this Agreement, (y) that have been
sold or transferred to the public pursuant to Rule 144 or (z) that may, within a
90-day period, be sold to the public without volume restrictions pursuant to
Rule 144 unless the Holder of such shares holds more than 5% of the outstanding
shares of Common Stock of the Company.
(h) Registrable Series B Stock. The term "Registrable Series B
--------------------------
Stock" means (1) any shares of Common Stock of the Company issued or issuable
upon conversion of any shares of Series B Stock issued under the Series B
Agreement, and (2) any shares of Common Stock of the Company issued (or issuable
upon conversions or exercise of any warrant, right or other security which is
issued) as a dividend or other distribution with respect to, or in exchange for
or in replacement of, all such shares of Common Stock described in clause (1) of
this subsection (h); provided that Registrable Series B Stock shall not,
--------
however, include any shares that formerly were Registrable Series B Stock and
that (x) have been sold or transferred by a person or entity in a transaction in
which rights under this Section 2 are not assigned in accordance with this
Agreement, (y) that have been sold or transferred to the public pursuant to Rule
144 or (z) that may, within a 90-day period, be sold to the public without
volume restrictions pursuant to Rule 144 unless the Holder of such shares holds
more than 5% of the outstanding shares of Common Stock of the Company.
(i) Registrable Series C Stock. The term "Registrable Series C
--------------------------
Stock" means (1) any shares of Common Stock of the Company issued or issuable
upon conversion of any shares of Series C Stock issued under the Series C
Agreement, (2) any shares of Common Stock of the Company issued or issuable upon
conversion of any shares of Series C Stock issued upon exercise of any warrant,
and (3) any shares of Common Stock of the Company issued (or issuable upon
conversions or exercise of any warrant, right or other security which is issued)
as a dividend or other distribution with respect to, or in exchange for or in
replacement of, all such shares of Common Stock described in clause (1) or (2)
of this subsection (i); provided that Registrable Series C Stock shall not,
--------
however, include any shares that formerly were Registrable Series C Stock and
that (x) have been sold or transferred by a person or entity in a transaction in
which rights under this Section 2 are not assigned in accordance with this
Agreement, (y) that have been sold or transferred to the public pursuant to Rule
144 or (z) that may, within a 90-day period, be sold to the public without
volume restrictions pursuant to Rule 144 unless the Holder of such shares holds
more than 5% of the outstanding shares of Common Stock of the Company.
(j) Registrable Founders Stock. The term "Registrable Founders
--------------------------
Stock" means (1) the Founders' Shares; and (2) any shares of Common Stock of the
Company issued (or issuable upon the conversion or exercise of any warrant,
right or other security which
-5-
<PAGE>
is issued) as a dividend or other distribution with respect to, or in exchange
for or in replacement of, all such Founders Shares; provided that Registrable
Securities shall not, however, include any shares that formerly were Registrable
Founders Stock, and that (a) have been sold or transferred by a person or entity
in a transaction in which rights under this Section 2 are not assigned in
accordance with this Agreement, (b) that have been sold or transferred to the
public pursuant to Rule 144, or (c) that may, within a 90-day period, be sold to
the public without volume restrictions pursuant to Rule 144 unless the Holder of
such shares holds more than 5% of the outstanding shares of Common Stock of the
Company.
2.2 Demand Registration.
-------------------
(a) Request by Holders of Series B Preferred Stock. If the
----------------------------------------------
Company shall receive at any time after the earlier of March 26, 2003, or six
(6) months after the IPO, a written request from Series B Investors collectively
holding at least 30% of Registrable Series B Stock then held by the Series B
Investors that the Company file a registration statement under the Securities
Act covering the Registrable Securities pursuant to this Section 2.2, then the
Company shall, within 20 days after the receipt of such written request, give
notice of such request ("Request Notice") to all Holders, and use its best
--------------
efforts to effect, as soon as reasonably practicable, the registration under the
Securities Act of all Registrable Securities which Holders request to be
registered and included in such registration by notice given by such Holders to
the Company within 20 days after receipt of the Request Notice, subject only to
the limitations of this Section 2; provided that the Registrable Securities
--------
requested by all Holders to be registered pursuant to such request must have an
anticipated aggregate public offering price (before any underwriting discounts
and commissions) of not less than $15,000,000.
(b) Request by Holders of Series C Preferred Stock. If the
----------------------------------------------
Company shall receive at any time after March 26, 2003, a written request from
Series C Investors collectively holding at least 30% of Registrable Series C
Stock then held by the Series C Investors that the Company file a registration
statement under the Securities Act covering at least 30% of the Registrable
Series C Stock pursuant to this Section 2.2, then the Company shall, within 20
days after the receipt of such written request, provide a Request Notice to all
Holders, and use its best efforts to effect, as soon as reasonably practicable,
the registration under the Securities Act of all Registrable Securities which
Holders request to be registered and included in such registration by notice
given by such Holders to the Company within 20 days after receipt of the Request
Notice, subject only to the limitations of this Section 2; provided that the
--------
Registrable Securities requested by all Holders to be registered pursuant to
such request must have an anticipated aggregate public offering price (before
any underwriting discounts and commissions) of not less than $20,000,000.
(c) Underwriting. If the Investors initiating the above
------------
registration request under this Section 2.2 ("Initiating Holders") intend to
------------------
distribute the Registrable Securities covered by their request by means of an
underwriting, then they shall so advise the Company as a part of their request
made pursuant to this Section 2.2 and the Company shall include such information
in the written notice referred to in subsections 2.2(a) or 2.2(b). In such
event, the right of any Holder to include his Registrable Securities in such
registration shall be conditioned
-6-
<PAGE>
upon such Holder's participation in such underwriting and the inclusion of such
Holder's Registrable Securities in the underwriting (unless otherwise mutually
agreed by a majority in interest of the Initiating Holders and such Holder) to
the extent provided herein. All Holders proposing to distribute their securities
through such underwriting shall enter into an underwriting agreement in
customary form with the managing underwriter or underwriters selected for such
underwriting by the Company (and reasonably satisfactory to a majority in
interest of the Initiating Holders). Notwithstanding any other provision of this
Section 2.2, if the underwriter(s) advise(s) the Company in writing that
marketing factors require a limitation of the number of securities to be
underwritten then the Company shall so advise all Holders of Registrable
Securities that would otherwise be registered and underwritten pursuant hereto,
and the number of Registrable Securities that may be included in the
underwriting shall be reduced as required by the underwriter(s) and allocated
first to the Initiating Holders, second to the Holders of Registrable Series B
or Registrable Series C Stock, who are not the Initiating Holders, and third to
any other stockholder holding Registrable Securities, on a pro rata basis among
such Holders based on the total number of Registrable Securities then held by
each such Holder. Any Registrable Securities excluded and withdrawn from such
underwriting shall be withdrawn from the registration.
(d) Maximum Number of Demand Registrations. The Company is
--------------------------------------
obligated to (i) effect two (2) such registrations pursuant to Section 2.2(a)
and (ii) effect two (2) such registrations pursuant to Section 2.2(b), and the
Company shall not be obligated to effect a registration during the one hundred
eighty (180) day period commencing with the date of the Company's IPO.
(e) Deferral. Notwithstanding the foregoing, if the Company
--------
shall furnish to Holders requesting the filing of a registration statement
pursuant to this Section 2.2, a certificate signed by the President or Chief
Executive Officer of the Company stating that in the good faith judgment of the
Board of Directors of the Company, it would be seriously detrimental to the
Company for such registration statement to be filed, then the Company shall have
the right to defer such filing for a period of not more than 120 days after
receipt of the request of the Initiating Holders; provided, however, that the
-------- -------
Company may not utilize this right more than twice in any twelve (12) month
period.
(f) Expenses. All registration expenses incurred in connection
--------
with a registration pursuant to this Section 2.2, including without limitation
all registration and qualification fees, printers' and accounting fees, fees and
disbursements of counsel (and the reasonable fees and disbursements of a single
counsel for all of the Registered Holders selling Registrable Securities
pursuant to the registration under this Section 2.2, up to a maximum of
$20,000), and underwriters' discounts and commissions shall be borne by the
Company. Each Holder participating in a registration pursuant to this Section
2.2 shall bear such Holder's proportionate share (based on the total number of
shares sold in such registration other than for the account of the Company) of
all discounts or commissions payable to underwriters in connection with such
offering. Notwithstanding the foregoing, the Company shall not be required to
pay for any expenses of any registration proceeding begun pursuant to this
Section 2.2 if the registration request is subsequently withdrawn at the request
of the Holders of a
-7-
<PAGE>
majority of the Registrable Securities to be registered, unless the Holders of a
majority of the Registrable Securities then outstanding agree to forfeit their
right to one (1) demand registration pursuant to this Section 2.2 (in which case
such right shall be forfeited by all Holders of Registrable Securities);
provided, further, however, that if at the time of such withdrawal, the Holders
- -------- ------- -------
have learned of a material adverse change in the condition, business, or
prospects of the Company not known to the Holders at the time of their request
for such registration and have withdrawn their request for registration with
reasonable promptness after learning of such material adverse change, then the
Holders shall not be required to pay any of such expenses and shall retain their
rights pursuant to this Section 2.2.
2.3 Piggyback Registrations. The Company shall notify all Holders
-----------------------
of Registrable Securities in writing at least twenty (20) days prior to filing
any registration statement under the Securities Act for purposes of effecting a
public offering of securities of the Company (including, but not limited to,
registration statements relating to secondary offerings of securities of the
Company, but excluding registration statements relating to any registration
---------
under Section 2.2 or Section 2.4 of this Agreement or to any employee benefit
plan, acquisition or corporate reorganization) and will afford each such Holder
an opportunity to include in such registration statement all or any part of the
Registrable Securities then held by such Holder. Each Holder desiring to include
in any such registration statement all or any part of the Registrable Securities
held by such Holder shall, within ten (10) days after receipt of the above-
described notice from the Company, so notify the Company in writing, and in such
notice shall inform the Company of the number of Registrable Securities such
Holder wishes to include in such registration statement. If a Holder decides not
to include all of its Registrable Securities in any registration statement
thereafter filed by the Company, such Holder shall nevertheless continue to have
the right to include any Registrable Securities in any subsequent registration
statement or registration statements as may be filed by the Company with respect
to offerings of its securities, all upon the terms and conditions set forth
herein.
(a) Underwriting. If a registration statement for which the
------------
Company gives notice under this Section 2.3 is for an underwritten offering,
then the Company shall so advise the Holders of Registrable Securities. In such
event, the right of any such Holder's Registrable Securities to be included in a
registration pursuant to this Section 2.3 shall be conditioned upon such
Holder's participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting to the extent provided herein. All
Holders proposing to distribute their Registrable Securities through such
underwriting shall enter into an underwriting agreement in customary form with
the managing underwriter or underwriter(s) selected for such underwriting.
Notwithstanding any other provision of this Agreement, if the managing
underwriter(s) determine(s) in good faith that marketing factors require a
limitation of the number of shares to be underwritten, then the managing
underwriter(s) may exclude shares (including Registrable Securities) from the
registration and the underwriting, and the number of shares that may be included
in the registration and the underwriting shall be allocated, first, to the
-----
Company, second, to each of the Holders requesting inclusion of their
------
Registrable Series C Stock and Registrable Series B Stock in such registration
statement, on a pro rata basis based on the total number of Registrable Series C
Stock and Registrable Series B Stock then held by each such Holder, third, to
-----
each of the Holders requesting inclusion of their Registrable Series A
-8-
<PAGE>
Stock and Registrable Founders Stock in such registration statement, on a pro
rata basis based on the total number of Registrable Series A Stock and
Registrable Founders Stock then held by each such Holder, fourth, to any other
------
Holder holding Registrable Securities and any other stockholders having
registration rights that are pari passu with those of Holders, on a pro rata
---- -----
basis based on the total number of Registrable Securities then held by each such
Holder, and fifth, to any other selling shareholders; provided, that with
----- --------
respect to each of the Series B Investors or Series C Investors holding
Registrable Securities, the number of shares of Registrable Securities to be
included in a registration under this Section 2.3 shall be no less than 30% of
the Series B Stock or Series C Stock requested by each such Holder to be sold
pursuant to this Section 2.3 and no less than 20% of any other Registrable
Securities requested by such Holder to be included in such registration;
provided, further, that if the registration relates to an initial public
- -------- -------
offering of the Company's securities or an offering solely by stockholders of
the Company exercising demand registration rights, then all Registrable
Securities held by such Holder may be excluded from such registration and
underwriting by the managing underwriter(s). If any Holder disapproves of the
terms of any such underwriting, such Holder may elect to withdraw therefrom by
written notice to the Company and the managing underwriter(s), delivered at
least ten (10) business days prior to the effective date of the registration
statement. Any Registrable Securities excluded or withdrawn from such
underwriting shall be excluded and withdrawn from the registration. For any
Holder that is a partnership or corporation, the partners, retired partners,
affiliates and shareholders of such Holder, or the estates and family members of
any such partners and retired partners and any trusts for the benefit of any of
the foregoing persons shall be deemed to be a single "Holder", and any pro rata
reduction with respect to such "Holder" shall be based upon the aggregate amount
of shares carrying registration rights owned by all entities and individuals
included in such "Holder", as defined in this sentence.
(b) Expenses. All expenses incurred in connection with a
--------
registration pursuant to this Section 2.3 (excluding underwriters' and brokers'
discounts and commissions), including, without limitation all federal and "blue
sky" registration and qualification fees, printers' and accounting fees, fees
and disbursements of counsel for the Company (and the reasonable fees and
disbursements of a single counsel for all of the Registered Holders selling
Registrable Securities pursuant to the registration under this Section 2.3, up
to a maximum of $20,000), shall be borne by the Company.
2.4 Form S-3 Registration. At any time that the Company is eligible
---------------------
to utilize a Form S-3 registration statement, in case the Company shall receive
from any Holder or Holders of Registrable Securities a written request or
requests that the Company effect a registration on Form S-3 and any related
qualification or compliance with respect to all or a part of the Registrable
Securities owned by such Holder or Holders, then the Company will:
(a) Notice. Promptly give written notice of the proposed
------
registration and the Holder's or Holders' request therefor, and any related
qualification or compliance, to all other Holders of Registrable Securities; and
-9-
<PAGE>
(b) Registration. As soon as practicable, effect such
------------
registration and all such qualifications and compliances as may be so requested
and as would permit or facilitate the sale and distribution of all or such
portion of such Holder's or Holders' Registrable Securities, as the case may be,
as are specified in such request, together with all or such portion of the
Registrable Securities of any other Holder or Holders joining in such request as
are specified in a written request given within ten (10) days after receipt of
written notice from the Company pursuant to Section 2.4(a); provided, however,
-------- -------
that the Company shall not be obligated to effect any such registration,
qualification or compliance pursuant to this Section 2.4:
(1) if Form S-3 is not available for such offering by the
Holders;
(2) if the Holders of Registrable Securities, together with
the holders of any other securities of the Company entitled to inclusion in such
registration, propose to sell Registrable Securities and such other securities
(if any) at an aggregate price to the public of less than $2,500,000;
(3) if the Company shall furnish to the Holders of
Registrable Securities a certificate signed by the President or Chief Executive
Officer of the Company stating that in the good faith judgment of the Board of
Directors of the Company, it would be seriously detrimental to the Company for
such Form S-3 Registration to be effected at such time, in which event the
Company shall have the right to defer the filing of the Form S-3 registration
statement no more than once during any twelve month period for a period of not
more than 90 days after receipt of the request of the Holder or Holders under
this Section 2.4;
(4) if the Company has within the twelve (12) month period
preceding the date of such request already effected two (2) registrations on
Form S-3 for the Holders pursuant to this Section 2.4; or
(5) in any particular jurisdiction in which the Company
would be required to qualify to do business or to execute a general consent to
service of process in effecting such registration, qualification or compliance.
(c) Expenses. Subject to the foregoing, the Company shall
--------
file a Form S-3 registration statement covering the Registrable Securities and
other securities so requested to be registered pursuant to this Section 2.4 as
soon as practicable after receipt of the request or requests of the Holders for
such registration. The Company shall pay all expenses incurred in connection
with the first three registrations requested by the holders of Registrable
Series C Stock and the first three registrations requested by the holders of all
other Registrable Stock, pursuant to this Section 2.4, (excluding underwriters'
or brokers' discounts and commissions, if any), including without limitation all
filing, registration and qualification, printers' and accounting fees and the
reasonable fees and disbursements of one counsel for the selling Holder or
Holders (up to a maximum of $20,000).
-10-
<PAGE>
(d) Form S-3 Not Demand or Piggyback Registration. Form S-3
---------------------------------------------
registrations shall not be deemed to be demand or piggyback registrations as
described in Sections 2.2 and 2.3 above.
2.5 Obligations of the Company. Whenever required to effect the
--------------------------
registration of any Registrable Securities under this Agreement, the Company
shall, as expeditiously and as reasonably practicable:
(a) Prepare and file with the SEC a registration statement with
respect to such Registrable Securities and, in the case of a registration under
Section 2.4 (S-3 Registration), use its best efforts to cause such registration
statement to become effective and, upon the request of the Holders of a majority
of the Registrable Securities registered thereunder, keep such Form S-3
registration statement effective for the earlier of up to one hundred twenty
(120) days or until all registered securities of such Holders have been sold;
provided, however, that if after the time of such registration a request is made
to the Holders pursuant to Section 2.9 of this Agreement (or a similar request
is made) for some period of time following the effective date of a Company
registration and the Holders enter into such an agreement, then such 120 day
period shall be extended for a period of time equal to the period that the
Holder selling shares pursuant to a registration under Section 2.4 refrains from
selling any Common Stock (or other securities) pursuant to such market stand-off
agreement.
(b) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement.
(c) Furnish to the Holders such number of copies of the
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as they may
reasonably request in order to facilitate the disposition of the Registrable
Securities owned by them that are included in such registration.
(d) Use its best efforts to register and qualify the securities
covered by such registration statement under such other securities or Blue Sky
laws of such jurisdictions as shall be reasonably requested by the Holders,
provided that the Company shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions.
(e) In the event of any underwritten public offering under
Section 2.2 or 2.3, enter into and perform its obligations under an underwriting
agreement, in usual and customary form, with the managing underwriter(s) of such
offering. Each Holder participating in such underwriting shall also enter into
and perform its obligations under such an agreement.
(f) Use its best efforts to notify each Holder of Registrable
Securities covered by such registration statement at any time when a prospectus
relating thereto is required to be delivered under the Securities Act of the
happening of any event as a result of which the prospectus included in such
registration statement, as then in effect, includes an untrue statement
-11-
<PAGE>
of a material fact or omits to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in the light
of the circumstances then existing, such obligation to continue as long as the
registration statement is effective or all Registrable Securities held by a
Holder have been sold, up to a maximum of 120 days from the date on which such
registration statement is declared effective.
2.6 Furnish Information. It shall be a condition precedent to the
-------------------
obligations of the Company to take any action pursuant to Sections 2.2, 2.3 or
2.4 that the selling Holders shall furnish to the Company such information
regarding themselves, the Registrable Securities held by them, and the intended
method of disposition of such securities as shall be required to timely and
legally effect the registration of their Registrable Securities.
2.7 Delay of Registration. No Holder shall have any right to
---------------------
obtain or seek an injunction restraining or otherwise delaying any such
registration as the result of any controversy that might arise with respect to
the interpretation or implementation of this Section 2.
2.8 Indemnification. In the event any Registrable Securities are
---------------
included in a registration statement under Sections 2.2, 2.3 or 2.4:
(a) By the Company. To the extent permitted by law, the
--------------
Company will indemnify and hold harmless each Holder, the partners, members,
officers and directors of each Holder, any underwriter (as defined in the
Securities Act) for such Holder and each person, if any, who controls such
Holder or underwriter within the meaning of the Securities Act or the
Securities Exchange Act of 1934, as amended, (the "1934 Act"), against any
--------
losses, claims, damages, or liabilities (joint or several) to which they may
become subject under the Securities Act, the 1934 Act or other federal or state
law, insofar as such losses, claims, damages, or liabilities (or actions in
respect thereof) arise out of or are based upon any of the following statements,
omissions or violations (a "Violation"):
---------
(i) any untrue statement or alleged untrue statement of a
material fact contained in such registration statement, including any
preliminary prospectus or final prospectus contained therein or any amendments
or supplements thereto;
(ii) the omission or alleged omission to state therein a
material fact required to be stated therein, or necessary to make the statements
therein not misleading, or
(iii) any violation or alleged violation by the Company of the
Securities Act, the 1934 Act, any federal or state securities law or any rule or
regulation promulgated under the Securities Act, the 1934 Act or any federal or
state securities law in connection with the offering covered by such
registration statement.
In the event of a violation, the Company will reimburse each such Holder,
partner, member, officer or director, underwriter or controlling person for any
legal or other expenses reasonably incurred by them, as incurred, in connection
with investigating or defending any such loss, claim, damage, liability or
action; provided however, that the indemnity agreement contained in this
-------- -------
subsection 2.8(a) shall not apply to amounts paid in settlement of any such
loss,
-12-
<PAGE>
claim, damage, liability or action if such settlement is effected without the
consent of the Company (which consent shall not be unreasonably withheld), nor
shall the Company be liable in any such case for any such loss, claim, damage,
liability or action to the extent that it arises out of or is based upon a
Violation which occurs in reliance upon and in conformity with written
information furnished expressly for use in connection with such registration by
such Holder, partner, officer, director, underwriter or controlling person of
such Holder; provided further, however, that the foregoing indemnity agreement
-------- -------
with respect to any preliminary prospectus shall not inure to the benefit of any
Holder or underwriter, or any person controlling such Holder or underwriter,
with respect to any losses, claims, damages or liabilities arising from the sale
by such Holder or underwriter of shares to any person if a copy of the
prospectus (as then amended or supplemented if the Company shall have furnished
any amendments or supplements thereto) was not sent or given by or on behalf of
such Holder or underwriter to such person, if required by law so to have been
delivered, at or prior to the written confirmation of the sale of the shares to
such person, and if the Company shall have timely furnished such Holder or
underwriter sufficient copies of such prospectus (as so amended or supplemented)
and of such prospectus (as so amended or supplemented) would have cured the
defect giving rise to such loss, claim, damage or liability.
(b) By Selling Holders. To the extent permitted by law, each
------------------
selling Holder will indemnify and hold harmless the Company, each of its
directors, each of its officers who have signed the registration statement, each
person, if any, who controls the Company within the meaning of the Securities
Act, any underwriter and any other Holder selling securities under such
registration statement or any of such other Holder's partners, members,
directors or officers or any person who controls such Holder within the meaning
of the Securities Act or the 1934 Act, against any losses, claims, damages or
liabilities (joint or several) to which the Company or any such director,
officer, controlling person, underwriter or other such Holder, partner, member
or director, officer or controlling person of such other Holder may become
subject under the Securities Act, the 1934 Act or other federal or state law,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereto) arise out of or are based upon any Violation, in each case to the
extent (and only to the extent) that such Violation occurs in reliance upon and
in conformity with written information furnished by such Holder expressly for
use in connection with such registration; and each such Holder will reimburse
any legal or other expenses reasonably incurred by the Company or any such
director, officer, controlling person, underwriter or other Holder, partner,
member, officer, director or controlling person of such other Holder in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the indemnity agreement contained
-------- -------
in this is subsection 2.8(b) shall not apply to amounts paid in settlement of
any such loss, claim, damage, liability or action if such settlement is effected
without the consent of the Holder, which consent shall not be unreasonably
withheld; and provided further, that the total amounts payable in indemnity by a
-------- -------
Holder under this Section 2.8(b) in respect of any Violation shall not exceed
the net proceeds received by such Holder in the registered offering out of which
such Violation arises.
(c) Notice. Promptly after receipt by an indemnified party
------
under this Section 2.8 of notice of the commencement of any action (including
any governmental action), such indemnified party will, if a claim in respect
thereof is to be made against any indemnifying
-13-
<PAGE>
party under this Section 2.8, deliver to the indemnifying party a written notice
of the commencement thereof and the indemnifying party shall have the right to
participate in, and, to the extent the indemnifying party so desires, jointly
with any other indemnifying party similarly noticed, to assume the defense
thereof with counsel selected by the indemnifying party and reasonably
satisfactory to the indemnified party; provided, however, that an indemnified
-------- -------
party shall have the right to retain its own counsel, with the fees and expenses
to be paid by the indemnifying party, if representation of such indemnified
party by the counsel retained by the indemnifying party would be inappropriate
due to actual or potential conflict of interests between such indemnified party
and any other party represented by such counsel in such proceeding. The failure
to deliver written notice to the indemnifying party within a reasonable time of
the commencement of any such action, if prejudicial to its ability to defend
such action, shall relieve such indemnifying party of any liability to the
indemnified party under this Section 2.8, but the omission so to deliver written
notice to the indemnifying party will not relieve it of any liability that it
may have to any indemnified party otherwise than under this Section 2.8.
(d) Defect Eliminated in Final Prospectus. The foregoing
-------------------------------------
indemnity agreements of the Company and Holders are subject to the condition
that, insofar as they relate to any Violation made in a preliminary prospectus
but eliminated or remedied in the amended prospectus on file with the SEC at the
time the registration statement in question becomes effective or the amended
prospectus filed with the SEC pursuant to SEC Rule 424(b) (the "Final
-----
Prospectus"), such indemnity agreement shall not inure to the benefit of any
- ----------
person if a copy of the Final Prospectus was furnished to the indemnified party
and was not furnished to the person asserting the loss, liability, claim or
damage at or prior to the time such action is required by the Securities Act.
(e) Contribution. In order to provide for just and equitable
------------
contribution to joint liability under the Securities Act in any case in which
either (i) any Holder (including any of its partners, members, officers or
directors) exercising rights under this Agreement, or any controlling person of
any such Holder, makes a claim for indemnification pursuant to this Section 2.8
but it is judicially determined (by the entry of a final judgment or decree by a
court of competent jurisdiction and the expiration of time to appeal or the
denial of the last right of appeal) that such indemnification may not be
enforced in such case notwithstanding the fact that this Section 2.8 provides
for indemnification in such case, or (ii) contribution under the Securities Act
may be required on the part of any such selling Holder or any such controlling
person in circumstances for which indemnification is provided under this Section
2.8; then, and in each such case, the Company and such Holder will contribute to
the aggregate losses, claims, damages or liabilities to which they may be
subject (after contribution from others) in such proportion so that such Holder
is responsible for the portion represented by the percentage that the public
offering price of its Registrable Securities offered by and sold under the
registration statement bears to the public offering price of all securities
offered by and sold under such registration statement, and the Company and other
selling Holders are responsible for the remaining portion; provided, however,
-------- -------
that, in any such case, (A) no such Holder will be required to contribute any
amount in excess of the public offering price of all such Registrable Securities
offered and sold by such Holder pursuant to such registration statement; and (B)
no person or entity guilty of fraudulent misrepresentation (within the meaning
of Section
-14-
<PAGE>
11(f) of the Securities Act) will be entitled to contribution from any person or
entity who was not guilty of such fraudulent misrepresentation.
(f) Survival. The obligations of the Company and Holders under
--------
this Section 2.8 shall survive the completion of any offering of Registrable
Securities in a registration statement, and otherwise.
2.9 "Market Stand-Off" Agreement. Each Holder hereby agrees that it
---------------------------
shall not, to the extent requested by the Company or an underwriter of
securities of the Company, sell or otherwise transfer or dispose of any
Registrable Securities or other shares of stock of the Company then owned by
such Holder at the time the registration statement is filed or thereafter (other
than to donees or partners of the Holder who agree to be similarly bound or
shares of Company stock purchased in the public market) for that number of days
so designated by the Company or the underwriter following the effective date of
a registration statement of the Company filed under the Securities Act (not to
exceed in any case 180 days after the effective date of the IPO registration
statement, and 90 days after the effective date of any subsequent registration
statement (except in the case of a partner of an Accel Entity who has been
validly assigned Registrable Securities pursuant to Section 5.1(b) hereof, who
shall be subject to the transfer and related restrictions in this Section only
in connection with the Company's IPO registration); provided, however, that:
-------- -------
(a) such agreement shall be applicable only to the first two
such registration statements of the Company which covers securities to be sold
on its behalf to the public in an underwritten offering but not to Registrable
Securities sold pursuant to such registration statement;
(b) all executive officers and directors of the Company then
holding Common Stock of the Company and all holders of 2.5 % or more of the
Common Stock of the Company (determined on an as-converted basis) shall enter
into similar agreements; and
(c) if any party specified in subsection (b) above is released
from any such agreement, then, after written notice of the same to the Company
and after the Company has had a reasonable opportunity (after receipt of such
notice) to obtain such agreement of such party, the holders of Registrable
Series B Stock and Registrable Series C Stock shall be so released from their
agreement under this Section.
In order to enforce the foregoing covenant, the Company shall have the
right to place restrictive legends on the certificates representing the shares
subject to this Section and to impose stop transfer instructions with respect to
the Registrable Securities and such other shares of stock of each Holder (and
the shares or securities of every other person subject to the foregoing
restriction) until the end of such period.
2.10 Rule 144 Reporting. With a view to making available the
------------------
benefits of certain rules and regulations of the Commission which may at any
time permit the sale of the Registrable Securities to the public without
registration, after such time as a public market exists for the Common Stock of
the Company, the Company agrees to:
-15-
<PAGE>
(a) Make and keep public information available, as those terms
are understood and defined in Rule 144, at all times after the effective date of
the first registration under the Securities Act filed by the Company for an
offering of its securities to the general public;
(b) Use its best efforts to file with the Commission in a timely
manner all reports and other documents required of the Company under the
Securities Act and the 1934 Act (at any time after it has become subject to such
reporting requirements); and
(c) So long as a Holder owns any Registrable Securities, to
furnish to the Holder forthwith upon request for a written statement by the
Company as to its compliance with the reporting requirements of Rule 144 (at any
time after 90 days after the effective date of the first registration statement
filed by the Company for an offering of its securities to the general public),
and of the Securities Act and the 1934 Act (at any time after it has become
subject to the reporting requirements of the 1934 Act), a copy of the most
recent annual or quarterly report of the Company, and such other reports and
documents of the Company as a Holder may reasonably request in availing itself
of any rule or regulation of the Commission allowing a Holder to sell any such
securities without registration (at any time after the Company has become
subject to the reporting requirements of the 1934 Act).
2.11 Termination of the Company's Obligations. The Company shall have
----------------------------------------
no obligations pursuant to Sections 2.2, 2.3 and 2.4 with respect to any request
or requests for registration made by any Holder on a date more than five (5)
years after the closing date of the IPO. The Company shall further have no
obligations pursuant to Sections 2.2, 2.3 and 2.4 with respect to any
Registrable Securities, including any Registrable Series A Stock, Registrable
Series B Stock or Registrable Series C Stock, proposed to be sold by a Holder
that then holds less than five percent (5%) of the outstanding shares of the
Company if, after the closing date of the IPO, in the opinion of counsel to the
Company all such Registrable Securities proposed to be sold by such Holder may
be sold in a 90-day period without registration under the Securities Act
pursuant to Rule 144 promulgated under the Securities Act.
2.12 Future Registration Rights. The Company shall have the right to
--------------------------
grant registration rights which are pari passu with or subordinate to the
registration rights granted hereunder without the consent of any party to this
Agreement.
3. RIGHTS OF FIRST OFFER.
---------------------
3.1 General. The Company hereby grants each Investor and each
-------
Founder the Rights of First Offer set forth in this Section 3.
(a) Investor and Founder Right of First Offer. Each Investor
-----------------------------------------
holding at least 53,333 shares of Series A Stock, at least 90,909 shares of
Series B Stock or at least 147,232 shares of Series C Stock (or any permitted
assignee of such Investor who holds such Series A Stock, Series B Stock or
Series C Stock) (with the shares of Series B Stock and Series C Stock held by
the Accel Entities or the SOFTBANK Entities, respectively, treated as held by a
single Investor for purposes of this Section 3.1) (each such Investor or any
permitted assignee
-16-
<PAGE>
thereof, an "Investor Rights Holder") and each Founder holding shares of
----------------------
Common Stock (or any permitted assignee of such Founder who holds such Common
Stock) (each Investor Rights Holder and each such Founder or assignee thereof,
are hereinafter referred to as a "Rights Holder"), has the right of first offer
-------------
to purchase such Rights Holder's Pro Rata Share (as defined in Section 3.1(b)
below), of all (or any part) of such Rights Holder's New Securities (as such
terms are defined in Section 3.2 below) that the Company may from time to time
issue after the date of this Agreement.
(b) "Pro Rata Share" for purposes of this right of first
--------------
offer is the ratio of (a) the number of shares of Series A Stock, Series B
Stock, Series C Stock and Common Stock held by a Rights Holder and all shares of
Common Stock issued in respect of such Series A Stock, Series B Stock and Series
C Stock, to (b) a number of outstanding shares of Common Stock of the Company
(calculated on a fully diluted basis assuming the exercise of outstanding stock
options, warrants and conversion of all securities which are convertible or
exercisable into Common Stock on the date immediately prior to such issuance).
3.2 New Securities Defined. "New Securities" shall mean any Common
---------------------- --------------
Stock or Peferred Stock of the Company, whether now authorized or not, and
rights, options or warrants to purchase such Common Stock or Preferred Stock,
and securities of any type whatsoever that are, or may become, convertible or
exchangeable into such Common Stock or Preferred Stock; provided, however,
-------- -------
than the term "new Securities" does not include:
---- --- -------
(i) shares or other securities of the Company's
Common Stock (and/or related options or warrants) issued to employees, officers,
directors, consultants, contractors, vendors, advisors, or other persons
performing services for the Company (including, but not by way of limitation,
distributors and sales representatives), and including any securities issuable
upon exercise or conversion of any of the foregoing securities, pursuant to any
stock offering, plan, agreement, or arrangement approved by unanimous written
consent of the Board of Directors or the vote of not less than a majority of the
members of the Company's Board of Directors present and voting at a duly held
meeting; provided that any issuance of such shares or other securities to
--------
William Lohse or any spouse, lineal descendant (whether natural or adopted) or
antecedent, sibling, or any entity or person which is controlled by or under
common control of William Lohse (a "Lohse Affiliate") shall require (for such
----- ---------
shares not be considered Investor New Securities) approval by unanimous written
consent of the Board of Directors or the vote of not less than a majority of the
members of the Company's Board of Directors present and voting at a duly held
meeting without counting the vote of William Lohse or any Lohse Affiliate;
(ii) any shares of Series B Stock or Series C Stock
issued under the Series B Agreement, the Series C Agreement or any warrant
issued in connection with the Series C Agreement, respectively, as such
agreements may be amended;
(iii) any shares or other securities issuable upon
conversion of or with respect to any then outstanding shares of Series A Stock,
Series B Stock or Series C Stock of the Company (or any shares of Common Stock
or other securities issuable
-17-
<PAGE>
upon conversion thereof, including as a Common Stock Event, as defined in
subsection 6.5 of the Company's Amended and Restated Certificate of
Incorporation);
(iv) any shares or other securities issuable upon
exercise of any options, warrants or rights to purchase any securities of the
Company outstanding on the date of this Agreement, and any shares or securities
issuable upon conversion of such shares or securities ("Warrant Securities");
------------------
(v) any shares or other securities issued in
connection with a Common Stock Event (as defined in subsection 6.5 of the
Company's Amended and Restated Certificate of Incorporation);
(vi) shares or other securities offered by the
Company to the public pursuant to a registration statement filed under the
Securities Act;
(vii) shares or other securities issued to banks and
other financial institutions or landlords in connection with the extension of
credit to the Company (including loans, lines of credit, guarantees or other
financing arrangements) or in connection with the lease of equipment or real
property and in each case for other than equity financing purposes; provided
--------
that such issuance has been approved by a majority of the Company's Board of
Directors.
(viii) shares or other securities issued pursuant to
the acquisition or merger of another corporation or entity by the Company by
consolidation, merger, purchase of all or substantially all of the assets, or
other reorganization in which the Company acquires, in a single transaction or
Series of related transactions, all or substantially all of the assets of such
other corporation or entity or fifty percent (50%) or more of the voting power
of such other corporation or entity or fifty percent (50%) or more of the equity
ownership of such other entity, or issued pursuant to the acquisition of
technologies or products from a third party; or
(ix) any shares or other securities issued pursuant
to approval by sixty percent (60%) of the shares of Series A Preferred Stock,
Series B Preferred Stock and Series C Stock voting collectively as a single
class, and a majority of shares of Common Stock held by the Founders.
3.3 Procedures. In the event that the Company proposes to undertake
----------
an issuance of New Securities it shall give to each Rights Holder written notice
of its intention to issue such New Securities (the "Notice"), describing the
------
type of New Securities and the price and the general terms upon which the
Company proposes to issue such New Securities. Each Rights Holder receiving the
Notice shall have ten (10) days from the date of mailing of any such Notice to
agree in writing to purchase such Rights Holder's Pro Rata Share of such New
Securities for the price and upon the general terms specified in the Notice by
giving written notice to the Company and stating therein the quantity of New
Securities to be purchased (not to exceed such Rights Holder's Pro Rata Share.
If any Rights Holder who has received the Notice fails to agree in writing
within such ten (10) day period to purchase such Rights Holder's full Pro Rata
Share of an offering of New Securities (each, a "Nonpurchasing Holder"), then
--------------------
such Nonpurchasing
-18-
<PAGE>
Holder shall forfeit the right hereunder to purchase that part of its Pro Rata
Share of such New Securities that it did not so agree to purchase.
3.4 Investor Overallotment Right. In the case of any Investor Rights
----------------------------
Holder who is a Nonpurchasing Holder, the Company shall promptly give each other
Investor Rights Holder who has timely agreed to purchase its full Pro Rata Share
of such offering of New Securities (a "Purchasing Holder") written notice of the
-----------------
failure of any such Investor Nonpurchasing Holder to purchase such Investor
Nonpurchasing Rights Holder's full Pro Rata Share of such offering of New
Securities (the "Overallotment Notice"). Each Purchasing Holder shall have a
--------------------
right of overallotment such that such Purchasing Holder may agree to purchase up
to one-half of the Investor Nonpurchasing Holders' unpurchased Pro Rata Share of
such offering on a pro rata basis according to the relative Pro Rata Share of
the Purchasing Rights Holders, at any time within five (5) days after receiving
the Overallotment Notice.
3.5 Failure to Exercise. In the event that the Rights Holders fail
-------------------
to exercise in full the right of first offer within such ten (10) day period and
such five (5) day overallotment period, then the Company shall have 120 days
thereafter to sell the New Securities with respect to which the Rights Holders'
rights of first offer hereunder were not exercised, at a price and upon general
terms not materially more favorable to the purchasers thereof than specified in
the Company's Notice to the Rights Holders. In the event that the Company has
not issued and sold the New Securities within such 120 day period, then the
Company shall not thereafter issue or sell any New Securities without again
first offering such New Securities to the Rights Holders pursuant to this
Section 3.
3.6 Termination of Investors' Right of First Offer. The Rights
----------------------------------------------
Holder's right of first offer in this Section 3 shall terminate (i) on an IPO,
or (ii) upon (a) the acquisition of all or substantially all the assets of the
Company or (b) an acquisition of the Company by another corporation or entity by
consolidation, merger or other reorganization in which the holders of the
Company's outstanding voting stock immediately prior to such transaction own,
immediately after such transaction, securities representing less than fifty
percent (50%) or more of the voting power of the corporation or other entity
surviving such transaction.
4. COVENANTS OF THE COMPANY.
------------------------
4.1 Proprietary Information and Inventions Agreement. The Company
------------------------------------------------
shall require all employees with access to material proprietary information of
the Company, to execute and deliver a Proprietary Information and Inventions
Agreement in the form attached to the Series C Agreement.
4.2 Stock Vesting. Unless otherwise approved by the Board of
-------------
Directors, (a) all stock options or other stock equivalents of the Company
issued after the date of this Agreement to employees, directors, consultants and
other service providers, as equity compensation, shall be subject to vesting, as
follows: (i) twenty-five percent (25%) of such stock shall vest at the end of
the first year following the earlier of the date of issuance or such person's
services commencement date with the Company, and (ii) the balance will vest at a
rate no faster than in thirty-six (36) monthly installments thereafter, and (b)
with respect to all shares of stock
-19-
<PAGE>
issued after the date of this Agreement which are purchased by any employees,
directors or consultants, the Company's repurchase option shall provide the
Company with the right to repurchase such shares (to the extent unvested) upon
such person's termination of employment or service with the Company, all as
permitted under applicable securities laws and other laws.
4.3 Directors and Officers Insurance. The Company will use all good
--------------------------------
faith efforts to obtain a directors and officers (D&O) insurance policy, to the
extent commercially available, with coverage as determined by the Board of
Directors of the Company.
4.4 Loan Repayment. Without the approval of a majority of the Board
--------------
of Directors of the Company (without counting the vote of William Lohse or any
Lohse Affiliate), the Company shall not repay the currently outstanding loan
made to the Company by William Lohse and evidenced by a promissory note dated
June 30, 1998, earlier than the date that payment is required under the terms of
Section 2 of the Lohse Note, or otherwise amend any term of the Lohse Note.
4.5 Lohse Transactions. Without the approval of a majority of the
------------------
Board of Directors of the Company (without counting the vote of William Lohse or
any Lohse Affiliate), the Company shall not enter into any transaction (which
could reasonably be expected to have a material effect on the Company) with,
amend any material agreement with or issue any stock or securities to William
Lohse or any Lohse Affiliate (except an issuance of securities to William Lohse
in connection with the exercise of William Lohse's rights of first offer under
Section 3 of this Agreement or the exercise of his rights or first refusal or
co-sale under that certain Second Amended and Restated Right of First Refusal
and Co-Sale Agreement dated as of the date hereof by and among the Company, the
Investors and the Founders).
4.6 Reservation of Series C Stock. The Company shall reserve 200,000
-----------------------------
shares of Series C Stock for issuance to banks and other financial institutions
or landlords in connection with the extension of credit to the Company
(including loans, lines of credit, guarantees or other financing arrangements)
or in connection with the lease of equipment or real property and in each case
for other than equity financing purposes.
4.7 Qualified Small Business Stock Status. The Company agrees to
-------------------------------------
submit to the Internal Revenue Service (and to provide a copy of such reports to
the Investors) any reports which it knows to be required under Section
1202(d)(1)(C) of the Code and any related Treasury Regulations; provided that
the failure to timely submit such reports shall impose no liability on the
Company. In addition, the Company agrees to undertake reasonable efforts to,
within ten (10) days after any Investor has delivered to the Company a written
request therefor, deliver to such Investor a written statement informing the
Investor whether, in the Company's good-faith judgment and to its knowledge,
such Investor's interest in the Company constitutes "qualified small business
stock" as defined in Section 1202(c) of the Code, and the accuracy and
correctness of such determination shall be without liability to the Company. The
Company's obligation to furnish a written statement pursuant to this Section 2.7
shall continue notwithstanding the fact that a class of the Company's stock may
be traded on an established securities market.
-20-
<PAGE>
4.8 Termination of Covenants. All covenants of the Company contained
------------------------
in this Section 4 shall expire and terminate as to each Investor and each
Founder upon the earlier of: (i) the effective date of the registration
statement relating to the IPO, or (ii) upon (a) the acquisition of all or
substantially all of the assets of the Company, or (b) an acquisition of the
Company by another corporation or entity by consolidation, merger or other
reorganization in which the holders of the Company's outstanding voting
securities immediately prior to such transaction own, immediately after such
transaction, securities representing less than fifty percent (50%) of the voting
power of the corporation or other entity surviving such transaction.
5. ASSIGNMENT AND AMENDMENT.
------------------------
5.1 Assignment. Notwithstanding anything herein to the contrary:
----------
(a) Information and Inspection Rights. The information and
---------------------------------
inspection rights set forth in Section 1 may be assigned only to (a) a party who
acquires at least 100,000 shares of Series A Stock, and/or 227,272 shares of
Series B Stock and/or 147,232 shares of Series C Stock issued under the Series C
Agreement (with the shares of Series B Stock and Series C Stock held by the
Accel Entities treated as held by a single Investor for purposes of this Section
5.1(a)) and/or an equivalent number (on an as-converted basis) of Registrable
Securities issued upon conversion thereof or any combination thereof (all
adjusted to reflect stock splits and the like), or (b) if the Investor is a
corporation, partnership, limited partnership, limited liability company or
other entity, a fund or other entity affiliated with the Investor (except to
Microsoft Corporation or any of its affiliates (as such term is defined under
the Securities Act) or to any direct competitor of the Company which shall not
be entitled to be assigned or otherwise receive any information or inspection
rights under Section 1 hereof, and any assignment or transfer of such rights in
violation of this Section 5.1(a) to such parties shall be void and of no
effect); provided, however that no party may be assigned any of the foregoing
-------- -------
rights unless the Company is given written notice by the assigning party at the
time of such assignment stating the name and address of the assignee and
identifying the securities of the Company as to which the rights in question are
being assigned; and provided further that any such assignee shall receive such
-------- -------
assigned rights subject to all the terms and conditions of this Agreement,
including without limitation the provisions of this Section 5.
(b) Registration Rights. The registration rights of a Holder
-------------------
under Section 2 hereof may be assigned only (a) to a party who acquires at least
100,000 shares of Series A or Series B Stock, and/or 500,000 shares of Series C
Stock, or all of a Holder's Registrable Securities, or (b) if the Investor is a
corporation, partnership, limited partnership, limited liability company or
other entity, to a fund or other entity affiliated with the Investor, or in the
case of a fund, to the partners, retired partners, members or retired members of
such Holder; provided, however that any number of shares of Registrable
-------- -------
Securities may be transferred to a Holder's stockholders or partners in
connection with pro rata distributions, or to a Holders' parent, sibling or
spouse, or to a Holder's estate or (c) in connection with the Sale Agreement (as
defined in Section 7.3). Any transfer or assignment of registration rights under
this Section 5.1(b) shall only be effective if (i) the Company is given written
notice by the assigning party at the time of such assignment stating the name
and address of the assignee and
-21-
<PAGE>
identifying the securities of the Company as to which the rights in question are
being assigned; and (ii) that any such assignee shall receive such assigned
rights subject to all the terms and conditions of this Agreement, including
without limitation the provisions of this Section 5.
(c) Rights of First Offer. The rights of first offer of a Rights
---------------------
Holder under Section 3 hereof may be assigned only (a) in the case of an
Investor to a party who acquires at least 100,000 shares of Series A Stock
issued under the Series A Agreement and/or 227,272 shares of Series B Stock
issued under the Series B Agreement and/or 339,000 shares of Series C Stock
issued under the Series C Agreement (with the shares of Series B Stock and
Series C Stock held by the Accel Entities treated as held by a single Investor
for purposes of this Section 5.1(c)) and/or an equivalent number (on an as-
converted basis) of Registrable Securities issued upon conversion thereof or any
combination thereof (all adjusted to reflect stock splits and the like), or (b)
if the Investor is a corporation, partnership, limited partnership, limited
liability company or other entity, to a fund, or other entity affiliated with
such Investor which acquires at least 50% of the shares initially issued to the
Investor, or in the case of a fund which is an Accel Entity, to any partner
thereof, or (c) in the case of Founder to a party who acquires at least 250,000
shares of Common Stock from such Founder; provided, however that no party may be
-------- -------
assigned any of the foregoing rights unless the Company is given written notice
by the assigning party at the time of such assignment stating the name and
address of the assignee and identifying the securities of the Company as to
which the rights in question are being assigned; and provided further that any
----------------
such assignee shall receive such assigned rights subject to all the terms and
conditions of this Agreement, including without limitation the provisions of
this Section 5.
(d) SOFTBANK Transfers. The SOFTBANK Entities, as an Investor,
------------------
may assign, in whole or in part, its rights and delegate its obligations
hereunder (including, but not limited to, those in Sections 1, 2 and 3) to any
of the entities listed on Exhibit C attached hereto; provided that such
---------
transferee is not Microsoft Corporation or a direct competitor of the Company
nor does such transferee work for Microsoft Corporation or a direct competitor
of the Company. Any such assignee shall, as a condition to acquiring such
shares, agree to be bound by the provisions of this Agreement pursuant to an
agreement in form and substance acceptable to the Company.
5.2 Amendment of Rights. Subject to Section 2.12 and 5.3, any
-------------------
provision of this Agreement may be amended and the observance thereof may be
waived (either generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and sixty percent
(60%) of the shares of the then outstanding Registrable Series A Stock,
Registrable Series B Stock and Registrable Series C Stock voting collectively as
a separate class, and a majority of the shares of the then outstanding Common
Stock held by any two or more Founders. Any amendment or waiver effected in
accordance with this Section 5.2 shall be binding upon each Investor, each
Founder, each Holder, each permitted successor or assignee of such Investor or
Holder and the Company.
5.3 New Investors. Notwithstanding anything herein to the contrary,
-------------
if pursuant to Section 2.2 of the Series C Agreement, additional parties may
purchase shares of Series C Stock as "New Investors" thereunder, then each such
New Investor shall become a party
-22-
<PAGE>
to this Agreement as an "Investor" hereunder, without the need any consent,
approval or signature of any Investor when such New Investor has both: (i)
purchased shares of Series C Stock under the Series C Agreement and paid the
Company all consideration payable for such shares and (ii) executed one or more
counterpart signature pages to this Agreement, the Amended and Restated Right of
First Refusal and Co-Sale Agreement and the Series C Agreement as an "Investor"
with the Company's consent.
6. BOARD OF DIRECTORS.
------------------
6.1 Board Size. The authorized number of directors constituting the
----------
Board of Directors of the Company (the "Board") shall be five (5); provided that
----- --------
in the event of a Lohse Termination or Lohse Resignation (as defined below) the
authorized number of directors constituting the Board shall then be seven (7).
The Company shall not alter the authorized number of directors in its
certificate of incorporation, Bylaws or otherwise, without first obtaining the
written consent, or affirmative vote, of the holders of at least a majority of
the then outstanding shares of the Series B Stock, Series C Stock and Common
Stock, consenting or voting (as the case may be), with the Series B Stock and
Series C Stock voting as a separate class and the Common Stock voting as a
separate class. Investors and the Founders agree that they shall during the term
of this Agreement each vote all shares of Common Stock and Preferred Stock and
other capital stock of the Company, now or hereafter directly or indirectly
owned (of record or beneficially) by such holders, at all meetings of the
stockholders of the Company, or by written consent in lieu thereof, to carry out
the intent of this Section 6.1 (including amending the Amended and Restated
Certificate of Incorporation of the Company to reflect the authorized number of
directors constituting the Board called for by this Section). "Lohse
-----
Resignation" means the voluntary resignation of William Lohse as the Company's
- -----------
Chief Executive Officer in a writing delivered to the Board. "Lohse Termination"
-----------------
means (i) the termination, removal or other failure of William Lohse to serve as
the Company's Chief Executive Officer for any reason other than as a result of a
Lohse Resignation, or (ii) a Constructive Termination. "Constructive
------------
Termination" shall mean the effective date of a written notice sent to the
- -----------
Company by William Lohse stating his good faith determination of the occurrence
of one of the following events (without the express written agreement of William
Lohse): (a) a material reduction in William Lohse's salary, bonus or other
benefits; (b) a material change in William Lohse's responsibilities or duties;
or (c) a requirement that William Lohse report to the Company's offices to
perform services as the Chief Executive Officer of the Company.
6.2 Election and Removal.
--------------------
(a) Election. The Investors and the Founders agree that they
--------
shall during the term of this Agreement each vote all shares of Common Stock and
Preferred Stock and other capital stock of the Company, now or hereafter
directly or indirectly owned (of record or beneficially) by such holders, at all
meetings of the stockholders of the Company, or by written consent in lieu
thereof, to:
(1) So long as William Lohse shall be the Company's Chief
Executive Officer,
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<PAGE>
Directors Elected By Stockholders. Cause at all times
---------------------------------
that the following nominees shall be elected to the Board: (A) two nominees
designated by a majority of the shares Common Stock held by the Founders (the
"Common Stock Directors") one of whom shall be Lohse in the event Lohse is the
----------------------
Chief Executive Officer, (B) one nominee designated by holders of a majority of
the outstanding shares of Series B Stock (the "Series B Director"); and (C) one
-----------------
nominee mutually agreed upon by all of the Common Stock Directors, the Series B
Director and the Series C Director (as defined below) (the "Outside Director")
----------------
and (D) one nominee mutually agreed upon by the holders of a majority of the
outstanding shares of Series C Stock and by both of the Common Stock Directors
(the "Series C Director"); or
-----------------
(2) In the event of a Lohse Termination or Lohse
Resignation,
Directors Elected By Stockholders. Cause at all times
---------------------------------
that the following nominees shall be elected to the Board: (A) two Common Stock
Directors, (B) one nominee whom shall be the Chief Executive Officer of the
Company chosen by the Board (the "CEO Director"), (C) the Series B Director; (D)
------------
the Outside Director; (E) the Series C Director; and (F) one nominee mutually
agreed upon by the holders of a majority of the outstanding shares of Series C
Stock, a majority of the outstanding shares of Series B Stock and by both of the
Common Stock Directors (the "Preferred Director").
------------------
(b) Initial Directors. The initial Common Stock Directors shall
-----------------
be William Lohse (the Company's Chief Executive Officer) and John Thomsen, the
initial Series B Director shall be Bud Colligan and the initial Series C
Director shall be Bill Burnham.
(c) Vacancy. If there shall be any vacancy in the office of a
-------
director who was designated by the holders of any class or Series of shares or
by the Common Stock Directors, the Series B Director and the Series C Director
as described above, then a successor to hold office for the unexpired term of
such director shall be designated in accordance with this Section 6.2.
(d) Removal. Any director who shall have been elected to the
-------
Board may be removed during his or her term of office, either with or without
cause, by, and only by, the affirmative vote of shares representing a majority
of the voting power of all the outstanding shares held by the holders who were
entitled to elect such person; provided that in the case of an Outside Director,
such director may be removed (i) by vote of the majority of the shares held by
the Founders, the Series B Stock held by the Investors and the Series C Stock
held by the Investors. The Prior Investors who hold Series B Stock, the
Investors who hold Series C Stock and the Founders agree to vote all shares of
Common Stock and Preferred Stock of the Company held by them in favor of the
removal of the Outside Director so designated for removal, and any vacancy
created by such removal may be filled only in the manner provided in subsection
6.2(a)(1) above.
(e) Notice; Cumulative Voting. The Company shall promptly give
-------------------------
each of the Investors and the Founders written notice of any change in
composition of the Board and of any proposal to remove or elect a new director.
In any election of directors pursuant to this Section 6, the Investors and
Founders agree to vote their shares in a manner sufficient to
-24-
<PAGE>
elect to the Board the individuals to be elected thereto as provided in this
Section 6, utilizing cumulative voting, if applicable and to the extent
necessary to do so.
(f) Termination. The provisions of this Section 6 shall cease to
-----------
be of any further force or effect upon the earlier to occur of: (i) the first
date on which the total number of outstanding shares of Series B Stock is less
than 2,000,000 shares (such number of shares being subject to proportional
adjustment to reflect combination or subdivisions of such Series B Stock or
dividends declared in shares of such stock) with respect to the Series B
Director and the Outside Director; and the total number of outstanding shares of
Series C Stock is less than 2,000,000 shares (such number of shares being
subject to proportional adjustment to reflect combination or subdivisions of
such Series C Stock or dividends declared in shares of such stock) with respect
to the Series C Director; (ii) upon the merger or consolidation of the Company
with or into any other corporation or corporations if such consolidation or
merger is approved by the stockholders of the Company in compliance with
applicable law and the Certificate of Incorporation and Bylaws of the Company;
(iii) a sale of all or substantially all of the Company's assets; or (iv) the
IPO.
(g) Further Assurances. Each of the Investors, and the Founders
------------------
and the Company agree not to vote any shares of Company stock, or to take any
other actions, that would in any manner defeat, impair, be inconsistent with or
adversely affect the stated intentions of the parties under Section 6 of this
Agreement.
(h) Transferees; Legends on Certificates.
------------------------------------
(1) Effect on Transferees. Each and every transferee or
---------------------
assignee of any shares of capital stock of the Company from any Investor and
Founder shall be bound by and subject to the terms and conditions of this
Agreement that are applicable to such transferee's transferor or assignor, and
the Company shall require, as a condition precedent to the transfer of any
shares of capital stock of the Company subject to this Agreement, that the
transferee agrees in writing to be bound by, and subject to, all the terms and
conditions of this Agreement.
(2) Legend. The Investors and the Founders agree that all
------
Company share certificates now or hereafter held by them that represent shares
of capital stock of the Company subject to this Agreement will be stamped or
otherwise imprinted with a legend to read as follows:
"THE SHARES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO
AGREEMENTS AND RESTRICTIONS WITH REGARD TO THE VOTING OF SUCH
SHARES AND THEIR TRANSFER, AS PROVIDED IN THE PROVISIONS OF A
SECOND AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT, A COPY OF
WHICH IS ON FILE IN THE OFFICE OF THE SECRETARY OF THE
CORPORATION."
(3) Enforcement of Agreement. Each of the Investors and the
------------------------
Founders, and the Company acknowledge and agree that any breach by any of them
of this
-25-
<PAGE>
Agreement shall cause the other parties irreparable harm which may not be
adequately compensable by money damages. Accordingly, in the event of a breach
or threatened breach by a party hereof of any provision of this Agreement, the
Company and each other Investor and/or Founder (as the case may be) shall each
be entitled to the remedies of specific performance, injunction or other
preliminary or equitable relief, including the right to compel any such
breaching Investor and/or Founder (as the case may be), as appropriate, to vote
such party's shares of capital stock of the Company in accordance with the
provisions of this Agreement, in addition to such other rights remedies as may
be available to the Company or any Investor and/or Founder (as the case may be)
for any such breach or threatened breach, including but not limited to the
recovery of money damages.
7. AMENDMENT AND RESTATEMENT OF CERTAIN FOUNDERS' AGREEMENTS; SALE OF
------------------------------------------------------------------
FOUNDERS'STOCK.
--------------
7.1 Amendment of the Agreement of Merger. Pursuant to Section 7.4.8
------------------------------------
of that certain Agreement of Merger (the "Merger Agreement") dated as of
----------------
February 5, 1998 by and among Netweb, Inc. (a predecessor to the Company),
Thomsen Enscore Computer Solutions, Inc. and each of John T. Thomsen, Erica
Enscore (now known as Erica Thomsen) and William Lohse, the Company, John T.
Thomsen, Erica Thomsen (formerly known as Erica Enscore) and William Lohse each
agree as follows:
(a) Section 4.2.6 of the Merger Agreement was terminated and
stricken from the Merger Agreement, and from the date of the Prior Rights
Agreement was of no further force or effect, and no party under the Merger
Agreement has any right, obligation or liability under such Section 4.2.6.
(b) As long as William Lohse remains a director or officer of
the Company, and John Thomsen remains an employee of the Company and Mr. Thomsen
beneficially owns (as determined under Section 13 of the 1934 Act, including
without limitation beneficial ownership of shares held by minor children and
trusts for the benefit of Mr. Thomsen's immediate family) an aggregate of at
least 1,000,000 shares (including any of the restricted shares) of the Company's
Common Stock: (a) William Lohse agrees to use his best efforts (including
without limitation voting shares of Common Stock) to cause John Thomsen to be
nominated and elected to the Board of the Company; and (b) Erica Thomsen may
attend all meetings of the Company's Board in a nonvoting observer capacity;
provided, however, that such observer shall agree to hold in confidence and
trust and to act in a fiduciary manner with respect to all information provided
to such observer; and provided further, that the Company may exclude such
observer from any meeting or portion thereof at which attendance by such
observer reasonably could be expected to adversely affect the attorney-client
privilege between the Company and its counsel. The Company shall pay all
expenses incurred by either John Thomsen or Erica Thomsen in attending such
meetings of the board or any committee thereof.
7.2 Termination of the Stock Rights Agreement. Pursuant to the terms
-----------------------------------------
of the Stock Rights and Restriction Agreement, dated as of February 5, 1999 ,
the Company, John T. Thomsen, Erica Thomsen and William Lohse each agreed that
as of the date of the Prior Rights
-26-
<PAGE>
Agreement the Stock Rights Agreement was terminated in its entirety, and was
from such date of no further force or effect, and no party under the Stock
Rights Agreement has any right, obligation or liability thereunder.
7.3 Sale of Outstanding Shares of Capital Stock to the Company. No
----------------------------------------------------------
later than the earlier of (i) ninety (90) days after the Closing and (ii) a
Change of Control (as defined below), the Founders and/or other stockholders of
the Company shall enter into an agreement (the "Sale Agreement") to sell no less
--------------
than 2,015,000, and up to 2,465,000 shares of the Company's capital stock to the
SOFTBANK Entities for a price of $3.396 per share (as adjusted for stock splits,
reverse stock splits, recapitalizations, stock dividends and the like). If such
sale has not been consummated for any reason other than a failure to consummate
such transaction by the SOFTBANK Entities, by the earlier of (i) thirty (30)
days from the date of such Sale Agreement, and (ii) the Company's IPO, the
number of shares of Common Stock issuable upon conversion of the Series C Stock
shall be adjusted as set forth in Article VI, Section 6.4(e) of the Company's
Amended and Restated Certificate of Incorporation.
For purposes of this Agreement Change of Control shall mean: (i) a merger
or acquisition in which the Company is not the surviving entity, except for a
transaction the principal purpose of which is to change the state in which the
Company is incorporated; (ii) the sale, transfer or other disposition of all or
substantially all of the assets of the Company; or (iii) any reverse merger in
which the Company is the surviving entity but in which fifty percent (50%) or
more of the Company's outstanding voting stock is transferred to holders
different from those who held the stock immediately prior to such merger.
The parties to this Agreement hereby agree that, the execution of this
Agreement, fully satisfies the requirement set forth in Section 9 of the
Restated Certificate of Incorporation to obtain consent of the Preferred
Stockholders for a repurchase of shares.
8. GENERAL PROVISIONS.
------------------
8.1 Notices. Any notice, request or other communication required or
-------
permitted hereunder shall be in writing and shall be sent or delivered by (i)
pre-paid registered/certified first class U.S. mail, (ii) hand, (iii) facsimile,
or (iv) private nationally recognized express courier service (such as Federal
Express or DHL), as follows:
(a) if to an Investor, at such Investor's respective address as
set forth on Exhibit A hereto.
---------
(b) if to the Company, at SmartAge Corporation, 3450 California
Street, San Francisco, California, 94118
(c) if to a Founder, at such Founder's address as set forth on
Exhibit B hereto.
- ---------
-27-
<PAGE>
Any party hereto (and such party's permitted assigns) may by notice so given
change its address for future notices hereunder. Notices delivered by hand or
facsimile, shall be deemed given on the day on which such notice is delivered.
Notices mailed or sent by courier as provided herein shall be deemed given on
the third (3d) business day following the date so mailed or sent, or the date of
actual receipt by a party, whichever is earlier.
8.2 Entire Agreement. This Agreement, together with all the Exhibits
----------------
hereto, constitutes and contains the entire agreement and understanding of the
parties with respect to the subject matter hereof and supersedes the Prior
Rights Agreement and any and all prior negotiations, correspondence, agreements,
understandings, duties or obligations between the parties respecting the subject
matter hereof. This Agreement will amend and restate the Prior Rights Agreement
in its entirety to read as set forth herein, when it has been duly executed by
parties having the right to so amend and restate the Prior Rights Agreement.
8.3 Governing Law. This Agreement shall be governed by and construed
-------------
exclusively in accordance with the internal laws of the State of California as
applied to agreements among California residents entered into and to be
performed entirely within California, excluding that body of law relating to
conflict of laws and choice of law.
8.4 Severability. If one or more provisions of this Agreement are
------------
held to be unenforceable under applicable law, then such provision(s) shall be
excluded from this Agreement and the balance of this Agreement shall be
interpreted as if such provision(s) were so excluded and shall be enforceable in
accordance with its terms.
8.5 Third Parties. Nothing in this Agreement, express or implied, is
-------------
intended to confer upon any person, other than the parties hereto and their
successors and assigns, any rights or remedies under or by reason of this
Agreement.
8.6 Successors and Assigns. Subject to the provisions of Section 5,
----------------------
the provisions of this Agreement shall inure to the benefit of, and shall be
binding upon, the successors and permitted assigns of the parties hereto.
8.7 Captions. The captions to sections of this Agreement have been
--------
inserted for identification and reference purposes only and shall not be used to
construe or interpret this Agreement.
8.8 Counterparts. This Agreement may be executed in counterparts,
------------
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
8.9 Costs And Attorneys' Fees. In the event that any action, suit or
-------------------------
other proceeding is instituted concerning or arising out of this Agreement or
any transaction contemplated hereunder, the prevailing party shall recover all
of such party's costs and attorneys' fees incurred in each such action, suit or
other proceeding, including any and all appeals or petitions therefrom.
-28-
<PAGE>
8.10 Adjustments for Stock Splits, Etc. Wherever in this Agreement
---------------------------------
there is a reference to a specific number of shares of Common Stock or Preferred
Stock of the Company of any class or series, then, upon the occurrence of any
subdivision, combination or stock dividend of such class or Series of stock, the
specific number of shares so referenced in this Agreement shall automatically be
proportionally adjusted to reflect the affect on the outstanding shares of such
class or Series of stock by such subdivision, combination or stock dividend.
8.11 Aggregation of Stock. All shares held or acquired by affiliated
--------------------
entities or persons shall be aggregated together for the purpose of determining
the availability of any rights under this Agreement.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
-29-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date and year first above written.
THE COMPANY:
-----------
SMARTAGE, CORP.
By: /s/ William Lohse
----------------------------------
Title:_______________________________
INVESTORS:
---------
SOFTBANK Capital Partners LP
By SOFTBANK Capital Partners LLC
Its General Partner
By:__________________________________
Title:_______________________________
SOFTBANK Capital Advisors Fund LP
By SOFTBANK Capital Partners LLC
Its General Partner
By:__________________________________
Title:_______________________________
Accel VI L.P.
By: Accel VI Associates L.L.C.
Its General Partner
By:__________________________________
Managing Member
Accel Internet Fund II L.P.
By: Accel Internet Fund II Associates L.L.C.
Its General Partner
By:__________________________________
Managing Member
[SIGNATURE PAGE TO SMARTAGE CORP. SECOND
AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT]
-30-
<PAGE>
SMARTAGE.COM CORP.
AMENDMENT TO THE
SECOND AMENDED AND RESTATED
INVESTORS' RIGHTS AGREEMENT
THIS AMENDMENT TO THE SECOND AMENDED AND RESTATED INVESTORS' RIGHTS
AGREEMENT (this "Amendment") is made and entered into as of the /24/ day of
March, 2000 by and among SMARTAGE.COM CORP., a Delaware corporation (the
------------------
"Company"), and the signatories hereto.
RECITALS:
A. The Company and certain of the signatories hereto entered into that
certain Second Amended and Restated Investors' Rights Agreement (the "Rights
Agreement") dated as of October 5, 1999.
B. Pursuant to Section 5.2 of the Rights Agreement such Agreement can be
amended with the consent of the Company, certain of the founders and the holders
of sixty percent of the Registrable Securities (as defined in the Rights
Agreement).
C. The Company has entered into that certain Interactive Marketing
Agreement between the Company and America Online, Inc., a Delaware Corporation
("AOL") as of even date hereof and as a condition thereof the Company agreed to
make AOL a party to the Rights Agreement with respect to certain provisions.
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
promises hereinafter set forth and other due and valid consideration, the
parties hereto agree as follows:
1. The parties hereto agree that the definition of Registrable Securities
set forth in Section 2.1(b) of the Rights Agreement be deleted in its entirety
and replaced with the following:
"Registrable Securities. The term "Registrable Securities" means: (1) all
---------------------- ----------------------
the shares of Common Stock of the Company issued or issuable upon the
conversion of any shares of Series A Stock issued under the Series A
Agreement or any shares of Series B Stock issued under the Series B
Agreement or any shares of Series C Stock issued under the Series C
Agreement, as such agreement may hereafter be amended from time to time
that are now owned or may hereafter be acquired by any Investor or any
Investor's successors and permitted assigns; (2) all the shares of Common
Stock of the Company issued or issuable upon the conversion of any shares
of Series C Stock issued upon exercise of any warrants, that are now owned
or may be hereafter acquired by an Investor or any Investor's successors or
permitted assigns; (3) the shares of Common Stock now held by the Founders
and set forth in Exhibit B attached hereto (the "Founders' Shares"); (4)
--------- ----------------
the shares of Common Stock issued or issuable to America Online, Inc., a
Delaware corporation
-1-
<PAGE>
("AOL") pursuant to that certain Interactive Marketing Agreement entered
into between the Company and AOL, dated as of March /15/, 2000; and (5) any
shares of Common Stock of the Company issued (or issuable upon the
conversion or exercise of any warrant, right or other security which is
issued) as a dividend or other distribution with respect to, or in exchange
for or in replacement of, all such shares of Common Stock described in
clause (1), (2), (3) or (4) of this subsection (b); provided that
Registrable Securities shall not, however, include any shares that formerly
were Registrable Securities and that (a) have been sold or transferred by a
person or entity in a transaction in which rights under this Section 2 are
not assigned in accordance with this Agreement, (b) have been sold or
transferred to the public pursuant to Rule 144 promulgated under the
Securities Act of 1933, as amended ("Rule 144") or (c) may, within a 90-day
--------
period, be sold to the public without volume restrictions pursuant to Rule
144 unless the Holder of such shares holds more than 5% of the outstanding
shares of Common Stock of the Company."
2. Section 5.2 of the Rights Agreement is deleted in its entirety and
replaced by the following:
"5.2 Amendment of Rights. Subject to Section 2.12 and 5.3, any provision
-------------------
of this Agreement may be amended and the observance thereof may be waived
(either generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and sixty
percent (60%) of the shares of the then outstanding Registrable Series A
Stock, Registrable Series B Stock, Registrable Series C Stock and
Registrable Securities held by AOL, voting collectively as a separate
class, and a majority of the shares of the then outstanding Common Stock
held by any two or more Founders. Any amendment or waiver effected in
accordance with this Section 5.2 shall be binding upon each Investor, each
Founder, each Holder, each permitted successor or assignee of such Investor
or Holder and the Company."
3. The undersigned agree that AOL is hereby included as an "Investor" in
the List of Investors, attached to the Rights Agreement as Exhibit A.
---------
4. The Company and the undersigned hereby agree that AOL shall become a
party to the Rights Agreement for purposes of Sections 1, 2 (excluding Section
2.2), 3, 5.2, 6 and 8 only; provided that, for purposes of Section 1, AOL shall
have the same rights and obligations as the Holders of 53,333 shares of Series A
Preferred Stock, and for the purposes of Section 2.3, AOL shall have the same
rights and obligations as the Holders of Registrable Series A Stock. By
execution of this Amendment AOL agrees to become a party to and be bound by the
provisions of the Rights Agreement with respect to such Sections and to abide by
the terms of the Rights Agreement.
5. Except as modified by this Amendment, all other terms and conditions in
the Rights Agreement shall remain in full force and effect and this Amendment
shall be governed by all provisions thereof.
-2-
<PAGE>
6. This Amendment will take effect immediately upon the execution hereof by
the Company, AOL and the holders of the requisite number of securities as set
forth in the Rights Agreement.
7. This Amendment may be executed in separate counterparts, all of which
taken together shall constitute a single instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment
effective as of the day and year first above written.
SMARTAGE.COM CORP.
By /s/ Brian McGee
-----------------------------------
Brian McGee
Vice President of Finance
AMERICA ONLINE, INC.
By /s/ David M. Colburn
-----------------------------------
INVESTORS
---------
SOFTBANK CAPITAL PARTNERS, LP
By /s/ Steve Murray
-----------------------------------
Title_________________________________
SOFTBANK CAPITAL ADVISORS FUND, LP
By /s/ Steve Murray
-----------------------------------
Title_________________________________
-3-
<PAGE>
ACCEL VI L.P.
By: Accel VI Associates L.L.C.
Its general partner
By /s/ S. Carter Sednaoui
-----------------------------------
Managing Member
ACCEL INTERNET FUND II L.P.
By: Accel Internet Fund II Associates L.L.C.
Its general partner
By /s/ S. Carter Sednaoui
-----------------------------------
Managing Member
ACCEL KEIRETSU VI L.P.
By: Accel Keiretsu VI Associates L.L.C.
Its general partner
By /s/ S. Carter Sednaoui
-----------------------------------
Managing Member
ACCEL INVESTORS `98 L.P.
By /s/ S. Carter Sednaoui
-----------------------------------
General Partner
-4-
<PAGE>
EL DORADO VENTURES IV, LP
By____________________________________
General Partner
EL DORADO TECHNOLOGY 98
By____________________________________
General Partner
INTEGRAL CAPITAL PARTNERS IV L.P.
By____________________________________
General Partner
INTEGRAL CAPITAL PARTNERS IV MS SIDE FUND
By____________________________________
General Partner
VECTOR CAPITAL LP.
By: VECTOR CAPITAL PARTNERS L.L.C.
Its General Partner
By____________________________________
Alex Slusky, Managing Member
-5-
<PAGE>
WONDERSTAR INVESTMENTS, INC.
By____________________________________
Michael Leeds
______________________________________
Stephen Grant
______________________________________
Anne-Marie Grant
______________________________________
Daniel Lynch
______________________________________
Roland Pieper
______________________________________
Benjamin Rosen
VIRANI FAMILY 1993 REVOCABLE TRUST
By____________________________________
Trustee
______________________________________
Vinton Cerf
-6-
<PAGE>
______________________________________
Sigrid Cerf
______________________________________
Albert Wu
/s/ William Lohse
---------------------------------------
William Lohse
/s/ John Thomsen
---------------------------------------
John Thomsen
______________________________________
Erica Thomsen
-7-
<PAGE>
EXHIBIT 10.2
SMARTAGE.COM CORP.
2000 OMNIBUS EQUITY INCENTIVE PLAN
(Adopted by the Board on March __, 2000)
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 1. ESTABLISHMENT AND PURPOSE....................... 1
SECTION 2. DEFINITIONS..................................... 1
(a) "Affiliate"....................................... 1
(b) "Award"........................................... 1
(c) "Board of Directors".............................. 1
(d) "Change in Control"............................... 1
(e) "Code"............................................ 2
(f) "Committee"....................................... 2
(g) "Company"......................................... 2
(h) "Consultant"...................................... 2
(i) "Employee"........................................ 2
(j) "Exchange Act".................................... 2
(k) "Exercise Price".................................. 2
(l) "Fair Market Value"............................... 2
(m) "ISO"............................................. 3
(n) "Nonstatutory Option"............................. 3
(o) "Offeree"......................................... 3
(p) "Option".......................................... 3
(q) "Optionee"........................................ 3
(r) "Outside Director"................................ 3
(s) "Parent".......................................... 3
(t) "Participant"..................................... 3
(u) "Plan"............................................ 3
(v) "Purchase Price".................................. 3
(w) "Restricted Share"................................ 3
(x) "Restricted Share Agreement "..................... 3
(y) "SAR"............................................. 3
(z) "SAR Agreement"................................... 3
(aa) "Service"......................................... 3
(bb) "Share"........................................... 4
(cc) "Stock"........................................... 4
(dd) "Stock Option Agreement".......................... 4
(ee) "Stock Purchase Agreement"........................ 4
(ff) "Stock Unit"...................................... 4
(gg) "Stock Unit Agreement"............................ 4
(hh) "Subsidiary"...................................... 4
(ii) "Total and Permanent Disability".................. 4
SECTION 3. ADMINISTRATION.................................. 4
(a) Committee Procedures.............................. 4
(b) Committee Responsibilities........................ 4
</TABLE>
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<TABLE>
<S> <C>
SECTION 4. ELIGIBILITY.................................................. 6
(a) General Rule................................................... 6
(b) Outside Directors.............................................. 6
(c) Limitation On Grants........................................... 6
(d) Ten-Percent Stockholders....................................... 6
(e) Attribution Rules.............................................. 7
(f) Outstanding Stock.............................................. 7
SECTION 5. STOCK SUBJECT TO PLAN........................................ 7
(a) Basic Limitation............................................... 7
(b) Annual Increase in Shares...................................... 7
(c) Additional Shares.............................................. 7
(d) Dividend Equivalents........................................... 7
SECTION 6. RESTRICTED SHARES............................................ 8
(a) Restricted Stock Agreement..................................... 8
(b) Payment for Awards............................................. 8
(c) Vesting........................................................ 8
(d) Voting and Dividend Rights..................................... 8
SECTION 7. OTHER TERMS AND CONDITIONS OF AWARDS OR SALES................ 8
(a) Duration of Offers and Nontransferability of Rights............ 8
(b) Purchase Price................................................. 9
(c) Withholding Taxes.............................................. 9
(d) Restrictions on Transfer of Shares............................. 9
SECTION 8. TERMS AND CONDITIONS OF OPTIONS.............................. 9
(a) Stock Option Agreement......................................... 9
(b) Number of Shares............................................... 9
(c) Exercise Price................................................. 9
(d) Withholding Taxes.............................................. 9
(e) Exercisability and Term........................................ 9
(f) Nontransferability............................................. 10
(g) Exercise of Options Upon Termination of Service................ 10
(h) Effect of Change in Control.................................... 10
(i) Leaves of Absence.............................................. 10
(j) No Rights as a Stockholder..................................... 11
(k) Modification, Extension and Renewal of Options................. 11
(l) Restrictions on Transfer of Shares............................. 11
(m) Buyout Provisions.............................................. 11
SECTION 9. PAYMENT FOR SHARES........................................... 11
(a) General Rule................................................... 11
(b) Surrender of Stock............................................. 11
(c) Services Rendered.............................................. 11
(d) Cashless Exercise.............................................. 12
(e) Exercise/Pledge................................................ 12
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
(f) Promissory Note................................................. 12
(g) Other Forms of Payment.......................................... 12
SECTION 10. STOCK APPRECIATION RIGHTS.................................... 12
(a) SAR Agreement................................................... 12
(b) Number of Shares................................................ 12
(c) Exercise Price.................................................. 12
(d) Exercisability and Term......................................... 12
(e) Effect of Change in Control..................................... 13
(f) Exercise of SARs................................................ 13
(g) Modification or Assumption of SARs.............................. 13
SECTION 11. STOCK UNITS.................................................. 13
(a) Stock Unit Agreement............................................ 13
(b) Payment for Awards.............................................. 13
(c) Vesting Conditions.............................................. 14
(d) Voting and Dividend Rights...................................... 14
(e) Form and Time of Settlement of Stock Units...................... 14
(f) Death of Recipient.............................................. 14
(g) Creditors' Rights............................................... 15
SECTION 12. PROTECTION AGAINST DILUTION.................................. 15
(a) Adjustments..................................................... 15
(b) Dissolution or Liquidation...................................... 15
(c) Reorganizations................................................. 15
SECTION 13. DEFERRAL OF AWARDS........................................... 16
SECTION 14. AWARDS UNDER OTHER PLANS..................................... 16
SECTION 15. PAYMENT OF DIRECTOR'S FEES IN SECURITIES..................... 16
(a) Effective Date.................................................. 16
(b) Elections to Receive NSOs, Restricted Shares or Stock Units..... 17
(c) Number and Terms of NSOs, Restricted Shares or Stock Units...... 17
SECTION 16. ADJUSTMENT OF SHARES......................................... 17
(a) General......................................................... 17
(b) Reorganizations................................................. 17
(c) Reservation of Rights........................................... 17
SECTION 17. LEGAL AND REGULATORY REQUIREMENTS............................ 18
SECTION 18. WITHHOLDING TAXES............................................ 18
(a) General......................................................... 18
(b) Share Withholding............................................... 18
SECTION 19. LIMITATION ON PARACHUTE PAYMENTS............................. 18
(a) Scope of Limitation............................................. 18
</TABLE>
-iii-
<PAGE>
<TABLE>
<S> <C>
(b) Supersedes Other Provisions..................................... 18
SECTION 20. NO EMPLOYMENT RIGHTS......................................... 18
SECTION 21. DURATION AND AMENDMENTS...................................... 19
(a) Term of the Plan................................................ 19
(b) Right to Amend or Terminate the Plan............................ 19
(c) Effect of Amendment or Termination.............................. 19
SECTION 22. EXECUTION.................................................... 19
</TABLE>
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<PAGE>
SMARTAGE.COM CORP.
------------------
2000 Omnibus Equity Incentive Plan
----------------------------------
(Adopted by the Board on March 6, 2000)
SECTION 1. ESTABLISHMENT AND PURPOSE.
- --------------------------------------
The Plan was adopted by the Board of Directors effective March 6, 2000.
The purpose of the Plan is to promote the long-term success of the Company and
the creation of stockholder value by (a) encouraging Employees, Outside
Directors and Consultants to focus on critical long-range objectives, (b)
encouraging the attraction and retention of Employees, Outside Directors and
Consultants with exceptional qualifications and (c) linking Employees, Outside
Directors and Consultants directly to stockholder interests through increased
stock ownership. The Plan seeks to achieve this purpose by providing for Awards
in the form of Restricted Shares, Stock Units, Options (which may constitute
incentive stock options or nonstatutory stock options) or stock appreciation
rights.
SECTION 2. DEFINITIONS.
- ------------------------
(a) "Affiliate" shall mean any entity other than a Subsidiary, if the
---------
Company and/or one of more Subsidiaries own not less than fifty percent (50%) of
such entity.
(b) "Award" shall mean any award of an Option, a SAR, a Restricted Share
-----
or a Stock Unit under the Plan.
(c) "Board of Directors" shall mean the Board of Directors of the Company,
------------------
as constituted from time to time.
(d) "Change in Control" shall mean the occurrence of either of the
-----------------
following events:
(i) A change in the composition of the Board of Directors, as a
result of which fewer than one-half of the incumbent directors are
directors who either:
(A) Had been directors of the Company twenty-four (24) months
prior to such change; or
(B) Were elected, or nominated for election, to the Board of
Directors with the affirmative votes of at least a majority of the
directors who had been directors of the Company twenty-four (24)
months prior to such change and who were still in office at the time
of the election or nomination; or
(ii) Any "person" (as such term is used in sections 13(d) and 14(d) of
the Exchange Act) who, by the acquisition or aggregation of securities, is
or becomes the beneficial owner, directly or indirectly, of securities of
the Company representing fifty percent (50%) or more of the combined
voting power of the Company's then outstanding securities ordinarily (and
apart from rights accruing under special circumstances) having
-1-
<PAGE>
the right to vote at elections of directors (the "Base Capital Stock");
except that any change in the relative beneficial ownership of the
Company's securities by any person resulting solely from a reduction in the
aggregate number of outstanding shares of Base Capital Stock, and any
decrease thereafter in such person's ownership of securities, shall be
disregarded until such person increases in any manner, directly or
indirectly, such person's beneficial ownership of any securities of the
Company. For purposes of this Subsection (ii), the term "person" shall not
include an employee benefit plan maintained by the Company.
(e) "Code" shall mean the Internal Revenue Code of 1986, as amended.
----
(f) "Committee" shall mean the committee designated by the Board of
---------
Directors, which is authorized to administer the Plan under Section 3 hereof.
The Committee shall have membership composition which enables the Options or
other rights granted under the Plan to qualify for exemption under Rule 16b-3
with respect to persons who are subject to Section 16 of the Exchange Act.
(g) "Company" shall mean SmartAge.com Corp., a Delaware corporation.
-------
(h) "Consultant" shall mean a consultant or advisor who provides bona fide
----------
services to the Company, a Parent, a Subsidiary or an Affiliate as an
independent contractor. Service as a Consultant shall be considered employment
for all purposes of the Plan, except as provided in the second sentence of
Section 4(a) and Section 4(b).
(i) "Employee" shall mean (i) any individual who is a common-law employee
--------
of the Company or of a Subsidiary, (ii) a member of the Board of Directors,
including (without limitation) an Outside Director, or an affiliate of member of
the Board of Directors and (iii) a member of the board of directors of a
Subsidiary; or (iv) an independent contractor or advisor who performs services
for the Company or a Subsidiary. Service as a member of the Board of Directors,
a member of the board of directors of a Subsidiary or as an independent
contractor or advisor shall be considered employment for all purposes of the
Plan except the second sentence of Section 4(a) and Section 4(b).
(j) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
------------
amended.
(k) "Exercise Price" shall mean, in the case of an Option, the amount for
--------------
which one Common Share may be purchased upon exercise of such Option, as
specified in the applicable Stock Option Agreement. "Exercise Price," in the
case of a SAR, shall mean an amount, as specified in the applicable SAR
Agreement, which is subtracted from the Fair Market Value of one Common Share in
determining the amount payable upon exercise of such SAR.
(l) "Fair Market Value" shall mean (i) the closing price of a Share on the
-----------------
principal exchange which the Shares are trading, on the date on which the Fair
Market Value is determined (if Fair Market Value is determined on a date which
the principal exchange is closed, Fair Market Value shall be determined on the
last immediately preceding trading day), or (ii) if the Shares are not traded on
an exchange but are quoted on the Nasdaq National Market or a successor
quotation system, the closing price on the date on which the Fair Market Value
is determined, or (iii) if the Shares are not traded on an exchange or quoted on
the Nasdaq National
-2-
<PAGE>
Market or a successor quotation system, the fair market value of a Share, as
determined by the Committee in good faith. Such determination shall be
conclusive and binding on all persons.
(m) "ISO" shall mean an employee incentive stock option described in Code
---
section 422.
(n) "Nonstatutory Option" shall mean an employee stock option that is not
-------------------
an ISO.
(o) "Offeree" shall mean an individual to whom the Committee has offered
-------
the right to acquire Shares under the Plan (other than upon exercise of an
Option).
(p) "Option" shall mean an ISO or Nonstatutory Option granted under the
------
Plan and entitling the holder to purchase Shares.
(q) "Optionee" shall mean an individual or estate who holds an Option or
--------
SAR.
(r) "Outside Director" shall mean a member of the Board of Directors who
----------------
is not a common-law employee of the Company or of a Subsidiary. Service as an
Outside Director shall be considered employment for all purposes of the Plan,
except as provided in the second sentence of Section 4(a).
(s) "Parent" shall mean any corporation (other than the Company) in an
------
unbroken chain of corporations ending with the Company, if each of the
corporations other than the Company owns stock possessing fifty percent (50%) or
more of the total combined voting power of all classes of stock in one of the
other corporations in such chain. A corporation that attains the status of a
Parent on a date after the adoption of the Plan shall be a parent commencing as
of such date.
(t) "Participant" shall mean an individual or estate who holds an Award.
-----------
(u) "Plan" shall mean this 2000 Omnibus Equity Incentive Plan of
----
SmartAge.com Corp., as amended from time to time.
(v) "Purchase Price" shall mean the consideration for which one Share may
--------------
be acquired under the Plan (other than upon exercise of an Option), as specified
by the Committee.
(w) "Restricted Share" shall mean a Common Share awarded under the Plan.
----------------
(x) "Restricted Share Agreement" shall mean the agreement between the
--------------------------
Company and the recipient of a Restricted Share which contains the terms,
conditions and restrictions pertaining to such Restricted Shares.
(y) "SAR" shall mean a stock appreciation right granted under the Plan.
---
(z) "SAR Agreement" shall mean the agreement between the Company and an
-------------
Optionee which contains the terms, conditions and restrictions pertaining to his
or her SAR.
(aa) "Service" shall mean service as an Employee.
-------
-3-
<PAGE>
(bb) "Share" shall mean one share of Stock, as adjusted in accordance with
-----
Section 9 (if applicable).
(cc) "Stock" shall mean the Common Stock of the Company.
-----
(dd) "Stock Option Agreement" shall mean the agreement between the Company
----------------------
and an Optionee which contains the terms, conditions and restrictions pertaining
to his Option.
(ee) "Stock Purchase Agreement" shall mean the agreement between the
------------------------
Company and an Offeree who acquires Shares under the Plan which contains the
terms, conditions and restrictions pertaining to the acquisition of such Shares.
(ff) "Stock Unit" shall mean a bookkeeping entry representing the
----------
equivalent of one Common Share, as awarded under the Plan.
(gg) "Stock Unit Agreement" shall mean the agreement between the Company
--------------------
and the recipient of a Stock Unit which contains the terms, conditions and
restrictions pertaining to such Stock Unit.
(hh) "Subsidiary" shall mean any corporation, if the Company and/or one or
----------
more other Subsidiaries own not less than fifty percent (50%) of the total
combined voting power of all classes of outstanding stock of such corporation. A
corporation that attains the status of a Subsidiary on a date after the adoption
of the Plan shall be considered a Subsidiary commencing as of such date.
(ii) "Total and Permanent Disability" shall mean that the Optionee is
------------------------------
unable to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result in
death or which has lasted, or can be expected to last, for a continuous period
of not less than twelve (12) months.
SECTION 3. ADMINISTRATION.
- ---------------------------
(a) Committee Procedures. The Plan shall be administered by the Committee.
--------------------
The Committee shall consist exclusively of two or more directors of the Company,
who shall be appointed by the Board of Directors. The Board of Directors shall
designate one of the members of the Committee as chairman. The Committee may
hold meetings at such times and places as it shall determine. The acts of a
majority of the Committee members present at meetings at which a quorum exists,
or acts reduced to or approved in writing by all Committee members, shall be
valid acts of the Committee.
(b) Committee Responsibilities. Subject to the provisions of the Plan,
--------------------------
the Committee shall have full authority and discretion to take the following
actions:
(i) To interpret the Plan and to apply its provisions;
(ii) To adopt, amend or rescind rules, procedures and forms relating
to the Plan;
-4-
<PAGE>
(iii) To authorize any person to execute, on behalf of the Company,
any instrument required to carry out the purposes of the Plan;
(iv) To determine when Shares are to be awarded or offered for sale
and when Options are to be granted under the Plan;
(v) To select the Offerees and Optionees;
(vi) To determine the number of Shares to be offered to each Offeree
or to be made subject to each Option;
(vii) To prescribe the terms and conditions of each award or sale of
Shares, including (without limitation) the Purchase Price, the vesting of
the award (including accelerating the vesting of awards) and to specify the
provisions of the Stock Purchase Agreement relating to such award or sale;
(viii) To prescribe the terms and conditions of each Option, including
(without limitation) the Exercise Price, the vesting or duration of the
Option (including accelerating the vesting of the Option), to determine
whether such Option is to be classified as an ISO or as a Nonstatutory
Option, and to specify the provisions of the Stock Option Agreement
relating to such Option;
(ix) To amend any outstanding Stock Purchase Agreement or Stock
Option Agreement, subject to applicable legal restrictions and to the
consent of the Offeree or Optionee who entered into such agreement;
(x) To prescribe the consideration for the grant of each Option or
other right under the Plan and to determine the sufficiency of such
consideration;
(xi) To determine the disposition of each Option or other right
under the Plan in the event of an Optionee's or Offeree's divorce or
dissolution of marriage;
(xii) To determine whether Options or other rights under the Plan
will be granted in replacement of other grants under an incentive or other
compensation plan of an acquired business;
(xiii) To correct any defect, supply any omission, or reconcile any
inconsistency in the Plan, any Stock Option Agreement or any Stock Purchase
Agreement; and
(xiv) To take any other actions deemed necessary or advisable for the
administration of the Plan.
Subject to the requirements of applicable law, the Committee may designate
persons other than members of the Committee to carry out its responsibilities
and may prescribe such conditions and limitations as it may deem appropriate,
except that the Committee may not delegate its authority with regard to the
selection for participation of or the granting of Options or other rights under
the Plan to persons subject to Section 16 of the Exchange Act. All decisions,
interpretations and other actions of the Committee shall be final and binding on
all Offerees, all
-5-
<PAGE>
Optionees, and all persons deriving their rights from an Offeree or Optionee. No
member of the Committee shall be liable for any action that he has taken or has
failed to take in good faith with respect to the Plan, any Option, or any right
to acquire Shares under the Plan.
SECTION 4. ELIGIBILITY.
- ------------------------
(a) General Rule. Only Employees shall be eligible for the grant of
------------
Restricted Shares, Stock Units, NSOs or SARs. In addition, only individuals who
are employed as common-law employees by the Company, a Parent or a Subsidiary
shall be eligible for the grant of ISOs. In addition, an Employee who owns more
than ten percent (10%) of the total combined voting power of all classes of
outstanding stock of the Company or any of its Parents or Subsidiaries shall not
be eligible for the grant of an ISO unless the requirements set forth in section
422(c)(6) of the Code are satisfied.
(b) Outside Directors. Any other provision of the Plan notwithstanding,
-----------------
the participation of Outside Directors in the Plan shall be subject to the
following restrictions:
(i) Outside Directors shall only be eligible for the grant of
Restricted Shares, Stock Units, Nonstatutory Options and SARs.
(ii) Each Outside Director shall automatically be granted a
Nonstatutory Option to purchase up to 250 Shares (subject to adjustment
under Section 16) as a result of their appointment as an Outside Director
on, if after, the effectiveness of the Company's initial public offering of
the Stocks. In addition, upon the conclusion of each regular annual meeting
of the Company's stockholders occurring after 1999 and following the
meeting at which they were appointed, each Outside Director who will
continue serving as a member of the Board thereafter shall receive a
Nonstatutory Option to purchase up to 10,000 Shares (subject to adjustment
under Section 16). All such Nonstatutory Options shall vest and become
exercisable at the date of grant;
(iii) The Exercise Price of all Nonstatutory Options granted to an
Outside Director under this Section 4(b) shall be equal to one hundred
percent (100%) of the Fair Market Value of a Share on the date of grant,
payable in one of the forms described in Section 9(a), (b) and (d).
(iv) All Nonstatutory Options granted to an Outside Director under
this Section 4(b) shall terminate on the earliest of (A) the tenth (10th)
anniversary of the date of grant of such Options or (B) the date twelve
(12) months after the termination of such Outside Director's service for
any reason.
(c) Limitation On Grants. No Employee shall be granted Options to purchase
--------------------
more than eight hundred thousand (800,000) Shares in any fiscal year of the
Company.
(d) Ten-Percent Stockholders. An Employee who owns more than ten percent
------------------------
(10%) of the total combined voting power of all classes of outstanding stock of
the Company or any of its Subsidiaries shall not be eligible for the grant of an
ISO unless such grant satisfies the requirements of Code section 422(c)(6).
-6-
<PAGE>
(e) Attribution Rules. For purposes of Subsection (d) above, in
-----------------
determining stock ownership, an Employee shall be deemed to own the stock owned,
directly or indirectly, by or for his brothers, sisters, spouse, ancestors and
lineal descendants. Stock owned, directly or indirectly, by or for a
corporation, partnership, estate or trust shall be deemed to be owned
proportionately by or for its shareholders, partners or beneficiaries.
(f) Outstanding Stock. For purposes of Subsection (d) above, "outstanding
-----------------
stock" shall include all stock actually issued and outstanding immediately after
the grant. "Outstanding stock" shall not include shares authorized for issuance
under outstanding options held by the Employee or by any other person.
SECTION 5. STOCK SUBJECT TO PLAN.
- ----------------------------------
(a) Basic Limitation. Shares offered under the Plan shall be authorized
----------------
but unissued Shares or treasury Shares. The maximum aggregate number of Options,
SARs, Stock Units and Restricted Shares awarded under the Plan shall not exceed
(a) eight hundred thousand (800,000) Shares, plus the additional Common Shares
described in Sections (b) and (c). The limitation of this Section 5(a) shall be
subject to adjustment pursuant to Section 12.
(b) Annual Increase in Shares. As of January 1 of each year, commencing
-------------------------
with the year 2001, the aggregate number of Options, SARs, Stock Units and
Restricted Shares that may be awarded under the Plan shall automatically
increase by a number equal to the lesser of (i) two million (2,000,000) shares,
(ii) 5% of the outstanding shares on such date or (iii) a lesser amount
determined by the Board. The aggregate number of Shares which may be issued
under the Plan shall at all times be subject to adjustment pursuant to Section
16. The number of Shares which are subject to Options or other rights
outstanding at any time under the Plan shall not exceed the number of Shares
which then remain available for issuance under the Plan. The Company, during the
term of the Plan, shall at all times reserve and keep available sufficient
Shares to satisfy the requirements of the Plan.
(c) Additional Shares. If Restricted Shares or Common Shares issued upon
-----------------
the exercise of Options are forfeited, then such Common Shares shall again
become available for Awards under the Plan. If Stock Units, Options or SARs are
forfeited or terminate for any other reason before being exercised, then the
corresponding Common Shares shall again become available for Awards under the
Plan. If Stock Units are settled, then only the number of Common Shares (if any)
actually issued in settlement of such Stock Units shall reduce the number
available under Section 5(a) and the balance shall again become available for
Awards under the Plan. If SARs are exercised, then only the number of Common
Shares (if any) actually issued in settlement of such SARs shall reduce the
number available in Section 5(a) and the balance shall again become available
for Awards under the Plan. The foregoing notwithstanding, the aggregate number
of Common Shares that may be issued under the Plan upon the exercise of ISOs
shall not be increased when Restricted Shares or other Common Shares are
forfeited.
(d) Dividend Equivalents. Any dividend equivalents paid or credited under
--------------------
the Plan shall not be applied against the number of Restricted Shares, Stock
Units, Options or SARs available for Awards, whether or not such dividend
equivalents are converted into Stock Units.
-7-
<PAGE>
SECTION 6. RESTRICTED SHARES
- ------------------------------
(a) Restricted Stock Agreement. Each grant of Restricted Shares under the
--------------------------
Plan shall be evidenced by a Restricted Stock Agreement between the recipient
and the Company. Such Restricted Shares shall be subject to all applicable terms
of the Plan and may be subject to any other terms that are not inconsistent with
the Plan. The provisions of the various Restricted Stock Agreements entered into
under the Plan need not be identical.
(b) Payment for Awards. Subject to the following sentence, Restricted
------------------
Shares may be sold or awarded under the Plan for such consideration as the
Committee may determine, including (without limitation) cash, cash equivalents,
full-recourse promissory notes, past services and future services. To the extent
that an Award consists of newly issued Restricted Shares, the Award recipient
shall furnish consideration with a value not less than the par value of such
Restricted Shares in the form of cash, cash equivalents, or past services
rendered to the Company (or a Parent or Subsidiary), as the Committee may
determine.
(c) Vesting. Each Award of Restricted Shares may or may not be subject to
-------
vesting. Vesting shall occur, in full or in installments, upon satisfaction of
the conditions specified in the Restricted Stock Agreement. The Committee may
include among such conditions the requirement that the performance of the
Company or a business unit of the Company for a specified period of one or more
years equal or exceed a target determined in advance by the Committee. Such
performance shall be determined by the Company's independent auditors. Such
target shall be based on one or more of the criteria set forth in Appendix A.
The Committee shall determine such target not later than the 90/th/ day of such
period. In no event shall the number of Restricted Shares which are subject to
performance based vesting conditions exceed 800,000, subject to adjustment in
accordance with Section 16. A Restricted Stock Agreement may provide for
accelerated vesting in the event of the Participant's death, disability or
retirement or other events. The Committee may determine, at the time of granting
Restricted Shares of thereafter, that all or part of such Restricted Shares
shall become vested in the event that a Change in Control occurs with respect to
the Company.
(d) Voting and Dividend Rights. The holders of Restricted Shares awarded
--------------------------
under the Plan shall have the same voting, dividend and other rights as the
Company's other stockholders. A Restricted Stock Agreement, however, may require
that the holders of Restricted Shares invest any cash dividends received in
additional Restricted Shares. Such additional Restricted Shares shall be subject
to the same conditions and restrictions as the Award with respect to which the
dividends were paid.
SECTION 7. OTHER TERMS AND CONDITIONS OF AWARDS OR SALES.
- ----------------------------------------------------------
(a) Duration of Offers and Nontransferability of Rights. Any right to
---------------------------------------------------
acquire Shares under the Plan (other than an Option) shall automatically expire
if not exercised by the Offeree within thirty (30) days after the grant of such
right was communicated to him by the Committee. Such right shall not be
transferable and shall be exercisable only by the Offeree to whom such right was
granted.
-8-
<PAGE>
(b) Purchase Price. The Purchase Price shall be determined by the
--------------
Committee at its sole discretion. The Purchase Price shall be payable in one of
the forms described in Sections 9(a), (b) or (c).
(c) Withholding Taxes. As a condition to the purchase of Shares, the
-----------------
Offeree shall make such arrangements as the Committee may require for the
satisfaction of any federal, state or local withholding tax obligations that may
arise in connection with such purchase.
(d) Restrictions on Transfer of Shares. Any Shares awarded or sold under
----------------------------------
the Plan shall be subject to such special forfeiture conditions, rights of
repurchase, rights of first refusal and other transfer restrictions as the
Committee may determine. Such restrictions shall be set forth in the applicable
Stock Purchase Agreement and shall apply in addition to any general restrictions
that may apply to all holders of Shares.
SECTION 8. TERMS AND CONDITIONS OF OPTIONS.
- --------------------------------------------
(a) Stock Option Agreement. Each grant of an Option under the Plan shall
----------------------
be evidenced by a Stock Option Agreement between the Optionee and the Company.
Such Option shall be subject to all applicable terms and conditions of the Plan
and may be subject to any other terms and conditions which are not inconsistent
with the Plan and which the Committee deems appropriate for inclusion in a Stock
Option Agreement. The Stock Option Agreement shall specify whether the Option is
an ISO or an NSO. The provisions of the various Stock Option Agreements entered
into under the Plan need not be identical. Options may be granted in
consideration of a reduction in the Optionee's other compensation. A Stock
Option Agreement may provide that a new Option will be granted automatically to
the Optionee when he or she exercises a prior Option and pays the Exercise Price
in a form described in Section 9.
(b) Number of Shares. Each Stock Option Agreement shall specify the number
----------------
of Shares that are subject to the Option and shall provide for the adjustment of
such number in accordance with Section 16. Options granted to an Optionee in a
single fiscal year of the Company shall not cover more than 800,000 Shares.
(c) Exercise Price. Each Stock Option Agreement shall specify the Exercise
--------------
Price. The Exercise Price of an ISO shall not be less than 100 percent (100%) of
the Fair Market Value of a Share on the date of grant, except as otherwise
provided in Section 4(d). Subject to the foregoing in this Section 8(c), the
Exercise Price under any Option shall be determined by the Committee at its sole
discretion. The Exercise Price shall be payable in one of the forms described in
Section 9.
(d) Withholding Taxes. As a condition to the exercise of an Option, the
-----------------
Optionee shall make such arrangements as the Committee may require for the
satisfaction of any federal, state or local withholding tax obligations that may
arise in connection with such exercise. The Optionee shall also make such
arrangements as the Committee may require for the satisfaction of any federal,
state or local withholding tax obligations that may arise in connection with the
disposition of Shares acquired by exercising an Option.
(e) Exercisability and Term. Each Stock Option Agreement shall specify the
-----------------------
date when all or any installment of the Option is to become exercisable. The
Stock Option
-9-
<PAGE>
Agreement shall also specify the term of the Option; provided that the term of
an ISO shall in no event exceed ten (10) years from the date of grant (five (5)
years for Employees described in Section 4(d)). A Stock Option Agreement may
provide for accelerated exercisability in the event of the Optionee's death,
disability, or retirement or other events and may provide for expiration prior
to the end of its term in the event of the termination of the Optionee's
service. Options may be awarded in combination with SARs, and such an Award may
provide that the Options will not be exercisable unless the related SARs are
forfeited. Subject to the foregoing in this Section 8(e), the Committee at its
sole discretion shall determine when all or any installment of an Option is to
become exercisable and when an Option is to expire.
(f) Nontransferability. During an Optionee's lifetime, his Option(s) shall
------------------
be exercisable only by him and shall not be transferable. In the event of an
Optionee's death, his Option(s) shall not be transferable other than by will or
by the laws of descent and distribution.
(g) Exercise of Options Upon Termination of Service. Each Stock Option
-----------------------------------------------
Agreement shall set forth the extent to which the Optionee shall have the right
to exercise the Option following termination of the Optionee's Service with the
Company and its Subsidiaries, and the right to exercise the Option of any
executors or administrators of the Optionee's estate or any person who has
acquired such Option(s) directly from the Optionee by bequest or inheritance.
Such provisions shall be determined in the sole discretion of the Committee,
need not be uniform among all Options issued pursuant to the Plan, and may
reflect distinctions based on the reasons for termination of Service.
(h) Effect of Change in Control. The Committee may determine, at the time
---------------------------
of granting an Option or thereafter, that such Option shall become exercisable
as to all or part of the Shares subject to such Option in the event that a
Change in Control occurs with respect to the Company, subject to the following
limitations:
(i) In the case of an ISO, the acceleration of exercisability shall
not occur without the Optionee's written consent.
(ii) If the Company and the other party to the transaction
constituting a Change in Control agree that such transaction is to be
treated as a "pooling of interests" for financial reporting purposes, and
if such transaction in fact is so treated, then the acceleration of
exercisability shall not occur to the extent that the Company's independent
accountants and such other party's independent accountants separately
determine in good faith that such acceleration would preclude the use of
"pooling of interests" accounting.
(i) Leaves of Absence. An Employee's Service shall cease when such
-----------------
Employee ceases to be actively employed by, or a consultant or adviser to, the
Company (or any subsidiary) as determined in the sole discretion of the Board of
Directors. For purposes of Options, Service does not terminate when an Employee
goes on a bona fide leave of absence, that was approved by the Company in
writing, if the terms of the leave provide for continued service crediting, or
when continued service crediting is required by applicable law. However, for
purposes of determining whether an Option is entitled to ISO status, an
Employee's Service will be treated as terminating ninety (90) days after such
Employee went on leave, unless such Employee's right to
-10-
<PAGE>
return to active work is guaranteed by law or by a contract. Service terminates
in any event when the approved leave ends, unless such Employee immediately
returns to active work. The Company determines which leaves count toward
Service, and when Service terminates for all purposes under the Plan.
(j) No Rights as a Stockholder. An Optionee, or a transferee of an
--------------------------
Optionee, shall have no rights as a stockholder with respect to any Shares
covered by his Option until the date of the issuance of a stock certificate for
such Shares. No adjustments shall be made, except as provided in Section 9.
(k) Modification, Extension and Renewal of Options. Within the limitations
----------------------------------------------
of the Plan, the Committee may modify, extend or renew outstanding options or
may accept the cancellation of outstanding options (to the extent not previously
exercised), whether or not granted hereunder, in return for the grant of new
Options for the same or a different number of Shares and at the same or a
different exercise price. The foregoing notwithstanding, no modification of an
Option shall, without the consent of the Optionee, impair his rights or increase
his obligations under such Option.
(l) Restrictions on Transfer of Shares. Any Shares issued upon exercise of
----------------------------------
an Option shall be subject to such special forfeiture conditions, rights of
repurchase, rights of first refusal and other transfer restrictions as the
Committee may determine. Such restrictions shall be set forth in the applicable
Stock Option Agreement and shall apply in addition to any general restrictions
that may apply to all holders of Shares.
(m) Buyout Provisions. The Committee may at any time (a) offer to buy out
-----------------
for a payment in cash or cash equivalents an Option previously granted or (b)
authorize an Optionee to elect to cash out an Option previously granted, in
either case at such time and based upon such terms and conditions as the
Committee shall establish.
SECTION 9. PAYMENT FOR SHARES.
- -----------------------------
(a) General Rule. The entire Exercise Price of Shares issued under the
------------
Plan shall be payable in lawful money of the United States of America at the
time when such Shares are purchased, except as provided in Subsections (b)
through (g) below.
(b) Surrender of Stock. To the extent that a Stock Option Agreement so
------------------
provides, payment may be made all or in part by surrendering, or attesting to
the ownership of, Shares which have already been owned by the Optionee or his
representative for more than twelve (12) months. Such Shares shall be valued at
their Fair Market Value on the date when the new Shares are purchased under the
Plan. The Optionee shall not surrender, or attest to the ownership of, Shares in
payment of the Exercise Price if such action would cause the Company to
recognize compensation expense (or additional compensation expense) with respect
to the Option for financial reporting purposes.
(c) Services Rendered. At the discretion of the Committee, Shares may be
-----------------
awarded under the Plan in consideration of services rendered to the Company or a
Subsidiary prior to the award. If Shares are awarded without the payment of a
Purchase Price in cash, the Committee
-11-
<PAGE>
shall make a determination (at the time of the award) of the value of the
services rendered by the Offeree and the sufficiency of the consideration to
meet the requirements of Section 6(c).
(d) Cashless Exercise. To the extent that a Stock Option Agreement so
-----------------
provides, payment may be made all or in part by delivery (on a form prescribed
by the Committee) of an irrevocable direction to a securities broker to sell
Shares and to deliver all or part of the sale proceeds to the Company in payment
of the aggregate Exercise Price.
(e) Exercise/Pledge. To the extent that a Stock Option Agreement so
---------------
provides, payment may be made all or in part by delivery (on a form prescribed
by the Committee) of an irrevocable direction to a securities broker or lender
to pledge Shares, as security for a loan, and to deliver all or part of the loan
proceeds to the Company in payment of the aggregate Exercise Price.
(f) Promissory Note. To the extent that a Stock Option Agreement so
---------------
provides, payment may be made all or in part by delivering (on a form prescribed
by the Company) a full-recourse promissory note. However, the par value of the
Common Shares being purchased under the Plan, if newly issued, shall be paid in
cash or cash equivalents.
(g) Other Forms of Payment. To the extent that a Stock Option Agreement so
----------------------
provides, payment may be made in any other form that is consistent with
applicable laws, regulations and rules.
SECTION 10. STOCK APPRECIATION RIGHTS.
- -------------------------------------
(a) SAR Agreement. Each grant of a SAR under the Plan shall be evidenced
-------------
by a SAR Agreement between the Optionee and the Company. Such SAR shall be
subject to all applicable terms of the Plan and may be subject to any other
terms that are not inconsistent with the Plan. The provisions of the various SAR
Agreements entered into under the Plan need not be identical. SARs may be
granted in consideration of a reduction in the Optionee's other compensation.
(b) Number of Shares. Each SAR Agreement shall specify the number of
----------------
Common Shares to which the SAR pertains and shall provide for the adjustment of
such number in accordance with Section 12. SARs granted to any Optionee in a
single calendar year shall in no event pertain to more than 800,000 Common
Shares. The limitations set forth in the preceding sentence shall be subject to
adjustment in accordance with Section 12.
(c) Exercise Price. Each SAR Agreement shall specify the Exercise Price. A
--------------
SAR Agreement may specify an Exercise Price that varies in accordance with a
predetermined formula while the SAR is outstanding.
(d) Exercisability and Term. Each SAR Agreement shall specify the date
-----------------------
when all or any installment of the SAR is to become exercisable. The SAR
Agreement shall also specify the term of the SAR. A SAR Agreement may provide
for accelerated exercisability in the event of the Optionee's death, disability
or retirement or other events and may provide for expiration
-12-
<PAGE>
prior to the end of its term in the event of the termination of the Optionee's
service. SARs may be awarded in combination with Options, and such an Award may
provide that the SARs will not be exercisable unless the related Options are
forfeited. A SAR may be included in an ISO only at the time of grant but may be
included in an NSO at the time of grant or thereafter. A SAR granted under the
Plan may provide that it will be exercisable only in the event of a Change in
Control.
(e) Effect of Change in Control. The Committee may determine, at the time
---------------------------
of granting a SAR or thereafter, that such SAR shall become fully exercisable as
to all Common Shares subject to such SAR in the event that a Change in Control
occurs with respect to the Company, subject to the following sentence. If the
Company and the other party to the transaction constituting a Change in Control
agree that such transaction is to be treated as a "pooling of interests" for
financial reporting purposes, and if such transaction in fact is so treated,
then the acceleration of exercisability shall not occur to the extent that the
Company's independent accountants and such other party's independent accountants
separately determine in good faith that such acceleration would preclude the use
of "pooling of interests" accounting.
(f) Exercise of SARs. Upon exercise of a SAR, the Optionee (or any person
----------------
having the right to exercise the SAR after his or her death) shall receive from
the Company (a) Common Shares, (b) cash or (c) a combination of Common Shares
and cash, as the Committee shall determine. The amount of cash and/or the Fair
Market Value of Common Shares received upon exercise of SARs shall, in the
aggregate, be equal to the amount by which the Fair Market Value (on the date of
surrender) of the Common Shares subject to the SARs exceeds the Exercise Price.
If, on the date when a SAR expires, the Exercise Price under such SAR is less
than the Fair Market Value on such date but any portion of such SAR has not been
exercised or surrendered, then such SAR shall automatically be deemed to be
exercised as of such date with respect to such portion.
(g) Modification or Assumption of SARs. Within the limitations of the
----------------------------------
Plan, the Committee may modify, extend or assume outstanding SARs or may accept
the cancellation of outstanding SARs (whether granted by the Company or by
another issuer) in return for the grant of new SARs for the same or a different
number of shares and at the same or a different exercise price. The foregoing
notwithstanding, no modification of a SAR shall, without the consent of the
Optionee, may alter or impair his or her rights or obligations under such SAR.
SECTION 11. STOCK UNITS.
- -----------------------
(a) Stock Unit Agreement. Each grant of Stock Units under the Plan shall
--------------------
be evidenced by a Stock Unit Agreement between the recipient and the Company.
Such Stock Units shall be subject to all applicable terms of the Plan and may be
subject to any other terms that are not inconsistent with the Plan. The
provisions of the various Stock Unit Agreements entered into under the Plan need
not be identical. Stock Units may be granted in consideration of a reduction in
the recipient's other compensation.
(b) Payment for Awards. To the extent that an Award is granted in the form
------------------
of Stock Units, no cash consideration shall be required of the Award recipients.
(c) Vesting Conditions. Each Award of Stock Units may or may not be
------------------
subject to vesting. Vesting shall occur, in full or in installments, upon
satisfaction of the conditions
-13-
<PAGE>
specified in the Stock Unit Agreement. A Stock Unit Agreement may provide for
accelerated vesting in the event of the Participant's death, disability or
retirement or other events. The Committee may determine, at the time of granting
Stock Units or thereafter, that all or part of such Stock Units shall become
vested in the event that a Change in Control occurs with respect to the Company,
except as provided in the next following sentence. If the Company and the other
party to the transaction constituting a Change in Control agree that such
transaction is to be treated as a "pooling of interests" for financial reporting
purposes, and if such transaction in fact is so treated, then the acceleration
of vesting shall not occur to the extent that the Company's independent
accountants and such other party's independent accountants separately determine
in good faith that such acceleration would preclude the use of "pooling of
interests" accounting.
(d) Voting and Dividend Rights. The holders of Stock Units shall have no
--------------------------
voting rights. Prior to settlement or forfeiture, any Stock Unit awarded under
the Plan may, at the Committee's discretion, carry with it a right to dividend
equivalents. Such right entitles the holder to be credited with an amount equal
to all cash dividends paid on one Common Share while the Stock Unit is
outstanding. Dividend equivalents may be converted into additional Stock Units.
Settlement of dividend equivalents may be made in the form of cash, in the form
of Common Shares, or in a combination of both. Prior to distribution, any
dividend equivalents which are not paid shall be subject to the same conditions
and restrictions as the Stock Units to which they attach.
(e) Form and Time of Settlement of Stock Units. Settlement of vested Stock
------------------------------------------
Units may be made in the form of (a) cash, (b) Common Shares or (c) any
combination of both, as determined by the Committee. The actual number of Stock
Units eligible for settlement may be larger or smaller than the number included
in the original Award, based on predetermined performance factors. Methods of
converting Stock Units into cash may include (without limitation) a method based
on the average Fair Market Value of Common Shares over a series of trading days.
Vested Stock Units may be settled in a lump sum or in installments. The
distribution may occur or commence when all vesting conditions applicable to the
Stock Units have been satisfied or have lapsed, or it may be deferred to any
later date. The amount of a deferred distribution may be increased by an
interest factor or by dividend equivalents. Until an Award of Stock Units is
settled, the number of such Stock Units shall be subject to adjustment pursuant
to Section 12.
(f) Death of Recipient. Any Stock Units Award that becomes payable after
------------------
the recipient's death shall be distributed to the recipient's beneficiary or
beneficiaries. Each recipient of a Stock Units Award under the Plan shall
designate one or more beneficiaries for this purpose by filing the prescribed
form with the Company. A beneficiary designation may be changed by filing the
prescribed form with the Company at any time before the Award recipient's death.
If no beneficiary was designated or if no designated beneficiary survives the
Award recipient, then any Stock Units Award that becomes payable after the
recipient's death shall be distributed to the recipient's estate.
(g) Creditors' Rights. A holder of Stock Units shall have no rights other
-----------------
than those of a general creditor of the Company. Stock Units represent an
unfunded and unsecured obligation of the Company, subject to the terms and
conditions of the applicable Stock Unit Agreement.
-14-
<PAGE>
SECTION 12. PROTECTION AGAINST DILUTION.
- ---------------------------------------
(a) Adjustments. In the event of a subdivision of the outstanding Common
-----------
Shares, a declaration of a dividend payable in Common Shares, a declaration of a
dividend payable in a form other than Common Shares in an amount that has a
material effect on the price of Common Shares, a combination or consolidation of
the outstanding Common Shares (by reclassification or otherwise) into a lesser
number of Common Shares, a recapitalization, a spin-off or a similar occurrence,
the Committee shall make such adjustments as it, in its sole discretion, deems
appropriate in one or more of:
(i) The number of Options, SARs, Restricted Shares and Stock Units
available for future Awards under Section 5;
(ii) The limitations set forth in Sections 8(b) and 10(b);
(iii) The number of NSOs to be granted to Outside Directors under
Section 4(b);
(iv) The number of Common Shares covered by each outstanding Option
and SAR;
(v) The Exercise Price under each outstanding Option and SAR; or
(vi) The number of Stock Units included in any prior Award which has
not yet been settled.
Except as provided in this Section 12, a Participant shall have no rights by
reason of any issue by the Company of stock of any class or securities
convertible into stock of any class, any subdivision or consolidation of shares
of stock of any class, the payment of any stock dividend or any other increase
or decrease in the number of shares of stock of any class.
(b) Dissolution or Liquidation. To the extent not previously exercised or
--------------------------
settled, Options, SARs and Stock Units shall terminate immediately prior to the
dissolution or liquidation of the Company.
(c) Reorganizations. In the event that the Company is a party to a merger
---------------
or other reorganization, outstanding Awards shall be subject to the agreement of
merger or reorganization. Such agreement shall provide for:
(i) The continuation of the outstanding Awards by the Company, if
the Company is a surviving corporation;
(ii) The assumption of the outstanding Awards by the surviving
corporation or its parent or subsidiary;
(iii) The substitution by the surviving corporation or its parent or
subsidiary of its own awards for the outstanding Awards;
-15-
<PAGE>
(iv) Full exercisability or vesting and accelerated expiration of the
outstanding Awards; or
(v) Settlement of the full value of the outstanding Awards in cash
or cash equivalents followed by cancellation of such Awards.
SECTION 13. DEFERRAL OF AWARDS.
- ------------------------------
The Committee (in its sole discretion) may permit or require a Participant
to:
(a) Have cash that otherwise would be paid to such Participant as a result
of the exercise of a SAR or the settlement of Stock Units credited to a deferred
compensation account established for such Participant by the Committee as an
entry on the Company's books;
(b) Have Common Shares that otherwise would be delivered to such
Participant as a result of the exercise of an Option or SAR converted into an
equal number of Stock Units; or
(c) Have Common Shares that otherwise would be delivered to such
Participant as a result of the exercise of an Option or SAR or the settlement of
Stock Units converted into amounts credited to a deferred compensation account
established for such Participant by the Committee as an entry on the Company's
books. Such amounts shall be determined by reference to the Fair Market Value of
such Common Shares as of the date when they otherwise would have been delivered
to such Participant.
A deferred compensation account established under this Section 13 may be
credited with interest or other forms of investment return, as determined by the
Committee. A Participant for whom such an account is established shall have no
rights other than those of a general creditor of the Company. Such an account
shall represent an unfunded and unsecured obligation of the Company and shall be
subject to the terms and conditions of the applicable agreement between such
Participant and the Company. If the deferral or conversion of Awards is
permitted or required, the Committee (in its sole discretion) may establish
rules, procedures and forms pertaining to such Awards, including (without
limitation) the settlement of deferred compensation accounts established under
this Section 13.
SECTION 14. AWARDS UNDER OTHER PLANS.
- ------------------------------------
The Company may grant awards under other plans or programs. Such awards may
be settled in the form of Common Shares issued under this Plan. Such Common
Shares shall be treated for all purposes under the Plan like Common Shares
issued in settlement of Stock Units and shall, when issued, reduce the number of
Common Shares available under Section 5.
SECTION 15. PAYMENT OF DIRECTOR'S FEES IN SECURITIES.
- ----------------------------------------------------
(a) Effective Date. No provision of this Section 15 shall be effective
--------------
unless and until the Board has determined to implement such provision.
-16-
<PAGE>
(b) Elections to Receive NSOs, Restricted Shares or Stock Units. An
-----------------------------------------------------------
Outside Director may elect to receive his or her annual retainer payments and/or
meeting fees from the Company in the form of cash, NSOs, Restricted Shares or
Stock Units, or a combination thereof, as determined by the Board. Such NSOs,
Restricted Shares and Stock Units shall be issued under the Plan. An election
under this Section 15 shall be filed with the Company on the prescribed form.
(c) Number and Terms of NSOs, Restricted Shares or Stock Units. The number
----------------------------------------------------------
of NSOs, Restricted Shares or Stock Units to be granted to Outside Directors in
lieu of annual retainers and meeting fees that would otherwise be paid in cash
shall be calculated in a manner determined by the Board. The terms of such NSOs,
Restricted Shares or Stock Units shall also be determined by the Board.
SECTION 16. ADJUSTMENT OF SHARES.
- --------------------------------
(a) General. In the event of a subdivision of the outstanding Stock, a
-------
declaration of a dividend payable in Shares, a declaration of a dividend payable
in a form other than Shares in an amount that has a material effect on the value
of Shares, a combination or consolidation of the outstanding Stock (by
reclassification or otherwise) into a lesser number of Shares, a
recapitalization or a similar occurrence, the Committee shall make appropriate
adjustments in one or more of (i) the number of Shares available for future
grants under Section 5, (ii) the number of Shares available for grants under
Section 4(c), (iii) the number of Shares covered by each outstanding Option,
(iv) the Exercise Price under each outstanding Option, (v) the number of shares
covered by each outstanding award or (vi) the Purchase Price of each outstanding
award.
(b) Reorganizations. In the event that the Company is a party to a merger
---------------
or other reorganization, outstanding Options shall be subject to the agreement
of merger or reorganization. Such agreement may provide for the assumption of
outstanding Options by the surviving corporation or its parent or for their
continuation by the Company (if the Company is a surviving corporation);
provided, however, that if assumption or continuation of the outstanding Options
is not provided by such agreement then the Committee shall have the option of
offering the payment of a cash settlement equal to the difference between the
amount to be paid for one Share under such agreement and the Exercise Price, in
all cases without the Optionees' consent.
(c) Reservation of Rights. Except as provided in this Section 16, an
---------------------
Optionee or Offeree shall have no rights by reason of any subdivision or
consolidation of shares of stock of any class, the payment of any dividend or
any other increase or decrease in the number of shares of stock of any class.
Any issue by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall not affect, and no
adjustment by reason thereof shall be made with respect to, the number or
Exercise Price of Shares subject to an Option. The grant of an Option pursuant
to the Plan shall not affect in any way the right or power of the Company to
make adjustments, reclassifications, reorganizations or changes of its capital
or business structure, to merge or consolidate or to dissolve, liquidate, sell
or transfer all or any part of its business or assets.
-17-
<PAGE>
SECTION 17. LEGAL AND REGULATORY REQUIREMENTS.
- ---------------------------------------------
Shares shall not be issued under the Plan unless the issuance and delivery
of such Shares complies with (or is exempt from) all applicable requirements of
law, including (without limitation) the Securities Act of 1933, as amended, the
rules and regulations promulgated thereunder, state securities laws and
regulations and the regulations of any stock exchange on which the Company's
securities may then be listed, and the Company has obtained the approval or
favorable ruling from any governmental agency which the Company determines is
necessary or advisable.
SECTION 18. WITHHOLDING TAXES.
- -----------------------------
(a) General. To the extent required by applicable federal, state, local or
-------
foreign law, a Participant or his or her successor shall make arrangements
satisfactory to the Company for the satisfaction of any withholding tax
obligations that arise in connection with the Plan. The Company shall not be
required to issue any Common Shares or make any cash payment under the Plan
until such obligations are satisfied.
(b) Share Withholding. The Committee may permit a Participant to satisfy
-----------------
all or part of his or her withholding or income tax obligations by having the
Company withhold all or a portion of any Common Shares that otherwise would be
issued to him or her or by surrendering all or a portion of any Common Shares
that he or she previously acquired. Such Common Shares shall be valued at their
Fair Market Value on the date when taxes otherwise would be withheld in cash.
SECTION 19. LIMITATION ON PARACHUTE PAYMENTS.
- --------------------------------------------
(a) Scope of Limitation. This Section 19 shall apply to an Award only if:
-------------------
(i) The independent auditors most recently selected by the Board (the
"Auditors") determine that the after-tax value of such Award to the
Participant, taking into account the effect of all federal, state and local
income taxes, employment taxes and excise taxes applicable to the
Participant (including the excise tax under section 4999 of the Code), will
be greater after the application of this Section 19 than it was before the
application of this Section 19; or
(ii) The Committee, at the time of making an Award under the Plan or
at any time thereafter, specifies in writing that such Award shall be
subject to this Section 19 (regardless of the after-tax value of such Award
to the Participant).
(b) Supersedes Other Provisions. If this Section 19 applies to an
---------------------------
Award, it shall supersede any contrary provision of the Plan or of any Award
granted under the Plan.
SECTION 20. NO EMPLOYMENT RIGHTS.
- --------------------------------
No provision of the Plan, nor any right or Option granted under the
Plan, shall be construed to give any person any right to become, to be treated
as, or to remain an Employee.
-18-
<PAGE>
The Company and its Subsidiaries reserve the right to terminate any person's
Service at any time and for any reason, with or without notice.
SECTION 21. DURATION AND AMENDMENTS.
- -----------------------------------
(a) Term of the Plan. The amended and restated Plan, as set forth herein,
----------------
shall terminate automatically on the tenth anniversary of its adoption and may
be terminated on any earlier date pursuant to Subsection (b) below.
(b) Right to Amend or Terminate the Plan. The Board of Directors may amend
------------------------------------
the Plan at any time and from time to time. Rights and obligations under any
Option granted before amendment of the Plan shall not be materially impaired by
such amendment, except with consent of the person to whom the Option was
granted. An amendment of the Plan shall be subject to the approval of the
Company's stockholders only to the extent required by applicable laws,
regulations or rules.
(c) Effect of Amendment or Termination. No Shares shall be issued or sold
----------------------------------
under the Plan after the termination thereof, except upon exercise of an Option
granted prior to such termination. The termination of the Plan, or any amendment
thereof, shall not affect any Share previously issued or any Option previously
granted under the Plan.
SECTION 22. EXECUTION.
- ---------------------
To record the adoption of the amended and restated Plan by the Board of
Directors effective as of ______________ __, 2000, the Company has caused its
authorized officer to execute the same.
CORP. SMARTAGE.COM
By _______________________________
William Lohse
Chief Executive Officer
-19-
<PAGE>
EXHIBIT 10.3
SMARTAGE.COM CORP.
2000 EMPLOYEE STOCK PURCHASE PLAN
(Adopted by the Board on March __, 2000)
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 1 Purpose Of The Plan.............................................. 1
SECTION 2 Definitions...................................................... 1
(a) "Accumulation Period............................................. 1
(b) "Board".......................................................... 1
(c) "Code"........................................................... 1
(d) "Committee"...................................................... 1
(e) "Company"........................................................ 1
(f) "Compensation"................................................... 1
(g) "Corporate Reorganization"....................................... 1
(h) "Eligible Employee".............................................. 2
(i) "Exchange Act"................................................... 2
(j) "Fair Market Value".............................................. 2
(k) "IPO"............................................................ 2
(l) "Offering Period"................................................ 2
(m) "Participant".................................................... 2
(n) "Participating Company".......................................... 2
(o) "Plan"........................................................... 3
(p) "Plan Account"................................................... 3
(q) "Purchase Price"................................................. 3
(r) "Stock".......................................................... 3
(s) "Subsidiary"..................................................... 3
SECTION 3 Administration Of The Plan....................................... 3
(a) Committee Composition............................................ 3
(b) Committee Responsibilities....................................... 3
SECTION 4 Enrollment And Participation..................................... 3
(a) Offering Periods................................................. 3
(b) Accumulation Periods............................................. 3
(c) Enrollment....................................................... 3
(d) Duration of Participation........................................ 4
(e) Applicable Offering Period....................................... 4
SECTION 5 Employee Contributions........................................... 4
(a) Frequency of Payroll Deductions.................................. 4
(b) Amount of Payroll Deductions..................................... 4
(c) Changing Withholding Rate........................................ 4
(d) Discontinuing Payroll Deductions................................. 5
(e) Limit on Number of Elections..................................... 5
SECTION 6 Withdrawal From The Plan......................................... 5
(a) Withdrawal....................................................... 5
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
(b) Re-enrollment After Withdrawal................................... 5
SECTION 7 Change In Employment Status...................................... 5
(a) Termination of Employment........................................ 5
(b) Leave of Absence................................................. 5
(c) Death............................................................ 6
SECTION 8 Plan Accounts And Purchase Of Shares............................. 6
(a) Plan Accounts.................................................... 6
(b) Purchase Price................................................... 6
(c) Number of Shares Purchased....................................... 6
(d) Available Shares Insufficient.................................... 6
(e) Issuance of Stock................................................ 7
(f) Unused Cash Balances............................................. 7
(g) Stockholder Approval............................................. 7
SECTION 9 Limitations On Stock Ownership................................... 7
(a) Five Percent Limit............................................... 7
(b) Dollar Limit..................................................... 7
SECTION 10 Rights Not Transferable.......................................... 8
SECTION 11 No Rights As An Employee......................................... 8
SECTION 12 No Rights As A Stockholder....................................... 8
SECTION 13 Securities Law Requirements...................................... 8
SECTION 14 Stock Offered Under The Plan..................................... 9
(a) Authorized Shares................................................ 9
(b) Antidilution Adjustments......................................... 9
(c) Reorganizations.................................................. 9
SECTION 15 Amendment Or Discontinuance...................................... 9
SECTION 16 Execution........................................................ 10
</TABLE>
ii
<PAGE>
SMARTAGE.COM CORP.
2000 EMPLOYEE STOCK PURCHASE PLAN
SECTION 1
---------
Purpose Of The Plan
-------------------
The Plan was adopted by the Board on March 6, 2000, effective as of the
date of the IPO. The purpose of the Plan is to provide Eligible Employees with
an opportunity to increase their proprietary interest in the success of the
Company by purchasing Stock from the Company on favorable terms and to pay for
such purchases through payroll deductions. The Plan is intended to qualify
under section 423 of the Code.
SECTION 2
---------
Definitions
-----------
(a) "Accumulation Period" means a six (6) month period during which
-------------------
contributions may be made toward the purchase of Stock under the Plan, as
determined pursuant to Section 4(b).
(b) "Board" means the Board of Directors of the Company, as constituted
-----
from time to time.
(c) "Code" means the Internal Revenue Code of 1986, as amended.
-----
(d) "Committee" means a committee of the Board, as described in Section 3.
---------
(e) "Company" means SmartAge.com Corp., a Delaware Corporation.
-------
(f) "Compensation" means (i) the total compensation paid in cash to a
------------
Participant by a Participating Company, including salaries, wages, bonuses,
incentive compensation, commissions, overtime pay and shift premiums, plus (ii)
any pre-tax contributions made by the Participant under section 401(k) or 125 of
the Code. "Compensation" shall exclude all non-cash items, moving or relocation
allowances, cost-of-living equalization payments, car allowances, tuition
reimbursements, imputed income attributable to cars or life insurance, severance
pay, fringe benefits, contributions or benefits received under employee benefit
plans, income attributable to the exercise of stock options, and similar items.
The Committee shall determine whether a particular item is included in
Compensation.
(g) "Corporate Reorganization" means:
------------------------
(i) The consummation of a merger or consolidation of the Company with
or into another entity, or any other corporate reorganization; or
(ii) The sale, transfer or other disposition of all or substantially
all of the Company's assets or the complete liquidation or dissolution of
the Company.
1
<PAGE>
(h) "Eligible Employee" means any employee of a Participating Company who
-----------------
meets both of the following requirements:
(i) His or her customary employment is for more than five (5) months
per calendar year and for more than 20 hours per week; and
(ii) He or she has been an employee of a Participating Company for not
less than __________ (__) consecutive months.
The foregoing notwithstanding, an individual shall not be considered an
Eligible Employee if his or her participation in the Plan is prohibited by the
law of any country which has jurisdiction over him or her or if he or she is
subject to a collective bargaining agreement that does not provide for
participation in the Plan.
(i) "Exchange Act" means the Securities Exchange Act of 1934, as amended.
------------
(j) "Fair Market Value" means the market price of Stock, determined by the
-----------------
Committee as follows:
(i) If Stock was traded on The Nasdaq National Market on the date in
question, then the Fair Market Value shall be equal to the last-transaction
price quoted for such date by The Nasdaq National Market;
(ii) If Stock was traded on a stock exchange on the date in question,
then the Fair Market Value shall be equal to the closing price reported by
the applicable composite transactions report for such date; or
(iii) If none of the foregoing provisions is applicable, then the Fair
Market Value shall be determined by the Committee in good faith on such
basis as it deems appropriate.
Whenever possible, the determination of Fair Market Value by the Committee
shall be based on the prices reported in the Wall Street Journal or as reported
-------------------
directly to the Company by Nasdaq or a stock exchange. Such determination shall
be conclusive and binding on all persons.
(k) "IPO" means the initial offering of Stock to the public pursuant to a
---
registration statement filed by the Company with the Securities and Exchange
Commission.
(l) "Offering Period" means a twenty-four (24) month period with respect
---------------
to which the right to purchase Stock may be granted under the Plan, as
determined pursuant to Section 4(a).
(m) "Participant" means an Eligible Employee who elects to participate in
-----------
the Plan, as provided in Section 4(c).
(n) "Participating Company" means (i) the Company and (ii) each present or
---------------------
future Subsidiary designated by the Committee as a Participating Company.
2
<PAGE>
(o) "Plan" means this SmartAge.com Corp. 2000 Employee Stock Purchase
----
Plan, as it may be amended from time to time.
(p) "Plan Account" means the account established for each Participant
------------
pursuant to Section 8(a).
(q) "Purchase Price" means the price at which Participants may purchase
--------------
Stock under the Plan, as determined pursuant to Section 8(b).
(r) "Stock" means the Common Stock of the Company.
-----
(s) "Subsidiary" means any corporation (other than the Company) in an
----------
unbroken chain of corporations beginning with the Company, if each of the
corporations other than the last corporation in the unbroken chain owns stock
possessing fifty percent (50%) or more of the total combined voting power of all
classes of stock in one of the other corporations in such chain.
SECTION 3
---------
Administration Of The Plan
--------------------------
(a) Committee Composition. The Plan shall be administered by the
---------------------
Committee. The Committee shall consist exclusively of one or more directors of
the Company, who shall be appointed by the Board.
(b) Committee Responsibilities. The Committee shall interpret the Plan
--------------------------
and make all other policy decisions relating to the operation of the Plan. The
Committee may adopt such rules, guidelines and forms as it deems appropriate to
implement the Plan. The Committee's determinations under the Plan shall be final
and binding on all persons.
SECTION 4
---------
Enrollment And Participation
----------------------------
(a) Offering Periods. While the Plan is in effect, two Offering Periods
----------------
shall commence in each calendar year. The Offering Periods shall consist of the
twenty-four (24) month periods commencing on each January 1 and July 1,
except that the first Offering Period shall commence on the date of the IPO and
end on December 31, 2001.
(b) Accumulation Periods. While the Plan is in effect, two Accumulation
--------------------
Periods shall commence in each calendar year. The Accumulation Periods shall
consist of the six (6) month periods commencing on January 1 and July 1, except
that the first Accumulation Period shall commence on the date of the IPO and end
on December 31, 2000.
(c) Enrollment. Any individual who, on the day preceding the first day
----------
of an Offering Period, qualifies as an Eligible Employee may elect to become a
Participant in the Plan for such Offering Period by executing the enrollment
form prescribed for this purpose by the Committee. The enrollment form shall be
filed with the Company at the prescribed location not later than fifteen (15)
days prior to the commencement of such Offering Period.
3
<PAGE>
(d) Duration of Participation. Once enrolled in the Plan, a Participant
-------------------------
shall continue to participate in the Plan until he or she ceases to be an
Eligible Employee, withdraws from the Plan under Section 5(a) or reaches the end
of the Offering Period in which his or her employee contributions were
discontinued under Section 5(d) or 9(b). A Participant who discontinued employee
contributions under Section 5(d) or 9(b) or withdrew from the Plan under Section
6(a) may again become a Participant, if he or she then is an Eligible Employee,
by following the procedure described in Subsection (c) above. A Participant
whose employee contributions were discontinued automatically under Section 9(b)
shall automatically resume participation at the beginning of the earliest
Offering Period ending in the next calendar year, if he or she then is an
Eligible Employee.
(e) Applicable Offering Period. For purposes of calculating the purchase
--------------------------
price under Section 8(b), the applicable Offering Period shall be determined as
follows:
(i) Once a Participant is enrolled in the Plan for an Offering
Period, such Offering Period shall continue to apply to him or her until
the earliest of: (A) the end of such Offering Period; (B) the end of his or
her participation under Subsection (d) above; or (C) re-enrollment in a
subsequent Offering Period under Paragraph (ii) below.
(ii) In the event that the Fair Market Value of Stock on the last
trading day before the commencement of the Offering Period in which the
Participant is enrolled is higher than on the last trading day before the
commencement of any subsequent Offering Period, the Participant shall
automatically be re-enrolled for such subsequent Offering Period.
(iii) When a Participant reaches the end of an Offering Period but his
or her participation is to continue, then such Participant shall
automatically be re-enrolled for the Offering Period that commences
immediately after the end of the prior Offering Period.
SECTION 5
---------
Employee Contributions
----------------------
(a) Frequency of Payroll Deductions. A Participant may purchase shares
-------------------------------
of Stock under the Plan solely by means of payroll deductions. Payroll
deductions, as designated by the Participant pursuant to Subsection (b) below,
shall occur on each payday during participation in the Plan.
(b) Amount of Payroll Deductions. An Eligible Employee shall designate
----------------------------
on the enrollment form the portion of his or her Compensation that he or she
elects to have withheld for the purchase of Stock. Such portion shall be a whole
percentage of the Eligible Employee's Compensation, but not less than one
percent (1%) nor more than fifteen percent (15%).
(c) Changing Withholding Rate. If a Participant wishes to change the
-------------------------
rate of payroll withholding, he or she may do so by filing a new enrollment form
with the Company at the prescribed location at any time. The new withholding
rate shall be effective as soon as
4
<PAGE>
reasonably practicable after such form has been received by the Company. The new
withholding rate shall be a whole percentage of the Eligible Employee's
Compensation, but not less than one percent (1%) nor more than fifteen percent
(15%).
(d) Discontinuing Payroll Deductions. If a Participant wishes to
--------------------------------
discontinue employee contributions entirely, he or she may do so by filing a new
enrollment form with the Company at the prescribed location at any time. Payroll
withholding shall cease as soon as reasonably practicable after such form has
been received by the Company. (In addition, employee contributions may be
discontinued automatically pursuant to Section 9(b).) A Participant who has
discontinued employee contributions may resume such contributions by filing a
new enrollment form with the Company at the prescribed location. Payroll
withholding shall resume as soon as reasonably practicable after such form has
been received by the Company.
(e) Limit on Number of Elections. No Participant shall make more than
----------------------------
two elections under Subsection (c) or (d) above during any Offering Period.
SECTION 6
---------
Withdrawal From The Plan
------------------------
(a) Withdrawal. A Participant may elect to withdraw from the Plan by
----------
filing the prescribed form with the Company at the prescribed location at any
time before the last day of an Accumulation Period. As soon as reasonably
practicable thereafter, payroll deductions shall cease and the entire amount
credited to the Participant's Plan Account shall be refunded to him or her in
cash, without interest. No partial withdrawals shall be permitted.
(b) Re-enrollment After Withdrawal. A former Participant who has
------------------------------
withdrawn from the Plan shall not be a Participant until he or she re-enrolls in
the Plan under Section 4(c). Re-enrollment may be effective only at the
commencement of an Offering Period.
SECTION 7
---------
Change In Employment Status
---------------------------
(a) Termination of Employment. Termination of employment as an Eligible
-------------------------
Employee for any reason, including death, shall be treated as an automatic
withdrawal from the Plan under Section 6(a). (A transfer from one Participating
Company to another shall not be treated as a termination of employment.)
(b) Leave of Absence. For purposes of the Plan, employment shall not be
----------------
deemed to terminate when the Participant goes on a military leave, a sick leave
or another bona fide leave of absence, if the leave was approved by the Company
in writing. Employment, however, shall be deemed to terminate ninety (90) days
after the Participant goes on a leave, unless a contract or statute guarantees
his or her right to return to work. Employment shall be deemed to terminate in
any event when the approved leave ends, unless the Participant immediately
returns to work.
5
<PAGE>
(c) Death. In the event of the Participant's death, the amount credited
-----
to his or her Plan Account shall be paid to a beneficiary designated by him or
her for this purpose on the prescribed form or, if none, to the Participant's
estate. Such form shall be valid only if it was filed with the Company at the
prescribed location before the Participant's death.
SECTION 8
---------
Plan Accounts And Purchase Of Shares
------------------------------------
(a) Plan Accounts. The Company shall maintain a Plan Account on its books
-------------
in the name of each Participant. Whenever an amount is deducted from the
Participant's Compensation under the Plan, such amount shall be credited to the
Participant's Plan Account. Amounts credited to Plan Accounts shall not be trust
funds and may be commingled with the Company's general assets and applied to
general corporate purposes. No interest shall be credited to Plan Accounts.
(b) Purchase Price. The Purchase Price for each share of Stock purchased
--------------
at the close of an Accumulation Period shall be the lower of:
(i) Eighty-five percent (85%) of the Fair Market Value of such share
on the last trading day in such Accumulation Period; or
(ii) Eighty-five percent (85%) of the Fair Market Value of such share
on the last trading day before the commencement of the applicable Offering
Period (as determined under Section 4(e)) or, in the case of the first
Offering Period under the Plan, eighty-five percent (85%) of the price at
which one share of Stock is offered to the public in the IPO.
(c) Number of Shares Purchased. As of the last day of each Accumulation
--------------------------
Period, each Participant shall be deemed to have elected to purchase the number
of shares of Stock calculated in accordance with this Subsection (c), unless the
Participant has previously elected to withdraw from the Plan in accordance with
Section 6(a). The amount then in the Participant's Plan Account shall be divided
by the Purchase Price, and the number of shares that results shall be purchased
from the Company with the funds in the Participant's Plan Account. The foregoing
notwithstanding, no Participant shall purchase more than 2,000 shares of Stock
with respect to any Accumulation Period nor more than the amounts of Stock set
forth in Sections 9(b) and 14(a). The Committee may determine with respect to
all Participants that any fractional share, as calculated under this Subsection
(c), shall be (i) rounded down to the next lower whole share or (ii) credited as
a fractional share.
(d) Available Shares Insufficient. In the event that the aggregate
-----------------------------
number of shares that all Participants elect to purchase during an Accumulation
Period exceeds the maximum number of shares remaining available for issuance
under Section 14(a), then the number of shares to which each Participant is
entitled shall be determined by multiplying the number of shares available for
issuance by a fraction, the numerator of which is the number of shares that such
Participant has elected to purchase and the denominator of which is the number
of shares that all Participants have elected to purchase.
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<PAGE>
(e) Issuance of Stock. Certificates representing the shares of Stock
-----------------
purchased by a Participant under the Plan shall be issued to him or her as soon
as reasonably practicable after the close of the applicable Accumulation Period,
except that the Committee may determine that such shares shall be held for each
Participant's benefit by a broker designated by the Committee (unless the
Participant has elected that certificates be issued to him or her). Shares may
be registered in the name of the Participant or jointly in the name of the
Participant and his or her spouse as joint tenants with right of survivorship or
as community property.
(f) Unused Cash Balances. An amount remaining in the Participant's Plan
--------------------
Account that represents the Purchase Price for any fractional share shall be
carried over in the Participant's Plan Account to the next Accumulation Period.
Any amount remaining in the Participant's Plan Account that represents the
Purchase Price for whole shares that could not be purchased by reason of
Subsection (c) above, Section 9(b) or Section 14(a) shall be refunded to the
Participant in cash, without interest.
(g) Stockholder Approval. Any other provision of the Plan
--------------------
notwithstanding, no shares of Stock shall be purchased under the Plan unless and
until the Company's stockholders have approved the adoption of the Plan.
SECTION 9
---------
Limitations On Stock Ownership
------------------------------
(a) Five Percent Limit. Any other provision of the Plan notwithstanding,
------------------
no Participant shall be granted a right to purchase Stock under the Plan if such
Participant, immediately after his or her election to purchase such Stock, would
own stock possessing more than five percent (5%) of the total combined voting
power or value of all classes of stock of the Company or any parent or
Subsidiary of the Company. For purposes of this Subsection (a), the following
rules shall apply:
(i) Ownership of stock shall be determined after applying the
attribution rules of section 424(d) of the Code;
(ii) Each Participant shall be deemed to own any stock that he or she
has a right or option to purchase under this or any other plan; and
(iii) Each Participant shall be deemed to have the right to purchase
2,000 shares of Stock under this Plan with respect to each Accumulation
Period.
(b) Dollar Limit. Any other provision of the Plan notwithstanding, no
------------
Participant shall purchase Stock with a Fair Market Value in excess of the
following limit:
Any other provision of the Plan notwithstanding, no Participant shall
purchase Stock with a Fair Market Value in excess of $25,000 per calendar year
(under this Plan and all other employee stock purchase plans of the Company or
any parent or Subsidiary of the Company).
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<PAGE>
For purposes of this Subsection (b), the Fair Market Value of Stock shall
be determined in each case as of the beginning of the Offering Period in which
such Stock is purchased. Employee stock purchase plans not described in section
423 of the Code shall be disregarded. If a Participant is precluded by this
Subsection (b) from purchasing additional Stock under the Plan, then his or her
employee contributions shall automatically be discontinued and shall resume at
the beginning of the earliest Accumulation Period ending in the next calendar
year (if he or she then is an Eligible Employee).
SECTION 10
----------
Rights Not Transferable
-----------------------
The rights of any Participant under the Plan, or any Participant's interest
in any Stock or moneys to which he or she may be entitled under the Plan, shall
not be transferable by voluntary or involuntary assignment or by operation of
law, or in any other manner other than by beneficiary designation or the laws of
descent and distribution. If a Participant in any manner attempts to transfer,
assign or otherwise encumber his or her rights or interest under the Plan, other
than by beneficiary designation or the laws of descent and distribution, then
such act shall be treated as an election by the Participant to withdraw from the
Plan under Section 6(a).
SECTION 11
----------
No Rights As An Employee
------------------------
Nothing in the Plan or in any right granted under the Plan shall confer
upon the Participant any right to continue in the employ of a Participating
Company for any period of specific duration or interfere with or otherwise
restrict in any way the rights of the Participating Companies or of the
Participant, which rights are hereby expressly reserved by each, to terminate
his or her employment at any time and for any reason, with or without cause.
SECTION 12
----------
No Rights As A Stockholder
--------------------------
A Participant shall have no rights as a stockholder with respect to any
shares of Stock that he or she may have a right to purchase under the Plan until
such shares have been purchased on the last day of the applicable Offering
Period.
SECTION 13
----------
Securities Law Requirements
---------------------------
Shares of Stock shall not be issued under the Plan unless the issuance and
delivery of such shares comply with (or are exempt from) all applicable
requirements of law, including (without limitation) the Securities Act of 1933,
as amended, the rules and regulations promulgated thereunder, state securities
laws and regulations, and the regulations of any stock exchange or other
securities market on which the Company's securities may then be traded.
8
<PAGE>
SECTION 14
----------
Stock Offered Under The Plan
----------------------------
(a) Authorized Shares. The maximum aggregate number of shares of Stock
-----------------
available for purchase under the Plan is one million five hundred thousand
(1,500,000), plus an annual increase to be added on the first day of the
Company's fiscal year beginning in 2001 equal to the lesser of (i) two million
(2,000,000) shares, (ii) one percent (1%) of the outstanding shares on such
date or (iii) a lesser amount determined by the Board. The aggregate number of
Shares available for purchase under the Plan shall at all times be subject to
adjustment pursuant to Section 14.
(b) Antidilution Adjustments. The aggregate number of shares of Stock
------------------------
offered under the Plan, the 2,000 share limitation described in Section 8(c) and
the price of shares that any Participant has elected to purchase shall be
adjusted proportionately by the Committee for any increase or decrease in the
number of outstanding shares of Stock resulting from a subdivision or
consolidation of shares or the payment of a stock dividend, any other increase
or decrease in such shares effected without receipt or payment of consideration
by the Company, the distribution of the shares of a Subsidiary to the Company's
stockholders or a similar event.
(c) Reorganizations. Any other provision of the Plan notwithstanding,
---------------
immediately prior to the effective time of a Corporate Reorganization, the
Offering Period then in progress shall terminate and shares shall be purchased
pursuant to Section 8, unless the Plan is assumed by the surviving corporation
or its parent corporation pursuant to the plan of merger or consolidation. The
Plan shall in no event be construed to restrict in any way the Company's right
to undertake a dissolution, liquidation, merger, consolidation or other
reorganization.
SECTION 15
----------
Amendment Or Discontinuance
---------------------------
The Board shall have the right to amend, suspend or terminate the Plan at
any time and without notice. Except as provided in Section 14, any increase in
the aggregate number of shares of Stock to be issued under the Plan shall be
subject to approval by a vote of the stockholders of the Company. In addition,
any other amendment of the Plan shall be subject to approval by a vote of the
stockholders of the Company to the extent required by an applicable law or
regulation.
9
<PAGE>
SECTION 16
----------
Execution
---------
To record the adoption of the Plan by the Board on March 6, 2000, the
Company has caused its authorized officer to execute the same.
SMARTAGE.COM CORP.
By
Title
10
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE
BEEN REDACTED AND HAVE BEEN SEPARATELY FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION.
EXECUTION COPY
Confidential
INTERACTIVE MARKETING AGREEMENT
-------------------------------
This Interactive Marketing Agreement (the "Agreement"), dated as of March
15, 2000 (the "Effective Date"), is between America Online, Inc. ("AOL"), a
Delaware corporation, with offices at 22000 AOL Way, Dulles, Virginia 20166, and
SmartAge.com Corp. ("SmartAge"), a Delaware corporation, with offices at 3450
California Street, San Francisco, California 94118. AOL and SmartAge may be
referred to individually as a "Party" and collectively as the "Parties."
INTRODUCTION
------------
AOL and SmartAge each desires to enter into an interactive marketing
relationship whereby AOL will promote and distribute interactive sites referred
to (and further defined) herein as the Co-Branded Sites. This relationship is
further described below and is subject to the terms and conditions set forth in
this Agreement. Defined terms used but not defined in the body of the Agreement
will be as defined on Exhibit B attached hereto.
TERMS
-----
1. PROMOTION, DISTRIBUTION AND MARKETING.
-------------------------------------
1.1. AOL Promotion of Co-Branded Sites. AOL will provide SmartAge with the
---------------------------------
promotions for the Co-Branded Sites described on Exhibit A attached
hereto. Subject to SmartAge's reasonable approval, AOL will have the
right to fulfill its promotional commitments with respect to any of
the foregoing by providing SmartAge Comparable Promotional Placements
in appropriate alternative areas of the AOL Network. In addition, if
AOL is unable to deliver any particular Promotion, AOL will work with
SmartAge to provide SmartAge, as its sole remedy, a Comparable
Promotional Placement. AOL reserves the right to redesign or modify
the organization, structure, "look and feel," navigation and other
elements of the AOL Network at any time. AOL intends, to the extent
practicable and commercially reasonable in light of such factors as
AOL's size and standard procedures (e.g., the great number of
departments and people responsible for various aspects of AOL's
operations, and the fact that different departments are responsible
for the design of the AOL Network and the management of the
implementation of partners' accounts), to use good faith efforts to
notify SmartAge of modifications which appropriate AOL personnel
(i.e., those responsible for working with SmartAge to implement the
Promotions on a day-to-day basis) know will materially and adversely
affect specific Promotions (such notice may be oral or by e-mail (or
in other written form) and need not be delivered as contemplated under
paragraph 16 of Exhibit G hereto). In the event such modifications in
fact materially and adversely affect any specific Promotion, AOL will
work with SmartAge to provide SmartAge, as its sole remedy, a
Comparable Promotional Placement. As used herein, the term "Comparable
----------
Promotional Placement" means alternate placements which are reasonably
---------------------
and mutually agreed to have an overall value comparable to the group
of placements they replace, with such value to be determined based on
a variety of factors, to the extent applicable, including without
limitation, number, size, location, extent of integration, quality,
type, reach/frequency, timing/seasonality, expected response
rate/effectiveness, and/or demographically/psychographically targeted
relevance; if the Parties are unable to reach such mutual agreement on
such alternate placements, then the issue shall be escalated pursuant
to Section 7 hereof.
1.2. Impressions Commitment. During the Term, AOL shall deliver ***
----------------------
Impressions to the Promotions (the "Impressions Commitment"). With
respect to the
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EXECUTION COPY
Impressions targets specified on Exhibit A, AOL will not be obligated
to provide in excess of any Impressions target amounts in any year.
In the event there is (or will be in AOL's reasonable judgment) a
shortfall in Impressions as of the end of the Initial Term (a "Final
Shortfall"), AOL will provide SmartAge, as its sole remedy, with one
of the following (at AOL's option): (a) an extension of the existing
promotional obligations hereunder (i.e., promoting the Co-Branded
Sites consistent with the terms hereof, e.g., as in Exhibit A hereto,
subject to availability as determined by AOL in its discretion)
(provided that SmartAge shall not be required to pay additional
carriage fees to AOL for such an extension) until the Impressions
Commitment has been satisfied, up to a maximum of six (6) months, at
which time if the Impressions Commitment still has not been satisfied
then AOL will provide SmartAge, as its sole remedy, with a *** of a
*** of the *** set forth in Section *** (not including the ***
described in Section ***, which for purposes of this section shall be
*** at ***), to the extent that AOL has actually *** such *** from
SmartAge and such *** remain *** at the time of *** (i.e., a *** of
the *** has not been *** at the time of ***), or (b) Comparable
Promotional Placements until the Impressions Commitment has been
satisfied. Except as otherwise set forth herein or otherwise mutually
agreed, after the Co-Branded Sites have been created and launched in
accordance with this Agreement, AOL will use good faith efforts to
distribute Impressions to *** and *** (excluding any *** or ***) ***
on a *** basis, over the course of the Initial Term, provided that the
Parties understand that such *** may be affected by such factors as
*** and ***.
1.3. Content of Promotions. The Promotions will link only to the Co-Branded
---------------------
Sites and will promote only the SmartAge Products described on Exhibit
D, as such Exhibit may be amended from time to time to the extent
mutually agreed by the Parties in writing; provided, however, that
until the Co-Branded Sites are built in accordance with the terms of
this Agreement the Promotions may instead link to the SmartAge
Standard Site as set forth in Section 2.1 below (and such Promotions
will be counted towards the Impressions Commitment). The specific
SmartAge Content to be contained within the Promotions described in
Exhibit A (the "Promo Content") will be subject to the restrictions
set forth in Exhibit D hereto and otherwise will be determined by
SmartAge (provided, however, that the Promo Content must pertain to
the Content of the Co-Branded Site to which the relevant Promotion
links (i.e., Promotions linking to the Co-Branded Corner Office must
only have Promo Content relating to the Content therein, and
Promotions linking to the Co-Branded Primary Site must only have Promo
Content relating to the Content therein)), subject to AOL's technical
limitations, the terms of this Agreement and AOL's then-generally-
applicable policies relating to advertising and promotions (provided
that if such a generally applicable policy is developed and
implemented by AOL after the Effective Date hereof which deprives
SmartAge of a material benefit which it reasonably expected to receive
under this Agreement, the Parties will work in good faith to determine
whether there is a comparable benefit which is commercially reasonable
for AOL to provide, and if the Parties cannot so agree on a comparable
benefit, they will resolve such a dispute via the procedures set forth
in Section 7 hereof). The determination of which Promotions will link
to the Co-Branded Primary Site and which shall link to the Co-Branded
Corner Office shall be made by AOL in its reasonable discretion in
consultation with SmartAge, provided, however, that any and all links
from the AOL Dashboards described in Exhibit D hereto shall link to
the Co-Branded Corner Office only. SmartAge will submit in advance to
AOL for its review a quarterly online marketing plan with respect to
the Co-Branded Sites. The Parties will meet in person or by telephone
at least monthly to review operations and performance hereunder,
including a review of the Promo Content to ensure that it is designed
to maximize performance. SmartAge will reasonably and
2
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COMMISSION.
<PAGE>
consistently update the Promo Content (i.e., to maximize the
effectiveness of the Promotions). Except to the extent expressly
described herein and in Exhibit A, the specific form, placement,
duration and nature of the Promotions will be as determined by AOL in
its reasonable editorial discretion (consistent with the editorial
composition of the applicable screens).
1.4. SmartAge Promotion of Co-Branded Sites and AOL. SmartAge will promote
AOL as set forth more fully on Exhibit C.
2. CO-BRANDED SITES.
----------------
2.1. Creation of Co-Branded Sites. To the extent consistent with the terms
----------------------------
hereof, SmartAge will create a customized, co-branded version of
SmartAge's primary Interactive Site (which currently is located at
http://www.smartage.com) as the "Co-Branded Primary Site" and a
-----------------------
customized, co-branded version of the portion of SmartAge's primary
Interactive Site devoted to SmartAge's "Corner Office" functionality
(including without limitation the functionality whereby participants
in SmartAge's ad banner/link exchange can monitor their ad campaigns
and create/edit banners and links) as the "Co-Branded Corner Office"
(the Co-Branded Primary Site and the Co-Branded Corner Office together
shall be referred to as the Co-Branded Sites), including distinct
versions of the Co-Branded Sites for each applicable property of the
AOL Network as set forth below (e.g., one version of each for linking
from the AOL Service which is co-branded with the AOL brand, one
version of each for linking with the CompuServe Service which is co-
branded with the CompuServe brand, etc.). SmartAge will comply with
AOL's and its affiliates' then generally applicable customization
standards and design guideline templates for each AOL property with
respect to headers, footers, co-branding and URLs, by way of example
as set forth in Exhibit H hereto, and AOL will have design approval
rights for user interface elements and all pages of the Co-Branded
Sites. Each page of the Co-Branded Sites shall have AOL or AOL
affiliate branded headers and footers, be located on the URL for the
appropriate AOL affiliate with the AOL affiliate as the primary domain
(e.g., www.SmartAge.aol.com or www.SmartAge.netscape.com) such that
-------------------- -------------------------
AOL receives credit for all traffic thereto, and contain navigational
links to the AOL Network. AOL agrees to make reasonable efforts to
work with SmartAge to enable the two then-most widely quoted,
nationally-recognized third party Internet traffic measurement and
reporting services (such as Media Metrix or Neilson Net Rating) (the
"Ratings Agencies") to attribute secondary credit for traffic to the
Co-Branded Sites to SmartAge (e.g., through a syndicated report or
such other report developed by the Ratings Agencies) so that if and
where SmartAge is mentioned in any publicly announced traffic
measurements or reports of the Ratings Agencies (other than the
reports or measurements by the Ratings Agencies of the top 50 Internet
Sites), such measurements or reports will combine the traffic to the
SmartAge Standard Site and Co-Branded Sites as part of a single total.
In addition, all Advertisements served by SmartAge as part of the
banner exchange programs or reciprocal linking programs offered on the
Co-Branded Sites or in the AOL Network, except for Advertisements
which appear within the AOL Network (including without limitation the
Netscape Business Cards), will be served on a URL co-branded with AOL,
with SmartAge as the primary domain (i.e., www.aol.SmartAge.com), and
--------------------
those Advertisements appearing within the AOL Network will be served
on a URL co-branded with AOL or the appropriate AOL affiliate with the
AOL affiliate as the primary domain (e.g., www.SmartAge.aol.com). AOL
--------------------
agrees to make reasonable efforts to work with SmartAge to enable the
Ratings Agencies to attribute secondary credit to SmartAge for traffic
to the Advertisements appearing within the AOL Network. SmartAge will
report traffic and click-through data according to AOL's third party
reporting guidelines. AOL shall have the right to change or modify its
design guideline templates and co-branding
3
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COMMISSION.
<PAGE>
requirements during the Term, to conform to general changes made to
the AOL Network or portions thereof, and SmartAge will modify the Co-
Branded Sites to reflect such changes as promptly as is commercially
reasonable (provided that if such a change or modification is
developed and implemented by AOL after the Effective Date hereof which
deprives SmartAge of a material benefit which it reasonably expected
to receive under this Agreement, the Parties will work in good faith
to determine whether there is a comparable benefit which is
commercially reasonable for AOL to provide, and if the Parties cannot
so agree on a comparable benefit, they will resolve such a dispute via
the procedures set forth in Section 7 hereof).. SmartAge will
integrate into the Co-Branded Sites AOL's tools and technology for
Quick Checkout (SmartAge will use commercially reasonable efforts to
accomplish such integration within *** days following the Effective
Date hereof, and in no event shall the time for such integration
exceed *** days). In addition, to the extent that SmartAge uses the
following tools or technology on either of the Co-Branded Sites,
SmartAge will use AOL's tools and technology therefor on the Co-
Branded Sites to the extent commercially reasonable: chat, message
boards, shopping cart, and calendar. To the extent that a user is
required to register for any such tool or technology, such
registration shall be conducted on AOL's standard page therefor, and
navigation back to the Co-Branded Sites from the registration page,
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 AOL 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 popup
window or any other similar device. In no event will SmartAge
integrate into either of the Co-Branded Sites any tools or technology
which may reasonably be deemed to be competitive with such products
(including Quick Checkout). Notwithstanding anything to the contrary
herein, SmartAge shall have a reasonable amount of time (SmartAge
shall make commercially reasonable efforts to ensure that such amount
of time does not exceed *** days from and after the Effective Date
hereof, and in no event shall it exceed *** days from and after the
Effective Date hereof) to build the Co-Branded Sites, during which
such time AOL may elect to instead link to the SmartAge Standard Site.
2.2. Content. SmartAge will make available through the Co-Branded Sites the
-------
comprehensive offering of Products and related Content described on
Exhibit D. Except as mutually agreed in writing by the Parties, the
Co-Branded Sites will contain only Content that is directly related to
the Products listed on Exhibit D. Except as expressly set forth on
Exhibit D, the Co-Branded Sites will not contain any third-party
products, services, programming or other Content. Except as expressly
set forth on Exhibit D, all sales of Products through the Co-Branded
Sites will be conducted through a direct sales format; SmartAge will
not promote, sell, offer or otherwise distribute any products through
any format other than a direct sales format (e.g., through auctions or
clubs) without the prior written consent of AOL. SmartAge will review,
delete, edit, create, update and otherwise manage all Content
available on or through the Co-Branded Sites in accordance with the
terms of this Agreement (other than the Content of the banner
advertisements served by AOL on the Co-Branded Sites pursuant to
Section 2.9 below). SmartAge will ensure that the Co-Branded Sites do
not promote, advertise, market or distribute the products, services or
content of any other Interactive Service, or any entity reasonably
construed to be in competition with any third party with which AOL has
an exclusive or premier relationship, as identified by the Restricted
Categories and Prohibited Categories on Exhibit D hereto.
2.3. Production Work. Except as agreed to in writing by the Parties
---------------
pursuant to the "Production Work" section of the Standard Online
Commerce Terms & Conditions attached hereto as Exhibit F, SmartAge
will be responsible for all production work
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associated with the Co-Branded Sites, including all related costs and
expenses (except for AOL's costs and expenses of serving the banner
advertisements sold by it on the Co-Branded Sites pursuant to Section
2.9 below).
2.4. Technology. SmartAge will take the commercially reasonable steps
----------
necessary to conform its promotion and sale of Products through the
Co-Branded Sites to the then-existing technologies identified by AOL
which are optimized for the AOL Service including, without limitation,
any "quick checkout" tool which AOL may implement to facilitate
purchase of products by AOL Users through the Co-Branded Sites
(provided that this requirement shall not be construed to require
SmartAge to integrate AOL's tools and technology for chat, message
boards, shopping cart, and calendar into the Co-Branded Sites, except
to the extent otherwise set forth in this Agreement). AOL will be
entitled to require reasonable changes to the Content (including,
without limitation, the features or functionality) within any linked
pages of the Co-Branded Sites to the extent such Content will, in
AOL's good faith judgment, adversely affect any technical operational
aspect of the AOL Network, and SmartAge shall implement such changes
as promptly as is commercially reasonable. AOL reserves the right to
review and test the Co-Branded Sites from time to time to determine
whether the site is compatible with AOL's then-available client and
host software and the AOL Network.
2.5. Product Offering. SmartAge will ensure that the Co-Branded Sites
----------------
together include substantially all of the Products and other Content
(including, without limitation, any features, offers, contests,
functionality or technology) that are made available by or on behalf
of SmartAge through any Additional SmartAge Channel; provided,
however, that (i) such inclusion will not be required where it is
commercially or technically impractical to either Party (i.e.,
inclusion would cause either Party to incur substantial incremental
costs) or to the extent that SmartAge is prohibited from including
certain Products or Content as set forth in Exhibit D hereto; (ii) the
specific changes in scope, nature and/or offerings required by such
inclusion will be subject to AOL's review and reasonable approval and
the terms of this Agreement; (iii) if and to the extent that any
Products or Content are offered by SmartAge exclusively through any
Additional SmartAge Channels designed primarily for an audience
outside the United States (each an "International SmartAge Channel"),
SmartAge shall not be required to offer such Products or Content on
the Co-Branded Sites unless otherwise mutually agreed (and SmartAge
shall in good faith offer AOL an opportunity to discuss the offering
of such Products or Content on the Co-Branded Sites) and (iv) such
inclusion will not be required where a Product is part of a *** with a
*** where such *** is not *** to be *** of an *** through the Co-
Branded Sites and/or be subject to the *** on *** set forth in ***.
2.6. Pricing and Terms. SmartAge will ensure: (i) the prices (and any other
-----------------
required consideration) for Products in the Co-Branded Sites do not
exceed on a normal basis the prices for the Products or substantially
similar Products offered by or on behalf of SmartAge through any
Additional SmartAge Channel (with the *** of *** resulting directly
from *** where such *** are not *** to *** or *** in connection with
the Products offered on the Co-Branded Sites, and in such instances
the prices (and any other required consideration) for the Products
offered in the Co-Branded Sites may be higher only to the extent of
the *** or *** by such ***); (ii) the terms and conditions related to
Products in the Co-Branded Sites are no less favorable *** in any ***
than the terms and conditions for the Products or substantially
similar Products offered by or on behalf of SmartAge through any
Additional SmartAge Channel; and (iii) both the prices and the terms
and conditions on the whole related to the banner exchange described
as
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AOL Clicks in Exhibit D hereto, the reciprocal linking program
described as AOL Links in Exhibit D hereto, and the newsletters
described as AOL Expert Newsletters in Exhibit D hereto, as offered in
the Co-Branded Sites. are reasonably competitive on a *** in all ***
with the prices and terms and conditions for the Products or
substantially similar Products offered by any SmartAge competitor
through any Interactive Site.
2.7. Exclusive Offers/Member Benefits. SmartAge will generally promote
--------------------------------
through the Co-Branded Sites any special or promotional offers made
available by or on behalf of SmartAge through any Additional SmartAge
Channel, except to the extent that (1) such a special or promotional
offer relates to Products which SmartAge is restricted from offering
on one or both of the Co-Branded Sites hereunder (e.g., if such a
special offer relates to a product which is prohibited from being
offered on the Co-Branded Corner Office but is not restricted from
being offered on the Co-Branded Primary Site, SmartAge shall not
promote the special offer through the Co-Branded Corner Office, but it
shall promote the special offer through the Co-Branded Primary Site);
or (2) such a special or promotional offer is offered in *** or other
*** with a *** or any *** that is *** to be *** of a special or
promotional offer on the Co-Branded Sites and/or be subject to the
restrictions on *** set forth in Section *** below. However, SmartAge
shall ensure that the number of such promotions is not substantially
greater than the number of promotions not involving such *** or ***
(and if in AOL's reasonable discretion the promotions in *** or other
*** with *** is substantially greater than other special or
promotional offers, then SmartAge shall provide additional permitted
special or promotional offers exclusively on the Co-Branded Sites in
order to compensate for such a deficit, provided that (i) such
additional permitted special or promotional offers need not provide an
identical economic benefit to users of the Co-Branded Sites as the
offers for which they are compensating, and (ii) if SmartAge provides
such additional permitted special or exclusive offers to compensate
for the deficit discussed herein during or within a reasonable amount
of time following the commencement of the promotions for which they
are compensating, then SmartAge shall not be deemed to have breached
the requirements set forth in this sentence). In addition, SmartAge
shall promote through the Co-Branded Sites from time to time special
offers exclusively available to AOL Users (the "AOL Exclusive
Offers"). The AOL Exclusive Offers made available by SmartAge shall
provide a substantial member benefit to AOL Users, either by virtue of
a meaningful price discount, product enhancement, unique service
benefit or other special feature. SmartAge will provide AOL with
reasonable prior notice of AOL Exclusive Offers so that AOL can market
the availability of such AOL Exclusive Offers in the manner AOL deems
appropriate in its editorial discretion. In addition, over the course
of the Term, SmartAge will use good faith efforts to devise AOL
Exclusive Offers which are substantially larger in scope than those
typically offered by SmartAge hereunder. If SmartAge provides
reasonable advance notice to AOL of such plans, AOL may discuss in
good faith the possibility of planning additional promotions in its
discretion for such larger AOL Special Offers (and any impressions to
such additional promotions will not count towards the Impressions
Commitment unless otherwise mutually agreed, to the extent that such
additional promotions deviate from the Promotions provided pursuant to
Section 1 above). In addition, SmartAge will devise special AOL
Exclusive Offers (e.g., including without limitation offering
significant pricing discounts on professionally produced advertising
banners, or offering free subscriptions (for a designated period) for
services which typically are paid for) to be mutually agreed upon
which AOL may in its discretion integrate into a contextually relevant
area or areas of the AOL Network (e.g., in a relevant area related to
registration for AOL's business-to-business targeted services). If
applicable and if requested by SmartAge, AOL will discuss in good
faith the opportunity for SmartAge to participate in AOL
loyalty/rewards programs (or segments thereof) which
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are targeted to the business-to-business industry and which are
relevant to the products and services offered by SmartAge on the Co-
Branded Sites, to the extent that such programs may exist during the
Term, and AOL may consent to such participation at its sole
discretion.
2.8. Operating Standards. SmartAge will ensure that the Co-Branded Sites
-------------------
comply at all times with the standards set forth in Exhibit E. To the
extent site standards are not established in Exhibit E with respect to
any aspect or portion of the Co-Branded Sites (or the Products or
other Content contained therein), SmartAge will provide such aspect or
portion at a level of accuracy, quality, completeness, and timeliness
which meets or exceeds generally prevailing, applicable standards in
the business-to-business industry. In the event SmartAge fails to
comply with any material terms of this Agreement or any Exhibit
attached hereto, AOL will have the right (in addition to any other
remedies available to AOL hereunder) to decrease the Promotions that
it provides to SmartAge hereunder and/or to reduce or remove the
integrated SmartAge Functionality described in Exhibit D hereto
(provided that AOL will provide reasonably prompt notice, whether
written or oral, to SmartAge of such a decrease or cessation (which
notice may occur after such decrease or cessation), provided further
that such notice need not be formally delivered as required by
paragraph 16 of Exhibit G hereto) until such time as SmartAge corrects
its non-compliance. In such an event, AOL will be relieved of the
proportionate amount of any promotional commitment made to SmartAge by
AOL hereunder corresponding to such decrease in Promotions, subject to
the resolution under Section 7 hereof of any dispute which may arise
as a result of SmartAge's reasonable belief that it has complied with
all material terms of this Agreement and the Exhibits hereto, and any
revenue threshold(s) set forth in Section 3 will each be adjusted
proportionately to correspond to such decrease in Promotions and other
obligations during the period of non-compliance.
2.9. Advertising Sales. AOL will own all advertising inventory within the
-----------------
Co-Branded Sites and will have the exclusive right to license and/or
sell Advertisements in the Co-Branded Sites. AOL agrees not to sell
(or otherwise provide) such advertising inventory to any of the
entities listed in Schedule 2.9 hereto. Except as expressly authorized
in Exhibit D hereto, SmartAge may not incorporate or link to any
promotional, advertising, sponsorship or otherwise commercial elements
without AOL's prior written approval. Notwithstanding the foregoing,
and in addition to the special or promotional offers discussed in
Section 2.7 above, SmartAge may incorporate where contextually
relevant within the Co-Branded Primary Site promotions for (and
related navigation to) Products offered by SmartAge within the Co-
Branded Primary Site (similar promotions and related navigation may be
provided in the Co-Branded Corner Office only as set forth in Exhibit
D hereto) (each a "SmartAge Placement"), subject to the restrictions
on Restricted Categories and Prohibited Categories set forth in
Exhibit D hereto. If and to the extent that any SmartAge Placement is
offered as part of a *** or other *** with a ***, then reference to
such *** may not be made within *** from the first page linked to off
the AOL Network (whether or not such page is the home page), provided,
however, that in no event may any SmartAge Placement be offered on the
Co-Branded Primary Site if related to a *** which is an *** or if the
SmartAge Placement relates in any way to any product, service or
functionality that can be reasonably construed to be in competition
with an ***.
2.10. Traffic Flow. SmartAge will take reasonable efforts to ensure that AOL
------------
traffic is either kept within the Co-Branded Sites or channeled back
into the AOL Network (with the exception of advertising links sold and
implemented pursuant to the Agreement). The Parties will work together
on implementing mutually acceptable links from the Co-Branded Sites
back to the AOL Network. In the event that AOL points to the Co-
Branded Sites or any other SmartAge Interactive Site or otherwise
delivers traffic to such site hereunder,
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SmartAge will ensure that navigation back to the AOL Network from such
site, 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 SmartAge 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
popup window or any other similar device. Rather, such AOL traffic
shall be pointed directly back to the AOL Network as designated by
AOL. SmartAge will modify links within the co-branded pages to re-
circulate users to the appropriate AOL property. SmartAge will ensure
that all AOL Users in the Co-Branded Sites will not be able to access
any links to any SmartAge Interactive Sites (expressly including any
International SmartAge Channels), except that there may be a link to
an "About SmartAge" page on the SmartAge Standard Site which provides
a brief summary of basic background information regarding SmartAge
(the "SmartAge Background Page"), and which may link to other pages of
the SmartAge Standard Site containing only additional basic background
information regarding SmartAge; provided, however, that (i) the
SmartAge Background Page and any page linked thereto shall not include
any Advertisements or unrelated Content within, preceding or framing
the basic background information; (ii) the SmartAge Background Page
and any page linked thereto must comply with all relevant obligations
that apply to the Co-Branded Sites (except for the co-branding
thereof) (e.g., navigation back to the AOL Network, applicability of
AOL's Terms of Service, etc.); and (iii) any links to the SmartAge
Background Page from the Co-Branded Sites must be disabled (and any
display of such links removed) as promptly as commercially reasonable
if *** or more of the traffic linking to the Co-Branded Sites clicks
through to the SmartAge Background Page.
3. PAYMENTS.
--------
3.1. Guaranteed Payments. SmartAge will pay AOL a non-refundable guaranteed
-------------------
payment of Twelve Million Dollars ($12,000,000) as follows:
(i) Delivery upon the execution thereof and hereof of the
Restricted Stock Purchase Agreement and Investor Rights
Agreement discussed more fully in Section 4 below, providing
for the issuance to AOL of a certain number of shares of
SmartAge stock (as described more fully therein) as
consideration hereunder;
(ii) *** within two (2) business days of the execution hereof;
(iii) An additional ***, as follows: *** upon each of the ***,
***, *** and *** month anniversaries of the execution
hereof; provided, however, that upon the latter of (i) the
date of any debt, equity, or other financing arrangement or
series of arrangements raising proceeds equal to or in
excess of *** ("Funding Event") (if a series of events, then
the date on which the proceeds from such events have reached
a level greater than or equal to ***), or (ii) the *** of
the *** and the *** of the *** therein (as set forth more
fully in Exhibit D hereto) (together with the Funding Event,
the "Triggering Events"), then these payments shall
accelerate as follows: (a) if the date of the latter of the
two Triggering Events occurs on or prior to the *** month
anniversary of the execution hereof, SmartAge shall pay to
AOL (in addition to the payments to be made on the *** and
*** month anniversaries of the execution hereof) a payment
of ***, which shall be in lieu of the
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payments to be made on the *** and *** month anniversaries
of the execution hereof, (b) if the date of the latter of
the two Triggering Events occurs after the *** month
anniversary of the execution hereof but prior to the ***
month anniversary of the execution hereof, SmartAge shall
pay to AOL (in addition to the payments to be made on the
***, *** and *** month anniversaries of the execution
hereof) a payment of ***, which shall be in lieu of the
payment to be made on the *** month anniversary of the
execution hereof, or (c) if the date of the latter of the
two Triggering Events occurs on or after the *** month
anniversary hereof, then the payments to be made on the ***,
***, *** and *** month anniversaries of the execution hereof
shall be made as regularly scheduled herein; and
(iv) An additional ***, as follows: *** on each of the ***, ***,
and *** month anniversaries of the execution hereof.
3.2. Inventory Share. After *** AOL Users have registered for (or have
---------------
otherwise received) Netscape Business Cards integrating AOL Clicks (as
defined in Exhibit D hereto), then AOL and SmartAge shall *** have the
right to sell *** of the advertising inventory in the Netscape
Business Cards which is allotted to SmartAge for sale to third parties
as set forth in Exhibit D. AOL shall be entitled to use its share of
such advertising inventory in its sole discretion; SmartAge shall be
entitled to use its share of such advertising inventory in accordance
with all applicable restrictions set forth in Exhibit D hereto (e.g.,
use of third party advertising agencies and the Advertising
Restrictions (as defined in Exhibit D)).
3.3. Transaction Revenues. SmartAge will retain *** of the Transaction
--------------------
Revenues generated on the Co-Branded Sites.
3.4. Sharing of Advertising Revenues. AOL shall own the rights to
-------------------------------
Advertising Revenues generated through the Co-Branded Sites. AOL will
pay to SmartAge *** of Advertising Revenues received by AOL for such
Advertisements in the Co-Branded Sites, as described herein on a
quarterly basis within thirty (30) days following the end of each
quarter. SmartAge shall retain *** of the revenues earned from its
sale of the advertising inventory allotted to it in as part of the
integration of the SmartAge Functionality as set forth in Exhibit D
hereto.
3.5. Late Payments; Wired Payments. All amounts owed hereunder not paid
-----------------------------
when due and payable will bear interest from the date such amounts are
due and payable at the prime rate in effect at such time. All payments
required to be made to AOL hereunder will be paid in immediately
available, non-refundable U.S. funds wired to the "America Online"
account, Account Number *** at The Chase Manhattan Bank, 1 Chase
Manhattan Plaza, New York, NY 10081 (ABA: ***).
3.6. Auditing Rights. (a) SmartAge will maintain complete, clear and
---------------
accurate records of all expenses, revenues and fees in connection with
the performance of this Agreement. For the sole purpose of ensuring
compliance with this Agreement, AOL will have the right to a
reasonable and necessary inspection, to be conducted by an independent
third party selected in good faith by AOL, of portions of the books
and records of SmartAge which are relevant to SmartAge's performance
pursuant to this Agreement. Any such audit may be conducted during
normal business hours after twenty (20) business days prior written
notice to SmartAge. The report provided in connection with this audit
shall redact the
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names of SmartAge's third party partners if and to the extent
necessary to protect information which SmartAge is prohibited from
revealing in such a context by contracts it has in place with third
parties. AOL shall bear the expense of any audit conducted pursuant
to this Section 3.6 unless such audit shows an error in AOL's favor
amounting to a deficiency to AOL in excess of five percent (5%) of the
actual amounts paid and/or payable to AOL hereunder, in which event
SmartAge shall bear the reasonable expenses of the audit. SmartAge
shall pay AOL the amount of any deficiency discovered by AOL within
thirty (30) days after receipt of notice thereof from AOL. (b) For
the sole purpose of ensuring compliance with Section 3.4 of this
Agreement, SmartAge will have the right to a reasonable and necessary
inspection, to be conducted by an independent third party selected in
good faith by AOL, from *** of the *** (and the *** shall not be the
*** then in *** by ***), of portions of the books and records of AOL
which are relevant to AOL's performance pursuant to those sections
(and AOL shall keep records relating thereto in accordance with its
standard practices). Such right may not be exercised more than ***
per year. AOL shall select such third party auditor within twenty
(20) business days of SmartAge's written notice to AOL of its desire
for such audit. The audit shall begin within a reasonable amount of
time following such selection, and shall be conducted during normal
business hours. SmartAge shall bear any and all of the reasonable,
direct, out-of-pocket costs and expenses of any audit conducted
pursuant to this Section 3.6 unless such audit shows an error in
SmartAge's favor amounting to a deficiency to SmartAge in excess of
five percent (5%) of the actual amounts paid and/or payable to
SmartAge hereunder, in which event AOL shall bear the reasonable
expenses of the audit. AOL shall pay SmartAge the amount of any
deficiency discovered by the auditor within thirty (30) days after
receipt of notice thereof from SmartAge.
3.7. Taxes. SmartAge will collect and pay and indemnify and hold AOL
-----
harmless from, any sales, use, excise, import or export value added or
similar tax or duty arising from or in relation to SmartAge's
operation of the Co-Branded Sites or the SmartAge Functionality (as
that term is defined in Exhibit D) and not based on AOL's net income
(i.e., not arising from AOL's sale of Advertisements on the Co-Branded
Sites, except to the extent that AOL shares revenues therefrom with
SmartAge), including any penalties and interest, as well as any costs
associated with the collection or withholding thereof, including
attorneys' fees.
3.8. Reports.
-------
3.8.1. Sales Reports. SmartAge will provide AOL in an automated
-------------
manner with a monthly report in a mutually agreed format,
detailing the following activity in such period (and any other
information mutually agreed upon by the Parties or reasonably
required for measuring revenue activity by SmartAge through
the Co-Branded Sites): (i) summary sales information by day
(date, number of Products, number of orders, total Transaction
Revenues); (ii) detailed sales and/or registration information
(e.g., order date/timestamp (if technically feasible),
purchaser name and screenname, SKU or Product description) (in
information in clauses (i) and (ii), "Sales Reports"). In
addition, each Sales Report shall contain information which
details and supports the basis for calculation of the Co-
Branded Sites Performance Payments and the Business Card
Performance Payments. Furthermore, if and to the extent that
it can reasonably do so without incurring significant
additional costs, SmartAge shall provide AOL with weekly
reports of Page Views (as defined in Section 5.2 below) to the
Co-Branded Sites. AOL will be entitled to use the Sales
Reports in its business operations, subject to the terms of
this Agreement, and to disclose information derived from the
Sales Reports in an aggregate form (i.e., combined with other
data in a manner that
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prevents individual identification of SmartAge's sales information), without
explicitly identifying SmartAge as the source of the Sales Reports (and provided
that AOL will not share the Sales Reports with SmartAge's Competitors except to
the extent that public disclosure is permitted hereunder). AOL acknowledges
that the Sales Reports may contain Confidential Information of SmartAge as
defined in Exhibit B hereto.
3.8.2. Usage Reports. AOL shall provide SmartAge with standard usage
-------------
information related to the Promotions (e.g. a schedule of the
Impressions delivered by AOL at such time): (i) a schedule of
the impressions delivered by AOL in connection with the
special promotions contemplated by Section 2.7 above; (ii) if
and to the extent that the Co-Branded Primary Site and the Co-
Branded Corner Office are served on different URLs (and if AOL
can reasonably provide such information without incurring
additional significant costs), an indication of the number of
Impressions for each Co-Branded Site which is similar in
timing, substance and form to the reports provided by AOL to
other interactive marketing partners similar to SmartAge;
(iii) a schedule of the Page Views to the Netscape Business
Cards on which SmartAge is selling advertising inventory; and
(iv) additional items if and to the extent mutually agreed.
Such reports also shall include information sufficient to
support the basis for AOL's calculation of SmartAge's share of
Advertising Revenue as set forth in Section 3.4 above.
SmartAge acknowledges AOL's reports may contain Confidential
Information of AOL as defined in Exhibit B hereto.
3.8.3. Fraudulent Transactions. To the extent permitted by applicable
-----------------------
laws, SmartAge will provide AOL with an prompt report of any
fraudulent order, including the date, screenname or email
address and amount associated with such order, promptly
following SmartAge obtaining knowledge that the order is, in
fact, fraudulent.
4. EQUITY. Concurrently with the execution of this Agreement, the parties
------
shall enter into a Restricted Stock Purchase Agreement and Amendment to
Investor Rights Agreement, forms of which are attached hereto as Exhibits I
and J, respectively. SmartAge hereby agrees to execute and deliver the
Restricted Stock Purchase Agreement and Amendment to Investor Rights
Agreement in consideration for the delivery and execution of this Agreement
by AOL, as set forth more fully in the Restricted Stock Purchase Agreement.
5. TERM; RENEWAL; TERMINATION.
--------------------------
5.1. Term. Unless earlier terminated as set forth herein, the initial term
----
of this Agreement will be two (2) years from the Effective Date (the
"Initial Term").
5.2. Renewal. Upon conclusion of the Initial Term, AOL will have the right
-------
to renew the Agreement for a one-year renewal term (the "Renewal
Term", and together with the Initial Term, the "Term"). During the
Renewal Term: (i) there shall be no Impressions Commitment and
SmartAge shall not be obligated to pay an additional carriage fee, and
(ii) SmartAge shall pay to AOL a payment of *** per thousand Unique
Users to the Co-Branded Sites (the "Unique User Payments") and a
payment of *** per thousand Page Views of the Netscape Business Cards
(the "Page View Payments"). The Renewal Term shall automatically
commence following the expiration of the Initial Term, provided that
AOL shall be entitled to terminate the Renewal Term with thirty (30)
days prior written notice to SmartAge. For the purposes of this
Agreement, a "Unique User" shall be defined as each visitor to the Co-
Branded Sites (or, during a Continued Link, to the SmartAge
Interactive Site linked to) (e.g., such that a single person who
visits the Co-Branded Sites shall only count as one Unique
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User, regardless of the number of times visited). The Parties shall measure the
number of Unique Users to the Co-Branded Sites (or SmartAge Interactive Site
linked to during the Continued Link) by engaging Media Metrix (or another
nationally recognized, third party service reasonably designated by AOL) to do
so. SmartAge shall be responsible for all costs and expenses associated with
such measurements. For purposes of this Agreement, a "Page View" shall mean a
user's exposure to a specified page, as such exposure may be reasonably
determined and measured by AOL in accordance with standard methodologies and
protocols.
5.3. Transition Period. At the end of the Term (including any Renewal Term
-----------------
pursuant to Section 5.2), whether by expiration or termination
thereof (excluding termination by SmartAge pursuant to Section 5.5
below for material breach of this Agreement by AOL which has remained
uncured), there will be a transition period (the "Transition Period")
of six (6) months, during which: (a) no SmartAge Functionality shall
remain integrated in any registration processes within the AOL
Network; (b) banners and links provided on the Netscape Business
Cards pursuant to the AOL Clicks and AOL Links functionality
described in Exhibit D hereto will continue to be provided to the
then-existing users thereof as set forth in Exhibit D hereto; (c)
SmartAge shall continue to maintain the Co-Branded Sites, subject to
all requirements herein except for the co-branding requirements; (d)
AOL shall provide at least one link to the Co-Branded Sites (which,
as noted in subpart (c) above, need not be co-branded) from a
relevant portion of the AOL Network in form and placement to be
determined by AOL in its sole discretion; (e) SmartAge shall either
(at AOL's option): (i) pay to AOL on a monthly basis the most
preferable rates offered under SmartAge's then-current affiliate
programs, or (ii) pay to AOL the Unique User Payments and Page View
Payments in Section 5.2 above); (f) AOL shall not intentionally block
access to the SmartAge Standard Site from the AOL Network, nor shall
it intentionally disrupt communications between AOL Users and
SmartAge on the SmartAge Standard Site; and (g) within sixty (60)
days prior to the end of the Transition Period, SmartAge may send no
more than two (2) e-mail communications to AOL Users who have
registered for and are then using the SmartAge Functionality,
provided that SmartAge will limit the subject of such e-mails to
informing such AOL Users of the URL at which they can locate
information relevant to their continued use of such SmartAge
Functionality (i.e., either the URL of the Co-Branded Corner Office
or the Co-Branded Primary Site) and such e-mails may not in any way
violate the terms of this Agreement (e.g., including without
limitation the restrictions on AOL User communications set forth in
Exhibit G hereto). Nothing in this Section 5.3 shall be construed to
require AOL to provide any links to the SmartAge Standard Site, to
cure any technical problems preventing access thereto or preventing
communications therein, or to refrain from offering, distributing, or
promoting any products, services, content or functionality which may
be competitive with the products, services, content or functionality
offered, distributed, or promoted in or on or through the SmartAge
Standard Site or the Co-Branded Sites. AOL may elect to extend the
Transition Period beyond six (6) months (the "Extension"), and during
such an Extension, any or all of subparts (a)-(g) of this Section 5.3
may apply, at AOL's option (and this sentence shall not be construed
to restrict any rights that SmartAge may have during the initial six
(6) month Transition Period (i.e., not including any Extension) under
this Section 5.3).
5.4. Continued Links. Upon expiration of the Term, AOL may, at its
---------------
discretion, continue to promote one or more "pointers" or links from
the AOL Network to a SmartAge Interactive Site and continue to use
SmartAge's trade names, trade marks and service marks in connection
therewith (collectively, a "Continued Link"). So long as AOL
maintains a Continued Link, SmartAge shall either (at AOL's option):
(i) pay to AOL on a monthly basis the most preferable rates offered
under SmartAge's then-current affiliate programs, or (ii) pay to AOL
the Unique User Payments and Page View Payments in Section 5.2 above
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(provided, however that instead of Unique Users visiting the Co-
Branded Sites, AOL shall receive credit for Unique Users visiting the
SmartAge Interactive Site which is linked to via the Continued Link).
In addition, Sections 3.6, 3.7 and 3.8 along with the terms of Exhibit
G hereto shall continue to apply with respect to the Continued Link
and any transactions arising therefrom, except that, if and to the
extent that it is not possible for *** to determine which users have
linked to its *** via the *** without incurring ***, *** need not
adhere to the requirements of Paragraphs ***, ***, and *** of ***
hereto (only to the extent that those paragraphs relate to ***) with
respect to users acquired following the Term, provided, however, that
nothing herein shall relieve SmartAge of any duties or obligations
that it may have with respect to AOL Users acquired during the Term
hereof.
5.5. Termination for Breach. Except as expressly provided elsewhere in this
----------------------
Agreement, either Party may terminate this Agreement at any time in
the event of a material breach of the Agreement by the other Party
which remains uncured after thirty (30) days written notice thereof to
the other Party (or such shorter period as may be specified elsewhere
in this Agreement); provided that AOL will not be required to provide
notice to SmartAge in connection with SmartAge's failure to make any
payment to AOL required hereunder, and the cure period with respect to
any scheduled payment will be thirty (30) days from the date for such
payment provided for herein (and regardless of whether SmartAge cures
a breach for failure to make a scheduled payment within the thirty
(30) day cure period, any subsequent failure to make a scheduled
payment shall automatically and immediately constitute a material
breach of this Agreement if not paid within five (5) days of the date
due, and AOL shall not be required to provide SmartAge with a period
in which to cure such breach). Notwithstanding the foregoing, in the
event of a material breach of a provision that expressly requires
action to be completed within an express period shorter than 30 days,
either Party may terminate this Agreement if the breach remains
uncured after written notice thereof to the other Party. In the event
that SmartAge terminates this Agreement for AOL's material breach as
contemplated hereby, and AOL either (i) does not dispute that it has
committed such material breach, or (ii) is adjudged to have committed
such material breach by a final, non-appealable (i.e., not subject to
judicial or administrative reconsideration or review) determination of
a competent court of law (or by the arbitration panel described in
Section 7 hereof, as applicable), then AOL shall *** to *** a *** of
the *** pursuant to *** (not including the *** described in ***, which
for purposes of this section shall be *** to *** at ***), based on the
*** of ***, to the extent that AOL has *** such *** from SmartAge and
such *** remain *** as of the *** of SmartAge's *** (i.e., a *** of
the *** has not been *** as of the ***).
5.6. Termination for Bankruptcy/Insolvency. Either Party may terminate this
-------------------------------------
Agreement immediately following written notice to the other Party if
the other Party (i) ceases to do business in the normal course, (ii)
becomes or is declared insolvent or bankrupt, (iii) is the subject of
any proceeding related to its liquidation or insolvency (whether
voluntary or involuntary) which is not dismissed within ninety (90)
calendar days or (iv) makes an assignment for the benefit of
creditors.
5.7. Termination on Change of Control. (a) (i) SmartAge shall promptly
--------------------------------
notify AOL in writing in the event that SmartAge enters into any
agreement with any Interactive Service intending to consummate or to
potentially consummate any Change of Control of SmartAge or which
could reasonably result in an Interactive Service controlling
SmartAge, notifying AOL of the existence of such agreement and the
nature of the transaction contemplated thereby (subject to any
applicable
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confidentiality provisions therein and any applicable securities laws) (and in
any event, such notice shall occur no later than one (1) day following any press
release or other public announcement thereof by SmartAge and/or the Interactive
Service). Such notice shall be referred to herein as the "Agreement Notice".
In negotiating such an agreement, SmartAge shall use commercially reasonable
efforts to avoid confidentiality provisions which would restrict its ability to
provide AOL with the Agreement Notice as described herein. However, if SmartAge
is restricted from providing such Agreement Notice immediately upon entering
into such an agreement due to applicable confidentiality restrictions of such
agreement or applicable securities laws, then SmartAge shall notify AOL of the
existence and nature of such agreement as soon as such restrictions no longer
prevent it from doing so. (ii) SmartAge also shall provide prompt written
notice to AOL of the occurrence of the Change of Control (such notice to be
referred to herein as the "Consummation Notice"). (iii) In the event that
SmartAge enters into an agreement with an Interactive Service as contemplated in
this section, AOL shall have the right to terminate this Agreement on or after
the date that is the earlier of (a) six (6) months after the date of the
Agreement Notice, or (b) the date of the Change of Control; provided, however,
that AOL must give SmartAge thirty (30) days prior written notice of its intent
to terminate.
(b) In the event of a Change of Control of AOL (other than the
consummation, in any form, of AOL's planned acquisition of, or merger
or consolidation with, Time Warner Inc., which was announced to the
public on January 10, 2000), AOL may terminate this Agreement by
providing sixty (60) days prior written notice of such intent to
terminate.
5.8. 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 similar public statement ("Press
Release") regarding the transactions contemplated hereunder, provided
that, subsequent to the initial Press Release, factual references by
either Party to the existence of a business relationship between the
Parties (or simply (i) reiterating facts announced in the initial
Press Release in accordance with the same characterization as in the
initial Press Release or (ii) citing to the existence of terms and
conditions of this Agreement which are then publicly available as a
result of an amendment to SmartAge's S-1 filing with the Securities
and Exchange Commission, without characterizing such terms and
conditions in any way) shall not require the other Party's approval.
Notwithstanding the foregoing, either Party may issue Press Releases
and other disclosures as required by law 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 by one Party to obtain the prior written approval of the
other Party prior to issuing a Press Release (except as required by
law) 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-breach party may elect to either (a) terminate this
Agreement *** to the *** and a *** in which to *** hereunder, or (b)
as liquidated damages, elect to modify the Impression commitment
hereunder by *** (either an increase in Impressions if AOL has
materially breached the Agreement or a decrease in Impressions if
SmartAge has materially breached the Agreement). The Parties agree
that the liquidated damages set forth are a reasonable approximation
of the injury that would be suffered by the non-breaching Party.
6. NETSCAPE TOOLS, UTILITIES AND PROGRAMMING
-----------------------------------------
6.1. Netscape Business Directory. Netscape will integrate SmartAge into the
---------------------------
Netscape Business Directory. SmartAge will, within sixty (60) days of
the Effective Date hereof, use good faith efforts to evaluate offering
an opportunity to participate in the Netscape Business Directory to
users of the SmartAge Standard Site and integrating its business
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users into the Netscape Business Directory. The above offering and
integration will be subject to all generally applicable terms of the
Netscape Business Directory, as available online. SmartAge
understands and agrees that the Netscape Business Directory product
may be structured by AOL to be provided by Netscape or a third party,
and that, if provided by a third party, AOL shall not be required to
force such third party to accept the terms of this Section 6.1, and
SmartAge may not be able to so participate (but shall do so if
requested by such third party).
6.2. Integration of SmartAge into Netscape Business Card. Following the
---------------------------------------------------
launch of the Netscape Business Cards, SmartAge will be integrated
into a Netscape Business Card (subject to all generally applicable
terms thereof), which, following such integration, shall contain
information related to SmartAge. SmartAge understands and agrees that
the Netscape Business Card product may be structured by AOL to be
provided by Netscape or a third party, and that, if provided by a
third party, AOL shall not be required to force such third party to
accept the terms of this Section 6.2, and SmartAge may not be able to
so participate (but shall do so if requested by such third party).
6.3. Integration of Netscape Business Card into SmartAge Interactive Sites.
---------------------------------------------------------------------
SmartAge will complete the following integration and commence the
following promotion (SmartAge shall use commercially reasonable
efforts to complete such integration and commence such promotion
within *** after the launch of the Netscape Business Cards, and in no
event shall the time for doing so exceed ***): (a) integrate the
registration for Netscape Business Cards as an *** Feature in the ***
Registration Process (as defined at the end of this Section 6.3) on
the SmartAge Standard Site; (b) request that each third party partner
with which SmartAge has a co-branded registration process on the
SmartAge Standard Site consent to the integration of the registration
for Netscape Business Cards as an *** Feature (or as an *** Feature,
if integration as an *** Feature is not acceptable to such third party
partner) in that co-branded registration process (each an "Approved
Co-Branded Registration Process"); and (c) promote to its existing
users the ability to register for Netscape Business Cards (such
promotions shall be in a form and substance to be mutually agreed by
the Parties). In addition, SmartAge shall request that each future
third party partner which will be made a part of a co-branded
registration process on the SmartAge Standard Site consent to the
integration of the registration for Netscape Business Cards as an ***
Feature (or as an *** Feature, if integration as an *** Feature is not
acceptable to such future third party partner) in that co-branded
registration process (for purposes of this Section 6.3, each such
future registration process also shall be deemed an Approved Co-
Branded Registration Process). To the extent that a SmartAge partner
or end user registers for a Netscape Business Card through a
registration process on the SmartAge Standard Site and subscribes for
any revenue generating service in the Netscape Business Cards (except
for revenue from the sale of products or services provided by
SmartAge), Netscape shall pay to SmartAge the *** under its *** for
***, provided, however, if no such ***, Netscape shall pay to SmartAge
*** of the net revenue generated. For a period of sixty (60) days
following the launch of the Netscape Business Cards, the Parties will
use good faith efforts to evaluate the possibility of integrating into
the Co-Branded Primary Site the Netscape Business Directory, in which
Netscape Business Cards *** would be integrated to the extent, in a
manner, and on terms and conditions to be mutually agreed. For
purposes of this section, the *** Registration Process shall be that
registration process on the SmartAge Standard Site which is not ***
with one of *** or is an Approved Co-Branded Registration Process and
through which a *** of registrants on that site register for SmartAge
products, services, content and/or functionality; provided, however,
that (i) if no ***
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*** or Approved Co-Branded Registration Process on the SmartAge
Standard Site *** for a *** of the registrants for SmartAge products,
services, content and functionality thereon, then SmartAge shall
integrate the registration for Netscape Business Cards as contemplated
herein into the *** and Approved Co-Branded Registration Processes
within the SmartAge Standard Site which *** for the ***, up to an
aggregate total of at least *** of total registrations (e.g., if
SmartAge were to have 4 *** and/or Approved Co-Branded Registration
Processes on its site, accounting for *** and *** of the registrations
thereon, respectively, then SmartAge would integrate the registration
for the Netscape Business Cards as contemplated herein into the *** or
Approved Co-Branded Registration Processes, as the case may be,
accounting for *** and *** of the registrations on the SmartAge
Standard Site).
6.4. Netscape Programming. To the extent mutually agreed, Netscape will
--------------------
provide SmartAge with content and programming targeted at its business
users through co-branded areas (including branding and attribution
using a Netscape designated name or logo, based on mutually agreed
design guideline templates and other co-branding requirements). If
mutually agreed, SmartAge will integrate Netscape's content and
programming throughout the SmartAge web based applications, and will
provide navigational links throughout the SmartAge web based
applications to the co-branded areas containing the Netscape
programming. The Parties will mutually agree upon the nature of
Netscape content and programming to be integrated on the SmartAge web
based applications and the carriage/integration plan for such content
and programming. Where appropriate, Netscape and SmartAge may mutually
agree upon a form of revenue sharing based on SmartAge's integration
of the Netscape content and programming. Netscape will own all
Advertising inventory on the co-branded areas (except if and to the
extent that the Parties mutually agree otherwise as part of the
revenue sharing discussed in this Section 6.4), and will have the
exclusive right to sell such inventory, provided, however that such
Advertising inventory shall not be sold to any of the entities listed
in Schedule 2.9 hereto. All pages on which such content and
programming appears will be served from a Netscape.com domain with the
following URL: http://www.SmartAge.netscape.com such that Netscape
--------------------------------
receives credit for all traffic thereto, in each case in accordance
with Netscape's then current generally applicable standards.
6.5. AOL Instant Messenger Agreement. The Parties shall use commercially
-------------------------------
reasonable efforts to enter into the AIM Agreement within *** the
Effective Date hereof.
6.6. SmartAge Functionality. SmartAge will provide AOL with the best-of-
----------------------
breed functionality set forth in Exhibit D hereto on the terms and
conditions set forth therein (the "SmartAge Functionality"). AOL will
integrate such functionality where editorially and contextually
relevant in the AOL Network as set forth in Exhibit D and subject to
the standards and requirements therein.
7. MANAGEMENT COMMITTEE/ARBITRATION.
--------------------------------
7.1. Management Committee. The Parties will 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 a ten (10) day time period, the
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Dispute will be submitted to the Management Committee for resolution.
For ten (10) days following submission of the Dispute to the
Management Committee, the Management Committee will have the exclusive
right to resolve such Dispute; provided further that the Management
Committee will have the final and exclusive right to resolve Disputes
arising from any provision of the Agreement which expressly or
implicitly provides for the Parties to reach mutual agreement as to
certain terms. If the Management Committee is unable to amicably
resolve the Dispute during the ten-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, or
cannot agree on whether to retain a mediator, the dispute will be
subject to arbitration as described below. In addition, in the event
that one of the Parties still is not satisfied following the
conclusion of mediation, the dispute will be subject to arbitration as
described below. "Management Committee" will mean a committee made up
of a senior executive from each of the Parties for the purpose of
resolving Disputes under this Section 7 and generally overseeing the
relationship between the Parties contemplated by this Agreement.
Neither Party will seek, nor will be entitled to seek, binding outside
resolution of the Dispute unless and until the Parties have been
unable amicably to resolve the Dispute as set forth in this Section 7
and then, only in compliance with the procedures set forth in this
Section 7.
7.2. Arbitration. Except for Disputes relating to issues of proprietary
------------
rights, including but not limited to intellectual property and
confidentiality, any Dispute not resolved by amicable resolution
(including mediation) as set forth in Section 7.1 will be governed
exclusively and finally by arbitration. Such arbitration will be
conducted by the American Arbitration Association ("AAA") in
Washington, D.C. and will 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 will 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 will 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.
7.3. Selection of Arbitrators. The arbitration panel will consist of three
-------------------------
arbitrators. Each Party will name an arbitrator within ten (10) days
after the delivery of the Demand. The two arbitrators named by the
Parties may have prior relationships with the naming Party, which in a
judicial setting would be considered a conflict of interest. The third
arbitrator, selected by the first two, should be a neutral
participant, with no prior working relationship with either Party. If
the two arbitrators are unable to select a third arbitrator within ten
(10) days, a third neutral arbitrator will be appointed by the AAA
from the panel of commercial arbitrators of any of the AAA Large and
Complex Resolution Programs. If a vacancy in the arbitration panel
occurs after the hearings have commenced, the remaining arbitrator or
arbitrators may not continue with the hearing and determination of the
controversy, unless (i) the Parties agree otherwise, (ii) if the
vacating arbitrator was appointed by AOL, then SmartAge shall have the
option to continue with the hearing (provided, however, that if the
vacancy is caused by the death or other physical or mental incapacity
of the arbitrator appointed by AOL, or by a change in employment of
the arbitrator appointed by AOL (e.g., if the arbitrator is terminated
or transferred by his or her employer), then
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only subsection (i) of this sentence shall apply), or (iii) if the
vacating arbitrator was appointed by SmartAge, then AOL shall have the
option to continue with the hearing (provided, however, that if the
vacancy is caused by the death or mental incapacity of the arbitrator
appointed by SmartAge, or by a change in employment of the arbitrator
appointed by SmartAge (e.g., if the arbitrator is terminated or
transferred by his or her employer), then only subsection (i) of this
sentence shall apply). In the event that the Parties agree to
continue with the hearing and determination of the controversy, or if
either AOL or SmartAge exercises its option to continue as provided
for in the previous sentence, then the vacated seat shall be filled in
the same manner as the vacating arbitrator's predecessor was selected
within fifteen (15) business days following the election to continue.
If the hearing is not continued, then a new panel shall be selected
(either with the remaining or new arbitrators) and a new hearing shall
be commenced in the manner set forth herein.
7.4. Governing Law. The Federal Arbitration Act, 9 U.S.C. Secs. 1-16, and
-------------
not state law, will govern the arbitrability of all Disputes. The
arbitrators will 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 will reference
the Federal Rules of Civil Procedure then in effect in setting the
scope and timing of discovery. The Federal Rules of Evidence will
apply in toto. The arbitrators may enter a default decision against
any Party who fails to participate in the arbitration proceedings.
7.5. Arbitration Awards. The arbitrators will have the authority to award
-------------------
compensatory damages only. Any award by the arbitrators will 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 will 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 will be kept confidential and no Party will
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.
7.6. Fees. Each Party will 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") will be borne
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.
7.7. Non Arbitratable Disputes. Any Dispute that is not subject to final
--------------------------
resolution by the Management Committee or to arbitration under this
Section 7 or by law (collectively, "Non-Arbitration Claims") will be
brought in a court of competent jurisdiction in the Commonwealth of
Virginia. Each Party irrevocably consents to the exclusive
jurisdiction of the courts of the Commonwealth of Virginia and the
federal courts situated in the Commonwealth of Virginia, 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.
8. ***. Netscape and SmartAge will use good faith efforts to evaluate a
relationship with *** for transaction and commerce related applications and
enterprise software on terms to be mutually agreed upon by the Parties. The
Parties will use good faith efforts to develop a specifications requirements
document.
9. MISCELLANEOUS. Except as otherwise expressly provided in this Agreement,
-------------
SmartAge will provide AOL with an opportunity for AOL to provide ***
provided by SmartAge, including without limitation, ***, ***,
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*** and *** on mutually agreeable terms. If SmartAge approaches
appropriate AOL representatives regarding the possibility of a reasonably
potential business relationship with respect to a *** or *** to be offered
by *** on the ***, AOL will use good faith efforts to discuss the
possibility of such a relationship with SmartAge.
10. STANDARD TERMS. The Standard Online Commerce Terms & Conditions set forth
--------------
on Exhibit F attached hereto and Standard Legal Terms & Conditions set
forth on Exhibit G attached hereto are each 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. SMARTAGE.COM CORP.
By: /s/ David M. Colburn By: /s/ William Lohse
--------------------------------- ---------------------------
Name David M. Colburn Name:
Title: President, Business Affairs Title:
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EXHIBIT A
Placement/Promotion
-------------------
I. Carriage Plan
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
AREA DESCRIPTION
- --------------------------------------------------------------------------------
<S> <S> <C>
Level 1A Promotions* ***
- --------------------------------------------------------------------------------
1 *** Integrated Text Link
- --------------------------------------------------------------------------------
2 *** Integrated Text Link
- --------------------------------------------------------------------------------
3 *** Integrated Text Link
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Level 1 Promotions* ***
- --------------------------------------------------------------------------------
1 *** Rotating text link
- --------------------------------------------------------------------------------
2 *** Rotating text link
- --------------------------------------------------------------------------------
3 *** 141x60 rotating banner
- --------------------------------------------------------------------------------
4 *** 234x60 rotating banner
- --------------------------------------------------------------------------------
5 *** 234x60 rotating banner
- --------------------------------------------------------------------------------
6 *** Rotating text link
- --------------------------------------------------------------------------------
7 *** 468x60 rotating banner
- --------------------------------------------------------------------------------
8 *** 141x60 rotating banner
- --------------------------------------------------------------------------------
9 *** 120x60 rotating banner
- --------------------------------------------------------------------------------
10 *** 120x60 rotating banner
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Level 2 Level 2 Promotions* ***
- --------------------------------------------------------------------------------
1 *** 468x60 rotating banner
- --------------------------------------------------------------------------------
2 *** Rotating text link
- --------------------------------------------------------------------------------
3 *** 468x60 rotating banner
- --------------------------------------------------------------------------------
</TABLE>
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<TABLE>
<C> <S> <C>
- --------------------------------------------------------------------------------
4 *** Rotating text link
- --------------------------------------------------------------------------------
5 *** Integrated text link
- --------------------------------------------------------------------------------
6 *** 88x31 rotating banner
- --------------------------------------------------------------------------------
7 *** Rotating text & graphic
- --------------------------------------------------------------------------------
8 *** Integrated text
- --------------------------------------------------------------------------------
9 *** Integrated text
- --------------------------------------------------------------------------------
10 *** Integrated text
- --------------------------------------------------------------------------------
11 *** Integrated text
- --------------------------------------------------------------------------------
12 *** Integrated text
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Level 3 Promotions* ***
- --------------------------------------------------------------------------------
1 *** Integrated text
- --------------------------------------------------------------------------------
2 *** Integrated text
- --------------------------------------------------------------------------------
3 *** 234x60 rotating banners
- --------------------------------------------------------------------------------
4 *** Integrated text
- --------------------------------------------------------------------------------
5 *** 468x60 rotating banners
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Level 4 Promotions* ***
- --------------------------------------------------------------------------------
1 *** Integrated text
- --------------------------------------------------------------------------------
2 *** 100x70 rotating banners
- --------------------------------------------------------------------------------
3 *** 468x60 rotating banners
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Level 5 Promotions* ***
- --------------------------------------------------------------------------------
1 *** 468x60 rotating banners
- --------------------------------------------------------------------------------
2 *** Rotating text links
- --------------------------------------------------------------------------------
</TABLE>
*Levels. Levels differ based on a variety of factors, e.g., including
------
without limitation level of integration, quality, type (including without
limitation size and location), reach/frequency, expected response
rate/effectiveness, and/or demographically/psychographically targeted
relevance. Additional examples of placements which may fit within each
level include the following: (1) Level
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1A - ***; (2) Level 1 - *** (3) Level 2 - *** (4) Level 3 *** (5) Level 4 - ***
(6) Level 5 - ***.
Tier Exchange. Except for any Promotions identified as permanent or
-------------
integrated placements (e.g., the Promotions listed in Level 1A), SmartAge
may elect to redistribute Promotions among the tier levels listed herein in
accordance with the procedures set forth herein and AOL's then-current
guidelines for re-allocating promotions. The exchange value of a new
Promotion (with respect to the number of Impressions received by SmartAge
for such new Promotion) shall be based upon AOL's then current rate card
rate for such new Promotion in comparison to AOL's then-current rate card
rate for the replaced Promotion. All redistribution of Promotions shall be
subject to availability (including without limitation, availability limited
by AOL exclusivity and other preferential commitments) as reasonably
determined by AOL. Unless AOL otherwise consents in writing, in no event
may SmartAge exchange integrated Impressions for other Impressions, or vice
versa. Impressions may be exchanged in blocks of a minimum of One Hundred
Thousand (100,000) Impressions. All exchanges of Promotions and Impressions
shall be permitted only for Promotions or Impressions within the same AOL
property (e.g., exchanges of Promotions within the AOL Service may be made
only for other Promotions within the AOL Service). Requests by SmartAge to
redistribute Impressions may be placed no more frequently than twice per
quarter, unless AOL otherwise agrees in writing. No such request may be
made until more than ninety (90) days have elapsed since the commercial
launch of the Co-Branded Sites in accordance with Section 2.1. For any
reallocation of Impressions between or among Levels which SmartAge chooses
to make pursuant hereto, SmartAge agrees and acknowledges that the
reallocated Impressions may be delivered differently than as originally
described herein.
II. During the Term, subject to the terms and conditions hereof, SmartAge shall
have the right to use the following Keyword Search Terms, which will link
to the Co-Branded Primary Site and the Co-Branded Corner Office,
respectively: SmartAge (for the Co-Branded Primary Site) and SmartClicks
(for the Co-Branded Corner Office).
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EXHIBIT B
Definitions
-----------
The following definitions will apply to this Agreement:
Additional SmartAge Channel. Any other distribution channel (e.g., an
- ---------------------------
Interactive Service other than AOL) through which SmartAge makes available an
offering comparable in nature to the Co-Branded Sites.
Advertisements. (a) Any advertisements, links, pointers, sponsorships, buttons,
- --------------
banners, navigation, or any other placements or promotions; or (b) any other
services or rights to the extent generally recognized and used as a medium for
advertisements (including without limitation `affiliate programs' or referral
sales) (e.g., not including the Products, themselves), in each case, whether for
a fixed placement fee or a bounty based on sales.
Advertising Revenues. Aggregate cash amounts collected by AOL or its agents, as
- --------------------
the case may be, arising from the license or sale of Advertisements that appear
within any pages of the Co-Branded Sites in accordance with Section 2.9 of this
Agreement, less Advertising Sales Commissions. Advertising Revenues do not
include amounts arising from Advertisements on any screens or forms preceding,
framing (e.g., the toolbar or menu surrounding pages within the Co-Branded
Sites) or otherwise directly associated with the Co-Branded Sites (but which are
not part of the Co-Branded Sites themselves), which such screens and forms are
owned and controlled exclusively by AOL.
Advertising Sales Commission. (i) Actual amounts paid as commission to third
- ----------------------------
party agencies by either buyer or seller in connection with sale of the
Advertisement or (ii) *** in the event that AOL has sold the Advertisement
directly and will not be deducting any third party agency commissions.
AIM Agreement. That certain agreement between the Parties for the license by
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AOL (or Netscape Communications Corporation) to SmartAge of an instant messaging
product as set forth more fully in Section 6.5 above.
AOL Interactive Site. Any Interactive Site which is managed, maintained, owned
- --------------------
or controlled by AOL or its agents.
AOL Look and Feel. The elements of graphics, design, organization,
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presentation, layout, user interface, navigation and stylistic convention
(including the digital implementations thereof) which are generally associated
with Interactive Sites within the AOL Service or AOL.com.
AOL Member. Any authorized user of the AOL Service, including any sub-accounts
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using the AOL Service under an authorized master account.
AOL Network. (i) The AOL Service, (ii) AOL.com, (iii) CompuServe, (iv) Digital
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City, (v) Netcenter, and (vi) any other product or service owned, operated,
distributed or authorized to be distributed by or through AOL or its affiliates
worldwide (and including those properties excluded from the definitions of the
AOL Service or AOL.com). It is understood and agreed that the rights of SmartAge
relate only to the AOL properties to the extent expressly set forth in this
Agreement and not generally to the AOL Network.
AOL Purchaser. (i) Any person or entity who enters either Co-Branded Site from
- -------------
the AOL Network including, without limitation, from any third party area therein
(to the extent entry from such third party area is traceable through both
Parties' commercially reasonable efforts), and generates Transaction Revenues
(regardless of whether such person or entity provides an e-mail address during
registration or entrance to the Co-Branded Sites which includes a domain other
than an "AOL.com" domain); and (ii) any other person or entity who, when
purchasing a product, good or service through a SmartAge Interactive Site,
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provides an AOL.com domain name or a Compuserve.com domain name as part of such
person or entity's e-mail address and provided that any person or entity who has
previously satisfied the definition of AOL Purchaser will remain an AOL
Purchaser, and any subsequent purchases by such person or entity (e.g., as a
result of e-mail solicitations or any off-line means for receiving orders
requiring purchasers to reference a specific promotional identifier or tracking
code) will also give rise to Transaction Revenues hereunder (and will not be
conditioned on the person or entity's satisfaction of clauses (i) or (ii)
above).
AOL Service. The then-standard narrow-band U.S. version of the America Online
- -----------
brand service, specifically excluding (a) AOL.com, Netcenter or 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) "Driveway," "ICQ(TM)," "AOL NetFind(TM)," "AOL Instant
Messenger(TM)," "Digital City," "NetMail(TM)," "Electra", "Thrive", "Real Fans",
"Love@AOL", "Entertainment Asylum," "AOL Hometown," "My News" or any similar
independent product, service or property which may be offered by, through or
with the U.S. version of the America Online brand service, (e) any programming
or Content area offered by or through the U.S. version of the America Online
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), (f) 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 brand service, (g) any property, feature,
product or service which AOL or its affiliates may acquire subsequent to the
Effective Date and (h) 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 or any version distributed through any broadband distribution
platform or through any platform or device other than a desktop personal
computer.
AOL User. Any user of the AOL Service, AOL.com, CompuServe, Digital City,
- --------
Netcenter, or the AOL Network.
AOL.com. AOL's then-primary Internet-based Interactive Site marketed under the
- -------
"AOL.COM(TM)" brand, specifically excluding (a) the AOL Service, (b) Netcenter,
(c) any international versions of such site, (d) "ICQ," "AOL NetFind(TM)," "AOL
Instant Messenger(TM)," "NetMail(TM)," "AOL Hometown," "My News" 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 such
site which was operated, maintained or controlled by the former AOL Studios
division (e.g., Electra), (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(TM)" brand, by virtue of its branding, distribution,
functionality, Content or services, including, without limitation, any co-
branded versions or any version distributed through any broadband distribution
platform or through any platform or device other than a desktop personal
computer.
B2B Area. The targeted, special purpose, business-to-business area, owned
--------
and controlled by AOL (which may be linked to from other areas of the AOL
Network in AOL's sole discretion), and which is the area expected to initially
be a sub-channel within the Small Business channel of Netcenter (and, at a later
point, possibly may, at AOL's option, form the entirety of the content of the
Small Business channel or be made into a Netcenter channel separate from the
Small Business channel), specifically excluding (a) the AOL Service, (b)
Netcenter, (c) any international versions of such site, (d) "ICQ," "AOL
NetFind(TM)," "AOL Instant Messenger(TM)," "NetMail(TM)," "AOL Hometown," "My
News" 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
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(including, without limitation, Content areas controlled by other parties and
member-created Content areas), (f) any programming or Content area offered by or
through such site which was operated, maintained or controlled by the former AOL
Studios division (e.g., Electra), (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, targeted, special
purpose, business-to-business area, by virtue of its branding, distribution,
functionality, Content or services, including, without limitation, any co-
branded versions or any version distributed through any broadband distribution
platform or through any platform or device other than a desktop personal
computer.
Change of Control. (a) The consummation of a reorganization, merger or
- -----------------
consolidation or sale or other disposition of substantially all of the assets of
a party or (b) the acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1933,
as amended) of beneficial ownership (within the meaning of Rule 13d-3
promulgated under such Act) of more than 50% of either (i) the then outstanding
shares of common stock of such party; or (ii) the combined voting power of the
then outstanding voting securities of such party entitled to vote generally in
the election of directors.
Co-Branded Sites. As set forth in Section 2.1.
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Component Products. Any of the following products or services: (i)
- -------------------
Communications or community tools, products or services (e.g., instant
messaging, chat, voice-activated chat, voice message, IP telephony, e-mail,
message boards) (but specifically excluding a reminder service), (ii) search
engines, navigation services, or directories/listings (e.g., web search, white
pages, yellow pages, member directories, open directories), (iii)
personalization services (e.g., homesteading/personal web publishing, calendar
functions, "You've Got Pictures" or other similar photographic services), or
(iv) shopping guides, decision guides, `robots', or other similar shopping or
decision aids.
CompuServe. The then-standard, narrow-band U.S. version of the CompuServe brand
- -----------
service, specifically excluding (a) any international versions of such service,
(b) any web-based service including "compuserve.com", "cserve.com" and "cs.com",
or any similar product or service offered by or through the U.S. version of the
CompuServe brand service, (c) Content areas owned, maintained or controlled by
CompuServe affiliates or any similar "sub-service," (d) any programming or
Content area offered by or through the U.S. version of the CompuServe brand
service over which CompuServe does not exercise complete or substantially
complete operational control (e.g., third-party Content areas), (e) any yellow
pages, white pages, classifieds or other search, directory or review services or
Content and (f) any co-branded or private label branded version of the U.S.
version of the CompuServe brand service, (g) any version of the U.S. version of
the CompuServe brand service which offers Content, distribution, services and/or
functionality materially different from the Content, distribution, services
and/or functionality associated with the standard, narrow-band U.S. version of
the CompuServe brand service, including, without limitation, any version of such
service distributed through any platform or device other than a desktop personal
computer and (h) any property, feature, product or service which CompuServe or
its affiliates may acquire subsequent to the Effective Date.
Confidential Information. Any information relating to or disclosed in the
- ------------------------
course of the Agreement or during negotiations between the Parties in connection
therewith, 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, AOL Users, AOL
Purchasers and SmartAge customers, 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" will 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.
CONFIDENTIAL
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Content. Text, images, video, audio (including, without limitation, music used
- -------
in synchronism or timed relation with visual displays) and other data, Products,
advertisements, promotions, URLs, links, pointers and software, including any
modifications, upgrades, updates, enhancements and related documentation.
Digital City. The then-standard, narrow-band U.S. version of Digital City's
- -------------
local content offerings marketed under the Digital City(R) brand name,
specifically excluding (a) the AOL Service, AOL.com, Netcenter, or any other AOL
Interactive Site, (b) any international versions of such local content
offerings, (c) the CompuServe(R) brand service and any other CompuServe products
or services (d) "Driveway," "ICQ(TM)," "AOL NetFind(TM)," "AOL Instant
Messenger(TM)," "Digital City," "NetMail(TM)," "Electra", "Thrive", "Real Fans",
"Love@AOL", "Entertainment Asylum," "AOL Hometown," "My News" or any similar
independent product, service or property which may be offered by, through or
with the standard narrow band version of Digital City's local content offerings,
(e) any programming or Content area offered by or through such local content
offerings 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 yellow pages, white pages, classifieds or
other search, directory or review services or Content offered by or through such
local content offerings, (g) any property, feature, product or service which AOL
or its affiliates may acquire subsequent to the Effective Date, (h) any other
version of a Digital City local content offering which is materially different
from the narrow-band U.S. version of Digital City's local content offerings
marketed under the Digital City(R) brand name, by virtue of its branding,
distribution, functionality, Content or services, including, without limitation,
any co-branded version of the offerings or any version distributed through any
broadband distribution platform or through any platform or device other than a
desktop personal computer, and (i) Digital City- branded offerings in any local
area where such offerings are not owned or operationally controlled by America
Online, Inc. or DCI (e.g., Chicago, Orlando, South Florida, and Hampton Roads).
Impression. User exposure to the applicable Promotion, as such exposure may be
- ----------
reasonably determined and measured by AOL in accordance with its standard
methodologies and protocols as generally applied to its partners.
Interactive Service. An entity offering one or more of the following: (i)
- -------------------
online or Internet connectivity services (e.g., an Internet service provider
("ISP")); (ii) any Portal; and (iii) communications software capable of serving
as the principal means through which a user creates, sends and receives
electronic mail or real time online messages; provided, however, that an entity
*** one or more of these *** shall not be *** an *** if and to the extent that
*** or *** of such entity *** and *** which, if *** by an ***, would not make
such *** an *** (e.g., an entity which *** an *** or which serves as a *** would
not be *** an *** if and to the extent that *** or *** thereof *** and ***
unrelated to the *** (e.g., such that the *** could *** offered by a *** of ***
if and to the extent that such *** operates *** and *** from a *** operating
***, but not *** themselves), provided, however, that any entity which is
primarily an *** (e.g., a reasonably *** of its *** and *** satisfy one or more
of the three *** above) shall not be excluded from the definition of ***
regardless of the *** or *** in question (e.g., even *** from *** would fall
outside the scope of this exception, and may not be promoted in the ***).
Interactive Site. Any interactive site or area, including, by way of example and
- ----------------
without limitation, (i) a SmartAge site on the World Wide Web portion of the
Internet (but not including international versions of such SmartAge sites) or
(ii) a channel or area delivered through a "push" product such as the Pointcast
Network or interactive environment such as Microsoft's Active Desktop.
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COMMISSION.
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Keyword Search Terms. (a) The Keyword(TM) online search terms made available on
- --------------------
the AOL Service, combining AOL's Keyword(TM) online search modifier with a term
or phrase specifically related to SmartAge (and determined in accordance with
the terms of this Agreement), and (b) the Go Word online search terms made
available on CompuServe, combining CompuServe's Go Word online search modifier
with a term or phrase specifically related to SmartAge and determined in
accordance with the terms of this Agreement).
Licensed Content. All Content offered through the Co-Branded Sites (e.g., not
- ----------------
solely through the other SmartAge Interactive Sites) and the SmartAge
Functionality, provided to AOL hereunder pursuant to this Agreement, or
otherwise provided by SmartAge or its agents in connection herewith for use by
AOL in connection with the promotion of the SmartAge Functionality or other
Promotions hereunder (e.g., offline or online promotional Content, Promotions,
AOL "slideshows" , etc.), including in each case, any modifications, upgrades,
updates, enhancements, and related documentation.
Netcenter. Netscape Communications Corporation's primary Internet-based
- ---------
Interactive Site marketed under the "Netscape Netcenter(TM)" brand, specifically
excluding (a) the AOL Service, (b) AOL.com, (c) any international versions of
such site, (d) "ICQ," "AOL Netfind(TM)," "AOL Instant Messenger(TM),"
"NetMail(TM)," "AOL Hometown," "My News," "Digital City(TM)," 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(R) brand service which was operated,
maintained or controlled by the former AOL Studios division (e.g., Electra), (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 AOL
or Netscape Communications Corporation Interactive Site which is materially
different from Netscape Communications Corporation's primary Internet-based
Interactive Site marketed under the "Netscape Netcenter(TM)" 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 (e.g. Custom NetCenters built specifically for third
parties).
*** Feature. A *** or *** which a *** must *** in order to participate.
- -----------
*** Feature. A *** or *** for which a *** will be *** to *** he or she *** not
- -----------
to do so.
Portal. Any interactive site or service providing links to or aggregation of
- ------
(e.g., a portal such as Yahoo! or MSN.com), or search or navigation of (e.g., a
search engine such as Excite or Lycos), interactive sites or services, in each
case consolidating a broad selection of aggregated third party interactive
content or marketing a broad selection of multiple third party product lines
and/or services across numerous industries (e.g., by way of example only, a
commerce site which sells or promotes books, flowers, candy, music and t-shirts
from various third parties). However, the term "Portal" *** a *** or ***, no
matter how ***, if only in *** and *** (e.g., by way of example only: (1) an
entity such as *** (as it exists today), whose *** is *** to *** the *** and ***
of *** between *** (even though those *** may *** numerous ***), and is not a
*** of *** or other ***; (2) a *** provider such as ***, whose *** is *** to
provide ***, even though such *** may be *** and *** across a *** of *** (e.g.,
*** and ***); or (3) an ***, whose *** is *** to ***, even though such *** may
be *** and *** across a *** of *** (e.g., *** and ***)).
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COMMISSION.
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Product. Any product, good or service which SmartAge (or others acting on its
- -------
behalf or as distributors) offers, sells, provides, distributes or licenses to
AOL Users through (i) the Co-Branded Sites (including through any Interactive
Site linked thereto), (ii) any SmartAge Interactive Site (including through any
Interactive Site linked thereto), (iii) any other electronic means directed at
AOL Users (e.g., including without limitation e-mail offers and the integration
of the SmartAge Functionality into the AOL Network), or (iv) an "offline" means
(e.g., toll-free number) for receiving orders related to specific offers within
the Co-Branded Sites or any SmartAge Interactive Site 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).
Promotions. The Advertisements described on Exhibit A, any Comparable
- ----------
Promotional Placements delivered by AOL in accordance with Section 1.1, the
additional mutually agreed promotions which may be provided by AOL in connection
with the special AOL Exclusive Offers (those which are described in Section 2.7
hereof as being substantially larger than typical AOL Exclusive Offers to be
provided by SmartAge), and any additional Advertisements relating to the Co-
Branded Sites (or the SmartAge Standard Site, to the extent that AOL may elect
to link to the SmartAge Standard Site pursuant to Section 2.1 hereof) provided
by AOL (including, without limitation, additional Keyword Search Terms and other
navigational tools, and any SmartAge trademarks or logos or any headline,
picture, story, teaser, icon, link or any other content which originates from,
describes or promotes either Co-Branded Site or the SmartAge Standard Site, to
the extent that AOL may elect to link to such web site pursuant to Section 2.1
hereof). Advertisements served by SmartAge which promote the Co-Branded Sites,
or the Products therein, within the Netscape Business Cards, Co-Branded Sites,
the Instant Messenger product which is the subject of the AIM Agreement, AOL
Clicks, or AOL Links (as the latter two terms are defined in Exhibit D hereto)
shall not count as Promotions or Comparable Promotional Placements.
Run of Service Inventory. A collection of inventory made up of all areas of the
- ------------------------
relevant AOL property or service. If SmartAge has purchased Run of Service
Inventory, AOL will place SmartAge's creative in different locations throughout
the relevant property or service in accordance with AOL internal policies. Run
of Service Impressions will be delivered reasonably evenly over a given time
period. SmartAge may not control placement within a Run of Service Inventory
purchase and AOL does not guarantee placement on any particular screen or group
of screens (except that Run of Channel Inventory will be run only in the
specified Channel).
SmartAge Interactive Site. Any Interactive Site (other than the Co-Branded
- -------------------------
Sites) which is managed, maintained, owned or controlled by SmartAge or its
agents (including without limitation the SmartAge Standard Site).
SmartAge Standard Site. SmartAge's generally available web site, currently
- ----------------------
located at URL http://www.smartage.com, or any successor thereto or replacement
-----------------------
thereof.
Transaction Revenues. Aggregate amounts paid by AOL Purchasers in connection
- --------------------
with the sale, licensing, distribution or provision of any Products, including,
in each case, handling, shipping, service charges, and excluding, in each case,
(a) amounts collected for sales or use taxes or duties and (b) credits and
chargebacks for returned or canceled goods or services, but not excluding cost
of goods sold or any similar cost.
CONFIDENTIAL
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<PAGE>
EXHIBIT C
SmartAge Cross-Promotion
------------------------
A. SmartAge shall offer AOL and Netscape, at no cost to AOL or Netscape,
premium placements (i.e., at all times during the Term offering AOL and
Netscape the most preferable treatment) within the SmartAge Affiliate
Network, which shall include placements (which shall be branded if listings
for other participants are branded) within the areas on any SmartAge
Interactive Site in which the entities receiving premium placements within
the SmartAge Affiliate Network are displayed or offered (including without
limitation the page currently located at the following URL:
http://www.smartage.com/sell/affiliate/network).
-----------------------------------------------
B. At SmartAge's discretion, SmartAge may participate in the standard,
generally available affiliate programs offered by AOL and Netscape.
Information about AOL's generally applicable affiliate program is currently
located at http://affiliate.aol.com/affiliate/welcome.html, and
-----------------------------------------------
information about Netscape's generally applicable affiliate program is
currently located at http://www.netscape.com/affiliate/welcome.html.
C. (1) Within the relevant Cross-Promo Area (as defined below) of any SmartAge
Interactive Site, SmartAge shall include each of the following
(collectively, the "AOL Promos"): (i) continuous listings (which shall be
branded if and to the extent that other listings for similar services in
the relevant Cross-Promo Area are branded, and shall be no less prominent
(e.g., including without limitation in terms of size, color or boldness)
than listings for other similar services (except if and to the extent that
*** for *** of ***), promoting the AOL Service and the CompuServe Service;
(ii) a "Netscape Now" listing (which shall be branded if and to the extent
that other listings for any Portals, Internet browsers, or other Netscape
competitors in the relevant Cross-Promo Area are branded, and shall be no
less prominent (e.g., including without limitation in terms of size, color
or boldness) than listings for any Portals, Internet browsers, or other
Netscape competitors (except if and to the extent that *** for *** of ***),
through which users can obtain promotional information about Netscape
products or services designated by Netscape and, at Netscape's option,
download or order the then-current version of client software for such
Netscape products or services (or other such Netscape or AOL products or
services as AOL or Netscape may designate); and (iii) other than as
expressly set forth in subparts (i) and (ii) above, to the extent that
SmartAge offers or promotes any products or services substantially similar
to AOL's Component Products on any SmartAge Interactive Site, SmartAge will
provide equally prominent promotions for AOL's Component Products, except
where *** has *** or *** with another *** of a *** and each such *** has
*** for such *** or ***. To the extent that users register for AOL products
via the promotions provided by SmartAge pursuant to this paragraph,
SmartAge shall receive the *** under any *** by *** or ***.
(2) A Cross-Promo Area shall be any area of any SmartAge Interactive Site
in which any of the following products or services are promoted, described
or sold (provided that any area otherwise not promoting, describing or
selling such products or services will not be deemed a Cross-Promo Area
solely by virtue of the presence of a banner or sponsorship for such
products or services): (a) Internet access (including without limitation
ISP services, DSL services, cable access, or any other means of accessing
the Internet), (b) e-mail or instant messaging functionality (e.g., any
real-time messaging/communicative service or software) (except that an area
devoted to customer service shall not be deemed a Cross-Promo Area by
virtue of the description of such functionality, or the utilization of the
"Pop-up Help" functionality described in Exhibit G hereto), or (c) Internet
browsers.
(3) AOL will provide the creative content to be used in the AOL Promos
(including designation of links from such content to other content pages)
(and AOL represents and warrants that it possesses all
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COMMISSION.
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<PAGE>
authorizations, approvals, consents, licenses, permits, certificates or
other rights and permissions necessary to distribute the creative content
to SmartAge for this purpose), subject to SmartAge's reasonable approval.
SmartAge shall post (or update, as the case may be) the approved creative
content supplied by AOL within the spaces for the AOL Promos within a
commercially reasonable time following its receipt of such content from
AOL. Without limiting any other reporting obligations of the Parties
contained herein, SmartAge shall provide AOL with quarterly written reports
specifying the number of impressions to the pages containing the AOL Promos
during the prior quarter. If and to the extent that the Parties mutually
agree, AOL shall serve the AOL Promos to the SmartAge Interactive Site from
an ad server controlled by AOL or its agent. In such an event, SmartAge
shall take the operational steps reasonably necessary to facilitate such ad
serving arrangement including, without limitation, inserting HTML code
designated by AOL on the pages of the SmartAge Interactive Site on which
the AOL Promos will appear.
(4) In addition, within each SmartAge Interactive Site, SmartAge shall
provide prominent promotion for the keywords granted to SmartAge hereunder
in an exact location to be mutually agreed. Except where *** has an *** or
*** with an *** other than ***, SmartAge will not promote any entity other
than AOL as the preferred access provider through which a user can access a
SmartAge Web based application.
D. In SmartAge's television, radio, print and "out of home" (e.g., buses and
billboards) advertisements and in any publications, programs, features or
other forms of media over which SmartAge exercises at least partial
editorial control (except where such partial control is not sufficient to
confer on SmartAge the right or ability to do so): SmartAge will include
specific, prominent references or mentions (verbally where possible) of the
availability of the Co-Branded Primary Site through the AOL Network (which
may be satisfied by a listing of the relevant "keyword" in the form listed
at the end of this paragraph), which are at least *** the primary
references that SmartAge makes to any SmartAge Interactive Site (by way of
prominence of site name, related company name, URL or otherwise). Without
limiting the generality of the foregoing, SmartAge's listing of the "URL"
for any SmartAge Interactive Site will be accompanied by a prominent
listing of the "keyword" terms on AOL for the Co-Branded Primary Site. This
will be done with the following treatment: "America Online Keyword:
SmartAge" or another AOL approved method.
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EXHIBIT D
Description of SmartAge Products, Content, Functionality and Integration
------------------------------------------------------------------------
I. Products, Services, Content and Functionality to be Provided to AOL
-----------------------------------------------------------------------
A. SmartAge Functionality
--------------------------
SmartAge will provide AOL with the following best-of-breed products, services,
content and functionality (collectively, the "SmartAge Functionality"). To the
----------------------
extent commercially reasonable, AOL will integrate such SmartAge Functionality
in the AOL Network as set forth more fully below, subject to AOL's right to
redesign the AOL Network in its sole discretion as described in Section 1.1 of
this Agreement, so long as SmartAge at all times maintains each element of the
SmartAge Functionality as best-of-breed, keeps the SmartAge Functionality
current and accurate, provides any technical support reasonably requested for
the maintenance, operation, offering and distribution of the SmartAge
Functionality, manages the administration of the SmartAge Functionality (e.g.,
including without limitation with respect to the implementation of the banner
exchange program and customer service related thereto) subject to AOL's approval
and the limitations herein, and ensures that, in addition to the above
requirements and the additional requirements specified below, the SmartAge
Functionality and SmartAge's provision thereof comply with all relevant terms of
this Agreement (e.g., all relevant obligations, representations, and warranties
of SmartAge with respect to the Co-Branded Sites, including without limitation
compatibility with the operations of AOL Network as set forth in Exhibit E and
compliance with AOL's Standard Terms and Conditions as set forth in Exhibit G).
AOL shall have design approval rights for user interface and display elements of
all portions of the SmartAge Functionality which may be integrated into the AOL
Network pursuant to this Agreement. To the extent that AOL has stated below
without any reservation that it "will" integrate an element of the SmartAge
Functionality (defined below) in a certain area of the AOL Network, if during
the Term AOL deems it appropriate to redesign the registration processes, page
layouts or links, or other elements relating to such integration (e.g., if user
privacy concerns prompt AOL to add, remove or alter elements of the registration
process for any of the business-to-business services in the AOL Network), and
such changes materially and adversely effect the planned integration of such
unconditionally promised functionality in the AOL Network, then AOL shall, as
SmartAge's sole remedy, provide SmartAge with an alternative form of integration
which reasonably resembles the unconditionally promised integration as closely
as is commercially reasonable, or otherwise will provide SmartAge with
integration which is reasonably and mutually agreed to have comparable overall
value (if such reasonably comparable integration cannot be agreed upon by the
Parties, then such a dispute shall be resolved pursuant to Section 7 of the
Agreement); provided, however, that if AOL fails to fulfill the unconditionally
promised integration as described herein because of SmartAge's failure to
fulfill any material requirements or obligations applicable to the relevant
functionality (e.g., failure to ensure that the SmartAge Functionality complies
with the terms of Exhibit E hereto), AOL shall not be required to provide
SmartAge with comparable integration. If at any time AOL believes that SmartAge
is not meeting the standards set forth herein, AOL shall notify SmartAge of the
deficiency and provide SmartAge with a *** period in which to cure the
deficiency (provided that during such time AOL may at its option take interim
remedial action as it deems appropriate (e.g., by blocking access to the
SmartAge Functionality)), and AOL will, to the extent applicable and
commercially reasonable, cooperate with SmartAge to identify the source or cause
of the cited deficiency (provided that in no event shall AOL be required to
incur substantial costs or expenses in doing so).
The Parties expressly acknowledge and agree that, as between AOL and SmartAge,
AOL owns and controls the AOL Network (and all portions thereof, including
without limitation the areas on which the SmartAge Functionality may reside),
and AOL shall have editorial discretion over the portions of the SmartAge
Functionality which are integrated into the AOL Network pursuant hereto (e.g.,
in terms of form,
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placement, and content). AOL shall own all advertising inventory in the AOL
Network. The Parties recognize that SmartAge will have the right to provide
banners and links for integration into the AOL Network pursuant to the AOL
Clicks and AOL Links functionality (some of which may be sold by SmartAge to
third parties, and SmartAge will have the right to retain *** of the revenue
from such sales to third parties as set forth in Section 3.4 of the main body of
this Agreement, and subject to Section 3.2 of the main body of this Agreement),
as discussed more fully below, but such integration shall not confer any
ownership interest in such advertising inventory to SmartAge. The Parties
recognize that SmartAge's right to provide Advertisements for integration into
the AOL Network and sell them to third parties is limited to the extent that
such Advertisements are properly allocated by virtue of AOL Users' active
participation in the SmartAge Functionality as described below. SmartAge shall
conform the SmartAge Functionality in accordance with AOL's hosting and
interface requirements. SmartAge shall provide the SmartAge Functionality to AOL
in accordance with this Agreement (including without limitation the terms of
this Exhibit D) within *** of the Effective Date of this Agreement, provided,
however, that if SmartAge is not able to meet the *** day requirement in any
respect, such delay shall not be considered a breach of this requirement if and
to the extent that AOL has not communicated to SmartAge specifications regarding
the AOL Network which are necessary for the integration described herein as far
in advance of the *** day deadline as is commercially reasonable so as not to
preclude SmartAge's ability to satisfy this requirement.
The SmartAge Functionality shall consist of the following and, subject to the
limitations herein, will be integrated into the AOL Network as described below:
(1) AOL Clicks (name is not finalized and is at AOL's discretion, but AOL will
use either "Smart" or "Clicks" in the name, unless AOL deems such use not
commercially reasonable (e.g., if AOL has reason to believe that such use
may subject it to liability) - The private banner exchange program
developed by SmartAge for AOL whereby a participating AOL User can arrange
for banner advertisements to be placed on Netscape Business Cards in
exchange for providing two rotating banner advertisements (both of which
will fill the same inventory space) on its own Interactive Site or Netscape
Business Card. Subject to AOL's right to redesign the Netscape Business
Cards in its discretion, the banner space on each Netscape Business Card
will consist of a *** within the *** page of the Netscape Business Card
(i.e., the page on which the *** is listed) *** (along with an AOL-branded
bar ***, the content of which shall be determined by AOL in its sole
discretion). One of the banner advertisements to be placed on the
participant's own Netscape Business Card may be sold to a third party by
SmartAge through its direct sales force or through AOL Media Buyer, subject
to the limitations herein (including without limitation Section 3.2 of the
main body of this Agreement) (provided that SmartAge may enter into an
agreement or agreements with a professional advertising agency or agencies
(which in no event may be an Interactive Service) to sell the banner
advertisements allotted for sale to third parties), provided, however that
in no event shall SmartAge or any such advertising agency sell any
Advertisement for placement on the AOL Network for (or which links to) any
of the following: (i) an Interactive Service, (ii) any product, service,
content or functionality falling within the Restricted Advertising
Categories (as defined following this paragraph) or Prohibited Categories
listed at the end of this Exhibit (as the same may be updated in accordance
with the terms hereof), or (iii) any product, service, content or
functionality which may reasonably be deemed to be competitive with any AOL
Component Product (collectively, the "Advertising Restrictions"). Under no
------------------------
circumstances shall AOL be obligated to display any Advertisement which it
considers in its reasonable discretion to be in violation of the
Advertising Restrictions. In entering into agreements with advertising
agencies for the sale of Advertisements as contemplated herein, SmartAge
shall require such agencies to abide by the Advertising Restrictions;
provided, however, that SmartAge agrees to remain primarily liable to AOL
for any violation of the Advertising Restrictions (and other relevant
requirements of the Agreement, e.g., technical compatibility with the AOL
Network), regardless of whether an Advertisement at issue was sold by
SmartAge or a third party. SmartAge shall use commercially reasonable
efforts to sell the advertising
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inventory allotted for sale to third parties by SmartAge to AOL Users
participating in AOL Clicks before attempting to sell such inventory to third
parties outside the AOL Network.
The "Restricted Advertising Categories" are all of the Restricted Categories
---------------------------------
listed in Section II of this Exhibit, except the following:
***
To the extent that AOL integrates AOL Clicks into the AOL Network,
Advertisements for AOL Users will appear on the Interactive Sites of other
participants in AOL Clicks. SmartAge may not place banners on the AOL Network
without AOL's advance, express, written consent, other than as expressly set
forth herein with respect to the Netscape Business Cards, and in no event may
a banner appear anywhere on the AOL Network (including without limitation the
Netscape Business Card, AOL Hometown, or Netscape Site Central, and any home
pages established in connection therewith) or on an Interactive Site of an
AOL User in violation of the Advertising Restrictions.
AOL Clicks currently is expected to be offered as a ***, ***
(provided that the SmartAge Upsells listed below may be offered for a
***) for AOL Users *** for a ***, if and to the extent that AOL
launches the Netscape Business Card functionality and establishes a
*** for the ***. AOL will provide SmartAge with the *** and *** (to
the extent that AOL possesses such information and can reasonably
provide it to SmartAge in light of ***) (and SmartAge expressly
recognizes that as a result of the provision of such information to
SmartAge, AOL may *** an additional *** in the *** to *** the ***
that such information will be transferred to SmartAge), solely for
SmartAge's use in connection with the operation of AOL Clicks during
the extent of each AOL User's continued participation in AOL Clicks.
Banners provided to AOL Users through AOL Clicks will be integrated
into Netscape Business Cards (to the extent such functionality is
launched as currently contemplated), subject to the limitations
above, provided, however, that no AOL Clicks banners may be
integrated into a Netscape Business Card for an AOL User who does not
participate in AOL Clicks (e.g., by opting out of AOL Clicks at any
time), and AOL and SmartAge shall each have the right to sell *** of
the inventory. AOL shall be entitled to use its share of the
advertising inventory made available by lack of participation as
described in the previous sentence in its sole discretion; SmartAge
shall be entitled to use its share of the advertising inventory made
available by lack of participation as described in the previous
sentence to promote the products, services, content and functionality
falling within the Permitted Categories below, as offered on the Co-
Branded Sites. It is SmartAge's responsibility to ensure seamless
integration and delivery of banners to Netscape Business Cards (e.g.,
including without limitation with respect to user interface and the
publishing and serving tools used (e.g., so that a person viewing a
Netscape Business Card sees no material lag time between the loading
of the Netscape Business Card and the loading of the Advertisements
(as determined by AOL in its reasonable discretion), the
Advertisements appear precisely in the appropriate location and
without the display of error messages)) to the extent that such
integration is permitted pursuant hereto. SmartAge agrees to conform
to AOL integration requirements (e.g., to ensure the satisfaction of
the requirements discussed in the prior sentence).
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AOL Clicks will be offered as a *** (provided that the SmartAge
Upsells listed below may be offered for a ***) for AOL Users who ***
for *** through the *** or *** web site ***. Banners provided to AOL
Users through AOL Clicks will be integrated into home pages
established by AOL Users through AOL Hometown or Netscape Site
Central (subject to the limitations above), provided that such AOL
Users have not *** of the AOL Clicks program. It is SmartAge's
responsibility to ensure seamless integration and delivery of banners
to home pages established through AOL Hometown or Netscape Site
Central (e.g., including without limitation with respect to user
interface and the publishing and serving tools used (e.g., so that a
person viewing a home page sees no material lag time between the
loading of the home page and the loading of the Advertisements (as
determined by AOL in its reasonable discretion), the Advertisements
appear precisely in the appropriate location and without the display
of error messages)), to the extent that such integration is permitted
pursuant hereto. Smartage agrees to conform to AOL integration
requirements (e.g., to ensure the satisfaction of the requirements
discussed in the prior sentence). AOL will use *** to *** into the
*** used by it for *** and ***, provided that SmartAge recognizes
that such efforts may delay the integration of AOL Clicks beyond the
date currently expected, and AOL shall not be liable for any such
delay.
AOL currently intends (but cannot guarantee) that participation in
AOL Clicks will be provided as an *** or promoted in *** of AOL's
additional *** and *** and *** within the ***, if and to the extent
that such areas are launched, which may be structured by AOL to be
provided by one or more third parties. If those services are so
structured, AOL shall not be required to force any such third party
to integrate participation in AOL Clicks as contemplated in this
paragraph, and AOL Clicks may not be so integrated. If and to the
extent that AOL Clicks is so integrated by such third parties, AOL
will use commercially reasonable efforts to *** that the *** to build
*** into the *** in connection with AOL Clicks. In addition, if and
to the extent that AOL deems it reasonable do so, without violating
any confidentiality obligations or impairing its relationship with
*** in any way, AOL will, upon SmartAge's request, cooperate in good
faith with SmartAge to facilitate AOL's commercially reasonable
efforts described in the previous sentence.
In addition, if and to the extent that AOL launches *** and ***
within the *** area of the ***, which may be structured by AOL to be
provided by one or more third parties, AOL will use good faith
efforts, for one (1) year following the Effective Date hereof, to
request that any such *** in AOL Clicks, provided, however, that AOL
shall not be required to force any such *** to so *** AOL Clicks, and
AOL Clicks may not be so ***.
(2) AOL Links (name is not finalized and is at AOL's discretion, but AOL will
use "Smart" or "Links" in the name, unless AOL deems such use not
commercially reasonable (e.g., if AOL has reason to believe that such use
may subject it to liability)) - The private reciprocal linking network
developed by SmartAge for AOL whereby a participating AOL User can exchange
links with other participants. To the extent that AOL integrates AOL Links
into the AOL Network, links for participating AOL Users will appear on the
Netscape Business Cards of other participants in SmartAge's reciprocal
linking network (e.g., the version of AOL Links offered on the Co-Branded
Sites and other reciprocal linking networks operated by SmartAge through
Additional SmartAge Channels), and may appear on home pages established
through AOL Hometown and Netscape Site Central, but SmartAge may not place
links on the AOL Network without AOL's advance, express, written consent,
other than as expressly set forth herein with respect to the Netscape
Business Cards, and in no event may a link appear anywhere on the AOL
Network (including without limitation the Netscape Business
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Card, AOL Hometown, or Netscape Site Central, and any home pages established
in connection therewith) or on an Interactive Site of an AOL User in violation
of the Advertising Restrictions. SmartAge shall ensure that, in addition to
the ability of data pertaining to the AOL Links functionality to be measured
separate and apart from that for AOL Clicks, AOL-requested data pertaining to
AOL Links and AOL Clicks can be measured and reported in an aggregate or
combined fashion (e.g., so that an AOL User participating in AOL Clicks and
AOL Links can be made aware of the combined click-through rate for banners and
links placed through those programs).
AOL Links currently is expected to be offered as a *** (provided that the
SmartAge Upsells listed below may be offered for a ***) for AOL Users ***
for a ***, if and to the extent that AOL launches the Netscape Business
Card functionality and establishes a *** for the ***. Links provided to
participating AOL Users through AOL Links will be integrated into
Netscape Business Cards (to the extent such functionality is launched as
currently contemplated), subject to the limitations above, provided,
however, that no links may be integrated into a Netscape Business Card as
part of AOL Links for an AOL User who does not participate in AOL Links
(e.g., by opting out of AOL Links at any time), and AOL and SmartAge
shall each have the right to sell *** of the inventory. AOL shall be
entitled to use its share of the advertising inventory made available by
lack of participation as described in the previous sentence in its sole
discretion; SmartAge shall be entitled to use its share of the
advertising inventory made available by lack of participation as
described in the previous sentence to promote the products, services,
content and functionality falling within the Permitted Categories below,
as offered on the Co-Branded Sites. It is SmartAge's responsibility to
ensure seamless integration and delivery of links to Netscape Business
Cards (e.g., including without limitation with respect to user interface
and the publishing and serving tools used (e.g., so that a person viewing
a Netscape Business Card sees no material lag time between the loading of
the Netscape Business Card and the loading of the Advertisements (as
determined by AOL in its reasonable discretion), the Advertisements
appear precisely in the appropriate location and without the display of
error messages)) to the extent that such integration is permitted
pursuant hereto. SmartAge agrees to conform to AOL integration
requirements (e.g., to ensure the satisfaction of the requirements
discussed in the prior sentence). AOL expressly reserves the right to
substitute placement of AOL Links in an alternative placement as
comparable as is commercially reasonable (e.g., AOL may utilize AOL Links
on the *** as a means by which small businesses may encourage other
businesses to *** for *** and ***), if AOL deems that AOL Links is not
suitable for integration into the Netscape Business Card.
(3) AOL Expert Newsletters (name is not finalized and is at AOL's discretion) -
Newsletters which offer expert advice. The Parties expressly agree that
all Content within the AOL Expert Newsletters must conform with all
applicable requirements of the Agreement and all of AOL's standards
generally applicable to content provided through the AOL Network (e.g.,
including without limitation AOL's Terms of Service generally and AOL's
restrictions on the sending of bulk e-mail specifically), and specifically
that the AOL Expert Newsletters may not promote or offer any product,
service or functionality which may reasonably be deemed to fall within the
Advertising Restrictions. The AOL Expert Newsletters may include *** for
*** subject to AOL's reasonable approval, provided that in no event may
such *** be provided by any *** or any entity which offers any *** or ***
which may *** be *** to be *** with any *** or falling within the *** as
set forth herein or the *** listed below (as may be *** pursuant hereto).
The AOL Expert Newsletters may link to the Interactive Sites of the authors
or ***, only if and to the extent that (i) the author is mutually and
reasonably agreed to be a recognized expert in the field discussed in the
AOL Expert Newsletter at
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issue, (ii) SmartAge uses commercially reasonable efforts to ensure that
any Interactive Site to be linked to from the AOL Expert Newsletter does
not promote any Interactive Service or any products, services, content or
functionality which may reasonably be construed to be competitive with any
AOL Component Product or falling within the Restricted Advertising
Categories as set forth herein or the Prohibited Categories listed below
(as may be updated pursuant hereto), and (iii) if either SmartAge or AOL
determines that the an Interactive Site to be linked to from the AOL Expert
Newsletter contains any such promotions, then the AOL Expert Newsletter may
not link to such Interactive Site but, in the case of an author's
Interactive Site, may instead list the author's own e-mail address as a
hyperlink via which a reader can contact the author directly. The AOL
Expert Newsletters may not encourage the readers thereof to link to or
participate in any functionality which may reasonably be construed to be
competitive with any AOL Component Product (e.g., a chat session), unless
such functionality is based in or such link is to an AOL determined area of
the AOL Network or the Co-Branded Sites (e.g., an AOL chat session). As
soon as possible, and in any event at least five (5) business days before
each AOL Expert Newsletter is sent to AOL Users, SmartAge shall give AOL an
opportunity to review each AOL Expert Newsletter (along with a notice of
the date on which distribution thereof is scheduled). In the event that
SmartAge does not give such notice in the time specified, the relevant AOL
Expert Newsletter may not be sent to the intended AOL Users. If SmartAge
provides at least five (5) business days advance notice, SmartAge may send
the AOL Expert Newsletter unchanged and as scheduled unless AOL otherwise
notifies SmartAge at any time before the AOL Expert Newsletter has been
sent. If AOL determines that an AOL Expert Newsletter would violate any of
the terms hereof, AOL shall discuss such violation with SmartAge and may
suggest revisions thereto to bring the AOL Expert Newsletter into
compliance. If and to the extent the Parties can mutually agree on such
revisions, then such revisions shall be made before the AOL Expert
Newsletter is sent; otherwise, the AOL Expert Newsletter may not be
distributed to AOL Users.
The AOL Expert Newsletters will be offered to AOL Users as a *** in an area
of the AOL Network *** for *** and *** to *** or ***, if and to the extent
such area is launched and such offering is deemed appropriate by AOL upon
and following such launch. No more than *** AOL Expert Newsletters may be
offered at any one time, unless otherwise mutually agreed. In addition to
the Ingredient Branding for the AOL Expert Newsletters on the whole (i.e.,
for the service itself, as discussed more fully below with respect to all
of the SmartAge Functionality), each AOL Expert Newsletter will have such
Ingredient Branding. Moreover, to the extent that any AOL Expert Newsletter
refers to any SmartAge Interactive Sites, such references shall be only to
the Co-Branded Primary Site, and each such reference shall be immediately
followed by a reference to the relevant Keyword Search Term provided
pursuant to Exhibit A to this Agreement by the use of the phrase "America
Online Keyword: SmartAge", in typeface at least as prominent (e.g., in
terms of coloring, size, and boldness) as the preceding reference to the
Co-Branded Primary Site.
Moreover, in any portion of any AOL Expert Newsletter where reference to
any of AOL's Component Products would be contextually relevant, such
reference shall be made, subject to SmartAge's reasonable approval,
including without limitation: (i) a mention of the availability of the
relevant Component Product and a contextually relevant statement concerning
its usefulness in that context (provided that such statements shall be
subject to AOL's review via the mechanism discussed in the previous
paragraph), and (ii) a link to a page on the Co-Branded Primary Site from
which the reader can register for and/or obtain such Component Product,
unless SmartAge has not integrated such Component Product into the Co-
Branded Primary Site, in which case the link shall go to an AOL-designated
web page (provided, however, that SmartAge's failure to have integrated a
particular Component Product into the Co-Branded Primary Site shall not
serve as a basis on which to deny approval of the reference and link to
such Component Product). It is expressly understood that any links provided
in connection with such references to AOL's Component Products shall not be
counted towards AOL's Impressions Commitment as set forth in Section 1.2 of
this Agreement. Moreover, if and to the extent that AOL has relevant
affiliate programs in place for such Component Products, new subscribers to
AOL's Component Products obtained directly via the references discussed in
this
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paragraph shall count towards relevant compensation provided for in such
affiliate programs, subject to the satisfaction of relevant requirements of
such affiliate programs (e.g., if AOL has an affiliate program whereby an
entity can earn $50 for each person who signs up for an AOL Component
Product through such entity and remains a user of such Component Product
for three months, then SmartAge shall receive $50 for each person who links
to such Component Product via an AOL Expert Newsletter, registers for and
downloads for the Component Product upon clicking through such link, and
remains a user of that Component Product for three months).
(4) Integration of AOL Clicks, AOL Links, AOL Expert Newsletters, and/or the
SmartAge Upsells into *** - If and to the extent that AOL offers *** to ***
of *** and ***, AOL may, at its discretion, reference special or
promotional offers offered by SmartAge for AOL Clicks, AOL Links, AOL
Expert Newsletters, and/or the SmartAge Upsells listed in Section 6(A)
below.
(5) Data for "AOL Dashboards" (name is not finalized and is at AOL's
discretion)- SmartAge shall provide data requested by AOL pertaining to the
services offered pursuant hereto (including without limitation any data
deemed by AOL to be useful to participants in any of the services discussed
herein), to the extent technically feasible and actually collected or
calculated by SmartAge or its agents, to be made available to AOL Users
participating in those services (if and to the extent that such services
are integrated into the AOL Network), for the purpose of offering summaries
of relevant data (or the raw data in place of summaries, if SmartAge cannot
provide AOL with summaries deemed useful by AOL), from which AOL will
provide a link to the Co-Branded Corner Office where more specific data can
be viewed and additional functionality utilized. Specifically, the Co-
Branded Corner Office shall allow AOL Users participating in the programs
discussed in this Exhibit D to monitor data and relevant statistics
relating to the services utilized by them, operate and modify the
specifications of such services (e.g., modify ad banner campaigns)
(collectively, the "Data and Modification Services"), and purchase
------------------------------
additional services as may be offered pursuant hereto (collectively, the
"Corner Office Functionality"), provided, however, SmartAge's right to
---------------------------
market such additional services within the Co-Branded Corner Office shall
be subject to the primary purpose of the Co-Branded Corner Office remaining
the Data and Modification Services, as determined by AOL in its reasonable
discretion.
(6) SmartAge Upsells
(A) Subject to the limitations herein, the following products and services
may be promoted as deemed appropriate by AOL:
(1) AOL Media Buyer (name is not finalized and is at AOL's
discretion)- SmartAge's automated online advertising buying
service in which AOL Users who choose to participate can purchase
online Advertisements to be distributed within AOL Clicks and
similar programs via SmartAge's third party partners (e.g., the
***) (the "Third Party Networks"). SmartAge shall, to the extent
--------------------
possible, ensure that data for different SmartAge Third Party
Networks can be combined (e.g., such that upon AOL's request
SmartAge will provide AOL with a single, accurate click-through
rate for an AOL User's Advertisements placed across AOL Clicks
and all other applicable Third Party Networks), and if such
aggregation of statistics is not possible, SmartAge shall ensure
that such data are available to AOL Users within a single web
page. SmartAge may not place Advertisements on the AOL Network
without AOL's advance, express, written consent, other than as
expressly set forth herein with respect to the ***, and in no
event may a banner appear anywhere on the AOL Network (including
without limitation the ***, ***, or ***, and any home pages
established in connection therewith) or on an Interactive Site of
an AOL User for (or which links to) an Interactive Service or any
Interactive Site which can reasonably be construed to be in
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competition with one of AOL's exclusive or premier partners
(e.g., relating to the Restricted Advertising Categories as set
forth herein or the Prohibited Categories listed below). It is
SmartAge's responsibility to ensure seamless integration and
delivery of Advertisements to Netscape Business Cards (e.g.,
including without limitation with respect to user interface and
the publishing and serving tools used (e.g., so that a person
viewing a Netscape Business Card sees no material lag time
between the loading of the Netscape Business Card and the loading
of the Advertisements (as determined by AOL in its reasonable
discretion), the Advertisements appear precisely in the
appropriate location and without the display of error messages))
to the extent that such integration is permitted pursuant hereto.
SmartAge agrees to conform to AOL integration requirements (e.g.,
to ensure the satisfaction of the requirements discussed in the
prior sentence).
Advertisements provided to AOL Users through AOL Media Buyer will
be integrated into Netscape Business Cards (to the extent such
functionality is launched as currently contemplated), subject to
the limitations above, provided, however, that no banners may be
integrated into a Netscape Business Card for an AOL User who does
not participate in AOL Clicks or AOL Links. Advertisements
provided to AOL Users through AOL Media Buyer will be integrated
into home pages established by AOL Users through AOL Hometown or
Netscape Site Central (subject to the limitations above),
provided that such AOL Users have not opted out of either AOL
Clicks or AOL Links. It is SmartAge's responsibility to ensure
seamless integration and delivery of banners to home pages
established through AOL Hometown or Netscape Site Central (e.g.,
including without limitation with respect to user interface and
the publishing and serving tools used (e.g., so that a person
viewing a home page sees no material lag time between the loading
of the home page and the loading of the Advertisements (as
determined by AOL in its reasonable discretion), the
Advertisements appear precisely in the appropriate location and
without the display of error messages)), to the extent that such
integration is permitted pursuant hereto. Smartage agrees to
conform to AOL integration requirements (e.g., to ensure the
satisfaction of the requirements discussed in the prior
sentence). Smartage agrees to limit the allowable size of any
third party's purchase through the AOL Media Buyer to *** or
less.
(2) AOL SmartStarters (name is not finalized and is at AOL's
discretion) -SmartAge's member discount buying service for online
Advertisements to be distributed within the banner exchange
network in accordance with the terms applicable to AOL Clicks.
(3) AOL Business Success Packs (name is not finalized and is at
AOL's discretion) - SmartAge's promotional packages whereby AOL
Users who choose to participate can purchase promotional packages
for Advertising and bundled services (such services may be any of
those listed in the Permitted Categories below, as may be updated
in accordance with the terms hereof) within the banner exchange
network in accordance with the terms applicable to AOL Clicks.
AOL's online search engine registration service (currently known
as "Register It") shall be used instead of SmartAge's comparable
functionality (currently known as "Add it Pro").
(4) AOL Instant Rank (name is not finalized and is at AOL's
discretion) -SmartAge's search engine ranking management tool
whereby an AOL User who chooses to participate can see how its
Interactive Site ranks through major search engines. At AOL's
option, AOL's and Netscape's search engines shall be included in
any rankings offered by AOL Instant Rank. Only AOL's or
Netscape's search engines may specifically be referred to in
promotions for AOL Instant Rank (and references to other search
engines in the aggregate,
38
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*** CONFIDENTIAL MATERIAL REDACTED AND FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION.
<PAGE>
without specification of a single search engine, are acceptable
(e.g., "See how your site ranks in searches through the major
search engines" or "See how your site ranks in searches through
AOL and other major search engines")).
(5) AOL Instant Watch (name is not finalized and is at AOL's
discretion) -SmartAge's web site monitoring service, analysis and
reporting tool.
(6) AOL Banner Building Service (name is not finalized and is at
AOL's discretion) - SmartAge's professional banner building
service.
(7) AOL Small Business Website Search (name is not finalized and
is at AOL's discretion) - A service whereby an AOL User who
chooses to participate can purchase search functionality which
can perform searches within that AOL User's own Interactive Site.
SmartAge will ensure that this tool only searches an AOL User's
Interactive Site and not anything beyond that site (i.e., any
functionality that enables a search beyond the participating AOL
User's own Interactive Site must be disabled at all times).
(B) Subject to the terms hereof, the following services (all as described
above) will be integrated on the *** and *** (names not finalized and
are at AOL's discretion) of the *** (name not finalized and is at
AOL's discretion) (if and to the extent that such pages are launched
as currently contemplated) (and if AOL includes a *** in the ***, the
*** will be *** the ***, and the following services will be included
in such *** the extent AOL deems them editorially and contextually
relevant:
(1) AOL Media Buyer -- AOL will provide a link, *** than *** for
*** on the ***, to a page in which a user can purchase the
services offered by AOL Media Buyer.
(2) AOL SmartStarters -- AOL will provide a link, *** than ***
for *** mutually agreed to be *** which appear on the ***, to a
page in which a user can purchase the services offered by AOL
Smart Starter.
(3) AOL Business Success Packs -- AOL will provide a link, ***
than *** for *** on the ***, to a page in which a user can
purchase the services offered by AOL Business Success Packs.
(4) To the extent that AOL launches, manages and controls the
*** and/or *** (e.g., if either such page is not managed by a
third party), a reference to additional SmartAge Functionality
may be provided therein if and to the extent approved by AOL. If
and to the extent such functionality is provided in the ***, such
services will appear with *** services mutually agreed to be
comparable which appear on ***.
B. Branding of SmartAge Functionality
--------------------------------------
. Ingredient Branding
39
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*** CONFIDENTIAL MATERIAL REDACTED AND FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION.
<PAGE>
The SmartAge Functionality (including the SmartAge Upsells) will include
"Ingredient Branding" of SmartAge where and to the extent deemed appropriate in
-------------------
AOL's reasonable editorial discretion (e.g., based on AOL's desired look and
feel for relevant pages, areas or subsets thereof (e.g., listings within
registration processes may not be ingredient branded if there are other third
party products in the same listings which are not ingredient branded)), and the
Parties expressly recognize that such Ingredient Branding in any event is less
prominent than AOL's standard primary co-branding (e.g., the co-branding of the
Co-Branded Sites) (provided, however, that where AOL deems appropriate, ***
shall be *** of ***). More specifically, and subject to the foregoing: (i) if
and to the extent that listings within registration processes are text-based,
then the Ingredient Branding, if any, shall also be text-based (e.g., "AOL's
Banner Exchange - powered by SmartAge"); if and to the extent that such listings
are graphics-based, the Ingredient Branding, if any, shall be AOL's "Standard
--------
Ingredient Branding" (discussed more fully below); and (ii) the pages of the Co-
- -------------------
Branded Corner Office shall be co-branded in accordance with the requirements of
this Agreement, provided, however, that the functionality within the Co-Branded
Corner Office shall have Standard Ingredient Branding; *** to *** within such
branding shall be *** of the *** of the *** to ***.
The specific form of AOL's Standard Ingredient Branding shall be determined by
AOL in its reasonable discretion in consultation with SmartAge, but in any event
shall be reasonably comparable in size and prominence to standard AOL Ingredient
Branding with third party partners, e.g., PersonaLogic's Ingredient Branding in
the AOL Auto Center New Car Guide area or AOL Cats for Kids area as of the
Effective Date, as available at:
http://www021.personalogic.aol.com/pl/system/pl.qanda?pl sid=c46q
-----------------------------------------------------------------
4sgv-1l31mwx-
-------------
5480k&info=aol%2CSILVER%2Cautocenter&product=cars%2Caol%2Cautocen
-----------------------------------------------------------------
ter
---
or
http://www025.personalogic.aol.com/pl/system/pl.qanda?pl sid=c46q
-----------------------------------------------------------------
6gv0-1l31mwy-
------------
60xlq&info=aol%2CSILVER%2Ckids&product=cats%2Caol%2Ckids
--------------------------------------------------------
respectively (and as also shown on the following pages).
40
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*** CONFIDENTIAL MATERIAL REDACTED AND FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION.
<PAGE>
[NOTE: replace this page with print-out of following site]
http://www021.personalogic.aol.com/pl/system/pl.qanda?pl sid=c46q4sgv-1l31mwx-
- -----------------------------------------------------------------------------
5480k&info=aol%2CSILVER%2Cautocenter&product=cars%2Caol%2Cautocenter
- --------------------------------------------------------------------
41
CONFIDENTIAL
<PAGE>
[NOTE: replace this page with print-out of following site]
http://www025.personalogic.aol.com/pl/system/pl.qanda?pl sid=c46q6gv0-1l31mwy-
- -----------------------------------------------------------------------------
60xlq&info=aol%2CSILVER%2Ckids&product=cats%2Caol%2Ckids
- --------------------------------------------------------
42
CONFIDENTIAL
<PAGE>
II. Co-Branded Sites
---------------------
SmartAge will provide AOL with the following best-of-breed products, services,
content and functionality (the "SmartAge Programming"), which SmartAge shall
--------------------
deliver and update so as to ensure that the SmartAge Programming remains
reasonably current and accurate (and in any event shall deliver and update the
SmartAge Programming no less frequently than it does for the similar programming
on SmartAge's generally available web site), and maintain as best-of-breed for
use in the Co-Branded Sites as set forth herein. SmartAge will conform the
SmartAge Programming with AOL's hosting and interface requirements.
Permitted Categories: The SmartAge Programming will include only items falling
- --------------------
within the following categories of small business targeted products, services,
content, and functionality available via the Internet, to the extent that such
products, services, content and functionality actually are targeted to small
business users (the "Permitted Categories"):
--------------------
(A) Co-Branded Corner Office: The Co-Branded Corner Office may only contain
the ingredient-branded Corner Office Functionality described in Section
I(A)(5) above (provided that the pages of the Co-Branded Corner Office
shall be co-branded with AOL as described in Section 2.1 of this
Agreement).
(B) Co-Branded Primary Site: The Co-Branded Primary Site may only contain the
following Products, subject to all the restrictions discussed in this
Exhibit D with respect thereto, and related content, with Standard
Ingredient Branding with AOL in accordance herewith (provided that the
pages of the Co-Branded Primary Site shall be co-branded with AOL as
described in Section 2.1 of this Agreement):
. AOL Clicks
. AOL Links
. AOL Expert Newsletters (only with respect to the Permitted Subject Matter)
. Corner Office Functionality
. AOL Media Buyer
. AOL SmartStarters
. AOL Business Success Packs
. AOL Instant Rank
. AOL Instant Watch
. AOL Professional Banner Building Service
. AOL Small Business Site Search
SmartAge may also offer users of the Co-Branded Primary Site an opportunity
to register for e-mails promoting products, services, content and
functionality falling within the Permitted Categories (as available on the
Co-Branded Primary Site) and the following additional categories (provided
that all such e-mails must comply with all relevant terms of this Agreement
(including without limitation the restrictions of Exhibit G)):
***
43
CONFIDENTIAL
*** CONFIDENTIAL MATERIAL REDACTED AND FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION.
<PAGE>
***
Restricted Categories on the Co-Branded Sites:
- ---------------------------------------------
With respect to the following categories of products, services or content (as
may be updated by AOL during the Term, but any such additions shall not
retroactively affect SmartAge's then existing products and services) (including
without limitation, if and to the extent that any of the above Permitted
Categories include any products, services or content pertaining to the
following) (the "Restricted Categories"): (1) no reference to or appearance of
---------------------
any element of the Restricted Categories, in any respect (e.g., including
without limitation any product or service falling within one of the Restricted
Categories), shall be permitted within any ads placed within the AOL Network in
connection with a banner exchange or similar program, the Promo Content, or the
*** page of the Co-Branded Sites linked to from the AOL Network (i.e., not
within *** of the AOL Network); (2) SmartAge may include a contextual reference
or navigation to such categories of products, services and content by means of a
link or tab (which shall be no greater in prominence, whether by means of size,
color, boldness or otherwise, than links or tabs to other functionality on the
same page) (e.g., a tab stating ***, which may not include *** functionality but
which may link to a page containing *** functionality to the extent permitted
hereunder), as long as such reference or navigation is at least *** off the AOL
Network; (3) in the Co-Branded Corner Office, such contextual reference or
navigation may not link to the applicable functionality (as described in item
(4) below), but instead may link to a page in which the services to be provided
within the applicable category may be listed or discussed; and (4) any
functionality associated with any Restricted Categories (e.g., the ability of a
user to register for, purchase, sell, view, or utilize the products, services,
or content associated with such Restricted Categories, e.g., including without
limitation in a *** area, the ability to review a catalog of products/services)
must be (i) in the case of the Co-Branded Primary Site, at least *** away from
the first page of the Co-Branded Primary Site linked to from the AOL Network
(regardless of whether the home page of the Co-Branded Primary Site is the first
page linked to), and (ii) in the case of the Co-Branded Corner Office, at least
*** away from the first page of the Co-Branded Corner Office linked to from the
AOL Network (regardless of whether the home page of the Co-Branded Corner Office
is the first page linked to):
***
44
CONFIDENTIAL
*** CONFIDENTIAL MATERIAL REDACTED AND FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION.
<PAGE>
***
Prohibited Categories:
- ---------------------
Notwithstanding anything to the contrary herein, products, services and content
pertaining to the following categories (as may be updated by AOL during the
Term, but any such additions shall not retroactively affect SmartAge's then
existing products and services) shall be excluded from any ads placed within the
AOL Network in connection with a banner exchange or similar program, the Promo
Content, the SmartAge Functionality, and all pages of the Co-Branded Sites
(except to the extent that AOL's products and services are the subject of such
references):
***
Additional SmartAge Functionality and SmartAge Programming:
- ----------------------------------------------------------
If SmartAge wants to add products, services, content or functionality which do
not fall within the categories listed in this Exhibit D, the Parties will, on a
case-by-case basis, work together in good faith in a commercially reasonable
time frame (e.g, taking into account the degree to which such products,
services, content or functionality have been fully developed) to discuss the
terms and conditions, if any, upon which such products, services, content or
functionality may be permitted, if and to the extent mutually agreed. More
specifically, with respect to additional SmartAge Programming, the Parties shall
use good faith efforts to commence discussions regarding new SmartAge
Programming proposed by SmartAge within
45
CONFIDENTIAL
*** CONFIDENTIAL MATERIAL REDACTED AND FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION.
<PAGE>
*** business days following written notice from SmartAge that it desires to add
new SmartAge Programming to one or both of the Co-Branded Sites.
46
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*** CONFIDENTIAL MATERIAL REDACTED AND FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION.
<PAGE>
EXHIBIT E
Operations
----------
1. General. The Co-Branded Sites (including the Products and other Content
-------
contained therein) will be in the top three (3) in the business-to-business
industry, as determined by the following methods (taken as a whole): (a) based
on a cross-section of independent third-party reviewers who are recognized
authorities in such industry and (b) with respect to all material quality
averages or standards in such industry, including each of the following: (i)
pricing of AOL Clicks, AOL Links, and the AOL Expert Newsletters (as those
services are described in Exhibit D), (ii) scope and selection of Products,
(iii) quality of Products, (iv) customer service and fulfillment associated with
the marketing and sale of Products and (v) ease of use. In addition, the Co-
Branded Sites will, with respect to the measures listed above, taken as a whole,
be competitive with that which is offered by any SmartAge competitors.
2. Infrastructure of Co-Branded Sites. SmartAge will be responsible for all
----------------------------------
communications, hosting and connectivity costs and expenses associated with the
Co-Branded Sites (except as expressly provided in this Agreement with respect to
AOL's serving of Advertisements in the Co-Branded Sites as set forth in Section
2.9 of the main body of the Agreement). SmartAge will provide all hardware,
software, telecommunications lines and other infrastructure necessary to meet
traffic demands on the Co-Branded Sites from the AOL Network. SmartAge will
design and implement the network between the AOL Service and Co-Branded Sites
such that (i) no single component failure will have a materially adverse impact
on AOL Members seeking to reach the Co-Branded Sites from the AOL Network and
(ii) no single line under material control by SmartAge will run at more than 70%
average utilization for a 5-minute peak in a daily period. In this regard,
SmartAge will provide AOL, upon request, with a detailed network diagram
regarding the architecture and network infrastructure supporting the Co-Branded
Sites, some of which may be deemed Confidential Information as defined in
Exhibit B. In the event that SmartAge elects to create a custom version of
either Co-Branded Site in order to comply with the terms of this Agreement,
SmartAge will bear responsibility for all aspects of the implementation,
management and cost of such customized site.
3. Optimization; Speed. SmartAge will use commercially reasonable efforts to
-------------------
ensure that: (a) the functionality and features within the Co-Branded Sites are
optimized for the client software then in use by AOL Members; and (b) the Co-
Branded Sites are designed and populated in a manner that minimizes delays when
AOL Members attempt to access such site. At a minimum, SmartAge will ensure
that the Co-Branded Sites' data transfers initiate within fewer than fifteen
(15) seconds on average. Prior to commercial launch of any material Promotions
described herein, SmartAge will permit AOL to conduct performance and load
testing of the Co-Branded Sites (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.
4. User Interface. SmartAge will maintain a graphical user interface within
--------------
each Co-Branded Site that is reasonably competitive in all material respects
with interfaces of other similar sites based on similar form technology,
provided that to the extent that the graphical user interface is deemed not
reasonably competitive due solely because of AOL's requirements for the design
of such interface, SmartAge shall not be in violation hereof. 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 SmartAge's compliance with the
preceding sentence. Should AOL determine that SmartAge is not maintaining a
graphical user interface in compliance herewith, AOL shall notify SmartAge of
any such deficiency and allow SmartAge a period of five (5) business days in
which to cure the deficiency, and SmartAge shall be deemed to be in violation of
this paragraph unless it has cured the deficiency to AOL's reasonable
satisfaction within such time.
5. Technical Problems. SmartAge agrees to use commercially reasonable efforts
------------------
to address material technical problems (over which SmartAge exercises control)
affecting use by AOL Members of either Co-Branded Site (a "SmartAge Technical
Problem") promptly following notice thereof. In the event that SmartAge is
unable to promptly resolve a SmartAge 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
SmartAge hereunder until such time as SmartAge corrects the SmartAge Technical
Problem at issue.
6. Monitoring. SmartAge will ensure that the performance and availability of
----------
the Co-Branded Sites is monitored on a continuous basis. SmartAge will provide
AOL with contact information (including e-mail, phone, pager and fax
information, as applicable, for both during and after business hours) for
SmartAge's principal business and technical representatives, for use in cases
when issues or problems arise with respect to the Co-Branded Sites.
7. Telecommunications. Where applicable, SmartAge 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 SmartAge has material control runs at more
than 70% average utilization for a 5-minute peak in a daily period.
8. Security. SmartAge 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 Co-Branded Sites. SmartAge will facilitate periodic reviews of the Co-
Branded Sites by AOL in order to evaluate the security risks of such
47
CONFIDENTIAL
<PAGE>
sites. SmartAge will promptly remedy any security risks or breaches of security
as may be identified by AOL's Operations Security team.
9. Technical Performance.
---------------------
i. SmartAge will design the Co-Branded Sites to support the AOL-client
embedded versions of the Microsoft Internet Explorer 3.XX and 4.XX
browsers (Windows and Macintosh)and 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 SmartAge creates customized pages on the Co-Branded
Sites for AOL Members, SmartAge will 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)."
iii. SmartAge will periodically review the technical information made
available by AOL at http://webmaster.info.aol.com.
iv. SmartAge will design its sites 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. SmartAge is responsible for the
manipulation of these parameters in web-based objects so as to allow them
to be cached or not cached as outlined in RFC 1945.
v. Prior to releasing material, new functionality or features through
either Co-Branded Site ("New Functionality"), SmartAge will use
commercially reasonable efforts to (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 Co-Branded Sites 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 is qualified
for the AOL Service.
10. AOL Internet Services SmartAge Support. AOL will provide SmartAge 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-based partners. AOL support will
not, in any case, be involved with content creation on behalf of SmartAge or
support for any technologies, databases, software or other applications which
are not supported by AOL or are related to any SmartAge area other than the Co-
Branded Sites. Support to be provided by AOL is contingent on SmartAge
providing to AOL demo account information (where applicable), a detailed
description of the Co-Branded Sites' software, hardware and network architecture
and access to the Co-Branded Sites for purposes of such performance and load
testing as AOL elects to conduct.
48
CONFIDENTIAL
<PAGE>
EXHIBIT F
Standard Online Commerce Terms & Conditions
-------------------------------------------
1. AOL Network Distribution. SmartAge will not authorize or expressly
------------------------
permit any third party to distribute or promote the Products or any SmartAge
Interactive Site (expressly including any International SmartAge Channels)
through the AOL Network absent AOL's prior written approval. The Promotions and
any other promotions or Advertisements purchased from or provided by AOL will
link only to the Co-Branded Sites, will be used by SmartAge solely for its own
benefit and will not be resold, traded, exchanged, bartered, brokered or
otherwise offered to any third party.
2. Provision of Other Content. In the event that AOL notifies SmartAge that
--------------------------
(i) as reasonably determined by AOL, any Content within the Co-Branded Sites
violates AOL's then-standard Terms of Service (as set forth on the America
Online brand service at Keyword term "TOS"), for the AOL Service or any other
AOL property through which the Co-Branded Sites are promoted, the terms of this
Agreement or any other standard, generally-applicable, written AOL policy or
(ii) AOL reasonably objects to the inclusion of any Content within the Co-
Branded Sites (other than any specific items of Content which may be expressly
identified in this Agreement), then SmartAge will take commercially reasonable
steps to block access by AOL Users to such Content using SmartAge's then-
available technology. In the event that SmartAge cannot, through its
commercially reasonable efforts, block access by AOL Users to the Content in
question, then SmartAge will provide AOL prompt written notice of such fact. AOL
may then, at its option, restrict access from the AOL Network to the Content in
question using technology available to AOL. SmartAge will cooperate with AOL's
reasonable requests to the extent AOL elects to implement any such access
restrictions.
3. Contests. SmartAge will take all steps necessary to ensure that any
--------
contest, sweepstakes or similar promotion conducted or promoted through the Co-
Branded Sites (a "Contest") complies with all applicable federal, state and
local laws and regulations.
4. Navigation. AOL will be entitled to establish navigational icons, links and
----------
pointers connecting the Co-Branded Sites (or portions thereof) with other
content areas on or outside of the AOL Network, provided that, unless otherwise
mutually agreed, such icons, links and pointers shall not be established (i)
only with respect to the Co-Branded Sites (and not to any other similarly
situated AOL partners), and (ii) within the center frame of the Co-Branded
Sites. Additionally, in cases where an AOL User performs a search for SmartAge
through any search or navigational tool or mechanism that is accessible or
available through the AOL Network (e.g., Promotions, Keyword Search Terms, or
any other promotions or navigational tools), AOL shall have the right to direct
such AOL User to the Co-Branded Sites, or any other SmartAge Interactive Site
determined by AOL in its reasonable discretion.
5. Disclaimers. Upon AOL's request, SmartAge agrees to include within the Co-
------------
Branded Sites a product disclaimer (the specific form and substance to be
mutually agreed upon by the Parties) indicating that transactions are solely
between SmartAge and AOL Users purchasing Products from SmartAge.
6. AOL Look and Feel. SmartAge acknowledges and agrees that AOL will own all
-----------------
right, title and interest in and to the elements of graphics, design,
organization, presentation, layout, user interface, navigation and stylistic
convention (including the digital implementations thereof) which are generally
associated with online areas contained within the AOL Network (the "AOL Look and
Feel"), subject to SmartAge's ownership rights in the elements of graphics,
design, organization, presentation, layout, user interface, navigation and
stylistic convention (including the digital implementations thereof) which are
generally associated with the SmartAge Interactive Sites (to the extent that
such elements are developed separate and apart from AOL's involvement with the
Co-Branded Sites).
7. Management of the Co-Branded Sites. SmartAge will manage, review, delete,
----------------------------------
edit, create, update and otherwise manage all Content available on or through
the Co-Branded Sites, in a timely and professional manner and in accordance with
the terms of this Agreement. SmartAge will ensure that the Co-Branded Sites are
current, accurate and well-organized at all times. SmartAge warrants that the
Products and other Licensed Content : (i) to the best of SmartAge's knowledge,
will not infringe on or violate any copyright, trademark, U.S. patent or any
other third party right, including without limitation, any music performance or
other music-related rights; (ii) will not violate AOL's then-generally
applicable Terms of Service for the AOL Service and any other AOL property
through which the Co-Branded Sites will be promoted or any other standard,
written AOL policy; and (iii) will not violate any applicable law or regulation,
including those relating to contests, sweepstakes or similar promotions.
Additionally, SmartAge represents and warrants that it owns or has a valid
license to all rights to any Licensed Content used in AOL "slideshow" (i.e.,
video clip) or other formats embodying elements such as graphics, animation and
sound, free and clear of all encumbrances and without violating the rights of
any other person or entity. SmartAge also warrants that a reasonable basis
exists for all Product performance or comparison claims by SmartAge or its
agents appearing in or about the Co-Branded Sites. SmartAge shall not in any
manner, including, without limitation in any Promotion, the Licensed Content or
the Materials state or imply that AOL recommends or endorses SmartAge or
SmartAge's Products (e.g., no statements that SmartAge is an "official" or
"preferred" provider of products or services for AOL). AOL will have no
obligations with respect to the Products available on or through the Co-Branded
Sites, including, but not limited to, any duty to review or monitor any such
Products.
8. Duty to Inform. SmartAge will promptly inform AOL of any information
--------------
related to the Co-Branded Sites which could reasonably
49
CONFIDENTIAL
<PAGE>
lead to a material claim, demand, or liability of or against AOL and/or its
affiliates by any third party.
9. Customer Service. It is the sole responsibility of SmartAge to provide
----------------
customer service to persons or entities purchasing Products through the AOL
Network ("Customers"). SmartAge will bear full responsibility for all customer
service, including without limitation, order processing, billing, fulfillment,
shipment, collection and other customer service associated with any Products
offered, sold or licensed through the Co-Branded Sites, and AOL will have no
obligations whatsoever with respect thereto. SmartAge will receive all emails
from Customers via a computer available to SmartAge's customer service staff and
generally respond to such emails within two business days of receipt, however
SmartAge will use commercially reasonable efforts to ensure that it generally
responds to such emails within one business day of receipt. SmartAge will
receive all orders electronically and generally process all orders within one
business day of receipt, provided Products ordered are not advance order items.
SmartAge will ensure that all orders of Products are received, processed,
fulfilled and delivered on a timely and professional basis. SmartAge will offer
AOL Users who purchase Products through such Co-Branded Sites a money back
satisfaction guarantee. SmartAge will bear all responsibility for compliance
with federal, state and local laws in the event that Products are out of stock
or are no longer available at the time an order is received. SmartAge will also
comply with the requirements of any federal, state or local consumer protection
or disclosure law. Payment for Products will be collected by SmartAge directly
from customers, although SmartAge may use third-party service providers,
provided that no such third party is an Interactive Service and any such third
party must remain subject to the restrictions on collection and use of AOL User
information set forth in Exhibit G hereto (provided that SmartAge shall remain
primarily liable to AOL for any violations thereof by such a third party).
SmartAge's order fulfillment operation will be subject to AOL's reasonable
review. It is expressly understood by the Parties that SmartAge may use its in-
house tool for customer support (currently known as "pop-up help") on the Co-
Branded Sites, so long as that tool (i) is not distributed on the Co-Branded
Sites and (ii) is not competitive with any of AOL's Component Products.
10. Production Work. In the event that SmartAge requests AOL's production
---------------
assistance in connection with the following (except for a reasonable amount of
assistance with integration of the SmartAge Functionality as set forth in
Exhibit D, integration into Netscape's "Universal Registration" or AOL's "SNAP"
system as set forth in Exhibit G, and integration of AOL's Quick Checkout tool
as set forth in Section 2.1 of the main body of this Agreement): (i) ongoing
programming and maintenance related to the Co-Branded Sites, (ii) a redesign of
or addition to the Co-Branded Sites (e.g., a change to an existing screen format
or construction of a new custom form), (iii) production to modify work performed
by a third party provider or (iv) any other type of production work, SmartAge
will work with AOL to develop a detailed production plan for the requested
production assistance (the "Production Plan"). Following receipt of the final
Production Plan, AOL will notify SmartAge of (i) AOL's availability to perform
the requested production work, (ii) the proposed fee or fee structure for the
requested production and maintenance work and (iii) the estimated development
schedule for such work. To the extent the Parties reach agreement regarding
implementation of the agreed-upon Production Plan, such agreement will be
reflected in a separate work order signed by the Parties. To the extent
SmartAge elects to retain a third party provider to perform any such production
work, work produced by such third party provider must generally conform to AOL's
standards & practices (as provided on the America Online brand service at
Keyword term "styleguide"). The specific production resources which AOL
allocates to any production work to be performed on behalf of SmartAge will be
as determined by AOL in its sole discretion. With respect to any additional
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 Co-Branded Sites ("Extranormal Services"), SmartAge will pay
the then-standard fees charged by AOL for such Extranormal Services.
11. Overhead Accounts. To the extent AOL has granted SmartAge any overhead
-----------------
accounts on the AOL Service, SmartAge will be responsible for the actions taken
under or through its overhead 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 overhead Account issued to SmartAge,
but SmartAge will not be liable for charges incurred by any overhead 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 overhead
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 overhead account.
12. Navigation Tools. Any Keyword Search Terms to be directed to the Co-
----------------
Branded Sites shall be (i) subject to availability for use by SmartAge, (ii)
subject to SmartAge's compliance with the cross-promotional obligations set
forth in Exhibit C hereto, and (iii) limited to the combination of the Keyword
search modifier combined with a registered trademark of SmartAge (e.g. "AOL
keyword: XYZ Company Name"). AOL reserves the right to revoke at any time
SmartAge's use of any Keyword Search Terms which do not incorporate registered
trademarks or service marks of SmartAge (and AOL shall grant "SmartAge" as a
Keyword Search Term, subject to the favorable resolution of the currently-
pending application for a registered trademark therefor and may in its
discretion grant future Keyword Search Terms for trademarks or service marks for
which applications are then pending, in each case subject to the favorable
resolution of such applications). Moreover, AOL reserves the right to revoke
any Keyword Search Terms if SmartAge is not in compliance with the cross-
promotional obligations of Exhibit C hereto. SmartAge 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 SmartAge holds in SmartAge's
registered trademark or service mark
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13. independent of the Keyword Search Term. Without limiting the generality of
the foregoing, SmartAge 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. To the extent AOL allows AOL Users to "bookmark" the URL
or other locator for the Co-Branded Sites, such bookmarks will be subject to
AOL's control at all times. Upon the termination of this Agreement, SmartAge's
rights to any Keyword Search Terms and bookmarking will terminate.
14. Merchant Certification Program. SmartAge will participate in any generally
------------------------------
applicable "Certified Merchant" program operated by AOL or its authorized agents
or contractors. Such program may require merchant participants on an ongoing
basis to meet certain reasonable, generally applicable standards relating to
provision of electronic commerce through the AOL Network (including, as a
minimum, use of 40-bit SSL encryption and if requested by AOL, 128-bit
encryption) and may also require the payment of certain reasonable certification
fees to the applicable entity operating the program. Each Certified Merchant in
good standing will be entitled to place on its affiliated Interactive Site an
AOL designed and approved button promoting the merchant's status as an AOL
Certified Merchant.
15. Reward Programs. On the Co-Branded Sites, SmartAge shall not offer,
---------------
provide, implement or otherwise make available any promotional programs or plans
that are intended to provide customers with rewards or benefits in exchange for,
or on account of, their past or continued loyalty to, or patronage or purchase
of, the products or services of SmartAge or any third party (e.g., a promotional
program similar to a "frequent flier" program), unless (1) such promotional
program or plan is provided exclusively through AOL's "AOL Rewards" program,
accessible on the AOL Service at Keyword: "AOL Rewards" or (2) AOL does not
permit SmartAge to participate in AOL's "AOL Rewards" program, in which case
SmartAge may offer a different rewards program, so long as such a program is not
linked to or related in any way to a rewards program offered by an Interactive
Service.
16. Search Terms. To the extent this Agreement sets forth any mechanism by
------------
which the Co-Branded Sites will be promoted in connection with specified search
terms within any AOL product or service, SmartAge hereby represents and warrants
that, to the best of its knowledge, SmartAge has all consents, authorizations,
approvals, licenses, permits or other rights necessary for SmartAge to use such
specified search terms. Notwithstanding the foregoing, AOL shall have the right
to suspend the use of any search term if AOL has a reasonable belief that
continued use may subject AOL to liability or other adverse consequences (e.g.,
including without limitation due to trademark infringement or claims of
misappropriation).
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EXHIBIT G
Standard Legal Terms & Conditions
---------------------------------
1. Promotional Materials/Press Releases. Each Party will submit to the
------------------------------------
other Party, for its prior written approval, which will not be unreasonably
withheld or delayed, any marketing, advertising, or other promotional
materials, excluding Press Releases, related to the Co-Branded Sites and/or
referencing the other Party and/or its trade names, trademarks, and service
marks (the "Promotional Materials"); provided, however, that either Party's use
of screen shots of the Co-Branded Sites for promotional purposes will not
require the approval of the other Party so long as America Online(R) is clearly
identified as the source of such screen shots; and provided further, however,
that, following the 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 to the existence
of a business relationship between the Parties in Promotional Materials, will
not require the approval of the other Party. Each Party will solicit and
reasonably consider the views of the other Party in designing and implementing
such Promotional Materials. Once approved, the Promotional Materials may be
used by a Party and its affiliates for the purpose of promoting the Co-Branded
Sites and the content contained therein 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.
2. License. SmartAge hereby grants AOL a non-exclusive worldwide license to
-------
market, license, distribute, reproduce, display, perform, transmit and promote
the Licensed Content (or any portion thereof) through such areas or features of
the AOL Network as AOL deems appropriate for the purpose of its performance of
this Agreement. SmartAge acknowledges and agrees that the foregoing license
permits AOL to distribute portions of the Licensed Content in synchronism or
timed relation with visual displays prepared by SmartAge or AOL (e.g., as part
of an AOL "slideshow"). In addition, AOL Users will have the right to access
and use the Co-Branded Sites.
3. Trademark License. In designing and implementing the Promotional Materials
-----------------
and subject to the other provisions contained herein, SmartAge will be entitled
to use the following trade names, trademarks, and service marks of AOL: the
"America Online" brand service, "AOL" service/software and AOL's triangle logo,
"Netscape(R)" and the N and horizon logos, and "CompuServe(R)" and the globe
logo; and AOL and its affiliates will be entitled to use the following trade
names, trademarks, and service marks of SmartAge for which SmartAge holds all
rights necessary for use in connection with this Agreement (collectively,
together with the AOL marks listed above, the "Marks"): "SmartAge.com(R)",
"SmartClicks(R)", "Corner Office(R)", and such other marks as to which SmartAge
consents and any others reasonably necessary for AOL's performance under this
Agreement; 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.
4. Ownership of Trademarks. Each Party acknowledges the ownership right of
-----------------------
the other Party in the Marks of the other Party and agrees that all use of the
other Party's Marks will inure to the benefit, and be on behalf, of the other
Party. 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.
5. Quality Standards. Each Party agrees that the nature and quality of its
-----------------
products and services supplied in connection with the other Party's Marks will
conform to quality standards set by the other Party. 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 will comply with all applicable laws, regulations, and
customs and obtain any required government approvals pertaining to use of the
other Party's marks.
6. 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 will 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
with its reasonable cooperation and assistance with respect to any such
infringement proceedings.
7. 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 and to perform the acts required of it
hereunder; (ii) the execution of this Agreement by
52
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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; and (iv) such Party acknowledges that the other Party makes no
representations, warranties or agreements related to the subject matter hereof
that are not expressly provided for in this Agreement. SmartAge hereby
represents and warrants that it possesses all authorizations, approvals,
consents, licenses, permits, certificates or other rights and permissions
necessary to sell the Products.
8. Confidentiality. Each Party acknowledges that Confidential Information may
---------------
be disclosed to the other Party during the course of this Agreement. Each Party
agrees that it will take reasonable steps, at least substantially equivalent to
the steps it takes to protect its own proprietary information, during the term
of this Agreement, and for a period of three years following expiration or
termination of this Agreement, to prevent the duplication or disclosure of
Confidential Information of the other Party, other than by or to its employees
or agents who must have access to such Confidential Information to perform such
Party's obligations hereunder, who will each agree to comply with this section.
Notwithstanding the foregoing, either Party may issue a press release or other
disclosure containing Confidential Information without the consent of the other
Party, to the extent such disclosure is required by law, rule, regulation or
government or court order. In such event, the disclosing Party will provide at
least five (5) business 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.
9. Limitation of Liability; Disclaimer; Indemnification.
----------------------------------------------------
9.1 Liability. UNDER NO CIRCUMSTANCES WILL 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 THE AGREEMENT, THE SALE OF PRODUCTS, THE
CONTENT, THE USE OR INABILITY TO USE THE AOL NETWORK, THE AOL SERVICE, AOL.COM,
THE CO-BRANDED SITES, OR THE SMARTAGE INTERACTIVE SITES, OR ARISING FROM 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 WILL REMAIN LIABLE TO THE OTHER PARTY TO THE EXTENT ANY
DISCLAIMED DAMAGES ARE CLAIMED BY A THIRD PARTY AND ARE SUBJECT TO
INDEMNIFICATION PURSUANT TO SECTION 9.3. EXCEPT AS PROVIDED IN SECTION 9.3, (I)
LIABILITY ARISING UNDER THIS AGREEMENT WILL BE LIMITED TO DIRECT, OBJECTIVELY
MEASURABLE DAMAGES, AND (II) THE MAXIMUM LIABILITY OF ONE PARTY TO THE OTHER
PARTY FOR ANY CLAIMS ARISING IN CONNECTION WITH THIS AGREEMENT WILL NOT EXCEED
THE AGGREGATE AMOUNT OF FIXED GUARANTEED PAYMENT OBLIGATIONS PAID AND OWED BY
SMARTAGE HEREUNDER (NOT INCLUDING ANY EQUITY IN SMARTAGE INCLUDED AS PAYMENT
HEREUNDER); PROVIDED THAT EACH PARTY WILL REMAIN LIABLE FOR THE AGGREGATE AMOUNT
OF ANY PAYMENT OBLIGATIONS OWED TO THE OTHER PARTY PURSUANT TO THE AGREEMENT.
9.2 No Additional Warranties. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT,
------------------------
NEITHER PARTY MAKES ANY, AND EACH PARTY HEREBY SPECIFICALLY DISCLAIMS ANY
REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, REGARDING THE AOL NETWORK,
THE AOL SERVICE, AOL.COM, THE CO-BRANDED SITES, THE SMARTAGE INTERACTIVE SITES,
THE PRODUCTS, OR THE CONTENT, 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 THE CO-BRANDED SITES.
9.3 Indemnity. Either Party will defend, indemnify, save and hold harmless
---------
the other Party and the officers, directors, agents, affiliates, distributors,
franchisees and employees of the other Party from any and all third party
claims, demands, liabilities, costs or expenses, including reasonable attorneys'
fees ("Liabilities"), resulting from the
53
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indemnifying Party's material breach of any duty, representation, or warranty of
this Agreement. SmartAge will defend, indemnify, save and hold harmless AOL and
the officers, directors, agents, affiliates, distributors, franchisees and
employees thereof from any and all Liabilities resulting from the infringement
or violation of any copyright, trademark, U.S. patent or any other right,
including without limitation, any music performance or other music-related
rights.
9.4 Claims. 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 will give the other Party (the "Indemnifying Party")
prompt written notice of such Action. Such notice will (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 will 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 will be obligated to defend the Action,
at its own expense, and by counsel reasonably satisfactory to the Indemnified
Party. The Indemnified Party will cooperate, at the expense of the Indemnifying
Party, with the Indemnifying Party and its counsel in the defense and the
Indemnified Party will 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 will 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 will cooperate, at its own
expense, with the Indemnified Party and its counsel in the defense against such
Action and the Indemnifying Party will have the right to participate fully, at
its own expense, in the defense of such Action. Any compromise or settlement of
an Action will require the prior written consent of both Parties hereunder, such
consent not to be unreasonably withheld or delayed.
10. Acknowledgment. AOL and SmartAge 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 10 will be
enforceable independent of and severable from any other enforceable or
unenforceable provision of this Agreement.
11. Solicitation of AOL Users. Except for those *** with whom *** has a ***
-------------------------
(defined at the end of this paragraph): (a) During the Term of the Agreement
and for a two year period thereafter, SmartAge will not use the AOL Network
(including, without limitation, the e-mail network contained therein) to solicit
AOL Users on behalf of another Interactive Service. (b) SmartAge 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 User to whom commercial e-mail or other online
communication is being sent has voluntarily either (i) engaged in a transaction
with SmartAge or (ii) provided information to SmartAge through a contest,
registration, or other communication, which included clear notice to the AOL
User that the information provided could result in commercial e-mail or other
online communication being sent to that AOL User by SmartAge or its agents.
(c) Any commercial e-mail or other online communications to AOL Users which are
otherwise permitted hereunder: (i) will include a prominent and easy means to
"opt-out" of receiving any future commercial communications from SmartAge; (ii)
shall also be subject to AOL's then-standard, generally applicable restrictions
on the use of e-mail functionality, including without limitation the
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); and (iii) will not contain any content which violates AOL's then-
applicable Terms of Service. Where exceptions are made in *** with respect to
*** with whom *** has a *** (as defined in the next sentence), such exceptions
shall apply if and to the extent that the communications between *** and such
*** (i) arise only from the *** and (ii) are not *** towards ***. For purposes
of this ***, a *** will mean that the *** in question has, either *** to the
***, or on or after the ***(provided that if done on or after the ***, such
actions must (i) have taken place on a *** other than the *** and off the ***,
and (ii) be *** to ***), *** either (i) *** in a *** with *** or its *** (other
than *** or its *** or ***) or (ii) provided information to *** or its ***
(other than *** or its *** or
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COMMISSION.
<PAGE>
***) through a ***, ***, or other ***, which included clear notice to the ***
that the information provided could result in *** or other *** being sent to
that *** by *** or its ***.
12. AOL User Communications. Except for *** with whom *** has a ***: (a) To
-----------------------
the extent that SmartAge is permitted to communicate with AOL Users under this
Exhibit G, in any such communications to AOL Users on or off the Co-Branded
Sites (including, without limitation, e-mail solicitations), SmartAge (1) will
limit the subject matter of such communications to those categories of products,
services and/or content that specifically fall within the Permitted Categories
in the Co-Branded Sites as set forth in Exhibit D of this Agreement (unless
otherwise expressly set forth in Exhibit D), and (2) will not encourage AOL
Users 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 Co-Branded Sites 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.
(b) Additionally, with respect to any AOL User communications, in the event
that SmartAge encourages an AOL User to purchase products through such
communications, SmartAge shall ensure that (a) if the Co-Branded Sites are
mentioned or promoted, the AOL Network is promoted as the primary means through
which the AOL User can access the Co-Branded Sites (e.g., including without
limitation by stating the applicable Keyword Search Term and including direct
links to specific offers within the Co-Branded Site) and (b) if any such
communication includes a link to either Co-Branded Site, it will link to a page
which indicates to the AOL User that such user is in a site which is affiliated
with the AOL Network.
13. Collection and Use of User Information. (a) Except for those *** with
--------------------------------------
which *** has a ***: (i) SmartAge shall ensure that its collection, use and
disclosure of information obtained from AOL Users under this Agreement ("User
Information") complies with (x) all applicable laws and regulations and (y)
AOL's standard privacy policies, available on the AOL Service at the keyword
term "Privacy" (or, in the case of the Co-Branded Sites, SmartAge's standard
privacy policies so long as such policies are prominently published on the Co-
Branded Sites and provide adequate notice, disclosure and choice to users
regarding SmartAge's collection, use and disclosure of user information). (ii)
SmartAge will not disclose User Information collected hereunder to any third
party in a manner that identifies AOL Users as end users of an AOL product or
service or use Member Information collected under this Agreement to market
another Interactive Service. (b) Notwithstanding anything to the contrary
herein, (i) if end users are required to register to access certain features
within the Co-Branded Sites, such registration processes will be seamlessly
integrated with Netscape's "Universal Registration" or AOL's "SNAP" system and
be consistent with AOL's (or the applicable AOL affiliate's) then-current
privacy policy; and (ii) AOL and SmartAge will jointly own all end user data
collected by SmartAge in conjunction with the use of the Co-Branded Sites.
14. Excuse. Neither Party will 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.
15. Independent Contractors. The Parties to this Agreement are independent
-----------------------
contractors. Neither Party is an agent, representative or employee of the other
Party. Neither Party will 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 will 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.
16. 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
or if delivered by facsimile with confirmation of sending; (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 SmartAge, such notice
will be provided to both the Vice President of Corporate Development (fax no.
415-434-4707) and the Corporate Counsel or General
CONFIDENTIAL
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17. Counsel (fax no. 415-434-4707), each at the address for SmartAge set
forth in the first paragraph of this Agreement. Each Party may update its
addresses for notice by notice properly delivered under this Section 16.
18. Launch Dates. In the event that any terms contained herein relate to or
------------
depend on the commercial launch date of the Co-Branded Sites contemplated by
this Agreement or the Netscape Business Cards (the "Launch Date"), then it is
the intention of the Parties to record each such Launch Date in a written
instrument signed by both Parties promptly following each such Launch Date;
provided that, in the absence of such a written instrument, the Launch Date of
the Co-Branded Sites will be as reasonably and mutually agreed, and the Launch
Date of the Netscape Business Cards will be as mutually agreed based on AOL's
records regarding the Netscape Business Cards.
19. 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 will 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 will be
and remain in full force and effect.
20. Return of Information. Upon the expiration or termination of this
---------------------
Agreement, each Party will, 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.
21. Survival. Sections 5.3 (except as expressly set forth therein) and 5.4 of
--------
the body of the Agreement (and those sections specified therein), Sections 8
through 30 of this Exhibit, and any payment obligations accrued prior to
termination or expiration will survive the completion, expiration, termination
or cancellation of this Agreement.
22. 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 will 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.
23. Amendment. No change, amendment or modification of any provision of this
---------
Agreement will be valid unless set forth in a written instrument signed by the
Party subject to enforcement of such amendment, and in the case of AOL, by an
executive of at least the same standing to the executive who signed the
Agreement.
24. Further Assurances. Each Party will take such action (including, but not
------------------
limited to, the execution, acknowledgment and delivery of documents) as may
reasonably be requested by any other Party for the implementation or continuing
performance of this Agreement.
25. Assignment. With the exception of (a) an assignment or succession of
----------
interest relating solely to a change in jurisdiction of incorporation, or (b) a
Change of Control (other than a Change of Control of SmartAge to an Interactive
Service, which shall be governed by Section 5.7 of the main body of this
Agreement): SmartAge will not assign this Agreement or any right, interest or
benefit under this Agreement, without the prior written consent of AOL. In
either instance, AOL's consent shall not be unreasonably withheld or delayed.
Subject to the foregoing, this Agreement will be fully binding upon, inure to
the benefit of and be enforceable by the Parties hereto and their respective
successors and assigns.
26. 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 will 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 will remain in full force and
effect.
27. 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; provided that, in connection with any dispute hereunder, SmartAge
will be not entitled to offset any amounts that it claims to be due and payable
from AOL against amounts otherwise payable by SmartAge to AOL.
28. Applicable Law. Except as otherwise expressly provided herein, this
--------------
Agreement will be interpreted, construed and enforced in all respects in
accordance with the laws of the State of New York except for its conflicts of
laws principles.
29. Export Controls. Both Parties will adhere to all applicable laws,
---------------
regulations and rules relating to the export of technical data and will 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
CONFIDENTIAL
56
<PAGE>
30. proscribed country listed in such applicable laws, regulations and rules
unless properly authorized.
31. Headings. The captions and headings used in this Agreement are inserted
--------
for convenience only and will not affect the meaning or interpretation of this
Agreement.
32. Counterparts. This Agreement may be executed in counterparts, each of
------------
which will be deemed an original and all of which together will constitute one
and the same document.
CONFIDENTIAL
- ------------
57
<PAGE>
EXHIBIT H
---------
Customization of Co-Branded Sites
---------------------------------
Except as otherwise expressly stated in this Agreement, each distinct version of
the Co-Branded Sites shall be designed as a "cul de sac" site containing no
links outside of the Co-Branded Sites other than to (a) the applicable AOL
business brand, (b) other AOL or third party Content determined by AOL, or (c)
advertisements permitted under this Agreement. Except as otherwise expressly
stated in this Agreement or as otherwise mutually agreed, SmartAge shall
eliminate the use of "pop-up" windows, screens and similar types of
functionality in connection with the display of advertising, promotions or
sponsorships on the Co-Branded Sites. AOL shall have the right to change or
modify its generally applicable design guideline templates and co-branding
requirements during the Term, to conform to general changes made to the AOL
Network or portions thereof. Such customization shall further include, without
limitation:
(i) the inclusion of an AOL (or its applicable affiliated business
brand, e.g., CompuServe) co-branded toolbar, running the full
width of the page, at the top and bottom of each page of the Co-
Branded Sites, the parameters, specifications and format of which
shall be determined by AOL, and such toolbar will, among other
things, provide navigation back to the AOL Network, and shall
contain an AOL search box (e.g., Netfind) and two (2) promotional
spaces to be programmed by AOL);
(ii) displaying a "C-frame" left-side menu bar on each page along the
left side using the then-current navigation bar of the applicable
AOL business brand;
(iii) various additional co-branding elements to be specified, as AOL
deems appropriate for consistency throughout the AOL Network and
throughout AOL's network of merchant partners; and
(iv) the creation of links in connection with communication services
on the Co-Branded Sites to the corresponding or equivalent
communication services or areas of the Co-Branded Sites of the
appropriate AOL Property (e.g., chat from the Co-Branded Sites of
the AOL Service will link to the chat area on the AOL Service).
CONFIDENTIAL
58
<PAGE>
EXHIBIT I
FORM OF RESTRICTED STOCK PURCHASE AGREEMENT
CONFIDENTIAL
59
<PAGE>
RESTRICTED STOCK PURCHASE AGREEMENT
-----------------------------------
RESTRICTED STOCK PURCHASE AGREEMENT (this "Agreement") entered into as of
March __, 2000, by and among (i) SmartAge.com Corp., a Delaware corporation (the
"Company"), and (ii) America Online, Inc. (the "Purchaser"). Certain
capitalized terms used in this Agreement are defined in Exhibit A attached
---------
hereto.
RECITAL
-------
In consideration of the Purchaser's agreement to enter into that certain
Interactive Marketing Agreement dated of even date herewith (the "Interactive
Marketing Agreement"), by and between the Company and the Purchaser, and certain
other services provided by Purchaser, the Company has agreed to issue to the
Purchaser the securities specified herein, and the Purchaser is willing to
acquire such securities, all on the terms and subject to the conditions set
forth in this Agreement.
AGREEMENT
---------
In consideration of the mutual promises, covenants and conditions
hereinafter set forth, the parties hereto mutually agree as follows:
1. Authorization and Sale of the Common Shares.
-------------------------------------------
1.1 Authorization. The Company has authorized the issuance and sale
-------------
pursuant to the terms and conditions hereof of that number of shares of its
common stock, par value, $0.0001 per share (the "Common Shares") as determined
pursuant to Section 1.2 below.
1.2 Issuance and Sale. On the terms and subject to the conditions
-----------------
hereof, at the Closing, the Company will issue and sell to the Purchaser, and
the Purchaser will acquire from the Company, that number of Common Shares (the
"Shares") equal to $2,000,000 divided by the Determined Price (as defined
below). The Determined Price shall be the price per share at which the Company
agrees to sell Shares to the underwriters in a Qualified Public Offering. Such
price shall be set by the Pricing Committee of the Board of Directors of the
Company after the registration statement filed with the Securities and Exchange
Commission (the "SEC") in connection with such offering is declared effective by
the SEC. Such determination by the Pricing Committee shall be referred to
herein as the "Pricing." If the Pricing does not occur within nine months after
the date hereof, the Determined Price shall be the greater of (1) the price per
share paid by the Company's investors in the Company's most recently completed
round of a Qualified Financing and (2) $3.396 per share (as adjusted for stock
splits, dividends and the like). Examples of the operation of this Section 1.2
shall be set forth in Exhibit B below. For purposes of this Section 1.2 a
Qualified Financing means a round of financing in which the lead investors are
nationally recognized investment-banking, corporate investor or venture capital
financing institutions or entities and in which such lead investors' investment
in such financing round shall be at least $5,000,000.
-1-
<PAGE>
1.3 Stockholder Rights. The Company will use its best efforts to provide
------------------
Purchaser with registration rights pursuant to the Amendment (the "Amendment")
to the Second Amended and Restated Investors' Rights Agreement dated October 5,
1999 (the "Rights Agreement") by and among the Company and the Series A, Series
B and Series C Preferred Stockholders, in the form attached as Exhibit B hereto,
---------
within thirty (30) days of the date hereof. In the event that the Company has
not made the Purchaser a party to the Rights Agreement within thirty (30) days
of the date hereof, the Company shall prepare and present the Purchaser with a
Registration Rights Agreement on substantially the same terms a Purchaser would
receive in the event it became a party to the Rights Agreement as set forth in
the Amendment. In the event that within thirty (30) days of the date hereof, the
Company has not made the Purchaser a party to the Rights Agreement, or a
Registration Rights Agreement with substantially the same terms as the terms of
the Rights Agreement, the Purchaser that in lieu of the Shares, shall have the
option to either (a) terminate the Interactive Marketing Agreement or (b)
require the Company to pay to the Purchaser $2,000,000 in immediately available
funds. The Company's maximum liability for breach of Section 1.3 shall in no
case exceed $2,000,000.
2. Closing.
-------
2.1 Closing. The closing (the "Closing") of the sale and acquisition
-------
of the Common Shares under this Agreement shall take place at the offices of
Pillsbury Madison & Sutro LLP, 2550 Hanover Street, Palo Alto, California the
earlier of (a) immediately after the Pricing and (b) nine (9) months from the
date hereof. The date of the Closing is hereinafter referred to as the "Closing
Date."
2.2 Deliveries. At the Closing, the Company will deliver to the
----------
Purchaser certificates registered in the Purchaser's name representing the
aggregate number of Common Shares issued and sold by the Company to the
Purchaser, as determined pursuant to Sections 1.2 above. The parties shall also
deliver all documents required to be delivered at the Closing pursuant to
Section 2.3 hereof.
2.3 Conditions to Closing.
---------------------
(a) Conditions to Obligations of the Purchaser. The obligations
------------------------------------------
of the Purchaser to acquire Common Shares at the Closing are subject to the
fulfillment on or prior to the Closing Date of the following conditions, any of
which may be waived by the Purchaser:
(i) Representations and Warranties Correct; Performance of
------------------------------------------------------
Obligations. The representations and warranties made by the Company in Section
- -----------
3 hereof shall have been true and correct in all material respects when made,
and shall be true and correct in all material respects on the Closing Date with
the same force and effect as if they had been made on and as of such date, and
the Company shall have performed all obligations, covenants and agreements
herein required to be performed by it on or prior to the Closing.
(ii) Consents and Waivers. The Company shall have obtained any
--------------------
and all consents (including all governmental or regulatory consents, approvals
or authorizations required in connection with the valid execution, delivery and
performance of this
-2-
<PAGE>
Agreement and the Related Agreements), permits and waivers necessary or
appropriate for consummation of the transactions contemplated by this Agreement
or any Related Agreement.
(iii) Interactive Marketing Agreement. The Interactive Marketing
-------------------------------
Agreement shall have been executed and delivered by the Company.
(iv) Opinion of Company's Counsel. The Purchaser shall have received
----------------------------
from Pillsbury Madison & Sutro LLP an opinion, dated the date hereof,
substantially in the form attached hereto as Exhibit G.
---------
(v) Other Documents. The Purchaser shall have received such other
---------------
certificates and documents as it shall have reasonably requested.
(b) Conditions to Obligations of the Company. The Company's
----------------------------------------
obligation to issue and sell the Common Shares at the Closing is subject to the
fulfillment on or prior to the Closing Date of the following conditions, any of
which may be waived by the Company:
(i) Representations and Warranties. The representations and
------------------------------
warranties made by the Purchaser in Section 4 hereof shall have been true and
correct when made, and shall be true and correct on such Closing Date with the
same force and effect as if they had been made on and as of such date.
(ii) Related Agreements. The Related Agreements shall have been
------------------
executed and delivered by the Purchaser and Purchaser shall have complied with
all obligations thereunder which are to be complied with as of the Closing Date.
(iii) Waiver. The Purchaser shall have executed and delivered to the
------
Company the Waiver of Registration Rights and Notice attached as Exhibit D
---------
hereto.
(iv) Valid Issuance of Shares; Consents. The offering and sale of
----------------------------------
the Shares to Purchaser shall comply in all respects with all applicable state
and federal securities laws and regulations, including those promulgated by the
U.S. Securities and Exchange Commission ("SEC"). No consent, approval or
authorization, which has not already been obtained, shall be required for the
issuance of the Shares with respect thereto from the Board of Directors, the
Company's Stockholders or any governmental agency, nor shall such issuance have
been prohibited or enjoined.
(v) Waiver. The Company's stockholders shall have waived any anti-
------
dilution rights or preemptive rights with respect to the Shares.
(vi) Lockup. The Purchaser shall have executed and delivered to the
------
Company the Lockup Agreement in the form requested by Donaldson, Lufkin &
Jenrette and attached hereto as Exhibit E.
---------
(vii) IPO Confirmation. The Company shall have received
----------------
acknowledgement from its investment bankers, their counsel and the Company's
counsel that the issuance of the Shares will not have an adverse impact on its
initial public offering.
-3-
<PAGE>
In the event that Company fails to issue the Shares as a result of any of
the conditions set forth in subsections (iv), (v) or (vii) of this Section 2.3
the Purchaser in lieu of the Shares, shall have the option to either (a)
terminate the Interactive Marketing Agreement or (b) require the Company to pay
to the Purchaser $2,000,000 in immediately available funds.
3. Representations and Warranties of the Company. The Company hereby
---------------------------------------------
represents and warrants that, except as set forth in the Schedule of Exceptions
("Schedule of Exceptions"), if any, attached to this Agreement as Exhibit F, the
---------
statements in the following paragraphs of this Section 3 are all true and
complete:
3.1 Organization, Good Standing and Qualification. The Company has
---------------------------------------------
been duly incorporated and organized, and is validly existing in good standing,
under the laws of the State of Delaware. The Company has the requisite
corporate power and authority to enter into and perform this Agreement and the
Rights Agreement, to own and operate its properties and assets and to carry on
its business as currently conducted and as presently proposed to be conducted.
The Company is duly qualified and is authorized to do business and is in good
standing as a foreign corporation in the State of California and in all
jurisdictions in which the nature of its activities and of its properties (both
owned and leased) makes such qualification necessary, except for those
jurisdictions in which failure to do so would not have a material adverse effect
on the Company or its business.
3.2 Due Authorization. All corporate action on the part of the
-----------------
Company's directors and stockholders necessary for the authorization, execution,
delivery of, and the performance of all obligations of the Company under this
Agreement, the authorization, issuance, reservation for issuance and delivery of
all of the Shares being sold under this Agreement has been taken or will be
taken prior to the Closing, and this Agreement constitutes, the valid and
legally binding obligation of the Company, enforceable against the Company in
accordance with its terms, except as may be limited by (i) applicable
bankruptcy, insolvency, reorganization or others laws of general application
relating to or affecting the enforcement of creditors' rights generally; and
(ii) the effect of rules of law governing the availability of equitable
remedies.
3.3 Valid Issuance of Stock. The Shares, when issued and paid for as
-----------------------
provided in this Agreement, will be duly authorized and validly issued, fully
paid and nonassessable and will be free of any liens or encumbrances; provided,
however, that the Shares may be subject to restrictions on transfer under state
and federal securities laws.
3.4 No Violation of Existing Agreements. Neither the execution and
-----------------------------------
delivery of this Agreement or any Related Agreement nor the consummation of the
transactions or performance of the Company's obligations contemplated hereby or
thereby will conflict with, result in a material breach or violation of, or
cause a default under, any provision of the Company's Certificate of
Incorporation or Bylaws, each as is currently in effect, any instrument,
contract or agreement that is material to the business of the Company or any
judgment, writ, decree, order, law, statute, ordinance, rule or regulation
applicable to the Company.
3.5 Financial Statements. The Company's unaudited balance sheet at
--------------------
December 31, 1999 and the related statements of cash flows for the periods then
ended (collec-
-4-
<PAGE>
tively, the "Financial Statements") (i) are or will be in accordance with the
books and records of the Company, (ii) present or will present fairly the
financial condition of the Company at such respective dates and the results of
its cash flows for the periods therein specified, (iii) have been or will be
prepared in accordance with the Company's accounting principles applied on a
consistent basis and (iv) have been prepared in all material respects in
accordance with GAAP. The Company has no liabilities or obligations in excess of
$250,000, absolute or contingent, which are not shown or provided for in the
Financial Statements, except liabilities or obligations incurred after December
31, 1999 in the ordinary course of business which, individually or in the
aggregate, would not have a material adverse effect upon the business,
operations or financial condition of the Company. Except as set forth in the
Financial Statements, the Company is not a guarantor of any indebtedness of any
other person, firm, or corporation. The Company maintains a system of accounting
procedures that are designed to facilitate the preparation, on a consistent
basis, of financial statements in accordance with the Company's accounting
principles.
3.6 Title to Property and Assets. Except with respect to ownership
----------------------------
of Proprietary Assets, which is addressed in Section 3.7, the Company has good
and marketable title to its properties and assets and has good title to its
leasehold estates. The properties and assets the Company owns are owned by the
Company free and clear of all mortgages, deeds of trust, liens, encumbrances and
security interests except for statutory liens for the payment of current taxes
that are not yet delinquent and liens, encumbrances and security interests which
arise in the ordinary course of business and which do not affect material
properties and assets of the Company. To the Company's knowledge, with respect
to the property and assets it leases, the Company is in material compliance with
such leases and, to its knowledge, holds a valid leasehold interest free of any
liens, claims or encumbrances.
3.7 Status of Proprietary Assets.
----------------------------
(a) Status. To the Company's knowledge, the Company has full title
------
and ownership of, or is duly licensed under or otherwise authorized to use, all
patents, patent applications, trademarks, service marks, trade names,
copyrights, mask works, trade secrets, confidential and proprietary information,
designs and proprietary rights (all of the foregoing collectively hereinafter
referred to as the "Proprietary Assets"), necessary to enable it to carry on its
business as now conducted by the Company without any conflict with or
infringement of the rights of others. The Investors acknowledge that the
Company currently has no patents, patent applications, registered copyrights or
copyright applications.
(b) Licenses; Other Agreements. Other than in the ordinary course of
--------------------------
the Company's business, the Company has not granted, and, to the Company's
knowledge, there are not outstanding, any material options, licenses or
agreements of any kind relating to any Proprietary Asset of the Company, nor is
the Company bound by or a party to any option, license or agreement of any kind
with respect to any of its Proprietary Assets. The Company is not obligated to
pay any royalties or other payments to third parties with respect to the
marketing, sale, distribution, manufacture, license or use of any Proprietary
Asset other than in the ordinary course of the Company's business.
-5-
<PAGE>
(c) Claims. To the Company's knowledge, the Company is not
------
infringing upon, violating or otherwise acting adverse to or, by conducting its
business as presently proposed, would infringe upon or violate any of the
patents, trademarks, service marks, trade names, copyrights or trade secrets or
other proprietary rights or Proprietary Assets of any other person or entity.
(d) Employees. The Company is not aware that any of its
----------
employees is obligated under any contract (including licenses, covenants or
commitments of any nature) or other agreement, or subject to any duties of the
Company that would conflict with the Company's business. Neither the execution
of this Agreement, nor the carrying on of the Company's business by the
employees of the Company, nor the conduct of the Company's business as presently
proposed, will, to the Company's knowledge, conflict with or result in a breach
of the terms, conditions or provisions of, or constitute a default under, any
contract, covenant or instrument under which any employee is now obligated. The
Company does not have any collective bargaining agreement covering any of its
employees. The Company does not believe it is or will be necessary to utilize
any inventions of any of its employees made prior to or outside the scope of
their employment by the Company.
3.8 Registration Rights. Except as provided in the Rights
-------------------
Agreement, the Company has not granted or agreed to grant to any person or
entity any rights (including piggyback registration rights) to have any
securities of the Company registered with the SEC or any other governmental
authority.
3.9 Litigation. There is no action, suit, proceeding, claim,
----------
arbitration or investigation ("Action") pending against the Company, its
activities, properties or assets or, to the Company's knowledge, against any
officer, director or employee of the Company in connection with such officer's,
director's or employee's relationship with, or actions taken on behalf of, the
Company. The Company is not a party to or subject to the provisions of any
order, writ, injunction, judgment or decree of any court or government agency or
instrumentality and there is no Action by the Company currently pending or which
the Company presently intends to initiate.
3.10 No Brokers. Neither the Company nor, to the Company's
----------
knowledge, any Company shareholder is obligated for the payment of fees or
expenses of any broker or finder in connection with the origin, negotiation or
execution of this Agreement.
3.11 Disclosure. The statements by the Company contained in this
----------
Agreement, the exhibits hereto, and the certificates and documents required to
be delivered by the Company to the Purchaser under this Agreement, taken as a
whole, do not contain any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements contained herein and
therein not misleading in light of the circumstances under which such statements
were made.
3.12 Securities Act. Subject to the accuracy of the Purchaser's
--------------
representations in Section 4 hereof, the offer, sale and issuance of the Common
Shares in conformity with the terms of this Agreement constitutes a transaction
exempt from the registration requirements of Section 5 of the Securities Act of
1933, as amended, and the qualification or registration requirements of any
applicable securities laws as such laws exist on the date hereof.
-6-
<PAGE>
4. Representations and Warranties of the Purchaser and Restrictions on
-------------------------------------------------------------------
Transfer Imposed by the Securities Act of 1933 and Applicable State Securities
- ------------------------------------------------------------------------------
Laws.
- ----
4.1 Representations and Warranties by the Purchaser. The Purchaser
-----------------------------------------------
represents and warrants to the Company as follows:
(a) The Shares are being or will be acquired for the Purchaser's
own account, for investment and not with a view to, or for resale in connection
with, any distribution or public offering thereof within the meaning of the
Securities Act of 1933, as amended (the "Securities Act"), or applicable state
securities laws.
(b) The Purchaser understands that (i) the Shares have not been
registered under the Securities Act by reason of their issuance in a transaction
exempt from the registration and prospectus delivery requirements of the
Securities Act pursuant to Section 4(2) thereof and have not been qualified
under any state securities laws on the grounds that the offering and sale of
securities contemplated by this Agreement are exempt from registration
thereunder, and (ii) the Company's reliance on such exemptions is predicated on
the Purchaser's representations set forth herein. The Purchaser understands
that the resale of the Common Shares may be restricted indefinitely, unless a
subsequent disposition thereof is registered under the Securities Act and
registered under any state securities law or is exempt from such registration.
(c) The Purchaser is an "Accredited Investor" as that term is
defined in Rule 501 of Regulation D promulgated under the Securities Act. The
Purchaser is able to bear the economic risk of the purchase of the Shares
pursuant to the terms of this Agreement, including a complete loss of the
Purchaser's investment in the Shares.
(d) The Purchaser has the full right, power and authority to
enter into and perform the Purchaser's obligations under this Agreement and each
Related Agreement, and this Agreement and each Related Agreement constitute
valid and binding obligations of the Purchaser enforceable in accordance with
their terms.
(e) No consent, approval or authorization of or designation,
declaration or filing with any Governmental Body on the part of the Purchaser is
required in connection with the valid execution and delivery of this Agreement
or any Related Agreement.
4.2 Legend. Each certificate representing the Common Shares may be
------
endorsed with the following legends:
(a) THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND ARE
"RESTRICTED SECURITIES" AS DEFINED IN RULE 144 PROMULGATED UNDER THE ACT. THE
SECURITIES MAY NOT BE SOLD OR OFFERED FOR SALE OR OTHERWISE DISTRIBUTED EXCEPT
(I) IN CONJUNCTION WITH AN EFFECTIVE REGISTRATION STATEMENT FOR THE SHARES UNDER
THE ACT, OR (II) IN COMPLIANCE WITH RULE 144 OR (III) OTHERWISE PURSUANT TO AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE ACT.
-7-
<PAGE>
(b) Any other legends required by applicable securities laws.
The Company may instruct its transfer agent not to register the transfer of the
Common Shares, unless the conditions specified in the foregoing legends are
satisfied.
4.3 Removal of Legend and Transfer Restrictions.
-------------------------------------------
Any legend endorsed on a certificate pursuant to Section
4.2(a) and the stop transfer instructions with respect to such Common Shares
shall be removed and the Company shall issue a certificate without such legend
to the holder thereof (1) if such Common Shares are registered under the
Securities Act and a prospectus meeting the requirements of Section 10 of the
Securities Act is available, or (2) if such legend may be properly removed under
the terms of Rule 144 promulgated under the Securities Act, and such holder
provides the Company with an opinion of counsel for such holder, reasonably
satisfactory to legal counsel for the Company to the effect that a sale,
transfer or assignment of such Securities may be made without registration.
5. Miscellaneous.
-------------
5.1 Waivers and Amendments. Neither this Agreement nor any provision
----------------------
hereof may be changed, waived, discharged or terminated orally, but only by a
statement in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought, except to the extent
provided in this subsection.
5.2 "Market Stand-Off" Agreement. Notwithstanding anything set forth
----------------------------
in the Rights Agreement, Purchaser hereby agrees that it shall not, to the
extent requested by the Company or an underwriter of securities of the Company,
sell or otherwise transfer or dispose of any Registrable Securities (as defined
in the Rights Agreement) or other shares of stock of the Company then owned by
such Purchaser at the time the registration statement is filed or thereafter
(other than to donees or partners of the Purchaser who agree to be similarly
bound or shares of Company stock purchased in the public market) for that number
of days so designated by the Company or the underwriter following the effective
date of a registration statement of the Company filed under the Securities Act
until the later of (i) one hundred eighty (180) days after the effective date of
the initial public offering ("IPO") registration statement, and (ii) the date of
the ***); provided, however, in no event shall such period exceed two years.
5.3 Sole Remedy. In the event of a material breach of the
-----------
representation of the Company set forth in Section 3.12 hereof, Purchaser shall
be entitled to receive two million dollars ($2,000,000) in exchange for
returning the Shares to the Company. The provisions of this Section 5.3 shall
be the sole and exclusive remedy for Purchaser in the event of a breach of the
representation set forth in Section 3.12.
5.4 Governing Law. This Agreement shall be governed in all respects
-------------
by the laws of the State of New York without regards to the principles of
conflicts of laws thereof.
5.5 Survival. The covenants and agreements made herein shall survive
--------
the execution of this Agreement and the Closing of the transactions contemplated
hereby.
-8-
*** CONFIDENTIAL MATERIAL REDACTED AND FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION.
<PAGE>
5.6 Successors and Assigns. Except as otherwise expressly provided herein and
----------------------
subject to the Related Agreements and applicable law, the provisions hereof
shall inure to the benefit of, and be binding upon, the successors, assigns,
heirs, executors and administrators of the parties hereto.
5.7 Entire Agreement. This Agreement, the Related Agreements and
----------------
other exhibits to this Agreement and the other documents delivered pursuant
hereto constitute the full and entire understanding and agreement between the
parties with regard to the subjects hereof and thereof.
5.8 Notices, etc. All notices, requests and other communications
------------
hereunder shall be in writing and shall be deemed to have been duly given at the
time of receipt if delivered by hand or by facsimile transmission or three days
after being mailed, registered or certified mail, return receipt requested, with
postage prepaid, to the address or facsimile number (as the case may be) listed
for each such party below such party's signature page hereto or, if any party
shall have designated a different address or facsimile number by notice to the
other parties given as provided above, then to the last address or facsimile
number so designated.
5.9 Separability. In case any provision of this Agreement shall be
------------
declared invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
5.10 Expenses. Each of the parties shall bear its respective
--------
expenses and legal fees incurred with respect to this Agreement, each of the
Related Agreements and the transactions contemplated hereby and thereby.
5.11 Titles and Subtitles. The titles of the paragraphs and
--------------------
subparagraphs of this Agreement are for convenience of reference only and are
not to be considered in construing this Agreement.
5.12 Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument. The Purchaser shall be deemed to have executed
and delivered this Agreement if it transmits to the Company or its counsel a
facsimile copy of a signed signature page hereof, in which case the Purchaser
shall promptly thereafter deliver to the Company a hard copy of a signed
counterpart of this Agreement.
5.13 Publicity. Neither party to this Agreement shall issue any
---------
press release or otherwise make any public announcement or disclosure with
respect to this Agreement, any of the Related Agreements or any of the
transactions contemplated hereby or thereby without the prior written consent of
the other party, unless such disclosure is required by applicable law.
-9-
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this Agreement as of the
day and year first above written.
SMARTAGE.COM CORP.
By: /s/ William Lohge
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
Address for Notice:
303 Second Street, 5/th/ Floor
----------------------------------------
San Francisco, CA 94107
----------------------------------------
Facsimile No.: (415) 343-4704
---------------------------
Attn: General Counsel - Legal Dept.
------------------------------------
With a copy to:
PILLSBURY MADISON & SUTRO LLP
2550 Hanover Street
Palo Alto, CA 94304
Facsimile No.: (650) 233-4545
Attn: Allison Leopold Tilley
AMERICA ONLINE, INC.
By: /s/ David M. Colburn
--------------------------------------
Name: David M. Colburn
------------------------------------
Title: President, Business Affairs
-----------------------------------
Address for Notice:
22000 AOL Way
------------------------------------------
Dulles, VA 20166
------------------------------------------
Facsimile No.: 703-265-1206
---------------------------
Attn: Senior VP for Business Affairs
------------------------------------
With a copy to:
America Online, Inc.
------------------------------------------
22000 AOL Way
------------------------------------------
Dulles, VA 20166
------------------------------------------
Facsimile No.: 703-265-1105
---------------------------
Attn: Deputy General Counsel
------------------------------------
-10-
<PAGE>
EXHIBIT A
---------
CERTAIN DEFINITIONS
-------------------
For purposes of the Agreement to which this Exhibit A is attached, the
following terms have the following meanings:
"Common Stock" means the common stock, par value $0.0001 per share, of the
Company.
"GAAP" means United States generally accepted accounting principles
consistently applied.
"Governmental Body" means any: (a) nation, state, commonwealth, province,
territory, county, municipality, district or other jurisdiction of any nature;
(b) federal, state, local, municipal, foreign or other government; or (c)
governmental or quasi-governmental authority of any nature (including any
governmental division, department, agency, commission, instrumentality,
official, organization, unit, body or entity and any court or other tribunal).
"Material Adverse Change" means a change which would have a Material
Adverse Effect.
"Material Adverse Effect." An event, violation or other matter will be
deemed to have a "Material Adverse Effect" on the Company if such event,
violation or other matter would be material in impact or amount to the Company's
business, intellectual property rights or condition, or, taken as a whole, its
assets, liabilities, operations, or financial performance.
"Person" means any individual, entity or Governmental Body.
"Pricing" shall have the meaning set forth in Section 1.2.
"Proprietary Asset" means: (a) any patent, patent application, trademark
(whether registered or unregistered), trademark application, trade name,
fictitious business name, service mark (whether registered or unregistered),
service mark application, copyright (whether registered or unregistered),
copyright application, maskwork, maskwork application, trade secret, know-how,
customer list, franchise, system, computer software, computer program,
invention, design, blueprint, engineering drawing, proprietary product,
technology, proprietary right or other intellectual property right or intangible
asset; and (b) any right to use or exploit any of the foregoing.
"Qualified Public Offering" shall refer to an underwritten registered
public offering of the Company's securities with expected net proceeds to the
Company of at least $50,000,000.
"Related Agreements" means (a) the Amendment to the Rights Agreement in
the form attached as Exhibit B to the Agreement; (b) the Interactive Marketing
---------
Agreement; (c) the Waiver of Registration Rights and Notice Agreement; (d) the
Lockup Agreement; and (e) any other
A-1
<PAGE>
agreement or document entered into by any of the parties in connection with the
Agreement or any of the transactions contemplated thereby.
A-2
<PAGE>
EXHIBIT B
---------
AMENDMENT TO THE SECOND AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
------------------------------------------------------------------------
B-1
<PAGE>
SMARTAGE.COM CORP.
AMENDMENT TO THE
SECOND AMENDED AND RESTATED
INVESTORS' RIGHTS AGREEMENT
THIS AMENDMENT TO THE SECOND AMENDED AND RESTATED INVESTORS' RIGHTS
AGREEMENT (this "Amendment") is made and entered into as of the ____ day of
March, 2000 by and among SMARTAGE.COM CORP., a Delaware corporation (the
------------------
"Company"), and the signatories hereto.
RECITALS:
A. The Company and certain of the signatories hereto entered into that
certain Second Amended and Restated Investors' Rights Agreement (the "Rights
Agreement") dated as of October 5, 1999.
B. Pursuant to Section 5.2 of the Rights Agreement such Agreement can be
amended with the consent of the Company, certain of the founders and the holders
of sixty percent of the Registrable Securities (as defined in the Rights
Agreement).
C. The Company has entered into that certain Interactive Marketing
Agreement between the Company and America Online, Inc., a Delaware Corporation
("AOL") as of even date hereof and as a condition thereof the Company agreed to
make AOL a party to the Rights Agreement with respect to certain provisions.
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
promises hereinafter set forth and other due and valid consideration, the
parties hereto agree as follows:
1. The parties hereto agree that the definition of Registrable Securities
set forth in Section 2.1(b) of the Rights Agreement be deleted in its entirety
and replaced with the following:
"Registrable Securities. The term "Registrable Securities" means: (1) all
---------------------- ----------------------
the shares of Common Stock of the Company issued or issuable upon the
conversion of any shares of Series A Stock issued under the Series A
Agreement or any shares of Series B Stock issued under the Series B
Agreement or any shares of Series C Stock issued under the Series C
Agreement, as such agreement may hereafter be amended from time to time
that are now owned or may hereafter be acquired by any Investor or any
Investor's successors and permitted assigns; (2) all the shares of Common
Stock of the Company issued or issuable upon the conversion of any shares
of Series C Stock issued upon exercise of any warrants, that are now owned
or may be hereafter acquired by an Investor or any Investor's successors or
permitted assigns; (3) the shares of Common Stock now held by the Founders
and set forth in Exhibit B attached hereto (the "Founders' Shares"); (4)
--------- ----------------
the shares of Common Stock issued or issuable to America Online, Inc., a
Delaware corporation
-1-
<PAGE>
("AOL") pursuant to that certain Interactive Marketing Agreement entered
into between the Company and AOL, dated as of March __, 2000; and (5) any
shares of Common Stock of the Company issued (or issuable upon the
conversion or exercise of any warrant, right or other security which is
issued) as a dividend or other distribution with respect to, or in exchange
for or in replacement of, all such shares of Common Stock described in
clause (1), (2), (3) or (4) of this subsection (b); provided that
Registrable Securities shall not, however, include any shares that formerly
were Registrable Securities and that (a) have been sold or transferred by a
person or entity in a transaction in which rights under this Section 2 are
not assigned in accordance with this Agreement, (b) have been sold or
transferred to the public pursuant to Rule 144 promulgated under the
Securities Act of 1933, as amended ("Rule 144") or (c) may, within a 90-day
--------
period, be sold to the public without volume restrictions pursuant to Rule
144 unless the Holder of such shares holds more than 5% of the outstanding
shares of Common Stock of the Company."
2. Section 5.2 of the Rights Agreement is deleted in its entirety and
replaced by the following:
"5.2 Amendment of Rights. Subject to Section 2.12 and 5.3, any provision
-------------------
of this Agreement may be amended and the observance thereof may be waived
(either generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and sixty
percent (60%) of the shares of the then outstanding Registrable Series A
Stock, Registrable Series B Stock, Registrable Series C Stock and
Registrable Securities held by AOL, voting collectively as a separate
class, and a majority of the shares of the then outstanding Common Stock
held by any two or more Founders. Any amendment or waiver effected in
accordance with this Section 5.2 shall be binding upon each Investor, each
Founder, each Holder, each permitted successor or assignee of such Investor
or Holder and the Company."
3. The undersigned agree that AOL is hereby included as an "Investor" in
the List of Investors, attached to the Rights Agreement as Exhibit A.
---------
4. The Company and the undersigned hereby agree that AOL shall become a
party to the Rights Agreement for purposes of Sections 1, 2 (excluding Section
2.2), 3, 5.2, 6 and 8 only; provided that, for purposes of Section 1, AOL shall
have the same rights and obligations as the Holders of 53,333 shares of Series A
Preferred Stock, and for the purposes of Section 2.3, AOL shall have the same
rights and obligations as the Holders of Registrable Series A Stock. By
execution of this Amendment AOL agrees to become a party to and be bound by the
provisions of the Rights Agreement with respect to such Sections and to abide by
the terms of the Rights Agreement.
5. Except as modified by this Amendment, all other terms and conditions in
the Rights Agreement shall remain in full force and effect and this Amendment
shall be governed by all provisions thereof.
-2-
<PAGE>
6. This Amendment will take effect immediately upon the execution hereof
by the Company, AOL and the holders of the requisite number of securities as set
forth in the Rights Agreement.
7. This Amendment may be executed in separate counterparts, all of which
taken together shall constitute a single instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment
effective as of the day and year first above written.
SMARTAGE.COM CORP.
By
--------------------------------------
Brian McGee
Vice President of Finance
AMERICA ONLINE, INC.
By
--------------------------------------
INVESTORS
---------
SOFTBANK CAPITAL PARTNERS, LP
By
--------------------------------------
Title
-----------------------------------
SOFTBANK CAPITAL ADVISORS FUND, LP
By
--------------------------------------
Title
-----------------------------------
-3-
<PAGE>
ACCEL VI L.P.
By: Accel VI Associates L.L.C.
Its general partner
By
--------------------------------------
Managing Member
ACCEL INTERNET FUND II L.P.
By: Accel Internet Fund II Associates L.L.C.
Its general partner
By
--------------------------------------
Managing Member
ACCEL KEIRETSU VI L.P.
By: Accel Keiretsu VI Associates L.L.C.
Its general partner
By
--------------------------------------
Managing Member
ACCEL INVESTORS `98 L.P.
By
--------------------------------------
General Partner
-4-
<PAGE>
EL DORADO VENTURES IV, LP
By
--------------------------------------
General Partner
EL DORADO TECHNOLOGY 98
By
--------------------------------------
General Partner
INTEGRAL CAPITAL PARTNERS IV L.P.
By
--------------------------------------
General Partner
INTEGRAL CAPITAL PARTNERS IV MS SIDE FUND
By
--------------------------------------
General Partner
VECTOR CAPITAL LP.
By: VECTOR CAPITAL PARTNERS L.L.C.
Its General Partner
By
--------------------------------------
Alex Slusky, Managing Member
-5-
<PAGE>
WONDERSTAR INVESTMENTS, INC.
By
--------------------------------------
Michael Leeds
--------------------------------------
Stephen Grant
--------------------------------------
Anne-Marie Grant
--------------------------------------
Daniel Lynch
--------------------------------------
Roland Pieper
--------------------------------------
Benjamin Rosen
VIRANI FAMILY 1993 REVOCABLE TRUST
By
--------------------------------------
Trustee
--------------------------------------
Vinton Cerf
-6-
<PAGE>
--------------------------------------
Sigrid Cerf
--------------------------------------
Albert Wu
--------------------------------------
William Lohse
--------------------------------------
John Thomsen
--------------------------------------
Erica Thomsen
-7-
<PAGE>
EXHIBIT C
---------
EXAMPLES OF OPERATION OF SECTION 1.2
------------------------------------
Example 1
- ---------
Pricing Committee of the Company's Board of Directors sets price at $20.
Purchaser receives 100,000 Shares.
Example 2
- ---------
Pricing Committee of the Company's Board of Directors sets price at $10.
Purchaser receives 200,000 Shares.
Example 1
- ---------
Pricing Committee of the Company's Board of Directors sets price at $15.
Purchaser receives 133,333 Shares.
C-1
<PAGE>
EXHIBIT D
Waiver of Registration Rights and Notice
SmartAge.com Corp.
c/o Bradley Johnsen
Pillsbury Madison & Sutro LLP
2550 Hanover Street
Palo Alto, CA 94304
Facsimile: (650) 233-4545
Ladies and Gentlemen:
The undersigned has been informed of a proposed public offering of shares
of Common Stock of SmartAge.com Corp., a Delaware corporation (the "Company")
pursuant to a Registration Statement on Form S-1 to be filed with the Securities
and Exchange Commission (the "Offering").
The undersigned, as to all of the securities of the Company owned now or
acquired in the future, hereby waives his, her, or its registration rights, if
any (including, without limitation, any registration rights pursuant to that
certain Second Amended and Restated Investors' Rights Agreement, dated October
5, 1999, by and among the Company and the parties named therein (including any
amendments thereto, the "Rights Agreement"), with respect to the Offering and
waives the Company's obligation to comply with any and all notice requirements,
including, without limitation, the notice requirements of the Agreement, in
connection with the Offering.
Dated: March ___, 2000 ---------------------------------
Print Stockholder Name
By:
-----------------------------
(signature)
---------------------------------
Name of person signing
(please print)
Title:
--------------------------
(if applicable)
D-1
<PAGE>
EXHIBIT E
---------
DLJ Lockup
February 23, 2000
SmartAge.com Corp.
3450 California Street
San Francisco, California 94118
Donaldson, Lufkin & Jenrette Securities Corporation
Merrill Lynch, Pierce, Fenner & Smith Incorporated
U.S. Bancorp Piper Jaffray
DLJdirect, Inc.
c/o Donaldson, Lufkin & Jenrette Securities Corporation
277 Park Avenue
New York, New York 10172
Dear Sirs:
The undersigned understands that Donaldson, Lufkin & Jenrette
Securities Corporation, Merrill Lynch, Pierce, Fenner & Smith Incorporated,
U.S. Bancorp Piper Jaffray and DLJdirect, Inc., as Representatives of the
several underwriters (the "Underwriters"), propose to enter into an
Underwriting Agreement with SmartAge.com Corp. (the "Company"), providing for
the initial public offering (the "Initial Public Offering") of common stock,
par value $.0001 per share (the "Common Stock"), of the Company.
To induce the Underwriters that may participate in the Initial Public
Offering to continue their efforts in connection with the Initial Public
Offering, the undersigned, from the date hereof and until the later of (i) and
through the end of the 180-day period after the date of the final prospectus
relating to the Initial Public Offering (the "Final Prospectus") and (ii) the
date of the ***; provided, however, in no event shall such period exceed two
years:
(i) agrees not to (x) offer, pledge, sell, contract to sell, sell any
option or contract to purchase, purchase any option or contract
to sell, grant any option, right or warrant to purchase, or
otherwise transfer or dispose of, directly or indirectly, any
shares of Common Stock or any securities convertible into or
exercisable or exchangeable for Common Stock (including, without
limitation, shares of Common Stock or securities convertible into
or exercisable or exchangeable for Common Stock which may be
deemed to be beneficially owned by the undersigned in accordance
with the rules and regulations of the Securities and Exchange
Commission) (collectively, "Company Securities") or (y) enter
into any swap or other arrangement that transfers all or a
portion of the economic consequences associated with the
E-1
*** CONFIDENTIAL MATERIAL REDACTED AND FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION.
<PAGE>
ownership of any Company Securities (regardless of whether any of the
transactions described in clause (x) or (y) is to be settled by the delivery of
Company Securities, in cash or otherwise), without the prior written consent of
Donaldson, Lufkin & Jenrette Securities Corporation and Merrill Lynch, Pierce,
Fenner & Smith Incorporated;
(ii) agrees not to make any demand for, or exercise any right with
respect to, the registration of any Company Securities, without
the prior written consent of Donaldson, Lufkin & Jenrette
Securities Corporation and Merrill Lynch, Pierce, Fenner & Smith
Incorporated; and
(iii) authorizes the Company to cause the transfer agent to decline to
transfer and/or to note stop transfer restrictions on the
transfer books and records of the Company with respect to any
Company Securities for which the undersigned is the record
holder and, in the case of any such shares or securities for
which the undersigned is the beneficial but not the record
holder, agrees to cause the record holder to cause the transfer
agent to decline to transfer and/or to note stop transfer
restrictions on such books and records with respect to such
shares or securities;
provided further, that the in the event the *** has occurred, restrictions in
clause (i) above shall cease to apply to (A) 25% of the Company Securities
beneficially owned by the undersigned on the date of the Final Prospectus upon
the later to occur of (I) the end of the 90-day period after the date of the
Final Prospectus or (II) the second trading day following the first public
release of the Company's quarterly results after the date of the Final
Prospectus, and (B) an additional 25% of the Company Securities beneficially
owned by the undersigned on the date of the Final Prospectus, upon the end of
the 135-day period after the date of the Final Prospectus if, in the case of
both clauses (A) and (B), (X) the reported last sale price of the Common Stock
on the Nasdaq National Market is at least twice the price per share in the
Initial Public Offering for 20 of the 30 trading days ending on (a) in the case
of clause (A) above, the later of (1) the last trading day of the 90-day period
after the date of the Final Prospectus or (2) the second trading day following
the first public release of the Company's quarterly results after the date of
the Final Prospectus and (b) in the case of clause (B) above, the last trading
day of the 135-day period after the date of the Final Prospectus and (Y) the
undersigned is not, and has not been since the date of the Final Prospectus, an
officer, director or affiliate of the Company; provided further, that the
undersigned agrees to give Donaldson Lufkin & Jenrette Securities Corporation,
Merrill Lynch, Pierce, Fenner & Smith Incorporated and the Company written
notice three business days prior to taking any of the actions set forth in
clause (i) above pursuant to the preceding proviso and to execute any such
action only through Donaldson Lufkin & Jenrette Securities Corporation or any of
its affiliates acting as broker, unless otherwise agreed in writing by Donaldson
Lufkin & Jenrette Securities Corporation. Furthermore, the provisions of the
preceding proviso regarding the cessation of the restrictions in clause (i)
above shall not apply to any Company Securities received by any securityholder
as a result of a gift or transfer permitted pursuant to the following paragraph.
Notwithstanding the foregoing, this Lock-Up Agreement shall not apply to
(1) a bona fide gift or gifts, provided that the donee or donees thereof agree
in writing with the Under-
E-2
*** CONFIDENTIAL MATERIAL REDACTED AND FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION.
<PAGE>
writers to be bound by the terms of this Lock-Up Agreement, (2) a transfer to
any trust for the benefit of the undersigned or the undersigned's immediate
family, provided that the trustee of the trust, as applicable, agrees with the
Underwriters in writing, on behalf of the trust, to be bound by the terms of
this Lock-Up Agreement or (3) shares of Common Stock purchased on the Nasdaq
National Market or as part of a directed share program, provided that the
undersigned is not an officer, director or affiliate of the Company.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to enter into the agreements set forth herein, and
that, upon request, the undersigned will execute any additional documents
necessary or desirable in connection with the enforcement hereof. All authority
herein conferred or agreed to be conferred shall survive the death or incapacity
of the undersigned and any obligations of the undersigned shall be binding upon
the heirs, personal representatives, successors, and assigns of the undersigned.
Notwithstanding the foregoing, this agreement shall lapse and become null
and void on the earlier of: (i) November 30, 2000 if the Initial Public Offering
has not been consummated on or before November 30, 2000; (ii) the date that the
Company informs the Underwriters in writing that the Company does not intend to
proceed with the Initial Public Offering; or (iii) the date that the
Underwriters inform the Company in writing that the Underwriters do not intend
to proceed with the Initial Public Offering.
Very truly yours,
AMERICA ONLINE, INC.
--------------------------------------
Name: David M. Colburn
Address: 22000 AOL Way
Dulles, VA 20166
E-3
<PAGE>
Social Security or Taxpayer Identification No.:
Number of shares of Common Stock owned:
Certificate Numbers:
Number and name of securities that are convertible into, or
exercisable or exchangeable for, Common Stock:
Number of shares of Common Stock issuable upon conversion,
exercise or exchange of such securities:
Certificate Numbers:
E-4
<PAGE>
Confidential Information
EXHIBIT F
---------
SCHEDULE OF EXCEPTIONS
----------------------
Series C Preferred Stock
Any disclosures made under one section of this Schedule of Exceptions may
apply to and/or qualify disclosures made under one or more other sections.
Section headings are provided for convenience only. Unless otherwise defined,
any capitalized terms in this Schedule of Exceptions shall have the same
meanings assigned to such terms in this Restricted Stock Purchase Agreement (the
"Agreement"), including without limitations, the Waiver of Registration Rights
---------
(the "Waiver") and the Second Amended and Restated Investors' Rights Agreement
(the "Rights Agreement"). Except as otherwise noted below, the Purchaser has
been provided with the documents, agreements and other materials referred to
herein and is deemed to have knowledge of the terms and conditions of such
documents, agreements and materials. Nothing in this Schedule of Exceptions
constitutes an admission of any liability or obligation of the Company to any
third party, nor an admission against the Company's interests.
Section 3.1:
- -----------
The Company currently maintains offices in San Francisco, California,
Charlotte, North Carolina and New York, New York. The Company also lists a
mailing address in Glenbrook, Nevada. The Company has one employee that works
and resides in Illinois, one employee that works and resides in Massachusetts
and one employee that works and resides in Kentucky. The Company is not
qualified to transact business in states other than California, North Carolina
Kentucky, Massachusetts, Oregon, Georgia and Nevada. The Company does not have a
business license or city/county permit in any jurisdiction mentioned in this
paragraph. The Company has filed and is in the process of completing the
necessary paperwork for qualification of the Company's business in the following
States: New York and Illinois.
Section 3.5
- -----------
The Company has no other material expenses other than the ones related to
(a) the company's first underwritten public offering; (b) cost of relocation of
the Company's headquarters; (c) payment of premiums for Director, Officer and
Employee insurance; (d) cost of advertising and promotional campaigns; and (e)
cost related to the creation of Japanese Joint Venture.
Section 3.6:
- ------------
The Company does not have any registered patents, copyrights, or any
pending patent or copyright applications. The Company received a federal
trademark registration for "SmartClicks" from the United States Patent &
Trademark Office (the "PTO"). In addition, the
F-1
<PAGE>
Confidential Information
Company has filed with the PTO an intent-to-use trademark application on June
22, 1998 for the mark "SmartAge," an intent-to-use trademark application on
March 5, 1999 for the mark "SmartAge.com," and an intent-to-use trademark
application on April 12, 1999 for the mark "Corner Office." No other trademark
applications have been filed. The Company is also using the marks "SmartAge
Media Buyer," "SmartAge Business Success Packs," "SmartAge Submit," "SmartAge
SiteRank," "SmartAge SiteWatch," "SmartAge SmartOpps," "SmartAge SmartStarters,"
and "SmartAge Banner Studio," for which the Company may have acquired certain
common law rights, and which may be subject to challenge by other
companies/third parties.
The Company is a party to various marketing/services agreements under which
the Company has granted to third parties the right to promote the Company and/or
its products or services using the phrase, "Powered by SmartAge" or similar
phrases. These agreements generally provide that such third parties may use the
Company's name, brands, trademarks or other such identifying marks, and that the
use of any such Company identifying marks is conditioned on the prior written
consent of the Company.
The Company has become aware that one of its employees, Irit Spitalnik (the
director of ad sales), has executed a non-compete covenant in favor of her
former employer, DoubleClick Inc., which under its terms expires one year after
termination of employment. Ms. Spitalnik has advised the Company that she left
the employ of DoubleClick, Inc. in December 1998. The Company has received a
verbal release from the CEO of DoubleClick, Inc. for Ms. Spitalnik from the non-
compete agreement (but has not yet requested or received a written release from
DoubleClick, Inc.)
Section 3.6:
- ------------
The Company currently leases office space in San Francisco, California and
Charlotte, North Carolina, pursuant to the terms of the following lease
agreements: (i) that certain Lease Agreement between the Company (as subtenant)
and the Juvenile Diabetes Foundation International (as sublessor) dated as of
March 17, 1998, with a term of two (2) years and a current monthly rent of
$1,794 (which varies over the term of the lease); (ii) that certain Office Lease
between the Company and Western Investment Real Estate Trust dated as of August
8, 1998, with a term of five (5) years and a current monthly rent of $9,900
(which varies over the term of the lease); (iii) that certain Lease Agreement
between the Company and FSP Park Seneca Limited Partnership dated as of February
13, 1998, and a subsequent amendment thereto, with a term of three (3) years and
a current monthly rent of $4,127 (which varies over the term of the lease); (iv)
that certain Lease Agreement between Company and The Canada Life Assurance
Company dated as of August 12, 1999, with a term of six (6) months and a monthly
rent of approximately $6,549; and (v) that certain Office Lease Agreement
between the Company and The Equitable Life Assurance Society of the United
States dated as of August 10, 1999, with a term of five (5) years and a monthly
rent of $69,003 (which varies over the term of the lease) commencing on or about
April 1, 2000. Such Lease Agreement will be amended this month of November,
1999, whereas the monthly rent will be increased to $133,493 per month. William
and Victoria Lohse have provided personal guarantees in connection with the
leases itemized
F-2
<PAGE>
Confidential Information
under (i) and (ii) above. The Company is scheduled to relocate its headquarters
on or about April 1, 2000 at the 303 2nd Street address, in San Francisco,
California.
The Company recently entered into a Lease Agreement with The Rotunda
Building commencing on March 1, 2000 with a term of six years until February 28,
2006 and a monthly rent of approximately $ 3,118.00.
The Company also has entered into an Executive Office Services Agreement
dated as of March 9, 1999 by and between the Company and Virgo Business Centers
L.L.C. (as lessor), under which the Company has leased certain office space in
New York beginning April 1, 1999 for an initial term of six (6) months until
September 30, 1999, and automatically renewing for additional six (6) month
periods unless terminated. Monthly lease payments under this lease are
approximately $2,000. The Company also leases a corporate apartment in
Sausalito, California for use by William Lohse, an officer and director of the
Company. The lease agreement is between VBM Corp., as lessor, and William Lohse
as lessee. The monthly rental payment on this corporate apartment is
approximately $5,000. The Company expects that Mr. Lohse will assign and
delegate his rights and obligations under this lease to the Company, and the
Company will assume such obligations, shortly after the Closing.
On November 1, 1999 the Company entered into a five (5) month lease with Y.
Clement Shek and Lisa Shekending and ending on March 30, 2000. Monthly payments
under this lease are approximately $4,820.00.
On February 9, 2000 the Company entered into a two (2) month lease with KBS
Properties LLC and ending on April 10, 2000. Monthly payments under this lease
are approximately $23,750.
The Company has entered into an Agreement for Irrevocable Standby Letter of
Credit and Security Agreement (collectively, the "Letter of Credit") dated July
22, 1999, with Union Bank of California pursuant to the requirements of the
Company's lease with The Equitable Life Assurance Society of the United States,
described above. The Letter of Credit automatically renews for one (1) year
periods, unless terminated, with a final expiration date of January 30, 2005.
Under the Letter of Credit, the Company deposited $977,543 as security and
recently increased the amount to $1,300,000, with interest accruing to the
Company. This deposit requirement automatically decreases over the term of the
agreement. Additionally the Company has recently entered into an Agreement for
Irrevocable Standby Letter of Credit and Security Agreement for that property
located at 4201 Congress St, Charlotte, NC 28209, The Rotunda Building in the
amount of approximately $637,564.
Section 3.8
- -----------
In July 1998, the Company issued a warrant to Lycos, Inc. ("Lycos") which
was amended in March 1999, to purchase an aggregate of 1,092,159 shares of our
Series A preferred stock at an exercise price of $0.9375 per share. This warrant
expires in July 2002. Pursuant to the term of this warrant, Lycos was granted
certain registration rights in connection with S-3 registration.
F-3
<PAGE>
Confidential Information
Section 3.9:
- ------------
On June 9, 1999, Internet Finance Corporation ("IFC") filed a Demand for
Arbitration with the American Arbitration Association in San Francisco,
Arbitration No. 74-117-0822-99. The Demand alleges breach of contract, breach of
express warranty, negligence, specific performance, fraud in the inducement,
unconscionable contract, failure of essential purpose of remedy, injunctive
relief, and intentional misrepresentation. On July 21, 1999 SmartAge filed an
answer and Counterclaim against IFC. On January 25, 2000 a five-day arbitration
hearing was conducted which concluded on February 1, 2000. On February 11, 2000
IFC filed a post-arbitration brief requesting $243,000 in what IFC called
"compensatory" damages; $2,143,000 for lost valuation; $1,000,000 in punitive
damages; and injunctive relief. The Company filed a brief on February 22, 2000.
IFC responded on March 6, 2000.
F-4
<PAGE>
EXHIBIT G
---------
OPINION OF COUNSEL
------------------
G-1
<PAGE>
[PILLSBURY MADISON & SUTRO LLP LOGO]
__________________, 2000
America Online, Inc.
________________
________________
Attn: __________
Re: SmartAge.com Corp. - Sale of Common Stock
Ladies and Gentlemen:
We have acted as counsel for SmartAge.com Corp., a Delaware corporation
(the "Company") in connection with the Restricted Stock Purchase Agreement dated
as of March __, 2000 (the "Purchase Agreement"), by and among the Company and
America Online, Inc. ("AOL"). This letter is provided to you in satisfaction of
the requirement set forth in Section 2.3(a)(iv) of the Purchase Agreement. The
Purchase Agreement provides, among other things, for the sale and purchase of
shares of the Company's Common Stock (the "Common Stock"). Terms not otherwise
defined herein have the meanings given to them in the Purchase Agreement.
In connection with the foregoing, we have examined the Purchase Agreement,
the Schedule of Exceptions to the Purchase Agreement, the Amendment to the
Second Amended and Restated Investors' Rights Agreement (the "Rights Agreement
Amendment"), records of proceedings of the directors and stockholders of the
Company, the Amended and Restated Certificate of Incorporation (the "Restated
Certificate") and Bylaws of the Company, certificates of officers of the Company
and public officials, and such other documentation as we have deemed necessary
or advisable in order to render the opinions expressed herein. As to questions
of fact material to such opinions, we have, when relevant facts were not
independently established, relied upon certificates of officers of the Company.
Based upon the foregoing and except as set forth on the Schedule of
Exceptions to the Purchase Agreement, it is our opinion that:
1. The Company has been duly incorporated and organized, is validly
existing and in good standing under the laws of the State of Delaware and has
the requisite corporate power and authority to own and operate its property and
assets and to conduct its business as it is currently being conducted. The
Company is qualified to do business as a foreign corporation in California North
Carolina, Kentucky, Nevada, Oregon, Georgia and Massachusetts.
<PAGE>
America Online, Inc.
__________, 2000
Page 2
2. The Company has all requisite corporate power and authority to execute,
deliver and perform its obligations under the Purchase Agreement, the
Interactive Marketing Agreement (the "Marketing Agreement") and the Rights
Agreement Amendment (collectively, the "Agreements"), to sell, issue and deliver
the Common Stock pursuant to the Purchase Agreement, and to carry out and
perform its obligations under the terms of the Agreements.
3. The Common Stock, when issued in accordance with the Company's Restated
Certificate and the terms of the Purchase Agreement, will be validly issued,
fully paid and nonassessable.
4. The Agreements have been duly and validly authorized, executed and
delivered by the Company, constitute legal, valid and binding agreements of the
Company, and are enforceable against the Company in accordance with their
respective terms.
5. The execution, delivery and performance of the Agreements by the
Company do not and the issuance of the shares of Common Stock pursuant thereto
will not, violate any provision of the Company's Restated Certificate or Bylaws,
and do not violate or contravene (i) any governmental statute, rule or
regulation applicable to the Company, (ii) any order, writ, judgment,
injunction, decree, determination or award which has been entered against the
Company and of which we are aware, or (iii) any contract of which we are aware
to which the Company is a party or by which the Company is bound, existing on
the date hereof, the violation or contravention of which would materially and
adversely affect the Company, its assets, financial condition or operations.
6. All consents, approvals, authorizations, or orders of, and filings,
registrations, and qualifications with any state or federal regulatory authority
or governmental body in the United States required for the consummation by the
Company of the transactions contemplated by the Purchase Agreement, have been
made or obtained, except for filings such as may be required to be filed
pursuant to applicable federal and state securities laws subsequent to the
consummation of the transactions contemplated by the Purchase Agreement.
The foregoing opinions are subject to the following qualifications:
Our opinion in paragraph 1 as to the good standing of the Company under the
laws of the states of Delaware, California, North Carolina, Kentucky, Nevada,
Oregon, Georgia and Massachusetts is based solely upon a review of certificates
of good standing from such States.
Our opinion in paragraph 3 above is subject to and limited by (i) the
effect of bankruptcy, insolvency, reorganization, receivership, conservatorship,
arrangement, moratorium or other laws affecting or relating to the rights of
creditors generally; (ii) the rules governing the availability of specific
performance, injunctive relief or other equitable remedies and general
principles of equity, regardless of whether considered in a proceeding in equity
or at law; and (iii) the effect of applicable court decisions, invoking statutes
or principles of equity, which have
<PAGE>
America Online, Inc.
__________, 2000
Page 3
held that certain covenants and provisions of agreements are unenforceable where
the breach of such covenants or provisions imposes restrictions or burdens upon
a party and it cannot be demonstrated that the enforcement of such restrictions
or burdens is necessary for the protection of the other party. We also express
no opinion as to the enforceability of the provisions of the Second Amended and
Restated Investors' Rights Agreement purporting to provide for indemnification
and contribution, to the extent that enforcement thereof may be limited by
public policy or otherwise.
We have assumed the genuineness of all signatures, the authenticity of all
documents submitted to us as originals, the conformity to original documents of
all documents submitted to us as photostatic or telecopied originals, the legal
capacity of all natural persons.
We draw your attention to the fact that we have not represented the Company
prior to August 1999. Furthermore, we have never acted as the Company's
transfer agent for its stock and other securities.
In rendering the opinion in paragraph 4 above, we have assumed that the
governing law (exclusive of California laws relating to conflicts of laws) of
each such material contracts is California law. We have not reviewed, however,
the covenants, if any, in any of such material contracts that contain financial
ratios and other similar financial restrictions, and no opinion is provided with
respect thereto.
This opinion is limited in all respects to matters governed by the laws of
the State of California, the General Corporation Law, as amended, of the State
of Delaware and the laws of the United States, and we express no opinion
concerning the laws or regulations of any other jurisdiction or jurisdictions.
We express no opinion as to the effect on the transaction of the antitrust laws
of California, Delaware or the United States. We express no opinion regarding
the compliance with the laws of any other states other than Delaware and
California in which offers or sales of Purchased Shares are made or deemed under
the laws of such states to have been made.
We assume that you know of no agreements, understandings or negotiations
between the parties not set forth in the Agreements that would modify the terms
or rights and obligations of the parties thereunder.
Whenever a statement herein is qualified by "to our knowledge," "we are not
aware" or similar phrase, it indicates that in the course of our representation
of the Company no information that would give us current actual knowledge of the
inaccuracy of such statement has come to the attention of the attorneys in this
firm principally responsible for handling current matters for the Company. We
have not made any independent investigation to determine the accuracy of such
statement, except as expressly described herein.
<PAGE>
America Online, Inc.
__________, 2000
Page 4
This opinion is being delivered to you by us as counsel to the Company in
connection with the transaction described above and may not be delivered to or
relied upon by any other person without our express written approval.
Very truly yours,
<PAGE>
EXECUTION COPY
EXHIBIT J
AMENDMENT TO INVESTOR RIGHTS AGREEMENT
60
CONFIDENTIAL
<PAGE>
SMARTAGE.COM CORP.
AMENDMENT TO THE
SECOND AMENDED AND RESTATED
INVESTORS' RIGHTS AGREEMENT
THIS AMENDMENT TO THE SECOND AMENDED AND RESTATED INVESTORS' RIGHTS
AGREEMENT (this "Amendment") is made and entered into as of the ____ day of
March, 2000 by and among SMARTAGE.COM CORP., a Delaware corporation (the
------------------
"Company"), and the signatories hereto.
RECITALS:
A. The Company and certain of the signatories hereto entered into that
certain Second Amended and Restated Investors' Rights Agreement (the "Rights
Agreement") dated as of October 5, 1999.
B. Pursuant to Section 5.2 of the Rights Agreement such Agreement can be
amended with the consent of the Company, certain of the founders and the holders
of sixty percent of the Registrable Securities (as defined in the Rights
Agreement).
C. The Company has entered into that certain Interactive Marketing
Agreement between the Company and America Online, Inc., a Delaware Corporation
("AOL") as of even date hereof and as a condition thereof the Company agreed to
make AOL a party to the Rights Agreement with respect to certain provisions.
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
promises hereinafter set forth and other due and valid consideration, the
parties hereto agree as follows:
1. The parties hereto agree that the definition of Registrable Securities
set forth in Section 2.1(b) of the Rights Agreement be deleted in its entirety
and replaced with the following:
"Registrable Securities. The term "Registrable Securities" means: (1) all
---------------------- ----------------------
the shares of Common Stock of the Company issued or issuable upon the
conversion of any shares of Series A Stock issued under the Series A
Agreement or any shares of Series B Stock issued under the Series B
Agreement or any shares of Series C Stock issued under the Series C
Agreement, as such agreement may hereafter be amended from time to time
that are now owned or may hereafter be acquired by any Investor or any
Investor's successors and permitted assigns; (2) all the shares of Common
Stock of the Company issued or issuable upon the conversion of any shares
of Series C Stock issued upon exercise of any warrants, that are now owned
or may be hereafter acquired by an Investor or any Investor's successors or
permitted assigns; (3) the shares of Common Stock now held by the Founders
and set forth in Exhibit B attached hereto (the "Founders' Shares"); (4)
--------- ----------------
the shares of Common Stock issued or issuable to America Online, Inc., a
Delaware corporation
-1-
<PAGE>
("AOL") pursuant to that certain Interactive Marketing Agreement entered
into between the Company and AOL, dated as of March __, 2000; and (5) any
shares of Common Stock of the Company issued (or issuable upon the
conversion or exercise of any warrant, right or other security which is
issued) as a dividend or other distribution with respect to, or in exchange
for or in replacement of, all such shares of Common Stock described in
clause (1), (2), (3) or (4) of this subsection (b); provided that
Registrable Securities shall not, however, include any shares that formerly
were Registrable Securities and that (a) have been sold or transferred by a
person or entity in a transaction in which rights under this Section 2 are
not assigned in accordance with this Agreement, (b) have been sold or
transferred to the public pursuant to Rule 144 promulgated under the
Securities Act of 1933, as amended ("Rule 144") or (c) may, within a 90-day
--------
period, be sold to the public without volume restrictions pursuant to Rule
144 unless the Holder of such shares holds more than 5% of the outstanding
shares of Common Stock of the Company."
2. Section 5.2 of the Rights Agreement is deleted in its entirety and
replaced by the following:
"5.2 Amendment of Rights. Subject to Section 2.12 and 5.3, any provision
-------------------
of this Agreement may be amended and the observance thereof may be waived
(either generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and sixty
percent (60%) of the shares of the then outstanding Registrable Series A
Stock, Registrable Series B Stock, Registrable Series C Stock and
Registrable Securities held by AOL, voting collectively as a separate
class, and a majority of the shares of the then outstanding Common Stock
held by any two or more Founders. Any amendment or waiver effected in
accordance with this Section 5.2 shall be binding upon each Investor, each
Founder, each Holder, each permitted successor or assignee of such Investor
or Holder and the Company."
3. The undersigned agree that AOL is hereby included as an "Investor" in
the List of Investors, attached to the Rights Agreement as Exhibit A.
---------
4. The Company and the undersigned hereby agree that AOL shall become a
party to the Rights Agreement for purposes of Sections 1, 2 (excluding Section
2.2), 3, 5.2, 6 and 8 only; provided that, for purposes of Section 1, AOL shall
have the same rights and obligations as the Holders of 53,333 shares of Series A
Preferred Stock, and for the purposes of Section 2.3, AOL shall have the same
rights and obligations as the Holders of Registrable Series A Stock. By
execution of this Amendment AOL agrees to become a party to and be bound by the
provisions of the Rights Agreement with respect to such Sections and to abide by
the terms of the Rights Agreement.
5. Except as modified by this Amendment, all other terms and conditions in
the Rights Agreement shall remain in full force and effect and this Amendment
shall be governed by all provisions thereof.
-2-
<PAGE>
6. This Amendment will take effect immediately upon the execution hereof
by the Company, AOL and the holders of the requisite number of securities as set
forth in the Rights Agreement.
7. This Amendment may be executed in separate counterparts, all of which
taken together shall constitute a single instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment
effective as of the day and year first above written.
SMARTAGE.COM CORP.
By__________________________________
Brian McGee
Vice President of Finance
AMERICA ONLINE, INC.
By___________________________________
INVESTORS
---------
SOFTBANK CAPITAL PARTNERS, LP
By__________________________________
Title_______________________________
SOFTBANK CAPITAL ADVISORS FUND, LP
By__________________________________
Title_______________________________
-3-
<PAGE>
ACCEL VI L.P.
By: Accel VI Associates L.L.C.
Its general partner
By__________________________________
Managing Member
ACCEL INTERNET FUND II L.P.
By: Accel Internet Fund II Associates L.L.C.
Its general partner
By__________________________________
Managing Member
ACCEL KEIRETSU VI L.P.
By: Accel Keiretsu VI Associates L.L.C.
Its general partner
By__________________________________
Managing Member
ACCEL INVESTORS `98 L.P.
By__________________________________
General Partner
-4-
<PAGE>
EL DORADO VENTURES IV, LP
By__________________________________
General Partner
EL DORADO TECHNOLOGY 98
By__________________________________
General Partner
INTEGRAL CAPITAL PARTNERS IV L.P.
By__________________________________
General Partner
INTEGRAL CAPITAL PARTNERS IV MS SIDE FUND
By__________________________________
General Partner
VECTOR CAPITAL LP.
By: VECTOR CAPITAL PARTNERS L.L.C.
Its General Partner
By__________________________________
Alex Slusky, Managing Member
-5-
<PAGE>
WONDERSTAR INVESTMENTS, INC.
By__________________________________
Michael Leeds
____________________________________
Stephen Grant
____________________________________
Anne-Marie Grant
____________________________________
Daniel Lynch
____________________________________
Roland Pieper
____________________________________
Benjamin Rosen
VIRANI FAMILY 1993 REVOCABLE TRUST
By__________________________________
Trustee
____________________________________
Vinton Cerf
-6-
<PAGE>
____________________________________
Sigrid Cerf
____________________________________
Albert Wu
____________________________________
William Lohse
____________________________________
John Thomsen
____________________________________
Erica Thomsen
-7-
<PAGE>
EXECUTION COPY
Schedule 2.9
Competitive Entities*
---------------------
The Parties expressly acknowledge and agree that this schedule only applies to
Section 2.9 and only with respect to Advertising sold by AOL to be served into
the Co-Branded Sites, and does not in any way limit AOL's ability to sell
Advertising to any entity, including any competitor of SmartAge, anywhere within
the AOL Network (or to any other third party areas, e.g., dr koop).
Notwithstanding anything to the contrary herein, AOL may, on the AOL Network,
sell Advertisements to, or otherwise promote, any of the entities listed on this
Schedule 2.9 or added hereto from time to time in accordance with the terms
hereof.
***
*Each of the listed entities shall be considered competitive to SmartAge only to
the extent that it maintains an online, small-business targeted presence and
continues to predominantly focus on business-to-business products and services.
SmartAge may add a Qualifying Entity (or Qualifying Entities) (as defined below)
to this list once per *** (to a maximum of *** additional Qualifying Entities
per year during the Term) with thirty (30) days' advance written notice to AOL,
provided, however, that the restrictions applicable to each Qualifying Entity
shall be subject to contractual commitments of AOL in existence as of the date
on which such Qualifying Entity is named by SmartAge. For purposes hereof, a
"Qualifying Entity" shall mean any other company to the extent they primarily
offer products, services and content falling within the Permitted Categories
listed in Exhibit D.
61
CONFIDENTIAL
*** CONFIDENTIAL MATERIAL REDACTED AND FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION.
