AMENDMENT TO OPTION AGREEMENT AND NOTICE OF EXERCISE
THIS AMENDMENT TO OPTION AGREEMENT AND NOTICE OF EXERCISE (this
"Agreement") is made on April 15, 2004, by and among 550 Digital Media Ventures,
Inc. ("Seller") and VP Alpha Holdings IV, L.L.C. ("Buyer").
Recitals
A. Pursuant to the terms of the Option Agreement (the "Option Agreement"),
dated as of July 15, 2003 by and among Seller, eUniverse, Inc. (the "Company")
and Buyer, Buyer acquired an option to purchase any and all of 3,050,000 shares
of Common Stock ("Common Stock") and 1,750,000 shares of Series B Preferred
Stock of the Company ("Series B Preferred Stock") held by Seller.
B. Pursuant to the terms of the 550 DMV Consent and Waiver Agreement,
dated October 31, 2003 (the "Option Agreement Amendment"), Buyer partially
exercised its option under the Option Agreement and purchased 454,545 shares of
Series B Preferred Stock from Seller.
C. Buyer and Seller desire to further amend the Option Agreement as
hereinafter provided.
NOW, THEREFORE, in consideration of the foregoing Recitals, the parties
hereto agree as follows:
1. Notice of Partial Exercise. Pursuant to the Option Agreement, Buyer
hereby elects to purchase the remaining 3,050,000 shares of Common Stock and the
remaining 1,295,455 shares of Series B Preferred Stock from Seller subject to
the Option Agreement, each at the price of $1.10 per Share (together with the
Series B shares previously purchased from Seller, the "Purchased Shares") for an
aggregate consideration of $4,780,000 (the "Shares Purchase Price"). Payment for
the shares purchased hereunder shall be made by Buyer to Seller promptly by wire
transfer, pursuant to wire transfer instructions to be given by Seller.
2. No Seller Rights with Respect to Purchased Shares. Subject to Seller's
receipt of the Shares Purchase Price and the Note Purchase Price, Section 4(b)
of the Option Agreement shall be eliminated and Seller shall have no further
rights to receive consideration or otherwise with respect to the Purchased
Shares. For the avoidance of doubt, if Buyer or its designee does not purchase
the Note and pay to Seller the full Note Purchase Price in accordance with
Section 4(c) below, Section 4(b) of the Option Agreement and Buyer's obligations
thereunder shall continue in full force and effect.
3. Seller Representations and Warranties. Seller hereby reaffirms that the
representations and warranties of Seller contained in Section 6 of the Option
Agreement are true and complete as of the date hereof and are applicable to all
shares sold by Seller hereunder. Buyer hereby reaffirms that the representations
and warranties of Buyer contained in Section 7 of the Option Agreement are true
and complete as of the date hereof and are applicable to all shares purchased by
Buyer hereunder.
4. Promissory Note.
(a) Seller is the owner of a Promissory Note dated October 31,
2003, issued from the Company to the Seller, in the principal
face amount of $2,403,527.87, together with any accrued
interest ("Note").
(b) If Buyer or its designee elects to purchase the Note pursuant
to Section 4(c) below, Seller represents and warrants to the
Buyer that on the date hereof and on the date the Note is
transferred to Buyer or its designee:
(i) The Note has been duly authorized, executed and delivered
by the Company and is a valid and binding obligation of the
Company, enforceable in accordance with the terms against the
Company. A true, correct, and complete copy of the Note is set
forth in Exhibit A annexed hereto.
(ii) The sale of the Note by Seller to Buyer or its designee
will not contravene any provision of applicable law, or the
certificate of incorporation or the bylaws of Seller, or, to
Seller's knowledge, any agreement or other instrument binding
upon Seller or any judgment, order or decree of any
governmental body, agency or court having jurisdiction over
Seller, and to Seller's knowledge, no consent, approval,
authorization or order of, or qualification with, any
governmental body or agency is required for the sale of the
Note by Seller to Buyer or its designee.
(iii) Seller has valid title to the Note and the legal right
and power, and subject to the Company's execution hereof and
compliance with Section 4(c) below, all authorization and
approval required by law, to sell, transfer, and deliver the
Note to Buyer or its designee.
(iv) Delivery of the Note to be sold by Seller hereunder will
pass title to the Note to Buyer or its designee free and clear
of any security interests, claims, liens, equities, and other
encumbrances.
(v) The purchase price for the Note may or may not reflect the
actual value of the Note, that Seller has investigated the
value independently, that it has been represented by counsel,
and that it understands that the value of the Note when
ultimately paid by the Company may be significantly higher
than the price paid for the Note by Buyer or its designee.
(c) If the Note can be amended in a manner satisfactory to Buyer
in its sole discretion, Buyer or its designee shall purchase,
and Seller shall sell, the Note, within the next sixty (60)
days for a price equal to seventy-five percent (75%) of the
unpaid principal and accrued interest at the time of purchase
(the "Note Purchase Price"). Buyer shall notify Seller in
writing two (2) days in advance as to the actual date of
purchase if Buyer or its designee elects to purchase the Note.
Wire transfer of such funds shall be made promptly by Buyer or
its designee to Seller within the next sixty (60) days,
pursuant to wire transfer instructions to be given by Seller.
Seller shall promptly deliver the original Note to Buyer or
its designee.
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(d) Upon payment of the Note Purchase Price, Seller shall assign
and transfer to Buyer or Buyer's designee any and all of
Seller's security interests and rights related thereto in the
assets of the Company. Seller shall cooperate as reasonably
requested by Buyer to receive all benefits associated with
such security interests and rights.
5. No Other Amendments. Except as amended hereby, the Option Agreement
remains in full force and effect.
[Signature Page to Follow]
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IN WITNESS WHEREOF, this Amendment to the Option Agreement and Notice of
Exercise has been duly executed and delivered by Buyer and Seller as of the day
and year written above:
SELLER:
550 Digital Media Ventures, Inc.,
on behalf of itself and Sony Music
Entertainment Inc. and its subsidiaries
By: /s/ Xxxx Xxxxxxxxx
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Name: Xxxx Xxxxxxxxx
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Title: Secretary
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BUYER
VP Alpha Holdings IV, L.L.C.
By: VantagePoint Venture Associates IV, L.L.C.,
Its Managing Member
By: /s/ Xxxxx X. Xxxxxx
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Name: Xxxxx X. Xxxxxx
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Title: Managing Member
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The Company hereby consents to the foregoing amendment of the Option Agreement,
such consent being limited to any required pursuant to Section 16 thereof in
order to give effect to such amendment, and such consent, for the avoidance of
doubt, not extending to any required for transfer or assignment of the Note.
Capitalized terms used in the preceding sentence have the meaning ascribed to
them in the foregoing Agreement.
COMPANY
eUniverse, Inc.
By: /s/
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Name:
Title: Chief Executive Officer
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