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EXHIBIT 10.4
INVESTMENT AGREEMENT
DATED AS OF JULY 7, 1997
BY AND BETWEEN
U S WEST INTERACTIVE SERVICES, INC.
AND
WIRE NETWORKS, INC.
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INVESTMENT AGREEMENT
This INVESTMENT AGREEMENT (this "Agreement"), made as of the 7th day of
July 1997 by and between U S WEST INTERACTIVE SERVICES, INC., a Colorado
corporation ("U S West"), and WIRE NETWORKS, INC., a California corporation (the
"Company") (U S West and the Company are sometimes referred to herein
collectively as the "Parties" and individually as a "Party").
WHEREAS, the Company has developed an informational web site, and
desires to further develop such site in conjunction with the U S West Dive-In
Project and High Bandwidth Project, each described below; and
WHEREAS, U S West desires to purchase and the Company desires to sell an
ownership interest in the Company; and
WHEREAS, the Parties are, together with certain other investors in the
Series C Preferred Stock financing of the Company and concurrently with the
execution of this Agreement, entering into the Series C Preferred Stock Purchase
Agreement Wire Networks, Inc., a copy of which is attached hereto as Exhibit A,
an Amended and Restated Investors Rights Agreement, a copy of which is attached
hereto as Exhibit B, an Amended and Restated Co-Sale and Voting Agreement, a
copy of which is attached hereto as Exhibit C, a Web Site Linking and Promotion
Agreement, a copy of which is attached hereto as Exhibit D, and other documents
necessary to consummate this transaction, (collectively, these documents shall
be referred to as the "Transaction Documents"); and
WHEREAS, the Parties desire to set forth the terms and conditions of and
certain understandings with respect to the acquisition by U S West of an
ownership interest in the Company.
NOW, THEREFORE, in consideration of the representations, warranties and
covenants contained herein and other good and valuable consideration, the
receipt of which is hereby acknowledged, the Parties hereby agree as follows:
1. DEFINITIONS. For purposes of this Agreement, capitalized terms used
herein shall, unless otherwise expressly provided for or defined hereto,
have the respective meanings set forth on Annex A hereto.
2. U S WEST'S PURCHASE OF AN INTEREST IN COMPANY.
(a) U S WEST'S PURCHASE. Subject to the terms and conditions of this
Agreement, the other Transaction Documents and any other
agreement governing the relationship between the Parties, U S
West hereby agrees to purchase one million three hundred fifteen
thousand seven hundred eighty-nine ( 1,315,789) shares of Series
C Convertible Preferred Stock (the "Stock") of the Company at a
total purchase price of four million one dollars and 60/100
($4,000,001.60) (the "Proceeds"), or three dollars and 4/100
($3.04) per share (the "Series C Stock Price"). In full
consideration of such subscription and payment, and the other
transactions contemplated hereby and in the Transaction
Documents, the Company hereby
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accepts such purchase and upon payment therefore, shall issue to
U S West the Stock representing, on the date hereof,
approximately a seventeen percent (17%) Ownership Interest in
the Company on an as-converted basis.
(b) The Company's right to retain [*] of the Proceeds shall be
contingent upon the Company developing the Dive-in Project
and/or the High Bandwidth Project, each described below, to the
reasonable satisfaction of U S West, and in accordance with the
timetable and requirements set forth below. If the Company fails
to develop the Dive-In Project and/or the High Bandwidth Project
as provided below, the Series C Stock Price for the Stock will
be reduced by the Company returning the unused portion of the
Dive-In Allocated Funds and/or the High Bandwidth Allocated
Funds, each defined below, to U S West without decreasing U S
West's equity interest in the Company.
(i) The Company agrees to allocate [*] (the "Dive-In
Allocated Funds ") in a reasonably detailed development
plan and budget approved by U S West, and to use the
Dive-in Allocated Funds for customizing the Company's
product such that the customized Company product may be
co-branded and co-linked with U S West's local on-line
service ("the Dive-In Project") in the cities where U S
West offers such service. The Company shall complete the
Dive-in Project within [*] of the date of the first
closing (the "Closing Date") of the Series C Preferred
Stock financing of the Company (the "Dive-in Completion
Date"). If the Company fails to use all of the Dive-in
Allocated Funds for the Dive-In Project, and/or fails to
complete the Dive-In Project by the Dive-in Completion
Date, the Company shall return all Dive-in Allocated
Funds unused as of the Dive-In Completion Date to U S
West without affecting U S West's equity interest in the
Company.
(ii) The Company agrees to allocate [*] (the "High Bandwidth
Allocated Funds") in a reasonably detailed development
plan and budget approved by U S West, and to use the
High Bandwidth Allocated Funds for developing and
customizing the Company's product and purchasing
equipment in connection with the deployment of high
bandwidth content (i.e. video) over U S West's domestic
cable assets pursuant to a mutually satisfactory
agreement between U S West, its domestic cable assets
and the Company for the provision of such high bandwidth
content ("the High Bandwidth Project"). The Company
shall complete the High Bandwidth Project within [*] of
the Closing Date ("the High Bandwidth Completion Date").
If the Company fails to use all of the High Bandwidth
Allocated Funds for the High Bandwidth Project, and/or
fails to complete the High Bandwidth Project by the High
Bandwidth Completion Date, the Company shall return all
High Bandwidth Allocated Funds unused as of the High
Bandwidth Completion Date to U S West without affecting
U S West's equity interest in the Company.
*Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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The Company will also grant to U S West warrants (the
"Series C Warrants") to acquire at the Series C Stock
Price up to eight hundred eighty-seven thousand six
hundred sixty five (887,665) shares of Series C
Convertible Preferred Stock (the "Warrant Stock") of the
Company. Upon exercise of fifty percent (50%) of the
Series C Warrants, U S West will be entitled to appoint
one (l) additional director to the Board of D/rectors of
the Company.
(c) U S WEST'S RIGHTS. U S West shall have the right to delay,
suspend, discontinue or terminate the Dive-In Project and/or the
High Bandwidth Project upon not less than thirty (30) days
written notice to the Company (a "Discontinuation"), which
notice shall be given in the manner provided in Section 12(e) of
this Agreement. In the event of a Discontinuation of either the
Dive-in Project or High Bandwidth Project, U S West may
reallocate the unused portion of the Dive-In Allocated Funds or
the High Bandwidth Allocated Funds, as the case may be, to the
other project not subject to a Discontinuation. In the event
that both the Dive-In Project and the High Bandwidth Project are
subject to a Discontinuation, the Company may retain the unused
portion of the Dive-In Allocated Funds and High Bandwidth
Allocated Funds for use on other projects.
3. TRADEMARKS AND INTELLECTUAL PROPERTY RIGHTS OF THE PARTIES.
(a) INTELLECTUAL PROPERTY RIGHTS. Except for the licenses expressly
granted to the Company under any Transaction Document, any and
all trademarks, service marks, copyrights and trade names of U S
West are, and shall remain, the exclusive property of U S West.
(b) INTELLECTUAL PROPERTY OF THE COMPANY. The Company shall retain,
obtain or acquire, and thereafter preserve (including, but not
limited to, placing trademark notices on all Content,
advertising materials and any products which the Company may
distribute), trademarks and/or service marks in the name of the
Company with respect to the Company products. Except for such
licenses as may be expressly granted to U S West in or pursuant
to any Transaction Document, any and all intellectual property
now owned or hereafter developed by the Company for the Dive-In
Project or the High Bandwidth Project pursuant to this Agreement
shall be the exclusive property of the Company. The right, title
and interest in and to any intellectual property developed
jointly by U S West and the Company or funded in whole or in
part by U S West, in addition to the investment hereunder, shall
be negotiated in a separate written agreement between the
Parties.
4. CUSTOMER LISTS. Lists of actual and potential end-users of the Company's
products, shall be deemed to be owned by the Company. Should the Company
cease to exist, and there is no successor entity thereto, including a
purchaser or other transferee of assets, U S West shall have
non-exclusive rights to use such lists.
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5. CAPITALIZATION, COSTS AND FEES. Except as otherwise expressly provided
herein, in the other Transaction Documents, the marketing plan or in any
business plan which may hereafter be developed by or on behalf of the
Company, each of the Parties shall bear and shall be responsible for its
own costs and expenses related to the Company products.
6. CONFIDENTIALITY.
(a) NEW INITIATIVES. The Parties anticipate that, as long as U S
West has an Ownership Interest in the Company, they may, from
time to time, discuss, and exchange with each other, ideas,
concepts or information to be used in connection with the
creation or development of possible future initiatives,
ventures, products or services, not contemplated by this
Agreement. The Parties agree that this Agreement is in no way
intended to limit such discussions or exchanges and that such
ideas, concepts or information referred to in the previous
sentence shall, without limitation, constitute Confidential
Information (as hereinafter defined).
(b) CONFIDENTIALITY. The Parties will each regard and preserve as
strictly confidential all information and material, including,
but not limited to, non-public information included as pan of
the transactions contemplated hereby and by the other
Transaction Documents and all other material or information,
including without limitation, customer or client information,
provided to one another in connection with the participation and
development of products, services or information for the Dive-in
Project or the High Bandwidth Project (hereinafter,
"Confidential Information"). Each of the Parties agrees that,
except as provided in this Agreement or any other Transaction
Document or as otherwise agreed by them in writing, it shall not
use the Confidential Information of the other Party for its own
benefit or for the benefit of any third Person. Each of the
Parties agrees not to interfere with, circumvent, frustrate or
otherwise impede in any manner the realization by the Company of
any of the objectives it seeks or benefits derived, or to be
derived, from any of such Confidential Information. The Parties
further acknowledge and agree that in the event of a breach or
threatened breach of this Section 6, the non-breaching Party or
Parties may have no adequate remedy in money damages and,
accordingly, may be entitled to appropriate injunctive relief
against such breach. The Parties agree that they each will have
no obligation in connection with specific Confidential
Information of any other Party to the extent, but only to the
extent that: (i) such Confidential Information is already known
to any of them, free from any obligation to keep such
Confidential Information confidential at the time it was
obtained from any other Party; (ii) such Confidential
Information is or becomes publicly known in the trade or
otherwise through no wrongful act of the receiving Party or any
third Person owing a duty of confidentiality to the disclosing
Party; or (iii) such Confidential Information is rightfully
received by the receiving Party from a third Person without
restriction and without breach of this Agreement or any
obligation of such third Person to the disclosing Party. Upon
the request of any of the Parties following the termination or
expiration of this Agreement as otherwise provided herein, all
tangible and machine readable copies of any Confidential
Information of any other Party shall be returned to such Party
and Confidential Information relating to the Company
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shall be returned to or remain with the Company. Should the
Company cease to exist, and there is no successor entity
thereto, including a purchaser or other transferee of assets,
U S West shall have non-exclusive rights to such Confidential
Information.
7. REPRESENTATIONS AND WARRANTIES.
(a) U S WEST REPRESENTATIONS AND WARRANTIES. U S West represents and
warrants to the Company that:
(i) it is a corporation duly organized validly existing and
in good standing under the laws of the State of
Colorado;
(ii) it has all requisite corporate power and authority to
enter into this Agreement and the other Transaction
Documents to which it is a party and to carry out its
obligations hereunder and thereunder;
(iii) this Agreement and the other Transaction Documents have
been duly authorized, executed and delivered by it and
are a valid and binding obligation of such Party
enforceable in accordance with their terms;
(iv) the execution, delivery and performance of and
compliance with this Agreement and the other Transaction
Documents do not and will not conflict with, or
constitute a default under, or result in the creation of
any mortgage, pledge, lien, encumbrance or charge upon
any of its properties or assets, nor result in any
violation of (A) any term of its certificate or articles
of incorporation or bylaws, (B) any term or provision of
any mortgage, indenture, contract, agreement,
instrument, judgment or decree of such Party, or (C) any
order, statute, rule or regulation applicable to it, the
violation of which would have a material adverse effect
on its ability to perform its obligations under this
Agreement or the other Transaction Documents to which it
is a party;
(v) it is acquiring the Stock and/or the Warrant Stock for
investment for its own account and not with a view to,
or for offer or sale in connection with, any public
distribution thereof and that it is an "accredited
investor" as defined in Regulation D promulgated under
the Securities Act of 1933;
(vi) it is not relying on any information provided by the
Company with respect to the tax and other economic
considerations of an investment in the Stock and/or the
Warrant Stock, and the undersigned has relied on the
advice of, or has consulted with, only the undersigned's
own advisor(s); and
(vii) the representations and warranties made by it in this
Agreement, and in any certificate or schedule referenced
hereby or attached hereto, do not contain any statement
which is false or misleading with respect to any
material fact and do not omit to state a material fact
required to be stated herein or therein or necessary in
order to make the statements contained
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herein or therein not materially false or misleading.
The representations, warranties and agreements of it
contained herein are true and correct as of the date
hereof and may be relied upon by the Company, and it
will notify the Company immediately of any adverse
change in any such representations and warranties which
may occur prior to the acceptance of the subscription
and will promptly send the Company written confirmation
thereof. The representations, warranties and agreements
of it contained herein shall survive the execution and
delivery of this Agreement and the purchase of the Stock
and/or the Warrant Stock.
(b) COMPANY REPRESENTATIONS AND WARRANTIES. The Company represents
and warrants to U S West that:
(i) it is a corporation duly organized validly existing and
in good standing under the laws of the State of
California;
(ii) it has all requisite corporate power and authority to
enter into this Agreement and the other Transaction
Documents to which it is a party and to carry out its
obligations hereunder and thereunder;
(iii) this Agreement and the other Transaction Documents have
been duly authorized, executed and delivered by it and
are valid and binding obligations of such Party
enforceable in accordance with their terms;
(iv) the execution, delivery and performance of and
compliance with this Agreement and the other Transaction
Documents do not and will not conflict with, or
constitute a default under, or result in the creation of
any mortgage, pledge, lien, encumbrance or charge upon
any of its properties or assets, nor result in any
violation of (A) any term of its articles of
incorporation or bylaws, (B) any term or provision of
any mortgage, indenture, contract, agreement,
instrument, judgment or decree of such Party, or (C) any
order, statute, code or regulation applicable to it, the
violation of which would have a material adverse effect
on its ability to perform its obligations under this
Agreement or the other Transaction Documents to which it
is a party;
(v) it is not relying on any information provided by U S
West with respect to the tax and other economic
considerations in connection with this transaction, and
has relied on the advice of, or has consulted with, only
its own advisor(s);
(vi) with the exception of Xxxxx, Xxxxx & Company, there is
no investment banker, broker, finder or other
intermediary which has been retained by, or is
authorized to act on behalf of, it, any shareholder of
it or their respective Affiliates who might be entitled
to any fee or commission from the Company or its
Affiliates upon the consummation of the transactions
contemplated hereby or thereafter; and
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(vii) the representations and warranties made by it in this
Agreement, and in any certificate or schedule referenced
hereby or attached hereto, do not contain any statement
which is false or misleading with respect to any
material fact and do not omit to state a material fact
required to be stated herein or therein or necessary in
order to make the statements contained herein or therein
not materially false or misleading. The representations,
warranties and agreements of it contained herein are
true and correct as of the date hereof and may be relied
upon by U S West, and it will notify U S West
immediately of any adverse change in any such
representations and warranties which may occur prior to
the acceptance of the subscription and will promptly
send U S West written confirmation thereof. The
representations, warranties and agreements of it
contained herein shall survive the execution and
delivery of this Agreement and the purchase by U S West
of the Stock and/or Warrant Stock.
8. INDEMNIFICATION.
(a) Each Party (the "Indemnifying Party") shall indemnify, defend
and hold the other Party (including the Company), their
respective officers, managers, employees, shareholders,
managers, members and agents (an "Indemnitee") harmless, on an
after tax basis, from any claims, actions, suits, demands,
liabilities, obligations, losses, damages, judgments or
settlements of whatsoever kind and nature, including any and all
reasonable costs and expenses related thereto including
reasonable attorneys' fees (the "Claims"), directly or
indirectly arising from (i) any failure by the Indemnifying
Party to comply with or perform any of the terms of this
Agreement, or (ii) a misrepresentation or Material Breach of any
representation, warrant3,, covenant, or agreement of the
Indemnifying Party contained in this Agreement, any Transaction
Documents or any other agreement, instrument, certificate or
other document delivered by the Indemnifying Party in connection
with the transactions contemplated hereby.
(b) ASSERTION OF RIGHT OF INDEMNIFICATION. To assert its rights of
indemnification hereunder, an Indemnitee shall:
(i) promptly notify the Indemnifying Party in writing of any
Claim or legal proceedings which gives rise to such
right;
(ii) afford the Indemnifying Party the opportunity to
participate in, or fully control, in its sole
discretion, any proceeding and the compromise,
settlement, resolution or other disposition of such
Claim or proceeding so long as such settlement involves
payment of money damages only and provides the
Indemnitees with a general release; and
(iii) fully cooperate with the Indemnifying Party, at the
Indemnifying Party's expense, in such Indemnifying
Party's participation and control of any proceeding and
the compromise, settlement, resolution or other
disposition of such claim or proceeding; provided,
however, that if such compromise,
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settlement or resolution or other disposition could have
an adverse effect on the Indemnitee, the Indemnitee's
consent to such compromise, settlement, resolution or
other disposition shall be required but shall not be
unreasonably withheld. The Indemnifying Party shall bear
all out of pocket expenses of the Indemnitee in
connection with such cooperation.
9. LIMITATION OF LIABILITY. EXCEPT AS SPECIFICALLY PROVIDED IN SECTION 7 OF
THE WEB SITE LINKING AND PROMOTION AGREEMENT, NEITHER PARTY SHALL BE
LIABLE TO THE OTHER, IN ANY CIRCUMSTANCES, FOR ANY LOSS OF BUSINESS OR
PROFITS, OR FOR ANY CONSEQUENTIAL, INCIDENTAL, PUNITIVE OR SIMILAR
DAMAGES.
10. TERMINATION; SURVIVAL.
(a) TERMINATION. In the event of a Material Breach of any
representation, warranty or covenant contained in this Agreement
or any Transaction Document, the non-breaching Party may
(reserving cumulatively all other rights and remedies at law or
in equity unless otherwise expressly stated herein) terminate
this Agreement with respect to the breaching Party by giving
twenty (20) days prior written notice to the breaching Party
specifying such breach. If within such twenty (20) day period,
the breaching Party fails to remedy any such breach, this
Agreement shall terminate with respect to the breaching Party
without further act or notice and all of the rights and
obligations with respect to the breaching Xxxxx hereunder shall
cease and terminate except as otherwise provided herein, or in
any other Transaction Document.
(b) ADDITIONAL TERMINATION RIGHTS. This Agreement may be terminated
by either party:
(i) if the other Party is declared insolvent or bankrupt by
a court of competent jurisdiction;
(ii) if the other Party files or consents, by answer or
otherwise, to the filing against it of a petition for
relief or reorganization or arrangement under the
insolvency or bankruptcy laws of any jurisdiction, and
any such petition is not dismissed within sixty (60)
days, thereafter; or
(iii) if a trustee in bankruptcy or a receiver or similar
entity is appointed for the other Party or the other
Party makes an assignment for the benefit of its
creditors, consents to the appointment of a custodian,
receiver, trustee or other officer with similar powers
for itself or for any substantial part of its property,
or enters into an agreement for the composition,
extension, or readjustment of substantially all of its
obligations; or
(iv) if any governmental entity of competent jurisdiction
shall enter an order appointing any of the foregoing for
such Party or with respect to any substantial portion of
its property, or seeking the dissolution, winding-up or
liquidation of such Party.
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(c) SURVIVAL. The following Sections or provisions of this Agreement
shall survive any termination of this Agreement until the
obligation of the Parties set forth therein shall have been
fully performed by the Parties: 3, 4, 6, 8, 9 and 11(a), 11(c),
11(e), 11(f), 11(g), 11(h), 11(1) and 11(n).
11. GENERAL.
(a) INDEPENDENT CONTRACTOR. The Parties agree that each Party is an
independent contractor and that no Party is an agent of the
other. No Party will be entitled to compensation for its
services hereunder except as expressly provided herein, or in
any separate agreements entered into among the Parties and/or
the Company from time to time. Each of the Parties, and not the
Company, will be responsible for, among other things, payment of
workers' compensation, disability benefits, unemployment
insurance, and for withholding income taxes and social security
for any of their respective employees that devote a portion of
their time to the business of the Company, unless and until any
of such personnel become employees of the Company. No Party will
have any authority to make any agreements or representations on
behalf of any other Party or to hold itself out to be an agent,
or representative of any other Party.
(b) PUBLIC ANNOUNCEMENTS. The Parties will jointly coordinate press
and other public announcements of US West's involvement in the
Company in order to maximize public, investor and advertiser
interest. Such announcements may not be used until the Company
shall have received written notice from U S West that it may use
such announcements.
(c) ENTIRE AGREEMENT. This Agreement, together with the other
Transaction Documents, sets forth the entire agreement between
the Parties in connection with the subject matter hereof and
incorporates, replaces, and supersedes all prior agreements,
promises, proposals, representations, understandings and
negotiations, written or not, between the Parties. The making,
execution, and delivery of this Agreement have been induced by
no representations, statements, warranties or agreements other
than those expressed herein and in the other Transaction
Documents.
(d) FORCE MAJEURE. No Party will be liable for any delay or failure
to perform under this Agreement if, and to the extent, such
failure is due to an act of God, war, fire, national disaster,
accident, act of government or other similar cause beyond the
control and without the fault or negligence of the Party
claiming excusable delay, and the Party claiming excusable delay
uses its best efforts to avoid or remove the cause of the delay.
The Party claiming excusable delay must promptly notify the
other Party of such delay. If the delay continues for more than
thirty (30) days and involves a material obligation, the Party
not claiming excusable delay may terminate this Agreement by
giving fourteen (14) calendar days written notice to the other
Party; provided that the Agreement will not terminate if the
Party claiming excusable delay substantially performs the
obligation which has been delayed within fourteen (14) days
after receipt of notice of such termination.
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Notwithstanding the foregoing, there shall be no excusable delay
pursuant to this Section 11(d) applicable to any obligation of
payment hereunder.
(e) NOTICE. All notices shall be in writing and will be delivered
personally or sent by confirmed facsimile transmission, or
overnight carrier at the addresses specified below:
If to U S West: If to the Company:
U S West Interactive Services, Inc. Wire Networks, Inc.
0000 X. Xxxxxxx Xxxxxx, Xxxxx 000 0000 Xxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000 Xxx Xxxxx, XX 00000
Fax (000) 000-0000 Fax: (000) 000-0000
Attn:_____________________________ Attn: Xxxxxxx XxXxxxxx
Any Party may change the person or the address to which notices are directed by
giving written notice to the other Party in accordance with this Section.
Personally delivered or confirmed facsimile notices will be deemed given when
delivered. Notices sent by overnight carrier will be deemed given on the second
business day after dispatch. Notwithstanding the foregoing, notices of change of
address will be deemed given only upon receipt by the Party to which it is
directed.
(f) GOVERNING LAW; CONSENT TO JURISDICTION. This Agreement shall be
governed by and interpreted in accordance with the laws of the
State of Colorado (without giving effect to principles of
conflicts of law).
(g) MODIFICATION. No modification, amendment, supplement to or
waiver of any provision of this Agreement shall be binding upon
the Parties unless made in writing and duly signed by all of the
Parties.
(h) WAIVER. A failure of any Party to exercise any right provided
for herein shall not be deemed to be a waiver of any right
hereunder.
(i) SEVERABILITY. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective
and valid under applicable law, but if any provision of this
Agreement shall be prohibited or invalid under applicable law,
such provision shall be ineffective to the extent of such
prohibition or invalidity without invalidating the remainder of
such provision or the remaining provisions of this Agreement.
Any unenforceable provision will be replaced by a mutually
acceptable provision which comes closest to the intention of the
Parties at the time the original provision was agreed upon.
(j) HEADINGS. The headings of this Agreement are for purposes of
reference only and shall not in any way limit or otherwise
affect the meanings or interpretations of any of the terms
hereof.
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(k) COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall
be deemed to be an original, but all of which together shall
constitute one and the same agreement.
(l) ASSIGNMENT. This Agreement and the rights and obligations of the
Parties hereunder shall not be assigned or delegated by any
Party to any other Person without the prior written consent of
the other Party, except that, U S West shall have the right on
notice to the Company, but without requiring the Company's
consent, to assign all of its respective rights hereunder to any
Person to which, U S West may transfer, assign or convey all or
substantially all of the business, assets or properties of U S
West, or to any Person with which, U S West may hereafter merge
or consolidate, or in connection with a reorganization
transaction, and the Company shall have the right on notice to U
S West, to assign this Agreement without the consent of U S West
in connection with a sale of all or substantially all of the
Company's assets, merger, consolidation or other reorganization
transaction.
(m) FURTHER ASSURANCES. The Parties agree to execute and deliver, or
to cause to be executed and delivered, such further instruments
or documents, and take such other actions as may be reasonably
required effectively to carry out the transactions contemplated
herein, in each case provided the same do not impose any
additional liabilities or obligations upon the Parties.
(n) DISPUTE RESOLUTION.
(i) Any claim, controversy or dispute, whether sounding in
contract, statute, tort, fraud, misrepresentation or
other legal theory, whenever brought and whether between
the parties to this Agreement or between one of the
parties of this Agreement and the employees, agents or
affiliated businesses of the other party, shall be
resolved by arbitration as prescribed in this Section
11(n). The Federal Arbitration Act, 9 U.S.C. Section
1-15, not state law, shall govern the arbitrability of
all claims.
(ii) A single arbitrator engaged in the practice of law and
experienced in transactions of the sort contemplated
hereby and by the Transaction Documents shall conduct
the arbitration under the then current rules of the
American Arbitration Association (AAA), unless otherwise
provided herein. The arbitrator shall be selected in
accordance with AAA procedures from a list of qualified
people maintained by AAA. The arbitration shall be
conducted in the regional AAA office closest to the
principal office of the Company, and all expedited
procedures prescribed by AAA. rules shall apply.
(iii) Except as provided in Section 11 (n)(v), the arbitrator
shall only have authority to award compensatory damages
and shall not have authority to award punitive damages,
other non-compensatory damages or any other form of
relief. Each party shall bear its own costs and
attorneys' fees and
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the Parties shall share equally the fees and expenses of
the arbitration; provided that the arbitrator may
provide for the reimbursement by one Party of the costs
and attorneys' fees of the other Party incurred in
enforcing such Party's rights under this Agreement- The
arbitrator's decision and award shall be final and
binding, and judgment upon the award rendered by the
arbitrator may be entered in any court having
jurisdiction thereof.
(iv) If any Party files a judicial or administrative action
asserting claims subject to arbitration, as prescribed
herein, and another party successfully stays such action
and/or compels arbitration of said claims, the Party
filing said action shall pay the other Party's costs and
expenses incurred in seeking such stay and/or compelling
arbitration, including reasonable attorneys' fees.
(v) The Parties each acknowledge and agree that either party
will be irreparably harmed as a result of a breach by
the other Party of Section 3 or 6 of this Agreement and
that it would be difficult, if not impossible, to
measure the damages resulting from such a breach.
Accordingly, in the event of any actual or threatened
breach by either party of Section 3 or 6, the
non-breaching party shall, in addition to any other
legal remedies permitted hereunder or by applicable law,
be entitled to obtain equitable remedies from a court of
competent jurisdiction, without the need for any bond or
security, including, without limitation, specific
performance, a temporary restraining order or a
permanent injunction to prevent or otherwise restrain a
breach hereof and to recover all costs and expenses,
including, without limitation, reasonable attorneys'
fees, incurred in enforcing this Agreement. Such relief
shall be in addition to and not in substitution for any
other remedies available to such Party. Notwithstanding
anything herein to the contrary, the Parties agree that
the non-breaching Party may seek a temporary restraining
order or a preliminary injunction or other equitable
relief from any court of competent jurisdiction in order
to prevent or restrain a breach hereof pending the
selection of an arbitrator to render a decision on the
ultimate merits of any dispute, controversy or claim.
(o) COMPLIANCE WITH LAWS. This Agreement and the Parties'
actions under this Agreement shall comply with all
applicable federal, state, and local laws, roles,
regulations, court orders, and governmental or
regulatory agency orders, including the
Telecommunications Act of 1996 and specifically the
separated affiliate requirements for the provision of
electronic publishing.
12.
14
IN WITNESS WHEREOF, the Parties have signed this Agreement as of the
Effective Date.
U S WEST INTERACTIVE SERVICES, INC.
By:/s/ US West Interactive Services, Inc.
---------------------------------------------
Title:
WIRE NETWORKS, INC.
By: /s/ Xxxxxxx X. XxXxxxxx
---------------------------------------------
Title: CEO and President
13.
15
ANNEX A
DEFINITIONS
"AFFILIATE" shall mean a Person that directly, or indirectly through one
or more intermediaries, controls, or is controlled by, or is under common
control with, the party specified. For purposes of this definition, the term
"control" (including the terms "controlling," "controlled by" and "under common
control with") means the possession, direct or indirect, of the power to direct
or cause the direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract or otherwise.
"COMPANY" shall mean Wire Networks, Inc., a California corporation.
"CONFIDENTIAL INFORMATION" shall have the meaning set forth in Section 6
of the Investment Agreement.
"DISCONTINUATION" shall have the meaning set forth in Section 2(c) of
the Investment Agreement.
"DIVE-IN PROJECT" shall mean the U S West product which provides an
entertainment, educational, and informational service targeted at local
geographic territories on numerous U S West sites on the World Wide Web part of
the Internet.
"EFFECTIVE DATE" shall mean July 7, 1997.
"HIGH BANDWIDTH PROJECT" shall have the meaning set forth in Section
2(b)(ii) of the Investment Agreement
"INDEMNIFYING PARTY" shall have the meaning set forth in Section 8 of
the Investment Agreement.
"INDEMNITEE" shall have the meaning set forth in Section 8 of the
Investment Agreement.
"INVESTMENT AGREEMENT" shall mean the Investment Agreement dated July 7,
1997 between U S West and the Company.
"MARKETING PLAN" shall have the meaning set forth in Section 3 of the
Investment Agreement.
"MATERIAL BREACH" shall mean a breach of any representation, warranty or
covenant by any party to a Transaction Document which is material in nature.
"OWNERSHIP INTEREST" shall mean, with respect to each Person holding of
record an interest in the Company, all of the interests of such Person in the
Company (including its Stock, interest in the Net Profits and Net Losses of the
Company, the Capital Account of such Person and all other rights and obligations
of such Person under this Agreement) that relate to such ownership status,
expressed as a percentage determined as of any particular time by dividing the
number of shares of Stock of the Company held of record by such Person by the
total number of shares of Stock of the Company then outstanding.
14.
16
"PERSON" shall mean a natural person, partnership (whether general or
limited and whether domestic or foreign), limited liability company, foreign
limited liability company, trust, estate, association, corporation, custodian,
nominee, government or any agency or political subdivision thereof or any other
individual or entity in its own or any representative capacity.
"TERRITORY" shall mean the United States, and its respective territories
and possessions.
"TRANSACTION DOCUMENTS" shall mean the Investment Agreement, the Amended
and Restated Investor Rights Agreement, the Amended and Restated Co-Sale and
Voting Agreement, the Web Site Linking and Promotion Agreement, and any other
agreement governing the relationship of the parties.
"TRANSFER" shall mean a sale, exchange, assignment, transfer, pledge,
hypothecation or other disposition of Stock of the Company (whether voluntary or
involuntary) other than by operation of law or to an Affiliate.
"WEB SITE LINKING AND PROMOTION AGREEMENT" shall mean the Web Site
Linking and Promotion Agreement dated July 7, 1997 between the Company and US
West.
15.
17
EXHIBIT 10.4(a)
XXXXX.XXX NETWORKS
AMENDMENT AGREEMENT
THIS AMENDMENT AGREEMENT (the "AMENDMENT") is made as of April ___,
1998, by and between XXXXX.XXX NETWORKS, a California corporation, formerly Wire
Networks, Inc. (the "COMPANY") and U S WEST INTERACTIVE SERVICES, INC., a
Colorado corporation ("U S WEST").
RECITALS
WHEREAS, the Company and MediaOne entered into that certain Investment
Agreement dated July 7, 1997 (the "INVESTMENT AGREEMENT") (capitalized terms not
otherwise defined herein shall have the meanings ascribed to them in the
Purchase Agreement); and
WHEREAS, in accordance with Section 11(g) of the Investment Agreement,
the Company and MediaOne wish to amend the Investment Agreement pursuant to this
Amendment.
NOW, THEREFORE, in consideration of the mutual agreements, covenants and
considerations contained herein, the undersigned hereby agree as follows:
AGREEMENT
1. Section 2(b)(ii) of the Investment Agreement is hereby amended by
adding a sentence to the last paragraph of such subsection which shall read as
follows:
"U S WEST's right to appoint such additional director to
the Board of Directors of the Company shall terminate
upon the closing date of the Company's first
underwritten public offering of its Common Stock
registered under the Securities Act of 1933, as
amended."
2. Section 2(b) of the Investment Agreement is hereby amended by adding
subsection (iii) which shall read in full as follows:
"(iii) In the event the Company is required to return to
U S WEST the unused portion of the Dive-In Allocated
Funds and/or the High Bandwidth Allocated Funds pursuant
to this Section 2(b) (the "Unused Portion"), in lieu of
returning the Unused Portion to U S WEST, the Company
shall distribute a "pro rata portion" of the Unused
Portion to each of the holders of the Company's Series C
Preferred Stock and Series D Preferred Stock. For the
purposes of this Section 2(b)(iii), the "pro rata
portion" for each holder of Series C Preferred Stock or
Series D Preferred Stock shall be determined in
accordance with the liquidation preference of such
1.
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shares of Series C Preferred Stock or Series D Preferred
Stock as set forth in the Company's then current
Articles of Incorporation."
3. Section 2(d) of the Investment Agreement is hereby amended to read in
full as follows with additions shown by double underlined text:
"(d) U S WEST'S RIGHTS. U S WEST shall have the right to
delay, suspend, discontinue or terminate the Dive-In
Project and/or the High Bandwidth Project upon not less
than thirty (30) days written notice to the Company (a
"DISCONTINUATION"), which notice shall be given in the
manner provided in Section 12(e) of this Agreement. In
the event U S WEST delays or suspends the Dive-In
Project and/or the High Bandwidth Project, the Dive-in
Completion Date and/or the High Bandwidth Completion
Date, respectively, shall be extended by the length of
such delay or suspension. In the event of a
Discontinuation of either the Dive-In Project or the
High Bandwidth Project, U S WEST may reallocate the
unused portion of the Dive-In Allocated Funds or the
High Bandwidth Allocated Funds, as the case may be, to
the other project not subject to a Discontinuation;
provided, that such unused portion of the project
subject to Discontinuation shall be used by the Company
in connection with the project not subject to
Discontinuation prior to the later of the Dive-In
Completion Date or the High Bandwidth Completion Date.
In the event that both the Dive-In Project and the High
Bandwidth Project are subject to a Discontinuation, the
Company may retain the unused portion of the Dive-In
Allocated Funds and the High Bandwidth Allocated Funds
for use on other projects."
4. The parties hereto hereby acknowledge that the High Bandwidth Project
has been delayed and the High Bandwidth Completion Date is [*]; which
date is subject to further adjustments pursuant to Section 2(d) of the
Investment Agreement.
This Amendment may be executed in two or more counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
[THIS SPACE INTENTIONALLY LEFT BLANK]
*Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
2.
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AMENDMENT AGREEMENT
IN WITNESS WHEREOF, the undersigned have executed this AMENDMENT
AGREEMENT as of the day and year first set forth above.
U S WEST INTERACTIVE SERVICES, INC. XXXXX.XXX NETWORKS
By: /s/ Xxxxxx X. Xxxxxx By: /s/ Xxxxxxx X. XxXxxxxx
--------------------------------- ----------------------------------
Title: Xxxxxx X. Xxxxxx, President Xxxxxxx XxXxxxxx, President
AMENDMENT AGREEMENT
