1
EXHIBIT 10.3
INVESTMENT AGREEMENT
THIS INVESTMENT AGREEMENT (this "Agreement"), made as of the 19th day of
August, 1997 by and between WIRE NETWORKS, INC., a California corporation ("WNI"
or the "Company") and GRAPHICS INTERNATIONAL, INC., D/B/A HALLMARK CONNECTIONS,
a California corporation ("Hallmark"), (Hallmark and WNI are sometimes referred
to herein collectively as the "Parties" and individually as a "Party").
WHEREAS, WNI has developed informational websites, and desires to
further develop a mini-site and websites in conjunction with Hallmark; and
WHEREAS, Hallmark, through an affiliated corporation, HC Crown Corp.
(the "Hallmark Affiliate"), desires to purchase and WNI desires to sell an
ownership interest in WNI; and
WHEREAS, the Parties are, together with certain other investors in the
Series C Preferred Stock financing of WNI and concurrently with the execution of
this Agreement, entering or have entered into that certain Series C Preferred
Stock Purchase Agreement dated as of July 9, 1997, 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 form of
Warrant, 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 the Hallmark Affiliate
of an ownership interest in WNI.
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. HALLMARK AFFILIATE'S PURCHASE OF AN INTEREST IN COMPANY.
(a) HALLMARK AFFILIATE'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, Hallmark hereby agrees to cause
the Hallmark Affiliate to purchase one million three hundred fifteen thousand
seven hundred ninety (1,315,790) shares of
1.
2
Series C Convertible Preferred Stock (the "Stock") of WNI 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, WNI hereby accepts such
purchase and upon payment therefore, shall issue to the Hallmark Affiliate the
Stock.
(b) The Company will also grant to the Hallmark Affiliate warrants (the
"Series C Warrants") to acquire at the Series C Stock Price, as adjusted
pursuant to the term of the Series C Warrants, 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, Hallmark will be entitled to appoint one
(1) additional director to the Board of Directors of the Company.
(c) WNI shall allocate [*] of the Proceeds ("Allocated Funds") over a
period of [*] ("Term") for the development of websites for Hallmark. WNI will
allocate [*] of the Allocated Funds to the development of a mini-site for
Hallmark currently titled [*] ("Mini-Site"). WNI will host this Mini-Site on one
of WNI's websites and Hallmark will appear as the exclusive sponsor of this
Mini-Site. WNI will complete the development of the Mini-Site within 6 months of
the date hereof. WNI will allocate [*] of the Allocated Funds to other websites
to be mutually agreed upon by WNI and Hallmark. These co-branded websites will
sell advertising in accordance with Hallmark's standard advertising guidelines
which shall be delivered to WNI as soon as possible in conjunction with the
development of the websites which accept advertising. Hallmark reserves the
right to require the withdrawal of the use of its name(s) and sponsorship within
48 business hours upon a clear deviation from such advertising guidelines. WNI
will receive revenues generated from these properties as defined in Section
1(e).
(d) If WNI fails to spend all of the Allocated Funds as set forth above
within the [*], Hallmark will have the option of (a) allocating the
unused portion of the funds for usage on the Mini-Site at an amount of [*]
per year for as long as it takes for the unused portion to be spent (in the
event that the Mini-Site is not active at the end of the two year term, the
funds will be allocated against another active site approved by Hallmark created
at the same dollar amounts) or (b) having the unused amount returned to the
Hallmark Affiliate without decreasing the equity interest of the Hallmark
Affiliate in the Company if and only if WNI fails to make a minimum of 4
commercially reasonably proposals to Hallmark with regard to new projects which
are consistent with Hallmark's image and strategy. In addition, if WNI does not
launch the Mini-Site within [*] of the date hereof, Hallmark will have the
option of re-allocating the unused portion of the [*] to another project or
have the unused amount returned to Hallmark without decreasing Hallmark's equity
interest in the Company.
(e) Hallmark will retain the copyright and all other rights to the
content on all Hallmark sites created pursuant to the terms of this Agreement
(the "Content"), including the Mini-Site, during the Term and in perpetuity
thereafter, provided, however; WNI shall have an exclusive license to use any
such Content during the Term solely for purposes of the internet.
*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.
3
However, Hallmark will be obligated to pay WNI, in perpetuity, for use of this
Content as follows: for all Advertising Revenues (defined as advertising
revenues after sales commissions and agency fees) and Ancillary Revenues
(defined as all revenues generated from a source other than advertising revenue)
generated ("Total Revenues") from use of the Content or unique concepts
developed by WNI on behalf of Hallmark, Hallmark will pay WNI [*] of the Total
Revenues until all of WNI's production costs are reimbursed. Once WNI has been
fully reimbursed, WNI will receive [*] of the net profit collected from any use
of the Content off the web, [*] of the net profit for any product sold on the
web and [*] of all other revenues collected on the web. WNI recognizes that net
profit may not be the best way to divide funds and commits to evaluating other
revenue sharing options on a case by case basis. During the Term, Hallmark shall
not enter into any agreement with any other party relating to the use of said
Content without WNI's prior written permission. During the Term and in
perpetuity, WNI will receive author attribution whenever the said Content is
used (unless WNI gives permission otherwise).
(f) In the event that Hallmark reasonably believes that WNI's actual
investment in producing the Content for these sites significantly varies from
the amount reported or either party believes that an error has occurred with
regard to revenue sharing, such party may, but no more than twice during any
twelve month period, at its own expense and upon ten (10) days prior written
notice to the other party (the "Audited Party"), designate independent auditors
or accountants (the "Auditor") to examine or audit the Audited Party's records
in a reasonable manner to verify the figures reported or amounts paid, as the
case may be. In the event that the Auditor determines that either (x) the actual
amount invested by the Audited Party is less than ninety percent (90%) of the
amount reported by the Audited Party, or (y) the amount paid by the Audited
Party is less than ninety percent (90%) of the actual amount owed by the Audited
Party, as the case may be, then such difference, plus the fees of the Auditor,
shall become immediately due and payable by the Audited Party upon written
notice to the Audited Party.
(g) Hallmark will have ongoing access and the right to use demographic
information/profiles and names that are collected with respect to the sites
created hereunder in all cases where the user is notified that this information
may be disseminated.
(h) The Xxxxxxxx.xxx site will be prominently linked to all sites
created hereunder in partnership with Hallmark and WNI. In addition, a minimum
of [*] Hallmark sites designated by Hallmark and approved by WNI will be
prominently linked to each site created hereunder. Additional links will be
added as mutually agreed upon.
(i) All Hallmark sites and all links to Hallmark sites created hereunder
will be subject to well-outlined taste and quality guidelines that Hallmark will
provide to WNI . Hallmark reserves the right to require withdrawal of the use of
its name(s) and sponsorship within 48 business hours upon a clear contravention
of such guidelines ("Contravention") and in any case, upon 30 days written
notice, which notice shall be given in the manner provided in Section 8(e) of
this Agreement. WNI will have 30 days to cure such a Contravention. In the event
that WNI does not cure the Contravention to Hallmark's satisfaction, the fund
re-allocation guidelines as defined in Section 1(d) will apply.
*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.
3.
4
(j) WNI will not enter any similar agreement with [*] and [*]. If Hallmark does
not agree with the use of pre-existing cards on the WNI sites (pre-dating the
signing of this agreement), there will be a 60 day negotiation / phase out
period before the cards are removed (or as long as advertising has been pre-sold
for the post-card areas).
2. TRADEMARKS AND INTELLECTUAL PROPERTY RIGHTS OF THE PARTIES. Any and all
trademarks, service marks, copyrights (including the Content) and trade names of
Hallmark and its affiliates are, and shall remain, the exclusive property of
Hallmark or its affiliates, as the case may be. Any and all trademarks, service
marks, copyrights and trade names of WNI are, and shall remain, the exclusive
property of WNI. WNI 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 WNI may distribute), trademarks
and/or service marks in the name of WNI with respect to WNI's products.
3. CONFIDENTIALITY.
(a) NEW INITIATIVES. The Parties anticipate that, as long as Hallmark or
the Hallmark Affiliate holds the Stock, 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 part 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, or services (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 WNI
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 4, 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
*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.
4.
5
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 WNI shall be
returned to or remain with WNI. Should WNI cease to exist, and there is no
successor entity thereto, including a purchaser or other transferee of assets,
Hallmark shall have non-exclusive rights to such Confidential Information.
4. REPRESENTATIONS AND WARRANTIES.
(a) HALLMARK REPRESENTATIONS AND WARRANTIES. Hallmark represents and
warrants to WNI 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 a 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 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) the Hallmark Affiliate is acquiring the 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 WNI with
respect to the tax and other economic considerations of an investment in the
Stock, and the undersigned has relied on the advice of, or has consulted with,
only the undersigned's own advisor(s); and
5.
6
(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 WNI, and it will notify WNI 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 WNI 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.
(b) COMPANY REPRESENTATIONS AND WARRANTIES. WNI represents and warrants
to Hallmark 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, 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 not relying on any information provided by Hallmark
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 WNI or
its Affiliates upon the consummation of the transactions contemplated hereby or
thereafter; and
6.
7
(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 Hallmark, and it will notify Hallmark
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 Hallmark 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 Hallmark of the Stock.
5. INDEMNIFICATION.
(a) EACH PARTY (THE "INDEMNIFYING PARTY") shall indemnify, defend and
hold the other Party (including WNI), 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, warranty, 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, 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.
7.
8
6. LIMITATION OF LIABILITY. 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.
7. 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 Party 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.
(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: 2, 3,
5, 6, and 8(a), 8(c), 8(e), 8(f), 8(g), 8(h), 8(l) and 8(n).
8. 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
8.
9
entered into among the Parties and/or WNI from time to time. Each of the Parties
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 WNI, unless and until any of such personnel
become employees of WNI. 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 Hallmark's involvement in WNI in order to maximize
public, investor and advertiser interest. Such announcements may not be used
until WNI shall have received written notice from Hallmark 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. 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 Hallmark: If to WNI:
Hallmark Cards Incorporated WIRE Networks, Inc.
2501 XxXxx, Xxx 000000 0000 Xxxxxxx Xxxxx, Xxxxx 000
Xxxxxx Xxxx, Xxxxxxxx 00000 Xxx Xxxxx, Xxxxxxxxxx 00000
Fax (000) 000-0000 Fax (000) 000-0000
Attn: Xxxx XxXxxxxxxxx Attn: Xxxxxxx XxXxxxxx
9.
10
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
California (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.
(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,
Hallmark shall have the right on notice to WNI, but without requiring WNI's
consent, to assign all of its respective rights hereunder to any Person to
which, Hallmark may transfer, assign or convey all or substantially all of the
business, assets or properties of Hallmark, or to any Person with which,
Hallmark may hereafter merge or consolidate, or in connection with a
reorganization transaction, and WNI shall have the right on notice to Hallmark,
to assign this Agreement without the consent of Hallmark in connection with a
sale of all or substantially all of WNI'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
10.
11
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 8(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 WNI, 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 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 2 or
3 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 2 or 3, 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
11.
12
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,
rules, 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.
13
IN WITNESS WHEREOF, the Parties have signed this Agreement as of the
Effective Date.
GRAPHICS INTERNATIONAL, INC.
D/B/A HALLMARK CONNECTIONS
By: /s/ Graphics International, Inc.
------------------------------------------
Title:
WIRE NETWORKS, INC.
By: /s/ Xxxxxxx XxXxxxxx
------------------------------------------
Title: CEO and President
13.
14
INVESTMENT AGREEMENT
DATED AS OF AUGUST 19, 1997
BY AND BETWEEN
GRAPHICS INTERNATIONAL, INC.
D/B/A HALLMARK CONNECTIONS
AND
WIRE NETWORKS, INC.
15
EXHIBIT 10.3(a)
XXXXX.XXX NETWORKS
AMENDMENT AGREEMENT
THIS AMENDMENT AGREEMENT (the "AMENDMENT") is made as of May 7, 1998, by
and between XXXXX.XXX NETWORKS, a California corporation, formerly Wire
Networks, Inc. (the "COMPANY") and GRAPHICS INTERNATIONAL, INC. D/B/A HALLMARK
CONNECTIONS, a California corporation ("HALLMARK").
RECITALS
WHEREAS, the Company and Hallmark entered into that certain Investment
Agreement dated August 19, 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 8(g) of the Investment Agreement,
the Company and Hallmark 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 1(b) of the Investment Agreement is hereby amended by adding
a sentence to such subsection which shall read as follows:
"Hallmark's right to appoint such additional director to
the Board of Directors of the Company shall terminate upon
the closing of the Company's first underwritten public
offering of its Common Stock registered under the
Securities Act of 1933, as amended."
2. Section 1(d) of the Investment Agreement is hereby amended to read in
full as follows:
"(d) If WNI fails to spend all of the Allocated Funds as
set forth above within the [*], Hallmark will
have the right to direct how and on what sites WNI shall
expend the unused portion of the funds, including
maintenance and updating of the Mini-Site and other
websites designated by Hallmark. WNI shall account, no
more often than monthly, to Hallmark in such detail as
Hallmark requires on how the Allocated Funds have been
expended and are anticipated to be expended."
3. The parties hereto hereby acknowledge that the development of the
Mini-Site has been completed by the Company in accordance with Section 1(c) of
the Investment Agreement.
*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.
1.
16
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]
2.
17
IN WITNESS WHEREOF, the undersigned have executed this AMENDMENT
AGREEMENT as of the day and year first set forth above.
GRAPHICS INTERNATIONAL, INC. XXXXX.XXX NETWORKS
D/B/A HALLMARK CONNECTIONS
By: /s/ Graphics International, Inc. By: /s/ Xxxxxxx XxXxxxxx
---------------------------------- ----------------------------------
Title: Xxxxxxx XxXxxxxx, President
-------------------------------
AMENDMENT AGREEMENT
